Oppenheimer
International Bond Fund


6803 South Tucson Way, Centennial, CO 80112

1.800.225.5677


Statement of Additional Information dated November 21, 2003, Revised December
24, 2003


      This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated November 21, 2003. It should be read
together with the Prospectus. You can obtain the Prospectus by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number shown
above, or by downloading it from the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

Contents
                                                                        Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.. 2
    The Fund's Investment Policies..................................... 2
    Other Investment Techniques and Strategies......................... 6
    Other Investment Restrictions...................................... 29
How the Fund is Managed ............................................... 31
    Organization and History........................................... 31
    Board of Trustees and Oversight Committees......................... 32
    Trustees and Officers of the Fund.................................. 33
    The Manager........................................................ 42
Brokerage Policies of the Fund......................................... 44
Distribution and Service Plans......................................... 46
Performance of the Fund................................................ 51

About Your Account
How To Buy Shares...................................................... 57
How To Sell Shares..................................................... 67
How To Exchange Shares................................................. 73
Dividends, Capital Gains and Taxes..................................... 77
Additional Information About the Fund.................................. 81

Financial Information About the Fund
Independent Auditors' Report........................................... 82
Financial Statements................................................... 83

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






ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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


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


      In selecting securities for the Fund's portfolio, the Manager evaluates
the merits of particular securities primarily through the exercise of its own
investment analysis. That process may include, among other things, evaluation
of the issuer's historical operations, prospects for the industry of which the
issuer is part, the issuer's financial condition, its pending product
developments and business (and those of competitors), the effect of general
market and economic conditions on the issuer's business, and legislative
proposals that might affect the issuer.

      Foreign Securities. The Fund expects to invest primarily in foreign
securities. For the most part, these will be debt securities issued or
guaranteed by foreign companies or governments, including supra-national
entities. "Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities issued or guaranteed by governments other than the U.S. government
or by foreign supra-national entities. They also include securities of
companies (including those that are located in the U.S. or organized under U.S.
law) that derive a significant portion of their revenue or profits from foreign
businesses, investments or sales, or that have a significant portion of their
assets abroad. They may be traded on foreign securities exchanges or in the
foreign over-the-counter markets.

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

      Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of such foreign currency against the U.S.
dollar will result in a change in the amount of income the Fund has available
for distribution.  Because a portion of the Fund's investment income may be
received in foreign currencies, the Fund will be required to compute its income
in U.S. dollars for distribution to shareholders, and therefore the Fund will
absorb the cost of currency fluctuations.  After the Fund has distributed
income, subsequent foreign currency losses may result in the Fund's having
distributed more income in a particular fiscal period than was available from
investment income, which could result in a return of capital to shareholders.
      Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer growth potential,
or in foreign countries with economic policies or business cycles different
from those of the U.S., or to reduce fluctuations in portfolio value by taking
advantage of foreign stock markets that do not move in a manner parallel to
U.S. markets. The Fund will hold foreign currency only in connection with the
purchase or sale of foreign securities.

o     Foreign Debt Obligations. The debt obligations of foreign governments and
entities may or may not be supported by the full faith and credit of the
foreign government. The Fund may buy securities issued by certain
"supra-national" entities, which include entities designated or supported by
governments to promote economic reconstruction or development, international
banking organizations and related government agencies. Examples are the
International Bank for Reconstruction and Development (commonly called the
"World Bank"), the Asian Development bank and the Inter-American Development
Bank.

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

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

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

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

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

Special Risks of Emerging Markets. Emerging and developing markets abroad may
also offer special opportunities for growth investing but have greater risks
than more developed foreign markets, such as those in Europe and Canada,
Australia, New Zealand and Japan. There may be even less liquidity in their
securities markets, and settlements of purchases and sales of securities may be
subject to additional delays. They are subject to greater risks of limitations
on the repatriation of income and profits because of currency restrictions
imposed by local governments. Those countries may also be subject to the risk
of greater political and economic instability, which can greatly affect the
volatility of prices of securities in those countries. The Manager will
consider these factors when evaluating securities in these markets, because the
selection of those securities must be consistent with the Fund's investment
objectives.


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

      Investing in PFICs involves the risks associated with investing in
foreign securities, as described above. There are also the risks that the Fund
may not realize that a foreign corporation it invests in is a PFIC for federal
tax purposes. Federal tax laws impose severe tax penalties for failure to
properly report investment income from PFICs. Following industry standards, the
Fund makes every effort to ensure compliance with federal tax reporting of
these investments. PFICs are considered foreign securities for the purposes of
the Fund's minimum percentage requirements or limitations of investing in
foreign securities.
      Subject to the limits under the Investment Company Act of 1940 (the
"Investment Company Act") and under its own non-fundamental policies, the Fund
may also invest in foreign mutual funds which are also deemed PFICs (since
nearly all of the income of a mutual fund is generally passive income).
Investing in these types of PFICs may allow exposure to varying countries
because some foreign countries limit, or prohibit, all direct foreign
investment in the securities of companies domiciled therein.

      In addition to bearing their proportionate share of a fund's expenses
(management fees and operating expenses), shareholders will also indirectly
bear similar expenses of such entities. Additional risks of investing in other
investment companies are described below under "Investment in Other Investment
Companies.


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

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


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


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

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

      Fluctuations in the market value of fixed-income securities after the
Fund buys them will not affect the interest payable on those securities, nor
the cash income from them.  However, those price fluctuations will be reflected
in the valuations of the securities, and therefore the Fund's net asset values
will be affected by those fluctuations.

o     Special Risks of Lower-Grade Securities. The Fund can invest without
limit in lower-grade debt securities, if the Manager believes it is consistent
with the Fund's objectives. Because lower-rated securities tend to offer higher
yields than investment grade securities, the Fund may invest in lower grade
securities if the Manager is trying to achieve greater income. In some cases,
the appreciation possibilities of lower-grade securities may be a reason they
are selected for the Fund's portfolio. However, these investments will be made
only when consistent with the Fund's overall goal of total return.


      "Lower-grade" debt securities are those rated below "investment grade"
which means they have a rating lower than "Baa" by Moody's or lower than "BBB"
by Standard & Poor's or Fitch, or similar ratings by other rating
organizations. If they are unrated, and are determined by the Manager to be of
comparable quality to debt securities rated below investment grade, they are
considered part of the Fund's portfolio of lower-grade securities.  The Fund
can invest in securities rated as low as "C" or "D" or which may be in default
at the time the Fund buys them.


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

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


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

|X|   Portfolio Turnover.  "Portfolio turnover" describes the rate at which the
Fund traded its portfolio securities during its last fiscal year.  For example,
if a fund sold all of its securities during the year, its portfolio turnover
rate would have been 100%. The Fund's portfolio turnover rate will fluctuate
from year to year, and the Fund may continue to have a portfolio turnover rate
of more than 250% annually.

      Increased portfolio turnover creates higher brokerage and transaction
costs for the Fund, which may reduce its overall performance. Additionally, the
realization of capital gains from selling portfolio securities may result in
distributions of taxable capital gains to shareholders, since the Fund will
normally distribute all of its capital gains realized each year, to avoid
excise taxes under the Internal Revenue Code.









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


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

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

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

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

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

o     U.S. Treasury Obligations. These include Treasury bills (maturities of
one year or less when issued), Treasury notes (maturities of more than one year
and up to 10 years), and Treasury bonds (maturities of more than 10 years).
Treasury securities are backed by the full faith and credit of the United
States as to timely payments of interest and repayments of principal. They also
can include U. S. Treasury securities that have been "stripped" by a Federal
Reserve Bank, zero-coupon U.S. Treasury securities described above, and
Treasury Inflation-Protection Securities ("TIPS").

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

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

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

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

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

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







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

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

      The yields to maturity of I/Os and P/Os are very sensitive to principal
repayments (including prepayments) on the underlying mortgages. If the
underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on
those assets. If underlying mortgages experience less than anticipated
prepayments of principal, the yield on the P/Os based on them could decline
substantially.  The market for some of these securities may be limited, making
it difficult for the Fund to dispose of its holdings at an acceptable price.

      Floating Rate and Variable Rate Obligations.  The interest rate on a
floating rate note is based on a stated prevailing market rate, such as a
bank's prime rate, the 91-day U.S. Treasury Bill rate, or some other standard,
and is adjusted automatically each time such rate is adjusted.  The interest
rate on a variable rate note is also based on a stated prevailing market rate
but is adjusted automatically at specified intervals of not less than one year.
Generally, the changes in the interest rate on such securities reduce the
fluctuation in their market value.  As interest rates decrease or increase, the
potential for capital appreciation or depreciation is less than that for
fixed-rate obligations of the same maturity. The Manager may determine that an
unrated floating rate or variable rate demand obligation meets the Fund's
quality standards by reason of being backed by a letter of credit or guarantee
issued by a bank that meets those quality standards.

      Some variable rate and floating rate obligations have a demand feature
that allows the Fund to tender the obligation to the issuer or a third party
prior to its maturity. The tender may be at par value plus accrued interest,
according to the terms of the obligations. Floating rate and variable rate
demand notes that have a stated maturity in excess of one year may have
features that permit the holder to recover the principal amount of the
underlying security at specified intervals not exceeding one year and upon no
more than 30 days' notice.  The issuer of that type of note normally has a
corresponding right in its discretion, after a given period, to prepay the
outstanding principal amount of the note plus accrued interest. Generally the
issuer must provide a specified number of days' notice to the holder.

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

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

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

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

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

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


      Participation Interests.  The Fund may invest in participation interests,
subject to the Fund's limitation on investments in illiquid investments.  A
participation interest is an undivided interest in a loan made by the issuing
financial institution in the proportion that the buyers participation interest
bears to the total principal amount of the loan.  No more than 5% of the Fund's
net assets can be invested in participation interests of the same borrower.
The issuing financial institution may have no obligation to the Fund other than
to pay the Fund the proportionate amount of the principal and interest payments
it receives.



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

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

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

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


      Repurchase agreements, considered "loans" under the Investment Company
Act of 1940 ("Investment Company Act"), are collateralized by the underlying
security.  The Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal or
exceed the repurchase price to fully collateralize the repayment obligation.
However, if the vendor fails to pay the resale price on the delivery date, the
Fund may incur costs in disposing of the collateral and may experience losses
if there is any delay in its ability to do so. The Manager will monitor the
vendor's creditworthiness to confirm that the vendor is financially sound and
will continuously monitor the collateral's value.


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

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

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


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


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

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

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

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







      Investments in Equity Securities. Under normal market conditions the Fund
can invest up to 20% of its assets in securities other than debt securities,
including equity securities of both foreign and U.S. companies. However, it
does not anticipate investing significant amounts of its assets in these
securities as part of its normal investment strategy. Equity securities include
common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investments can include stocks of
companies in any market capitalization range, if the Manager believes the
investment is consistent with the Fund's objectives of total return and income.
Certain equity securities may be selected not only for their appreciation
possibilities but because they may provide dividend income.


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


      Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry. The Fund can invest in securities of large companies and
mid-size companies, but may also buy stocks of small companies, which may have
more volatile stock prices than large companies.

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


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


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

(1)   whether, at the option of the investor, the convertible security can be
         exchanged for a fixed number of shares of common stock of the issuer,
(2)   whether the issuer of the convertible securities has restated its
         earnings per share of common stock on a fully diluted basis
         (considering the effect of conversion of the convertible securities),
         and

(3)   the extent to which the convertible security may be a defensive "equity
         substitute," providing the ability to participate in any appreciation
         in the price of the issuer's common stock.

o     Rights and Warrants.  The Fund may invest up to 5% of its total assets in
warrants or rights. That limit does not apply to warrants and rights the Fund
has acquired as part of units of securities or that are attached to other
securities that the Fund buys. The Fund does not expect that it will have
significant investments in warrants and rights.

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


      Loans of Portfolio Securities.  The Fund may lend its portfolio
securities pursuant to the Securities Lending Agreement  (the "Securities
Lending Agreement") with JP Morgan Chase, subject to the restrictions stated in
the Prospectus. 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 for Leverage.  The fund may borrow for leverage as described
below under "Investment Restrictions." The Fund will pay interest on these
loans, and that interest expense will raise the overall expenses of the Fund
and reduce its returns. If it does borrow, its expenses will be greater than
comparable funds that do not borrow for leverage. Additionally, the Fund's
net asset values per share might fluctuate more than that of funds that do
not borrow. Currently, the Fund does not contemplate using this technique in
the next year but if it does so, it will not likely be to a substantial
degree.


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


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

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

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

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


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

      Asset-Backed Securities.  Asset-backed securities are fractional
interests in pools of assets, typically accounts receivable or consumer loans.
They are issued by trusts or special-purpose corporations. They are similar to
mortgage-backed securities, described above, and are backed by a pool of assets
that consist of obligations of individual borrowers. The income from the pool
is passed through to the holders of participation interest in the pools. The
pools may offer a credit enhancement, such as a bank letter of credit, to try
to reduce the risks that the underlying debtors will not pay their obligations
when due. However, the enhancement, if any, might not be for the full par value
of the security.  If the enhancement is exhausted and any required payments of
principal are not made, the Fund could suffer losses on its investment or
delays in receiving payment.

      The value of an asset-backed security is affected by changes in the
market's perception of the asset backing the security, the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also affected if
any credit enhancement has been exhausted. The risks of investing in
asset-backed securities are ultimately related to payment of consumer loans by
the individual borrowers. As a purchaser of an asset-backed security, the Fund
would generally have no recourse to the entity that originated the loans in the
event of default by a borrower. The underlying loans are subject to
prepayments, which may shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as in the case of
mortgage-backed securities and CMOs, described above. Unlike mortgage-backed
securities, asset-backed securities typically do not have the benefit of a
security interest in the underlying collateral.

      Bank Obligations and Securities That Are Secured By Them.  The Fund can
invest in bank obligations, including time deposits, certificates of deposit,
and bankers' acceptances. They must be either obligations of a domestic bank
with total assets of at least $1 billion or obligations of a foreign bank with
total assets of at least U.S. $1 billion. The Fund may also invest in
instruments secured by bank obligations (for example, debt which is guaranteed
by the bank). For purposes of this policy, the term "bank" includes commercial
banks, savings banks, and savings and loan associations that may or may not be
members of the Federal Deposit Insurance Corporation.

      Time deposits are non-negotiable deposits in a bank for a specified
period of time at a stated interest rate. They may or may not be subject to
withdrawal penalties. However, time deposits that are subject to withdrawal
penalties, other than those maturing in seven days or less, are subject to the
limitation on investments by the Fund in illiquid investments.

      Bankers' acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods.  They are deemed
"accepted" when a bank guarantees their payment at maturity.

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


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


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


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

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

      If the Fund takes a short position in the credit default swap, and 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).

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

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


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

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


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

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

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


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


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

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

o     Writing Covered Call Options.  The Fund may write (that is, sell) covered
calls. If the Fund sells a call option, it must be covered.  That means the
Fund must own the security subject to the call while the call is outstanding,
or, for certain types of calls, the call may be covered by identifying liquid
assets on the Fund's books to enable the Fund to satisfy its obligations if the
call is exercised.  Up to 50% of the Fund's total assets may be subject to
calls the Fund writes.







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

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

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

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

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

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


o     Writing Put Options.  The Fund can sell put options on securities,
broadly-based securities indices, foreign currencies, options on commodities
indices and futures. A put option on securities gives the purchaser the right
to sell, and the writer the obligation to buy, the underlying investment at the
exercise price during the option period.  The Fund will not write puts if, as a
result, more than 50% of the Fund's net assets would be required to be
identified to cover such put options.


      If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a
put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put.  However, he Fund also
assumes the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price.

      If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred.  If the
put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed the
market value of the investment at that time.  In that case, the Fund may incur
a loss if it sells the underlying investment. That loss will be equal to the
sum of the sale price of the underlying investment and the premium received
minus the sum of the exercise price and any transaction costs the Fund incurred.

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

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

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


o     Purchasing Calls and Puts.  The Fund can purchase calls only on
securities, broadly-based securities indices, foreign currencies, options on
commodities indices and futures. It may do so to protect against the
possibility that the Fund's portfolio will not participate in an anticipated
rise in the securities market. When the Fund buys a call (other than in a
closing purchase transaction), it pays a premium. The Fund then has the right
to buy the underlying investment from a seller of a corresponding call on the
same investment during the call period at a fixed exercise price.


      The Fund benefits only if it sells the call at a profit or if, during the
call period, the market price of the underlying investment is above the sum of
the call price plus the transaction costs and the premium paid for the call and
the Fund exercises the call.  If the Fund does not exercise the call or sell it
(whether or not at a profit), the call will become worthless at its expiration
date. In that case, the Fund will have paid the premium but lost the right to
purchase the underlying investment.

      The Fund can buy puts only on securities, broadly-based securities
indices, foreign currencies, options on commodities indices and futures,
whether or not it owns the underlying investment. When the Fund purchases a
put, it pays a premium and, except as to puts on indices, has the right to sell
the underlying investment to a seller of a put on a corresponding investment
during the put period at a fixed exercise price.

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

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

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

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

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


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


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


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

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


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


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


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


      An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular option.  The Fund
might experience losses if it could not close out a position because of an
illiquid market for the future or option.  There is a risk in using short
hedging by selling futures or purchasing puts on broadly-based indices or
futures to attempt to protect against declines in the value of the Fund's
portfolio securities. The risk is that the prices of the futures or the
applicable index will correlate imperfectly with the behavior of the cash
prices of the Fund's securities.  For example, it is possible that while the
Fund has used hedging instruments in a short hedge, the market might advance
and the value of the securities held in the Fund's portfolio might decline. If
that occurred, the Fund would lose money on the hedging instruments and also
experience a decline in the value of its portfolio securities. However, while
this could occur for a very brief period or to a very small degree, over time
the value of a diversified portfolio of securities will tend to move in the
same direction as the indices upon which the hedging instruments are based.


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

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

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

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

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

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

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


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


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

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

      The precise matching of the amounts under forward contracts and the value
of the securities involved generally will not be possible because the future
value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold.  In some cases, the Manager might decide
to sell the security and deliver foreign currency to settle the original
purchase obligation. If the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver, the Fund might
have to purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the security
instead exceeds the amount of foreign currency the Fund is obligated to deliver
to settle the trade, the Fund might have to sell on the spot market some of the
foreign currency received upon the sale of the security. There will be
additional transaction costs on the spot market in those cases. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
Forward contracts involve the risk that anticipated currency movements will not
be accurately predicted, causing the Fund to sustain losses on these contracts
and to pay additional transactions costs. The use of forward contracts in this
manner might reduce the Fund's performance if there are unanticipated changes
in currency prices to a greater degree than if the Fund had not entered into
such contracts.

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

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

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

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


      Swap agreements entail both interest rate risk and credit risk.  There is
a risk that, based on movements of interest rates in the future, the payments
made by the Fund under a swap agreement will be greater than the payments it
received.  Credit risk arises from the possibility that the counterparty will
default.  If the counterparty defaults, the Fund's loss will consist of the net
amount of contractual interest payments that the Fund has not yet received.
The Manager will monitor the creditworthiness of counterparties to the Fund's
interest rate swap transactions on an ongoing basis.


      The Fund can enter into swap transactions with certain counterparties
pursuant to master netting agreements.  A master netting agreement provides
that all swaps done between the Fund and that counterparty shall be regarded as
parts of an integral agreement.  If amounts are payable on a particular date in
the same currency in respect of one or more swap transactions, the amount
payable on that date in that currency shall be the net amount.  In addition,
the master netting agreement may provide that if one party defaults generally
or on one swap, the counterparty can terminate all of the swaps with that
party.  Under these agreements, if a default results in a loss to one party,
the measure of that party's damages is calculated by reference to the average
cost of a replacement swap for each swap. It is measured by the mark-to-market
value at the time of the termination of each swap.  The gains and losses on all
swaps are then netted, and the result is the counterparty's gain or loss on
termination.  The termination of all swaps and the netting of gains and losses
on termination is generally referred to as "aggregation."


         Swaption Transactions. The Fund may enter into a swaption transaction,
which is a contract that grants the holder, in return for payment of the
purchase price (the "premium") of the option, the right, but not the
obligation, to enter into an interest rate swap at a preset rate within a
specified period of time, with the writer of the contract.  The writer of the
contract receives the premium and bears the risk of unfavorable changes in the
preset rate on the underlying interest rate swap.  Unrealized gains/losses on
swaptions are reflected in investment assets and investment liabilities in the
Fund's statement of financial condition.
o     Regulatory Aspects of Hedging Instruments.  The Commodities Futures
Trading Commission (the "CFTC") recently eliminated limitations on futures
trading by certain regulated entities including registered investment companies
and consequently registered investment companies may engage in unlimited
futures transactions and options thereon provided that the Fund claims an
exclusion from regulation as a commodity pool operator. The Fund has claimed
such an exclusion from registration as a commodity pool operator under the
Commodity Exchange Act ("CEA"). The Fund may use futures and options for
hedging and non-hedging purposes to the extent consistent with its investment
objective, internal risk management guidelines adopted by the Fund's investment
advisor (as they may be amended from time to time), and as otherwise set forth
in the Fund's prospectus or this statement of additional information.


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

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

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

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

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

(1)






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


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

|X|   Temporary Defensive and Interim Investments.  When market, economic or
political conditions are unstable, or the Manager believes it is otherwise
appropriate to reduce holdings in stocks, the Fund can invest in a variety of
debt securities for defensive purposes. The Fund can also purchase these
securities for liquidity purposes to meet cash needs due to the redemption of
Fund shares, or to hold while waiting to invest cash received from the sale of
other portfolio securities. The Fund can buy:


o     high quality, short term money market instruments, including those issued
            by the U.S Treasury or other government obligations issued or
            guaranteed by the U. S. government or its instrumentalities or
            agencies,
o     commercial paper (short-term, unsecured, promissory notes of domestic or
            foreign companies) rated in the three top rating categories of a
            nationally recognized rating organization,
o     short-term debt obligations of corporate issuers, rated investment grade
            (rated at least Baa by Moody's or at least BBB by Standard &
            Poor's, or a comparable rating by another rating organization), or
            unrated securities judged by the Manager to have a comparable
            quality to rated securities in those categories,
o     certificates of deposit and bankers' acceptances of domestic and foreign
            banks and savings and loan associations, having total assets in
            excess of $1 billion, and
o     repurchase agreements.

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

|X|   Investment in Other Investment Companies. The Fund can also invest in the
securities of other investment companies, which can include open-end funds,
closed-end funds and unit investment trusts, subject to the limits set forth in
the Investment Company Act 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.

Other Investment Restrictions

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


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


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

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

o     The Fund cannot buy or sell real estate. However, the Fund can purchase
debt securities secured by real estate or interests in real estate or issued by
companies, including real estate investment trusts, which invest in real estate
or interests in real estate.

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


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



o     The Fund cannot borrow money in excess of 33 1/3% of the value of its
total assets.  The Fund may borrow only from banks and/or affiliated investment
companies.  The Fund cannot make any investment at a time during which its
borrowings exceed 5% of the value of its assets.  With respect to this
fundamental policy, the Fund can borrow only if it maintains a 300% ratio of
assets to borrowings at all times in the manner set forth in the Investment
Company Act.

o     The Fund cannot concentrate o investments. That means it cannot invest
25% or more of its total assets in any one industry. The Fund will not invest
25% or more of its total assets in government securities of any one foreign
company or in debt and equity securities issued by companies organized under
the laws of any one foreign country. Obligations of the U.S. government, its
agencies and instrumentalities are not considered to be part of an "industry"
for the purposes of this policy.

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

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

Non-Diversification of the Fund's Investments.  The Fund is "non-diversified,"
as defined in the Investment Company Act.  Funds that are diversified have
restrictions against investing too much of their assets in the securities of
any one "issuer."  That means that the Fund can invest more of its assets in
the securities of a single issuer than a fund that is diversified.

      Being non-diversified poses additional investment risks, because if the
Fund invests more of its assets in fewer issuers, the value of its shares is
subject to greater fluctuations from adverse conditions affecting any one of
those issuers.  However, the Fund does limit its investments in the securities
of any one issuer to qualify for tax purposes as a "regulated investment
company" under the Internal Revenue Code.  By qualifying, it does not have to
pay federal income taxes if more than 90% of its earnings are distributed to
shareholders.  To qualify, the Fund must meet a number of conditions.  First,
not more than 25% of the market value of the Fund's total assets may be
invested in the securities of a single issuer.  Second, with respect to 50% of
the market value of its total assets, (1) no more than 5% of the market value
of its total assets may be invested in the securities of a single issuer, and
(2) the Fund must not own more than 10% of the outstanding voting securities of
a single issuer.  This is not a fundamental policy.

How the Fund is Managed

Organization and History. The Fund is an open-end, non-diversified management
investment company with an unlimited number of authorized shares of beneficial
interest. The Fund was organized as a Massachusetts business trust on February
28, 1995.

      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.

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

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

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

|X|   Meetings of Shareholders.  As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders. Although the Fund will not normally hold annual meetings of its
shareholders, it may hold shareholder meetings from time to time on important
matters, and shareholders have the right to call a meeting to remove a Trustee
or to take other action described in the Fund's Declaration of Trust.

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


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

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

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

      The Board of Trustees has an Audit Committee and a Review Committee. The
Audit Committee is comprised solely of Independent Trustees. The members of the
Audit Committee are Edward L. Cameron (Chairman), William L. Armstrong, George
C. Bowen and Robert J. Malone.  The Audit Committee held six meetings during
the fiscal year ended September 30, 2003. The Audit Committee furnishes the
Board with recommendations regarding the selection of the Fund's independent
auditors. Other main functions of the Audit Committee include, but are not
limited to: (i) reviewing the scope and results of financial statement audits
and the audit fees charged; (ii) reviewing reports from the Fund's independent
auditors regarding the Fund's internal accounting procedures and controls;
(iii) review reports from the Manager's Internal Audit Department; (iv)
maintaining a separate line of communication between the Fund's independent
auditors and its Independent Trustees; and (v) exercise all other functions
outlined in the Audit Committee Charter, including but not limited to reviewing
the independence of the Fund's independent auditors and the pre-approval of the
performance by the Fund's independent auditors of any non-audit service,
including tax service, for the Fund and the Manager and certain affiliates of
the Manager.

      The Audit Committee's functions include selecting and nominating, to the
full Board, nominees for election as Trustees, and selecting and nominating
Independent Trustees for election.  The Audit Committee may, but need not,
consider the advice and recommendation of the Manager and its affiliates in
selecting nominees. The full Board elects new trustees except for those
instances when a shareholder vote is required.

      To date, the Committee has been able to identify from its own resources
an ample number of qualified candidates.  Nonetheless, shareholders may submit
names of individuals, accompanied by complete and properly supported resumes,
for the Audit Committee's consideration by mailing such information to the
Committee in care of the Fund.  The Committee may consider such persons at such
time as it meets to consider possible nominees.  The Committee, however,
reserves sole discretion to determine the candidates to present to the Board
and/or shareholders when it meets for the purpose of considering potential
nominees.

      The members of the Review Committee are Jon S. Fossel (Chairman), Robert
G. Avis, Sam Freedman, Beverly Hamilton and F. William Marshall, Jr.  The
Review Committee held six meetings during the fiscal year ended September 30,
2003. Among other functions, the Review Committee reviews reports and makes
recommendations to the Board concerning the fees paid to the Fund's transfer
agent and the services provided to the Fund by the transfer agent.  The Review
Committee also reviews the Fund's investment performance and policies and
procedures adopted by the Fund to comply with Investment Company Act and other
applicable law.

Trustees and Officers of the Fund. Except for Messrs. Murphy, each of the
Trustees  are "Independent Trustees," as under the Investment Company Act. Mr.
Murphy is an "Interested Trustee," because he is affiliated with the Manager by
virtue of his positions as an officer and director of the Manager, and as a
shareholder of its parent company. Mr. Murphy was elected as a Trustee of the
Fund with the understanding that in the event he ceases to be the chief
executive officer of the Manager, he will resign as a trustee of the Fund and
the other Board II Funds (defined below) for which he is a trustee or director.


      The Fund's Trustees and officers and their positions held with the Fund
and length of service in such position(s) and their principal occupations and
business affiliations during the past five years are listed in the chart below.
The information for the Trustees also includes the dollar range of shares of
the Fund as well as the aggregate dollar range of shares beneficially owned in
any of the Oppenheimer funds overseen by the Trustees. All of the Trustees are
also trustees or directors of the following Oppenheimer funds (except for Mrs.
Hamilton and Mr. Malone, who are not Trustees of Oppenheimer Senior Floating
Rate Fund) (referred to as "Board II Funds"):


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

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

      Messrs. Murphy, de'Rossi, Molleur, Vottiero, Wixted and Zack, and Mses.
Bechtolt, Feld and Ives who are officers of the Fund, respectively hold the
same offices with one or more of the other Board II Funds as with the Fund. As
of October 22, 2003, the Trustees and officers of the Fund, as a group, owned
of record or beneficially less than 1% of each class of shares of the Fund.
The foregoing statement does not reflect ownership of shares held of record by
an employee benefit plan for employees of the Manager, other than the shares
beneficially owned under that plan by the officers of the Fund listed above. In
addition, each Independent Trustee, and his family members, do not own
securities of either the Manager or Distributor of the Board II Funds or any
person directly or indirectly controlling, controlled by or under common
control with the Manager or Distributor.

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

- -------------------------------------------------------------------------------------
                                Independent Trustees
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name,               Principal Occupation(s) During Past 5     Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                                                                         Beneficially
                                                                         Owned in
                    Years;                                    Range of   Any of the
Position(s) Held    Other Trusteeships/Directorships Held by  Shares     Oppenheimer
with Fund,          Trustee;                                  BeneficiallFunds
Length of Service,  Number of Portfolios in Fund Complex      Owned in   Overseen
Age                 Currently Overseen by Trustee             the Fund   by Trustee
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2002
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

William L.          Chairman   of   the   following   private None       $50,001-
Armstrong,          mortgage banking companies:  Cherry Creek            $100,000
Chairman of the     Mortgage     Company     (since    1991),
Board since 2003    Centennial  State Mortgage Company (since
and Trustee since   1994),   The  El  Paso  Mortgage  Company
1999                (since   1993),    Transland    Financial
Age: 66             Services,  Inc. (since 1997); Chairman of
                    the following  private  companies:  Great
                    Frontier  Insurance   (insurance  agency)
                    (since    1995),     Ambassador     Media
                    Corporation and Broadway  Ventures (since
                    1984);   a  director  of  the   following
                    public  companies:   Helmerich  &  Payne,
                    Inc.  (oil  and  gas  drilling/production
                    company)  (since 1992) and  UNUMProvident
                    (insurance  company)  (since  1991).  Mr.
                    Armstrong is also a  Director/Trustee  of
                    Campus   Crusade   for   Christ  and  the
                    Bradley  Foundation.  Formerly a director
                    of  the  following:   Storage  Technology
                    Corporation  (a  publicly-held   computer
                    equipment company)  (1991-February 2003),
                    and  International  Family  Entertainment
                    (television     channel)     (1992-1997),
                    Frontier Real Estate,  Inc.  (residential
                    real estate brokerage)  (1994-1999),  and
                    Frontier Title (title  insurance  agency)
                    (1995-June    1999);   a   U.S.   Senator
                    (January  1979-January 1991). Oversees 38
                    portfolios   in   the    OppenheimerFunds
                    complex.

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

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Avis,     Formerly,  Director and President of A.G. None       Over
Trustee since 1995  Edwards  Capital,  Inc.  (General Partner            $100,000
Age: 72             of private equity funds) (until  February
                    2001);  Chairman,   President  and  Chief
                    Executive   Officer   of   A.G.   Edwards
                    Capital,  Inc.  (until March 2000);  Vice
                    Chairman  and  Director of A.G.  Edwards,
                    Inc. and Vice Chairman of A.G.  Edwards &
                    Sons,   Inc.   (its   brokerage   company
                    subsidiary) (until March 1999);  Chairman
                    of A.G.  Edwards Trust Company and A.G.E.
                    Asset  Management   (investment  advisor)
                    (until  March   1999);   and  a  Director
                    (until  March  2000)  of A.G.  Edwards  &
                    Sons  and  A.G.  Edwards  Trust  Company.
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
George C. Bowen,    Formerly (until April 1999):  Senior Vice $10,001-$50Over
Trustee since 1998  President   (from   September  1987)  and            $100,000
Age: 67             Treasurer   (from   March  1985)  of  the
                    Manager;  Vice President (from June 1983)
                    and  Treasurer   (since  March  1985)  of
                    OppenheimerFunds   Distributor,  Inc.  (a
                    subsidiary of the  Manager);  Senior Vice
                    President    (since    February    1992),
                    Treasurer  (since  July  1991)  Assistant
                    Secretary and a director  (since December
                    1991)  of  Centennial   Asset  Management
                    Corporation;    Vice   President   (since
                    October 1989) and Treasurer  (since April
                    1986)  of  HarbourView  Asset  Management
                    Corporation   (an   investment   advisory
                    subsidiary  of the  Manager);  President,
                    Treasurer    and   a    director    (June
                    1989-January  1990) of Centennial Capital
                    Corporation   (an   investment   advisory
                    subsidiary   of   the   Manager);    Vice
                    President  and  Treasurer  (since  August
                    1978) and  Secretary  (since  April 1981)
                    of   Shareholder   Services,    Inc.   (a
                    transfer   agent    subsidiary   of   the
                    Manager);  Vice President,  Treasurer and
                    Secretary   (since   November   1989)  of
                    Shareholder  Financial Services,  Inc. (a
                    transfer   agent    subsidiary   of   the
                    Manager);   Assistant   Treasurer  (since
                    March  1998) of  Oppenheimer  Acquisition
                    Corp.      (the     Manager's      parent
                    corporation);  Treasurer  (since November
                    1989)    of    Oppenheimer    Partnership
                    Holdings,   Inc.   (a   holding   company
                    subsidiary   of   the   Manager);    Vice
                    President  and   Treasurer   (since  July
                    1996)   of    Oppenheimer    Real   Asset
                    Management,  Inc. (an investment advisory
                    subsidiary   of   the   Manager);   Chief
                    Executive  Officer  and  director  (since
                    March  1996)  of  MultiSource   Services,
                    Inc. (a  broker-dealer  subsidiary of the
                    Manager);  Treasurer (since October 1997)
                    of  OppenheimerFunds  International  Ltd.
                    and  OppenheimerFunds  plc (offshore fund
                    management  subsidiaries of the Manager).
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Edward L. Cameron,  A  member  of The  Life  Guard  of  Mount None       $50,001-
Trustee since 1999  Vernon,  George  Washington's home (since            $100,000
Age: 65             June  2000).  Formerly  (March 2001 - May
                    2002)  Director of Genetic  ID, Inc.  and
                    its   subsidiaries   (a  privately   held
                    biotech   company);    a   partner   with
                    PricewaterhouseCoopers      LLP     (from
                    1974-1999)  (an   accounting   firm)  and
                    Chairman    (from    1994-1998),    Price
                    Waterhouse    LLP    Global    Investment
                    Management   Industry   Services   Group.
                    Oversees    38    portfolios    in    the
                    OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Jon S. Fossel,      Chairman  and  Director  (since  1998) of Over       Over
Trustee since 1995  Rocky    Mountain   Elk   Foundation   (a $100,000   $100,000
Age: 61             not-for-profit    foundation);    and   a

                    director  (since  October  1999)  of P.R.
                    Pharmaceuticals    (a   privately    held
                    company) and  UNUMProvident (an insurance
                    company)  (since June 1, 2002).  Formerly
                    Chairman  and a director  (until  October
                    1996) and President  and Chief  Executive
                    Officer   (until  October  1995)  of  the
                    Manager;   President,   Chief   Executive
                    Officer  and a  director  of  Oppenheimer
                    Acquisition Corp.,  Shareholders Services
                    Inc. and Shareholder  Financial Services,
                    Inc.  (until October  1995).  Oversees 38
                    portfolios   in   the    OppenheimerFunds
                    complex.

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Sam Freedman,       Director    of    Colorado    Uplift   (a None       Over
Trustee since 1996  non-profit   charity)  (since   September            $100,000
Age: 63             1984).  Formerly (until October 1994) Mr.
                    Freedman   held   several   positions  in
                    subsidiary  or  affiliated  companies  of
                    the Manager.  Oversees 38  portfolios  in
                    the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Beverly L.          Trustee (since 1996) of MassMutual        None       $10,001-$50,000
Hamilton,           Institutional Funds and of MML Series
Trustee since 2002  Investment Fund (open-end investment
Age: 57             companies); Director of MML Services
                    (since April 1987) and America Funds
                    Emerging Markets Growth Fund (since

                    October 1991) (both are investment
                    companies), The California Endowment (a
                    philanthropy organization) (since April
                    2002), and Community Hospital of
                    Monterey Peninsula, (since February
                    2002); a trustee (since February 2000)
                    of Monterey International Studies (an
                    educational organization), and an
                    advisor to Unilever (Holland)'s pension
                    fund and to Credit Suisse First Boston's
                    Sprout venture capital unit. Mrs.
                    Hamilton also is a member of the
                    investment committees of the Rockefeller
                    Foundation, the University of Michigan
                    and Hartford Hospital. Formerly,
                    President (February 1991-April 2000)
                    ARCO Investment Management Company.
                    Oversees 37 portfolios in the
                    OppenheimerFunds complex.

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert J. Malone,   Chairman and CEO (since 2003) of Steele   $50,000-$10Over0
Trustee since 2002  Street State Bank (a commercial banking              $100,000
Age: 59             entity); Director (since 2001) of Jones
                    Knowledge, Inc. (a privately held
                    company), U.S. Exploration, Inc., (since
                    1997), Colorado UpLIFT (a non-profit
                    organization) (since 1986) and a trustee
                    of the Gallagher Family Foundation
                    (non-profit organization) (since 2000).
                    Formerly, Chairman of U.S. Bank (a
                    subsidiary of U.S. Bancorp and formerly
                    Colorado National Bank,) (July
                    1996-April 1, 1999) and a director of
                    Commercial Assets, Inc. (a REIT)
                    (1993-2000). Oversees 37 portfolios in
                    the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
F. William          Trustee   (since   1996)  of   MassMutual None       Over
Marshall, Jr.,      Institutional  Funds  and of  MML  Series            $100,000
Trustee since 2000  Investment   Fund  (open-end   investment
Age: 61             companies);    Trustee    (since   1987),

                    Chairman  of the Board  (since  2003) and
                    Chairman  of  the  investment   committee
                    (since 1994) for the  Worcester  Polytech
                    Institute;    President   and   Treasurer
                    (since  January  1999) of the SIS Fund (a
                    private not for profit  charitable fund);
                    Trustee  (since 1995) of the  Springfield
                    Library and Museum  Association;  Trustee
                    (since  1996)  of  the  Community   Music
                    School of Springfield.  Formerly,  member
                    of  the   investment   committee  of  the
                    Community     Foundation    of    Western
                    Massachusetts  (1998  -  2003);  Chairman
                    (January  1999-July 1999) of SIS & Family
                    Bank,   F.S.B.   (formerly   SIS   Bank);
                    President,  Chief  Executive  Officer and
                    Director (May 1993-December  1998) of SIS
                    Bankcorp,  Inc.  and SIS  Bank  (formerly
                    Springfield  Institution for Savings) and
                    Executive   Vice    President    (January
                    1999-July   1999)  of  Peoples   Heritage
                    Financial   Group,   Inc.   Oversees   38
                    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, New York 10281-1008. Mr. Murphy serves
for an indefinite term, until his resignation, retirement, death or removal.


   Interested
   Trustee and
     Officer
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5      Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                                                                         Shares
                   Years;                                     Range of   Beneficially
Position(s) Held   Other Trusteeships/Directorships Held by   Shares     Owned in
with Fund,         Trustee;                                   BeneficiallAny of the
Length of Service, Number of Portfolios in Fund Complex       Owned in   Oppenheimer
Age                Currently Overseen by Trustee              the Fund   Funds
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2002
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
John V. Murphy,    Chairman,   Chief  Executive  Officer  and None       Over
President and      director  (since June 2001) and  President            $100,000
Trustee since 2001 (since  September  2000)  of the  Manager;
Age: 54            President  and a  director  or  trustee of
                   other Oppenheimer  funds;  President and a
                   director  (since July 2001) of Oppenheimer
                   Acquisition   Corp.   and  of  Oppenheimer
                   Partnership  Holdings,  Inc.;  a  director
                   (since November 2001) of  OppenheimerFunds
                   Distributor,    Inc.;   Chairman   and   a
                   director  (since July 2001) of Shareholder
                   Services,    Inc.   and   of   Shareholder
                   Financial Services,  Inc.; President and a
                   director     (since    July    2001)    of
                   OppenheimerFunds    Legacy    Program   (a
                   charitable  trust program  established  by
                   the Manager);  a director of the following
                   investment   advisory    subsidiaries   of
                   OppenheimerFunds,  Inc.: OFI Institutional
                   Asset  Management,   Inc.  and  Centennial
                   Asset   Management    Corporation   (since
                   November    2001),    HarbourView    Asset
                   Management  Corporation  and  OFI  Private
                   Investments,   Inc.   (since  July  2001);
                   President  (since  November 1, 2001) and a
                   director  (since July 2001) of Oppenheimer
                   Real Asset  Management,  Inc.;  a director
                   (since    November    2001)   of   Trinity
                   Investment  Management  Corp.  and Tremont
                   Advisers,    Inc.   (investment   advisory
                   affiliates  of  the  Manager);   Executive
                   Vice  President  (since  February 1997) of
                   Massachusetts    Mutual   Life   Insurance
                   Company (the Manager's parent company);  a
                   director   (since   June   1995)   of  DLB
                   Acquisition    Corporation    (a   holding
                   company  that  owns  shares  of  David  L.
                   Babson & Company,  Inc.); formerly,  Chief
                   Operating  Officer  (September   2000-June
                   2001)  of  the  Manager;   President   and
                   trustee (November  1999-November  2001) of
                   MML Series  Investment Fund and MassMutual
                   Institutional  Funds (open-end  investment
                   companies);    a    director    (September
                   1999-August  2000) of C.M. Life  Insurance
                   Company;    President,   Chief   Executive
                   Officer    and     director     (September
                   1999-August  2000) of MML Bay  State  Life
                   Insurance   Company;   a  director   (June
                   1989-June  1998) of Emerald  Isle  Bancorp
                   and Hibernia  Savings Bank (a wholly-owned
                   subsidiary   of  Emerald  Isle   Bancorp).
                   Oversees    72     portfolios    in    the
                   OppenheimerFunds complex.
- -------------------------------------------------------------------------------------


      The address of the Officers in the chart below is as follows: Messrs.
de'Rossi, Molleur, and Zack and Ms. Feld, Two World Financial Center, 225
Liberty Street, 11th Floor, New York, New York 10281-1008, for Messrs. Vottiero
and Wixted and Mses. Bechtolt and Ives, 6803 South Tucson Way, Centennial, CO
80112-3924. Each Officer serves for an annual term or until his or her earlier
resignation, death or removal.


- -------------------------------------------------------------------------------------
                                Officers of the Fund
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name;                  Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund;
Length of Service;
Age
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Ruggero de'Rossi,      Senior Vice President of the Manager (since February 2003);
Vice President and     an officer of 1 portfolio in the OppenheimerFunds complex.
Portfolio Manager      Formerly, Vice President of the Manager (March 2000-January
since 2000             2003). Prior to joining the Manager he was a Senior Vice
Age:  40               President and Chief Emerging Markets Debt and Currency
                       Strategist of ING Barings, a global investment bank (July
                       1998 - March 2000); before that he was a Vice President,
                       head of emerging markets trading strategies at Citicorp
                       Securities, after having run the bank's proprietary trading
                       activity on international fixed income and foreign exchange
                       derivatives (May 1995 - July 1998).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Brian W. Wixted,       Senior Vice President and Treasurer (since March 1999) of
Treasurer since 1999   the Manager; Treasurer (since March 1999) of HarbourView
Age: 44                Asset Management Corporation, Shareholder Services, Inc.,
                       Oppenheimer Real Asset Management Corporation, Shareholder
                       Financial Services, Inc., Oppenheimer Partnership Holdings,
                       Inc., OFI Private Investments, Inc. (since March 2000),
                       OppenheimerFunds International Ltd. and OppenheimerFunds plc
                       (offshore fund management subsidiaries of the Manager)
                       (since May 2000) and OFI Institutional Asset Management,
                       Inc. (since November 2000); Treasurer and Chief Financial
                       Officer (since May 2000) of Oppenheimer Trust Company (a
                       trust company subsidiary of the Manager); Assistant
                       Treasurer (since March 1999) of Oppenheimer Acquisition
                       Corp. and OppenheimerFunds Legacy Program (since April
                       2000); formerly Principal and Chief Operating Officer (March
                       1995-March 1999), Bankers Trust Company-Mutual Fund Services
                       Division. An officer of 82 portfolios in the
                       OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Connie Bechtolt,       Assistant Vice President of the Manager  (since September
Assistant Treasurer    1998); formerly Manager/Fund Accounting (September
since 2002             1994-September 1998) of the Manager. An officer of 82
Age: 40                portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Philip Vottiero,       Vice President/Fund Accounting of the Manager (since March
Assistant Treasurer    2002); formerly Vice President/Corporate Accounting of the
since 2002             Manager (July 1999-March 2002) prior to which he was Chief
Age: 40                Financial Officer at Sovlink Corporation (April 1996-June
                       1999). An officer of 82 portfolios in the OppenheimerFunds
                       complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Zack,        Senior Vice President (since May 1985) and General Counsel
Vice President &       (since February 2002) of the Manager; General Counsel and a
Secretary since 2001   director (since November 2001) of OppenheimerFunds
Age: 55                Distributor, Inc.; Senior Vice President and General Counsel
                       (since November 2001) of HarbourView Asset Management
                       Corporation; Vice President and a director (since November
                       2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice
                       President, General Counsel and a director (since November
                       2001) of Shareholder Services, Inc., Shareholder Financial
                       Services, Inc., OFI Private Investments, Inc., Oppenheimer
                       Trust Company and OFI Institutional Asset Management, Inc.;
                       General Counsel (since November 2001) of Centennial Asset
                       Management Corporation; a director (since November 2001) of
                       Oppenheimer Real Asset Management, Inc.; Assistant Secretary
                       and a director (since November 2001) of OppenheimerFunds
                       International Ltd.; Vice President (since November 2001) of
                       OppenheimerFunds Legacy Program; Secretary (since November
                       2001) of Oppenheimer Acquisition Corp.; formerly Acting
                       General Counsel (November 2001-February 2002) and Associate
                       General Counsel (May 1981-October 2001) of the Manager;
                       Assistant Secretary of Shareholder Services, Inc. (May
                       1985-November 2001), Shareholder Financial Services, Inc.
                       (November 1989-November 2001); OppenheimerFunds
                       International Ltd. And OppenheimerFunds plc (October
                       1997-November 2001). An officer of 82 portfolios in the
                       OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Katherine P. Feld,     Vice President and Senior Counsel (since July 1999) of the
Assistant Secretary    Manager; Vice President (since June 1990) of
since 2001             OppenheimerFunds Distributor, Inc.; Director, Vice President
Age: 45                and Assistant Secretary (since June 1999) of Centennial
                       Asset Management Corporation; Vice President (since 1997) of
                       Oppenheimer Real Asset Management, Inc.; formerly Vice
                       President and Associate Counsel of the Manager (June
                       1990-July 1999). An officer of 82 portfolios in the
                       OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kathleen T. Ives,      Vice President (since June 1998) and Senior Counsel (since
Assistant Secretary    October 2003) of the Manager; Vice President (since 1999) of
since 2001             OppenheimerFunds Distributor, Inc.; Vice President and
Age: 38                Assistant Secretary (since 1999) of Shareholder Services,
                       Inc.; Assistant Secretary (since December 2001) of
                       OppenheimerFunds Legacy Program and Shareholder Financial
                       Services, Inc.; formerly an Assistant Counsel (August
                       1994-October 2003) and Assistant Vice President of the
                       Manager (August 1997-June 1998). An officer of 82 portfolios
                       in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Denis R. Molleur,      Vice President and Senior Counsel of the Manager (since July
Assistant Secretary    1999); formerly a Vice President and Associate Counsel of
since 2001             the Manager (September 1995-July 1999). An officer of 73
Age: 46                portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

      Remuneration of Trustees. The officers of the Fund and Mr. Murphy (who is
an officer and Trustee of the Fund) are affiliated with the Manager and receive
no salary or fee from the Fund.  The remaining Trustees of the Fund received
the compensation shown below from the Fund with respect to the Fund's fiscal
year ended September 30, 2003.  The compensation from all 41 of the Board II
Funds (including the Fund) represents compensation received for serving as a
director or trustee and member of a committee (if applicable) of the boards of
those funds during the calendar year ended December 31, 2002.









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

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

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

William L. Armstrong                      $1,619                $92,076
Chairman of the Board and
Audit Committee Member

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Robert G. Avis                           $1,619                $92,199
Review Committee Member
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

George C. Bowen                          $1,619                $91,124

Audit Committee Member
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Edward L. Cameron                         $1,842                $99,743
Audit Committee Chairman
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Jon S. Fossel                             $1,842                $94,590
Review Committee Chairman
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Sam Freedman                              $1,619                $92,199
Review Committee Member
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

Beverly Hamilton                          $1,5972             $113,6593,4

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

Robert J. Malone                          $1,5975              $58,3263
Audit Committee Member

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

F. William Marshall, Jr.                  $1,619               $138,1246
Review Committee Member

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

James C. Swain7                           $2,840               $177,996

- -------------------------------------------------------------------------------
Effective  July 1,  2002,  C.  Howard  Kast and  Robert M.  Kirchner  retired  as
Trustees  from the Board II Funds.  For the  calendar  year  ended  December  31,
2002,  Mr.  Kast  received  $41,451  and  Mr.  Kirchner  received  $38,001  total
compensation from all of the Oppenheimer funds for which they served as Trustee.
1.    Aggregate  Compensation from Fund includes fees and deferred  compensation,
   if any, for a Trustee.
2. Includes $1,597 deferred under Deferred Compensation Plan described below.
3.    Mrs.  Hamilton  and Mr.  Malone  were  elected as  Trustees of the Board II
   Funds effective June 1, 2002.  Total  compensation  for Mrs.  Hamilton and Mr.
   Malone was paid by all the Board II Funds,  with the exception of  Oppenheimer
   Senior  Floating  Rate Fund for which they  currently do not serve as Trustees
   (total of 40 Oppenheimer funds at December 31, 2002).
4.    Includes  $55,333   compensation  (of  which  100%  was  deferred  under  a
   deferred  compensation  plan) paid to Mrs.  Hamilton  for serving as a trustee
   by two open-end investment companies  (MassMutual  Institutional Funds and MML
   Series  Investment  Fund) the  investment  adviser  for which is the  indirect
   parent  company  of  the  Fund's  Manager.  The  Manager  also  serves  as the
   Sub-Advisor  to  the  MassMutual   International  Equity  Fund,  a  series  of
   MassMutual Institutional Funds.
5.    Includes $1,597 deferred under Deferred Compensation Plan described below.
6.    Includes  $47,000  compensation  paid  to Mr.  Marshall  for  serving  as a
   trustee by two open-end investment companies  (MassMutual  Institutional Funds
   and MML  Series  Investment  Fund)  the  investment  adviser  for which is the
   indirect  parent  company of the Fund's  Manager.  The Manager  also serves as
   the  Sub-Advisor  to the  MassMutual  International  Equity  Fund, a series of
   MassMutual Institutional Funds.

7.    Mr. Swain retired from the Board II Funds effective December 15, 2003.


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

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

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

|X|   Major Shareholders. As of October 29, 2003, the only persons who owned of
record or were known by the Fund to own beneficially 5% or more of the Fund's
outstanding securities of any class were the following:


      Charles Schwab & Co., Inc., 101 Montgomery Street, San Francisco, CA
      94104, which owned 16,960,609.251 Class A shares (19.76% of the Class A
      shares then outstanding) for the benefit of its customers.

      Merrill Lynch, Pierce, Fenner & Smith, 4800 Deer Lake Drive, E., Floor 3,
      Jacksonville, Florida 32246, which owned 4,427,450.402 Class A shares
      (5.16% of the Class A shares then outstanding) for the benefit of its
      customers.

      Citigroup Global Markets, Inc., Attn: Cindy Tempesta, 7th Floor, 333 West
      34th Street, New York, NY  10001, which owned 1,433,395.565 Class C
      shares (7.92% of the Class C shares then outstanding) for the benefit of
      its customers.

      Merrill Lynch, Pierce, Fenner & Smith, 4800 Deer Lake Drive, E., Floor 3,
      Jacksonville, Florida 32246, which owned 1,333,394.449 Class C shares
      (7.36% of the Class C shares then outstanding) for the benefit of its
      customers.


      Kaplan Schaer & Toddy Tr, Zarwin Baum Devito Kaplan, 1515 Market Street
      Ste 1200, Philadelphia, PA 19102, which owned 1,333,394.449 Class N
      shares (7.36% of the Class N hares then outstanding) for the benefit of
      its customers.

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

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

    The Code of Ethics is an exhibit to the Fund's registration statement filed
with the 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.

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

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

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

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

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

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

      -------------------------------------------------------------------
      Fiscal Year ended 9/30: Management Fees Paid to OppenheimerFunds,
                                                 Inc.
      -------------------------------------------------------------------
      -------------------------------------------------------------------
               2001                           $1,769,586
      -------------------------------------------------------------------
      -------------------------------------------------------------------
               2002                           $1,851,525
      -------------------------------------------------------------------
      -------------------------------------------------------------------
               2003                           $3,415,246
      -------------------------------------------------------------------
    The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss resulting from a good faith
error or omission on its part with respect to any of its duties under the
agreement.

    The agreement permits the Manager to act as investment advisor for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
advisor or general distributor. If the Manager shall no longer act as
investment advisor to the Fund, the Manager may withdraw the right of the Fund
to use the name "Oppenheimer" as part of its name.
      |X|   Annual Approval of Investment Advisory Agreement. Each year, the
Board of Trustees, including a majority of the Independent Trustees, is
required to approve the renewal of the investment advisory agreement. The
Investment Company Act requires that the Board request and evaluate and the
Manager provide such information as may be reasonably necessary to evaluate the
terms of the investment advisory agreement.  The Board employs an independent
consultant to prepare a report that provides such information as the Board
requests for this purpose.

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

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

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

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

Brokerage Policies of the Fund

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

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

|X|   Brokerage Practices Followed by the Manager. Most purchases of debt
obligations made by the Fund are in principal transactions at net prices.
Instead of using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker unless the
Manager determines that a better price or execution can be obtained by using
the services of a broker.  Therefore, the Fund does not incur substantial
brokerage costs.  Portfolio securities purchased from underwriters include a
commission or concession paid by the issuer to the underwriter in the price of
the security.  Portfolio securities purchased from dealers include a spread
between the bid and asked prices.  The Fund seeks to obtain prompt execution of
these orders at the most favorable net price.

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

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

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

    In an option transaction, the Fund ordinarily uses the same broker for the
purchase or sale of the option and any transaction in the securities to which
the option relates.  When possible, the Manager tries to combine concurrent
orders to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates.  The transactions under those
combined orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.

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

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

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

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

      ---------------------------------------------------------------
        Fiscal Year Ended   Total Brokerage Commissions Paid by the
              9/30:                          Fund1
      ---------------------------------------------------------------
      ---------------------------------------------------------------
              2001                          $23,8552
      ---------------------------------------------------------------
      ---------------------------------------------------------------
              2002                          $34,536
      ---------------------------------------------------------------
      ---------------------------------------------------------------
              2003                          $81,962
      ---------------------------------------------------------------
1.    Amounts do not include  spreads or  commissions  on principal  transactions
         on a net trade basis.
2.    In the fiscal year ended 9/30/01,  the amount of  transactions  directed to
         brokers for research  services was  $12,630,295 and the amount
         of the commissions paid to  broker-dealers  for those services
         was $2,134.


Distribution and Service Plans

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

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

- -------------------------------------------
Fiscal    Aggregate        Class A
                           Front-End
Year      Front-End Sales  Sales Charges
Ended     Charges on       Retained by
9/30:     Class A Shares   Distributor
- -------------------------------------------
- -------------------------------------------
  2001        $228,525        $50,5661
- -------------------------------------------
- -------------------------------------------
  2002        $452,569        $98,2601
- -------------------------------------------
- -------------------------------------------
  2003       $1,607,039       $328,2231
- -------------------------------------------
1.  Includes  amounts  retained  by a  broker-dealer  that is an  affiliate  or a
parent of the Distributor.

- -----------------------------------------------------------------------------
Fiscal    Concessions on   Concessions on   Concessions on  Concessions on
Year      Class A Shares   Class B Shares   Class C Shares  Class N Shares
Ended     Advanced by      Advanced by      Advanced by     Advanced by
9/30:     Distributor1     Distributor1     Distributor1    Distributor1
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
  2001        $61,374          $263,637         $48,250           $282
                               --------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
  2002        $115,077         $549,159        $128,269          $6,626
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
  2003        $366,872        $1,414,536       $474,412         $21,566
- -----------------------------------------------------------------------------
1.    The Distributor  advances  concession payments to dealers for certain sales
   of Class A shares  and for  sales  of Class B,  Class C and  Class N shares
   from its own resources at the time of sale.
2.    The inception date of Class N shares was March 1, 2001.

- -----------------------------------------------------------------------------
Fiscal    Class A          Class B          Class C          Class N
          Contingent       Contingent       Contingent       Contingent
Year      Deferred Sales   Deferred Sales   Deferred Sales   Deferred Sales
Ended     Charges          Charges          Charges          Charges
9/30      Retained by      Retained by      Retained by      Retained by
          Distributor      Distributor      Distributor      Distributor
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
  2003        $10,937          $475,852         $57,864          $6,737
- -----------------------------------------------------------------------------

Distribution and Service Plans. The Fund has adopted a Service Plan for Class A
shares and Distribution and Service Plans for Class B, Class C and Class N
shares under Rule 12b-1 of the Investment Company Act. Under those plans the
Fund pays the Distributor for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of the
particular class. Each plan has been approved by a vote of the Board of
Trustees, including a majority of the Independent Trustees1, cast in person at
a meeting called for the purpose of voting on that plan.

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

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

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

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


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

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

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

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

      For the fiscal period ended September 30, 2003, payments under the Class
A Plan totaled $686,288, of which $523 was retained by the Distributor under
the arrangement described above, and included $24,208 paid to an affiliate of
the Distributor's parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. The Distributor may not use payments received under the Class
A Plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.

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

      Each Plan permits the Distributor to retain both the asset-based sales
charges and the service fees or to pay recipients the service fee on a
quarterly basis, without payment in advance. However, the Distributor currently
intends to pay the service fee to recipients in advance for the first year
after Class B, Class C and Class N shares are purchased. After the first year
Class B, Class C or Class N shares are outstanding, after their purchase, the
Distributor makes service fee payments quarterly on those shares. The advance
payment is based on the net asset value of shares sold. Shares purchased by
exchange do not qualify for the advance service fee payment. If Class B, Class
C or Class N shares are redeemed during the first year after their purchase,
the recipient of the service fees on those shares will be obligated to repay
the Distributor a pro rata portion of the advance payment of the service fee
made on those shares. In cases where the Distributor is the broker of record
for Class B, Class C and Class N shares, i.e. shareholders without the services
of a broker directly invest in the Fund, the Distributor will retain the
asset-based sales charge and service fee for Class B, Class C and Class N
shares.

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

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

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

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

 -------------------------------------------------------------------------------
   Distribution Fees Paid to the Distributor in the Fiscal Year Ended 9/30/03
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class:       Total          Amount Retained  Distributor's    Distributor's
                                              Aggregate        Unreimbursed
                                              Unreimbursed     Expenses as %
              Payments                        Expenses Under   of Net Assets
              Under Plan     by Distributor   Plan             of Class
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class B Plan   $1,191,405      $892,0471        $5,656,823         4.20%
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class C Plan    $630,580       $290,5712        $1,803,279         2.00%
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class N Plan    $13,217         $11,3783         $56,311           1.21%
 -------------------------------------------------------------------------------
1.    Includes $9,746 paid to an affiliate of the Distributor's parent company.
2.    Includes $6,662 paid to an affiliate of the Distributor's parent company.
3.    Includes $522 paid to an affiliate of the Distributor's parent company.

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


Performance of the Fund

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


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

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

o     Yields and total returns measure the performance of a hypothetical
         account in the Fund over various periods and do not show the
         performance of each shareholder's account. Your account's performance
         will vary from the model performance data if your dividends are
         received in cash, or you buy or sell shares during the period, or you
         bought your shares at a different time and price than the shares used
         in the model.
o     The Fund's performance returns do not reflect the effect of taxes on
         dividends and capital gains distributions (unless otherwise indicated).
o     An investment in the Fund is not insured by the FDIC or any other
         government agency.
o     The principal value of the Fund's shares, and its yields and total
         returns are not guaranteed and normally will fluctuate on a daily
         basis.
o     When an investor's shares are redeemed, they may be worth more or less
         than their original cost.
o     Yields and total returns for any given past period represent historical
         performance information and are not, and should not be considered, a
         prediction of future yields or returns.

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

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



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


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

 Standardized Yield = 2a-b +1)6 -1]
                       ---
                     [(
                       cd

      The symbols above represent the following factors:

      a =  dividends and interest earned during the 30-day period.

      b =  expenses accrued for the period (net of any expense assumptions).

      c =  the average  daily number of shares of that class  outstanding  during
           the 30-day period that were entitled to receive dividends.

      d =  the  maximum  offering  price per share of that  class on the last day
           of the period, adjusted for undistributed net investment income.


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


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

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


      The maximum offering price for Class A shares includes the current
maximum initial sales charge.  The maximum offering price for Class B and Class
C shares is the net asset value per share, without considering the effect of
contingent deferred sales charges. The Class A dividend yield may also be
quoted without deducting the maximum initial sales charge.








  -----------------------------------------------------------------------
          The Fund's Yields for the 30-Day Periods Ended 9/30/03
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
  Class of        Standardized Yield              Dividend Yield
  Shares
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
                Without         After         Without         After
                 Sales          Sales          Sales          Sales
                 Charge         Charge         Charge         Charge
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
  Class A        1.51%          1.43%          3.26%          3.10%
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
  Class B        0.86%           N/A           2.46%           N/A
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
  Class C        0.80%           N/A           2.49%           N/A
  -----------------------------------------------------------------------
  -----------------------------------------------------------------------
  Class N        1.13%           N/A           2.91%           N/A
  -----------------------------------------------------------------------

      Total Return Information.  There are different types of "total returns"
to measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. The cumulative total return measures the change
in value over the entire period (for example, 10 years). An average annual
total return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period. However,
average annual total returns do not show actual year-by-year performance. The
Fund uses standardized calculations for its total returns as prescribed by the
SEC. The methodology is discussed below.

      In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown without sales charge,
as described below).  For Class B shares, payment of the applicable contingent
deferred sales charge is applied, depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third
and fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1.0% contingent deferred sales charge is
deducted for returns for the one-year period. For Class N shares, the 1%
contingent deferred sales charge is deducted for returns for the one year and
life of class periods. Class N total returns may also be calculated for the
periods prior to 3/1/01 (the inception date for Class N shares), based on the
Fund's Class A returns, adjusted to reflect the higher Class N 12b-1 fees.

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


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

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

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

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


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


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

 ERV - P   = Total Return
- -----------
    P

o     Total Returns at Net Asset Value.  From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C or Class N
shares.  Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that class
of shares (without considering front-end or contingent deferred sales charges)
and takes into consideration the reinvestment of dividends and capital gains
distributions.










- --------------------------------------------------------------------------------
       The Fund's Total Returns for the Periods Ended September 30, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class    Cumulative Total              Average Annual Total Returns
of       Returns (Life of
Shares   Class)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                 1-Year            5-Year       Life of Class
                                                (or life of
                                                   Class)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
         After    Without   After    Without  After   Without  After    Without
         Sales    Sales     Sales    Sales    Sales   Sales    Sales    Sales
         Charge   Charge    Charge   Charge   Charge  Charge   Charge   Charge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A  109.41%1 119.85%1   20.65%   26.67%  11.47%   12.56%   9.32%1  9.97%1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B  110.10%2 110.10%2   20.48%   25.48%  11.43%   11.69%   9.37%2  9.37%2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C  106.06%3 106.06%3   24.48%   25.48%  11.69%   11.69%   9.11%3  9.11%3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N  42.57%4   42.57%4   25.31%   26.31%  14.73%4 14.73%4    N/A      N/A
- --------------------------------------------------------------------------------
1.    Inception of Class A:   6/15/95
2.    Inception of Class B:   6/15/95
Inception of Class C:   6/15/95
 Inception of Class N:  3/01/01

- --------------------------------------------------------------------------
  Average Annual Total Returns for Class A Shares (After Sales Charge)
                For the Periods Ended September 30, 2003
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
                                 1-Year         5-Year     Life of Class
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on Distributions     18.93%         9.15%          6.20%1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
After Taxes on                   13.26%         8.35%          5.93%1
Distributions and
Redemption of Fund Shares
- --------------------------------------------------------------------------
   1. Inception date of Class A: 6/15/95

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

      Lipper Rankings. From time to time the Fund may publish the ranking of
the performance of its classes of shares by Lipper Inc. ("Lipper").  Lipper is
a widely-recognized independent mutual fund monitoring service. Lipper monitors
the performance of regulated investment companies, including the Fund, and
ranks their performance for various periods in categories based on investment
styles. The Lipper performance rankings are based on total returns that include
the reinvestment of capital gain distributions and income dividends but do not
take sales charges or taxes into consideration. Lipper also publishes
"peer-group" indices of the performance of all mutual funds in a category that
it monitors and averages of the performance of the funds in particular
categories.

      Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service.  Morningstar rates mutual funds in
their specialized market sector.  The Fund is ranked among international bond
funds.
      Morningstar proprietary star ratings reflect historical risk-adjusted
total investment return. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating(TM)based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly
performance (including the effects of sales charges, loads, and redemption
fees), placing more emphasis on downward variations and rewarding consistent
performance.  The top 10% of funds in each category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2
stars, and the bottom 10% receive 1 star.  (Each share class is counted as a
fraction of one fund within this scale and rated separately, which may cause
slight variations in the distribution percentages.) The Overall Morningstar
Rating for a fund is derived from a weighted average of the performance figures
associated with its three-, five-and ten-year (if applicable) Morningstar
Rating metrics.

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

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

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

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


ABOUT your account

How to Buy Shares

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

      Before you establish Asset Builder payments, you should obtain a
prospectus of the selected fund(s) from your financial advisor (or the
Distributor) and request an application from the Distributor.  Complete the
application and return it.  You may change the amount of your Asset Builder
payment or you can terminate these automatic investments at any time by writing
to the Transfer Agent.  The Transfer Agent requires a reasonable period
(approximately 10 days) after receipt of your instructions to implement them.
The Fund reserves the right to amend, suspend or discontinue offering Asset
Builder plans at any time without prior notice.


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      |X|   Securities Valuation.  The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o     Equity securities traded on a U.S. securities exchange or on Nasdaq(R)are
valued as follows:
(1)   if last sale information is regularly reported, they are valued at the
               last reported sale price on the principal exchange on which they
               are traded or on Nasdaq, as applicable, on that day, or
(2)   if last sale information is not available on a valuation date, they are
               valued at the last reported sale price preceding the valuation
               date if it is within the spread of the closing "bid" and "asked"
               prices on the valuation date or, if not,  at the closing "bid"
               price on the valuation date.
o     Equity securities traded on a foreign securities exchange generally are
valued in one of the following ways:
(1)   at the last sale price available to the pricing service approved by the
               Board of Trustees, or
(2)   at the last sale price obtained by the Manager from the report of the
               principal exchange on which the security is traded at its last
               trading session on or immediately before the valuation date, or
(3)   at the mean between the "bid" and "asked" prices obtained from the
               principal exchange on which the security is traded or, on the
               basis of reasonable inquiry, from two market makers in the
               security.
o     Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o     The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
(1)   debt instruments that have a maturity of more than 397 days when issued,
(2)   debt instruments that had a maturity of 397 days or less when issued and
                 have a remaining maturity of more than 60 days, and
(3)   non-money market debt instruments that had a maturity of 397 days or less
                 when issued and which have a remaining maturity of 60 days or
                 less.

o     The following securities are valued at cost, adjusted for amortization of
premiums and accretion of discounts:
(1)   money market debt securities held by a non-money market fund that had a
               maturity of less than 397 days when issued that have a remaining
               maturity of 60 days or less, and
(2)   debt instruments held by a money market fund that have a remaining
               maturity of 397 days or less.
o     Securities (including restricted securities) not having readily-available
market quotations are valued at fair value determined under the Board's
procedures.  If the Manager is unable to locate two market makers willing to
give quotes, a security may be priced at the mean between the "bid" and "asked"
prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).


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

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

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

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


How to Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      The Fund cannot guarantee receipt of a payment on the date requested. The
Fund reserves the right to amend, suspend or discontinue offering these plans
at any time without prior notice. Because of the sales charge assessed on Class
A share purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan. Class B,
Class C and Class N shareholders should not establish automatic withdrawal
plans, because of the potential imposition of the contingent deferred sales
charge on such withdrawals (except where the Class B, Class C or Class N
contingent deferred sales charge is waived as described in Appendix C to this
Statement of Additional Information).

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

      Automatic Exchange Plans.  Shareholders can authorize the Transfer Agent
to exchange a pre-determined amount of shares of the Fund for shares (of the
same class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum
amount that may be exchanged to each other fund account is $50. Instructions
should be provided on the OppenheimerFunds application or signature-guaranteed
instructions. Exchanges made under these plans are subject to the restrictions
that apply to exchanges as set forth in "How to Exchange Shares" in the
Prospectus and below in this Statement of Additional Information.

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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

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

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

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

      Oppenheimer New Jersey Municipal Fund     Rochester Fund Municipals

   The following funds do not offer Class Y shares:

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

                                            Street Fund

   Oppenheimer Champion Income Fund         Oppenheimer Principal Protected Main
                                            Street Fund II

   Oppenheimer Convertible Securities Fund  Oppenheimer Quest Capital Value Fund,
                                            Inc.
   Oppenheimer Disciplined Allocation Fund  Oppenheimer Quest International Value
                                            Fund, Inc.
   Oppenheimer Developing Markets Fund      Oppenheimer Rochester National Municipals
   Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
   Oppenheimer International Bond Fund      Oppenheimer Small Cap Value Fund
   Oppenheimer International Growth Fund    Oppenheimer Total Return Bond Fund
   Oppenheimer International Small Company  Limited Term New York Municipal Fund
   Fund
      o   Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
      for shares of any other fund.
o     Class B, Class C and Class N shares of Oppenheimer Cash Reserves are
      generally available only by exchange from the same class of shares of
      other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k)
      plans.
o     Class M shares of Oppenheimer Convertible Securities Fund may be
      exchanged only for Class A shares of other Oppenheimer funds. They may
      not be acquired by exchange of shares of any class of any other
      Oppenheimer funds except Class A shares of Oppenheimer Money Market Fund
      or Oppenheimer Cash Reserves acquired by exchange of Class M shares.
o     Class X shares of Limited Term New York Municipal Fund may be exchanged
      only for Class B shares of other Oppenheimer funds and no exchanges may
      be made to Class X shares.
o     Shares of Oppenheimer Capital Preservation Fund may not be exchanged for
      shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves
      or Oppenheimer Limited-Term Government Fund. Only participants in certain
      retirement plans may purchase shares of Oppenheimer Capital Preservation
      Fund, and only those participants may exchange shares of other
      Oppenheimer funds for shares of Oppenheimer Capital Preservation Fund.
o     Class A shares of Oppenheimer funds may be exchanged at net asset value
      for shares of any money market fund offered by the Distributor. Shares of
      any money market fund purchased without a sales charge may be exchanged
      for shares of Oppenheimer funds offered with a sales charge upon payment
      of the sales charge. They may also be used to purchase shares of
      Oppenheimer funds subject to an early withdrawal charge or contingent
      deferred sales charge.
o     Shares of Oppenheimer Money Market Fund, Inc. purchased with the
      redemption proceeds of shares of other mutual funds (other than funds
      managed by the Manager or its subsidiaries) redeemed within the 30 days
      prior to that purchase may subsequently be exchanged for shares of other
      Oppenheimer funds without being subject to an initial sales charge or
      contingent deferred sales charge. To qualify for that privilege, the
      investor or the investor's dealer must notify the Distributor of
      eligibility for this privilege at the time the shares of Oppenheimer
      Money Market Fund, Inc. are purchased. If requested, they must supply
      proof of entitlement to this privilege.
o     Shares of the Fund acquired by reinvestment of dividends or distributions
      from any of the other Oppenheimer funds or from any unit investment trust
      for which reinvestment arrangements have been made with the Distributor
      may be exchanged at net asset value for shares of any of the Oppenheimer
      funds.
o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of any of the Oppenheimer funds.
      However, shareholders are not permitted to exchange shares of other
      Oppenheimer funds for shares of Oppenheimer Principal Protected Main
      Street Fund until after the expiration of the warranty period (8/5/2010).
o     Shares of Oppenheimer Principal Protected Main Street Fund II may be
      exchanged at net asset value for shares of any of the Oppenheimer funds.
      However, shareholders are not permitted to exchange shares of other
      Oppenheimer funds for shares of Oppenheimer Principal Protected Main
      Street Fund II until after the expiration of the warranty period
      (2/4/2011).

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

      |X|   How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any class
purchased subject to a contingent deferred sales charge, with the following
exceptions:
      o  When Class A shares of any Oppenheimer fund (other than Rochester
National Municipals and Rochester Fund Municipals) acquired by exchange of
Class A shares of any Oppenheimer fund purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months measured from
the beginning of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares.

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

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

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

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

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

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

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

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

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

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

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

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

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

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








Dividends, Capital Gains and Taxes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      The Fund will be required in certain cases to withhold 30% (29% for
payments after December 31, 2003) of ordinary income dividends, capital gains
distributions and the proceeds of the redemption of shares, paid to any
shareholder (1) who has failed to provide a correct taxpayer identification
                                            -------
number or to properly certify that number when required, (2) who is subject to
backup withholding for failure to report the receipt of interest or dividend
income properly, or (3) who has failed to certify to the Fund that the
shareholder is not subject to backup withholding or is an "exempt recipient"
(such as a corporation). All income and any tax withheld by the Fund is
remitted by the Fund to the U.S. Treasury and is identified in reports mailed
to shareholders in January of each year.

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

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

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

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

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

      If the foreign person fails to provide a certification of his/her foreign
status, the Fund will be required to withhold U.S. tax at a rate of 28% on
ordinary income dividends, capital gains distributions and the proceeds of the
redemption of shares, paid to any foreign person. All income and any tax
withheld (in this situation) by the Fund is remitted by the Fund to the U.S.
Treasury and is identified in reports mailed to shareholders in January of each
year.
      The tax consequences to foreign persons entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.  Foreign
shareholders are urged to consult their own tax advisors or the U.S. Internal
Revenue Service with respect to the particular tax consequences to them of an
investment in the Fund, including the applicability of the U.S. withholding
taxes described above.

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

Additional Information About the Fund

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

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a
division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It serves as the Transfer Agent for an
annual per account fee. It also acts as shareholder servicing agent for the
other Oppenheimer funds. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown on
the back cover.

The Custodian.  J.P. Morgan Chase Bank is the custodian of the Fund's assets.
The custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities and handling the delivery of such securities to and
from the Fund.  It is the practice of the Fund to deal with the custodian in a
manner uninfluenced by any banking relationship the custodian may have with the
Manager and its affiliates.  The Fund's cash balances with the custodian in
excess of $100,000 are not protected by federal deposit insurance.  Those
uninsured balances at times may be substantial.

Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Fund. They audit the Fund's financial statements and perform other related
audit services.  They also act as auditors for the Manager and for certain
other funds advised by the Manager and its affiliates.
Audit and non-audit services provided to the Fund must be pre-approved by the
Audit Committee.  Non-audit services provided by Deloitte & Touche LLP to the
Manager and certain related companies must also be pre-approved by the Audit
Committee.

INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of Oppenheimer International Bond Fund:

  We have audited the accompanying statement of assets and liabilities of Oppenheimer International Bond Fund, including the statement of investments, as of September 30, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

  We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2003, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer International Bond Fund as of September 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP Denver, Colorado November 14, 2003 9 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS September 30, 2003

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

 Foreign Government Obligations--77.4%
- ---------------------------------------------------------------------------------------------------------------
 Argentina--2.3%
 Argentina (Republic of) Bonds:
 1.162%, 8/3/12 1                                                                  $14,025,000   $  8,462,839
 1.278%, 5/3/05 2,3                                                                    693,000        637,560
 Series PRE8, 2%, 1/3/10 2,3,4 [ARP]                                                 5,820,000      1,763,485
 Series PR12, 2%, 1/3/16 2,3,4 [ARP]                                                11,505,972      2,676,497
- ---------------------------------------------------------------------------------------------------------------
 Argentina (Republic of) Disc. Bonds, 2.345%, 3/31/23 2,3                              660,000        326,700
- ---------------------------------------------------------------------------------------------------------------
 Argentina (Republic of) Treasury Bills, 14.75%, 10/8/04 5 [ARP]                       412,000        125,050
- ---------------------------------------------------------------------------------------------------------------
 Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas,
 Series PBA1, 3.257%, 4/1/07 2,4 [ARP]                                               2,237,889        739,657
- ---------------------------------------------------------------------------------------------------------------
 JPMorgan Chase Bank, Argentina (Republic of) Treasury Bills,
 8.84%, 2/20/04 4 [ARP]                                                                785,000        257,669
                                                                                                 --------------
                                                                                                   14,989,457

- ---------------------------------------------------------------------------------------------------------------
 Austria--1.0%
 Austria (Republic of) Nts.:
 3.40%, 10/20/04 [EUR]                                                               1,580,000      1,864,093
 5.50%, 10/20/07 [EUR]                                                               2,440,000      3,109,597
 Series 98-3, 3.90%, 10/20/05 [EUR]                                                  1,435,000      1,723,861
                                                                                                 --------------
                                                                                                    6,697,551

- ---------------------------------------------------------------------------------------------------------------
 Belgium--3.4%
 Belgium (Kingdom of) Bonds:
 5%, 9/28/11 [EUR]                                                                   1,950,000      2,449,816
 Series 19, 6.50%, 3/31/05 [EUR]                                                     7,460,000      9,231,381
 Series 28, 5.75%, 3/28/08 [EUR]                                                     8,405,000     10,840,255
                                                                                                 --------------
                                                                                                   22,521,452

- ---------------------------------------------------------------------------------------------------------------
 Brazil--4.0%
 Brazil (Federal Republic of) Bonds:
 11.50%, 4/2/09 [EUR]                                                                6,930,000      8,521,259
 Series 15 yr., 2.188%, 4/15/09 1                                                       21,177         19,139
- ---------------------------------------------------------------------------------------------------------------
 Brazil (Federal Republic of) Sr. Unsec. Unsub. Nts., 12%, 11/17/06 [EUR]            5,730,000      7,390,203
- ---------------------------------------------------------------------------------------------------------------
 Brazil (Federal Republic of) Unsec. Bonds, 10%, 7/30/07 [GBP]                       5,495,000      8,809,865
- ---------------------------------------------------------------------------------------------------------------
 Brazil (Federal Republic of) Unsec. Unsub. Bonds:
 10%, 8/7/11                                                                         1,314,000      1,294,290
 11%, 8/17/39                                                                              200            190
 Cl. B, 8.875%, 4/15/24                                                                 81,000         64,881
                                                                                                 --------------
                                                                                                   26,099,827

- ---------------------------------------------------------------------------------------------------------------
 Canada--0.7%
 Canada (Government of) Bonds, 5.50%, 6/1/10 [CAD]                                   6,000,000      4,789,685
- ---------------------------------------------------------------------------------------------------------------
 Colombia--1.9%
 Colombia (Republic of) Sr. Unsec. Unsub. Bonds, 11.25%, 10/20/05 [EUR]              9,535,000     12,494,755
- ---------------------------------------------------------------------------------------------------------------
 Denmark--0.8%
 Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK]                                       33,200,000      5,343,283
- ---------------------------------------------------------------------------------------------------------------
 Dominican Republic--0.2%
 Dominican Republic Unsec. Unsub. Bonds, 9.50%, 9/27/06                              1,570,000      1,554,300

10 | OPPENHEIMER INTERNATIONAL BOND FUND

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

 Finland--2.2%
 Finland (Republic of) Bonds, 5%, 4/25/09 [EUR]                                      1,680,000   $  2,120,726
- ---------------------------------------------------------------------------------------------------------------
 Finland (Republic of) Sr. Unsec. Unsub. Bonds:
 2.75%, 7/4/06 [EUR]                                                                 3,470,000      4,059,273
 5%, 7/4/07 [EUR]                                                                    6,915,000      8,641,711
                                                                                                 --------------
                                                                                                   14,821,710

- ---------------------------------------------------------------------------------------------------------------
 France--4.0%
 France (Government of) Obligations Assimilables du Tresor Bonds,
 5.50%, 10/25/07 [EUR]                                                               3,615,000      4,605,152
- ---------------------------------------------------------------------------------------------------------------
 France (Government of) Treasury Nts.:
 3.50%, 7/12/04 [EUR]                                                                5,180,000      6,100,774
 3 yr., 3.50%, 1/12/05 [EUR]                                                         7,090,000      8,402,594
 5 yr., 4.75%, 7/12/07 [EUR]                                                         6,085,000      7,545,193
                                                                                                 --------------
                                                                                                   26,653,713

- ---------------------------------------------------------------------------------------------------------------
 Germany--6.7%
 Germany (Republic of) Bonds:
 2%, 6/17/05 [EUR]                                                                   7,865,000      9,127,126
 3%, 12/10/04 [EUR]                                                                  2,385,000      2,806,892
 5.375%, 1/4/10 [EUR]                                                                5,630,000      7,227,136
 Series 01, 5%, 7/4/11 [EUR]                                                         3,635,000      4,572,212
 Series 02, 5%, 7/4/12 [EUR]                                                         4,200,000      5,274,572
 Series 140, 4.50%, 8/17/07 6 [EUR]                                                 12,380,000     15,202,859
                                                                                                 --------------
                                                                                                   44,210,797

- ---------------------------------------------------------------------------------------------------------------
 Great Britain--1.5%
 United Kingdom Treasury Nts., 7.50%, 12/7/06 7,8 [GBP]                              5,325,000      9,684,762
- ---------------------------------------------------------------------------------------------------------------
 Greece--5.2%
 Greece (Republic of) Bonds:
 3.50%, 4/18/08 [EUR]                                                               20,740,000     24,463,486
 5.35%, 5/18/11 [EUR]                                                                7,520,000      9,611,087
                                                                                                 --------------
                                                                                                   34,074,573

- ---------------------------------------------------------------------------------------------------------------
 Guatemala--0.4%
 Guatemala (Republic of) Nts.:
 10.25%, 11/8/11 9                                                                     160,000        184,000
 10.25%, 11/8/11                                                                     1,940,000      2,231,000
                                                                                                 --------------
                                                                                                    2,415,000

- ---------------------------------------------------------------------------------------------------------------
 Italy--4.1%
 Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
 3.50%, 1/15/08 [EUR]                                                                4,500,000      5,326,417
 4%, 3/1/05 [EUR]                                                                    1,135,000      1,355,998
 4.50%, 7/1/04 [EUR]                                                                 5,870,000      6,961,004
 5%, 10/15/07 6 [EUR]                                                               10,625,000     13,319,901
                                                                                                 --------------
                                                                                                   26,963,320

11 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued

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

 Ivory Coast--0.1%
 Ivory Coast (Government of) Past Due Interest Bonds,
 1.90%, 3/29/18 2,3,4 [FRF]                                                         16,007,500   $    507,986
- ---------------------------------------------------------------------------------------------------------------
 Japan--22.3%
 Japan (Government of) Bonds, 5 yr., Series 14, 0.40%, 6/20/06 6 [JPY]          16,372,800,000    146,911,860
- ---------------------------------------------------------------------------------------------------------------
 Mexico--0.3%
 United Mexican States Bonds, 6.75%, 6/6/06 6 [JPY]                                120,000,000      1,229,164
- ---------------------------------------------------------------------------------------------------------------
 United Mexican States Unsec. Unsub. Nts., Series 6 BR, 6.75%, 6/6/06 [JPY]         85,000,000        870,657
                                                                                                 --------------
                                                                                                    2,099,821

- ---------------------------------------------------------------------------------------------------------------
 Nigeria--0.3%
 Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20                      1,375,000      1,223,750
- ---------------------------------------------------------------------------------------------------------------
 Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10              755,202        633,081
                                                                                                 --------------
                                                                                                    1,856,831

- ---------------------------------------------------------------------------------------------------------------
 Peru--0.6%
 Peru (Republic of) Sr. Nts., 4.53%, 2/28/16 5                                       6,568,457      3,916,771
- ---------------------------------------------------------------------------------------------------------------
 Philippines--2.2%
 Philippines (Republic of) Nts., 9.875%, 3/16/10                                       540,000        611,550
- ---------------------------------------------------------------------------------------------------------------
 Philippines (Republic of) Unsec. Unsub. Nts., 9.375%, 12/7/06 [EUR]                11,075,000     14,088,784
                                                                                                 --------------
                                                                                                   14,700,334

- ---------------------------------------------------------------------------------------------------------------
 Portugal--1.3%
 Portugal (Republic of) Obrig Do Tes Medio Prazo Unsec
 Unsub. Bonds, 5.85%, 5/20/10 [EUR]                                                  6,465,000      8,505,828
- ---------------------------------------------------------------------------------------------------------------
 Russia--3.0%
 Ministry Finance of Russia Debs., Series V, 3%, 5/14/08                            10,420,000      9,325,900
- ---------------------------------------------------------------------------------------------------------------
 Russian Federation Unsec. Unsub. Nts.:
 8.75%, 7/24/05                                                                      1,430,000      1,578,362
 10%, 6/26/07                                                                        7,435,000      8,866,238
                                                                                                 --------------
                                                                                                   19,770,500

- ---------------------------------------------------------------------------------------------------------------
 Spain--2.5%
 Spain (Kingdom of) Bonds, Bonos y Obligacion del Estado,
 4.80%, 10/31/06 [EUR]                                                               5,500,000      6,809,052
- ---------------------------------------------------------------------------------------------------------------
 Spain (Kingdom of) Treasury Bills, 2.02%, 10/10/03 5 [EUR]                          8,175,000      9,515,434
                                                                                                 --------------
                                                                                                   16,324,486

- ---------------------------------------------------------------------------------------------------------------
 Sweden--2.2%
 Sweden (Kingdom of) Debs., Series 1040, 6.50%, 5/5/08 [SEK]                       102,770,000     14,753,741
- ---------------------------------------------------------------------------------------------------------------
 The Netherlands--3.4%
 The Netherlands (Government of) Bonds:
 5%, 7/15/11 [EUR]                                                                   1,850,000      2,330,648
 Series 1, 5.75%, 2/15/07 [EUR]                                                     15,880,000     20,231,396
                                                                                                 --------------
                                                                                                   22,562,044

- ---------------------------------------------------------------------------------------------------------------
 Turkey--0.2%
 Turkey (Republic of) Sr. Unsec. Unsub. Nts., 11.875%, 1/15/30                         955,000      1,107,800

12 | OPPENHEIMER INTERNATIONAL BOND FUND

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

 Ukraine--0.6%
 Ukraine (Government of) Bonds, 7.65%, 6/11/13                                 $     2,460,000   $  2,460,000
- ---------------------------------------------------------------------------------------------------------------
 Ukraine (Government of) Sr. Unsec. Nts., 11%, 3/15/07                               1,215,212      1,360,734
                                                                                                 --------------
                                                                                                    3,820,734

- ---------------------------------------------------------------------------------------------------------------
 Venezuela--0.0%
 Venezuela (Republic of) Collateralized Par Bonds, Series W-B, 6.75%, 3/31/20          159,000        140,715
                                                                                                 --------------
 Total Foreign Government Obligations (Cost $486,067,431)                                         510,293,636

- ---------------------------------------------------------------------------------------------------------------
 Loan Participations--2.2%

 Algeria (Republic of) Loan Participation Bonds, 0.938%, 3/4/10 1,4 [JPY]          230,311,880      1,906,776
- ---------------------------------------------------------------------------------------------------------------
 Algeria (Republic of) Loan Participation Nts., 2.063%, 3/4/10 1,4                     880,750        846,621
- ---------------------------------------------------------------------------------------------------------------
 Algeria (Republic of) Loan Participation Nts., 2.063%, 9/4/06 1,4                     985,714        966,000
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, OAO Gazprom Loan Participation Nts., 6.50%, 8/4/05                3,005,000      3,015,818
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Indonesian Rupiah Loan Participation Nts.:
 2.636%, 5/21/04                                                                     5,390,000      4,945,325
 2.636%, 3/25/05                                                                     3,155,000      2,736,962
                                                                                                 --------------
 Total Loan Participations (Cost $13,331,428)                                                      14,417,502

- ---------------------------------------------------------------------------------------------------------------
 Corporate Bonds and Notes--2.5%

 Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995 2,3,4              2,000           --
- ---------------------------------------------------------------------------------------------------------------
 Mexican Williams, 1.258% Sr. Nts., 11/15/08 1,4                                       500,000        521,250
- ---------------------------------------------------------------------------------------------------------------
 Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/04 2,3,4                   550,000          3,438
- ---------------------------------------------------------------------------------------------------------------
 Pemex Project Funding Master Trust, 6.625% Bonds, 4/4/10 9 [EUR]                    4,950,000      6,134,891
- ---------------------------------------------------------------------------------------------------------------
 Petroleos Mexicanos, 7.375% Unsec. Nts., 8/13/07 4 [ITL]                       14,895,000,000      9,771,872
                                                                                                 --------------
 Total Corporate Bonds and Notes (Cost $15,304,663)                                                16,431,451

                                                                                        Shares
- ---------------------------------------------------------------------------------------------------------------
 Common Stocks--2.2%

 AO VimpelCom, Sponsored ADR 3                                                           7,375        448,842
- ---------------------------------------------------------------------------------------------------------------
 Banco Bradesco SA, Sponsored ADR                                                       14,100        284,397
- ---------------------------------------------------------------------------------------------------------------
 Banco Itau Holding Financeira SA, ADR                                                  20,400        738,480
- ---------------------------------------------------------------------------------------------------------------
 Bank Pekao SA, Sponsored GDR                                                           19,204        549,868
- ---------------------------------------------------------------------------------------------------------------
 Cesky Telecom AS, GDR 3                                                                44,233        435,695
- ---------------------------------------------------------------------------------------------------------------
 Companhia de Bebidas das Americas, ADR                                                 48,800      1,056,520
- ---------------------------------------------------------------------------------------------------------------
 Companhia Siderurgica Nacional SA, Sponsored ADR                                       23,600        838,272
- ---------------------------------------------------------------------------------------------------------------
 Companhia Vale do Rio Doce, ADR                                                        21,390        873,140
- ---------------------------------------------------------------------------------------------------------------
 Gedeon Richter Rt., GDR, S Shares                                                       3,805        372,890
- ---------------------------------------------------------------------------------------------------------------
 iShares MSCI Brazil Index Fund 3                                                       70,115        889,759
- ---------------------------------------------------------------------------------------------------------------
 iShares MSCI Hong Kong Index Fund                                                         225          2,131
- ---------------------------------------------------------------------------------------------------------------
 JSC Mining & Metallurgical Co. Norilsk Nickel, ADR                                     10,185        505,431
- ---------------------------------------------------------------------------------------------------------------
 KGHM Polska Miedz SA, GDR 3                                                            17,559        182,613
- ---------------------------------------------------------------------------------------------------------------
 Komercni Banka AS, GDR                                                                 29,434        858,001
- ---------------------------------------------------------------------------------------------------------------
 LUKOIL, Sponsored ADR                                                                   4,785        395,050

13 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued

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

 Common Stocks Continued

 Magyar Tavkozlesi Rt, Sponsored ADR                                                    25,098   $    469,082
- ---------------------------------------------------------------------------------------------------------------
 MOL Magyar Olaj-es Gazipari Rt, Sponsored GDR                                          16,308        451,732
- ---------------------------------------------------------------------------------------------------------------
 OAO Gazprom, Sponsored ADR                                                             18,105        449,004
- ---------------------------------------------------------------------------------------------------------------
 OTP Bank Ltd., GDR, S Shares 3                                                         31,439        748,248
- ---------------------------------------------------------------------------------------------------------------
 Petroleo Brasileiro SA, Sponsored ADR                                                  38,277        877,692
- ---------------------------------------------------------------------------------------------------------------
 Polski Koncern Naftowy Orlen SA, GDR                                                   45,128        546,049
- ---------------------------------------------------------------------------------------------------------------
 Sibneft, Sponsored ADR 3                                                               15,405        450,596
- ---------------------------------------------------------------------------------------------------------------
 Surgutneftegaz, Sponsored ADR                                                          17,405        394,223
- ---------------------------------------------------------------------------------------------------------------
 Telekomunikacja Polska SA, GDR                                                        140,595        503,330
- ---------------------------------------------------------------------------------------------------------------
 Uniao de Bancos Brasileiros SA (Unibanco), Sponsored ADR                               27,000        534,600
- ---------------------------------------------------------------------------------------------------------------
 YUKOS, ADR                                                                              7,485        464,145
                                                                                                 --------------
 Total Common Stocks (Cost $13,340,250)                                                            14,319,790

                                                                                         Units
- ---------------------------------------------------------------------------------------------------------------
 Rights, Warrants and Certificates--2.8%

 Chesapeake Energy Corp. Wts., Exp. 9/1/04 3                                                66              3
- ---------------------------------------------------------------------------------------------------------------
 ICG Communications, Inc. Wts., Exp. 9/15/05 3,4                                           495              5
- ---------------------------------------------------------------------------------------------------------------
 Loral Space & Communications Ltd. Wts., Exp. 1/15/07 3,4                                   50             --
- ---------------------------------------------------------------------------------------------------------------
 Morgan Stanley Capital I, Inc. All Country Asia Free
 (except for Japan) Wts., Exp. 3/4/05 3                                                427,760      5,500,181
- ---------------------------------------------------------------------------------------------------------------
 Morgan Stanley Capital I, Inc. Basket of countries Wts., Exp. 3/4/05 3                338,332      4,046,045
- ---------------------------------------------------------------------------------------------------------------
 Morgan Stanley Capital III, Inc. All Country Asia Free
 (except for Japan) Wts., Exp. 3/4/05 3                                                827,508      8,926,081
- ---------------------------------------------------------------------------------------------------------------
 Protection One, Inc. Wts., Exp. 6/30/05 3,4                                               640             --
- ---------------------------------------------------------------------------------------------------------------
 Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 3,4              500             --
                                                                                                 --------------
 Total Rights, Warrants and Certificates (Cost $15,748,122)                                        18,472,315

                                                                                     Principal
                                                                                        Amount
- ---------------------------------------------------------------------------------------------------------------
 Structured Notes--9.2%

 Citigroup Global Capital Markets Holdings, Inc., OAO Gazprom
 Russia Local Market Unsec. Credit Linked Nts., 15.208%, 11/8/05 1                $  4,406,270      4,735,194
- ---------------------------------------------------------------------------------------------------------------
 Citigroup Global Markets Holdings, Inc., Argentine Peso Linked Nts.,
 7/6/04                                                                              1,165,000      1,144,263
- ---------------------------------------------------------------------------------------------------------------
 Credit Suisse First Boston Corp. (Nassau Branch), U.S. Dollar/
 Philippine Peso Linked Nts., 12.50%, 3/5/12 1 [PHP]                               119,085,000      2,174,888
- ---------------------------------------------------------------------------------------------------------------
 Credit Suisse First Boston International, U.S. Dollar/
 South African Rand Linked Nts., Series FBi 43, 1.065%, 5/23/22 1                    2,100,000      2,037,210
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Basket of Emerging Market Currencies Linked Nts.:
 0.85%, 1/20/04                                                                     11,340,000     11,490,822
 0.85%, 3/24/04                                                                      8,490,000      8,532,450
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Indonesian Rupiah Linked Nts.:
 14%, 6/22/09                                                                        3,867,352      4,501,598
 14%, 6/22/09                                                                        2,145,123      2,360,922
 14%, 6/22/09                                                                        1,855,000      2,128,983

14 | OPPENHEIMER INTERNATIONAL BOND FUND

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

 Structured Notes Continued

 Deutsche Bank AG, Peru Credit Default Linked Nts., 4.716%, 4/29/06 1              $ 2,250,000   $  2,293,200
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Turkish Lira Treasury Bill Linked Nts., 0.985%, 8/20/04           4,730,000      5,169,417
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Venezuela (Republic of) Credit Linked Certificate
 of Deposit, 8.18%, 9/20/06 1                                                        2,180,000      2,122,666
- ---------------------------------------------------------------------------------------------------------------
 Deutsche Bank AG, Venezuela (Republic of) Credit Linked Nts.,
 1.094%, 6/15/04 1                                                                   2,800,000      2,939,160
- ---------------------------------------------------------------------------------------------------------------
 JPMorgan Chase Bank, EMBI Plus/EMBI Global Uruguay Linked
 Certificate of Deposit, 0.30%, 10/21/03                                             1,581,823      1,564,064
- ---------------------------------------------------------------------------------------------------------------
 JPMorgan Chase Bank, Venezuela (Republic of) Credit Linked
 Certificate of Deposit:
 7.79%, 9/20/05 1                                                                    2,410,000      2,408,072
 7.84%, 9/20/05 1                                                                    2,410,000      2,410,241
- ---------------------------------------------------------------------------------------------------------------
 JPMorgan Chase Bank, Venezuela (Republic of) Credit Linked
 Default Bonds, 7.94%, 9/20/05 1                                                     2,410,000      2,414,579
                                                                                                 --------------
 Total Structured Notes (Cost $59,229,113)                                                         60,427,729

                                                         Dates     Strike            Contracts
- ---------------------------------------------------------------------------------------------------------------
 Options Purchased--0.2%

 Chilean Peso Call 3,4                                 3/22/04        655CLP         6,378,824        134,478
- ---------------------------------------------------------------------------------------------------------------
 Euro Call 3,4                                          4/1/04       1.20EUR        56,025,000      1,042,065
- ---------------------------------------------------------------------------------------------------------------
 Japanese Yen Call 3,4                                  6/1/04        107JPY     1,917,000,000        393,752
- ---------------------------------------------------------------------------------------------------------------
 Japanese Yen Put 3,4                                  2/25/04        122EUR        12,755,000        125,892
                                                                                                 --------------
 Total Options Purchased (Cost $1,616,881)                                                          1,696,187

                                                                                     Principal
                                                                                        Amount
- ---------------------------------------------------------------------------------------------------------------
 Joint Repurchase Agreements--4.1%

 Undivided interest of 4.27% in joint repurchase agreement (Principal
 Amount/Market Value $626,785,000, with a maturity value of $626,801,192)
 with Banc One Capital Markets, Inc., 0.93%, dated 9/30/03, to be repurchased
 at $26,770,692 on 10/1/03, collateralized by U.S. Treasury Nts., 7.25%, 5/15/04,
 with a value of $53,265,500, U.S. Treasury Bonds, 1.75%--9%, 9/30/05--8/15/23,
 with a value of $448,490,782 and U.S. Treasury Bills, 2/5/04--2/19/04, with
 a value of $138,244,579 (Cost $26,770,000)                                        $26,770,000     26,770,000

- ---------------------------------------------------------------------------------------------------------------
 Total Investments, at Value (Cost $631,407,888)                                         100.6%   662,828,610
- ---------------------------------------------------------------------------------------------------------------
 Liabilities in Excess of Other Assets                                                    (0.6)    (3,996,399)
                                                                               --------------------------------
 Net Assets                                                                              100.0%  $658,832,211
                                                                               ================================

15 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued Footnotes to Statement of Investments Principal amount and strike are reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso GBP British Pound Sterling CAD Canadian Dollar ITL Italian Lira CLP Chilean Peso JPY Japanese Yen DKK Danish Krone PHP Philippines Peso EUR Euro SEK Swedish Krona FRF French Franc 1. Represents the current interest rate for a variable or increasing rate security. 2. Issuer is in default. See Note 1 of Notes to Financial Statements. 3. Non-income producing security. 4. Identifies issues considered to be illiquid or restricted. See Note 11 of Notes to Financial Statements. 5. Zero coupon bond reflects effective yield on the date of purchase. 6. Delayed settlement security to be delivered and settled after September 30, 2003. See Note 1 of Notes to Financial Statements. 7. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. 8. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:

                           Contracts         Expiration  Exercise        Premium  Market Value
                     Subject to Call              Dates     Price       Received    See Note 1
- ------------------------------------------------------------------------------------------------

 Chilean Peso              6,378,797            3/22/04    665.00CLP  $  149,901    $  189,132
 Japanese Yen             25,510,000            4/28/04    141.00JPY     355,505        87,244
 Japanese Yen             12,755,000            2/25/04    132.00JPY     146,582       197,830
 Japanese Yen          9,840,000,000  10/23/03-10/30/03    110.00JPY     896,782       731,752
 Thailand Baht             2,660,000           10/27/03     40.00THB      17,423        17,556
                                                                      --------------------------
                                                                       1,566,193     1,223,514
                                                                      ==========================

                           Contracts
                      Subject to Put
- ------------------------------------------------------------------------------------------------

 Japanese Yen          2,161,000,000             6/1/04    120.00JPY     403,387       132,685
 Thailand Baht             2,660,000           10/27/03     40.50THB      10,773         6,251
                                                                      --------------------------
                                                                         414,160       138,936
                                                                      --------------------------
                                                                      $1,980,353    $1,362,450
                                                                      ==========================

9. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $6,318,891 or 0.96% of the Fund's net assets as of September 30, 2003. 16 | OPPENHEIMER INTERNATIONAL BOND FUND

  Distribution of investments representing geographic holdings, as a percentage of total investments at value, is as follows:

Geographic Holdings Market Value Percent - -------------------------------------------------------------------------- Japan $146,911,860 22.2% United States 47,828,261 7.2 Germany 44,210,797 6.7 Philippines 36,898,494 5.6 Greece 34,074,573 5.1 Brazil 31,302,928 4.7 Russia 30,628,803 4.6 Italy 26,963,320 4.1 France 26,653,713 4.0 The Netherlands 22,562,044 3.4 Belgium 22,521,452 3.4 Mexico 18,527,834 2.8 Indonesia 16,677,228 2.5 Spain 16,324,486 2.5 Argentina 16,133,720 2.4 Finland 14,821,710 2.2 Sweden 14,753,741 2.2 Colombia 12,494,755 1.9 Venezuela 12,435,433 1.9 Great Britain 9,684,762 1.5 Portugal 8,505,828 1.3 Austria 6,697,551 1.0 Turkey 6,277,217 0.9 Peru 6,209,971 0.9 Denmark 5,343,283 0.8 Canada 4,789,685 0.7 Ukraine 3,820,734 0.6 Algeria 3,719,397 0.6 Guatemala 2,415,000 0.4 Hungary 2,041,952 0.3 South Africa 2,037,210 0.3 Nigeria 1,856,831 0.3 Poland 1,781,860 0.3 Uruguay 1,564,064 0.2 Dominican Republic 1,554,300 0.2 Czech Republic 1,293,696 0.2 Ivory Coast 507,986 0.1 Hong Kong 2,131 -- --------------------------- Total $662,828,610 100.0% =========================== See accompanying Notes to Financial Statements. 17 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES September 30, 2003

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

 Assets

 Investments, at value (cost $631,407,888)--see accompanying statement                       $662,828,610
- -----------------------------------------------------------------------------------------------------------
 Cash--foreign currencies (cost $56,551)                                                           56,910
- -----------------------------------------------------------------------------------------------------------
 Cash used for collateral on futures                                                            2,603,000
- -----------------------------------------------------------------------------------------------------------
 Unrealized appreciation on foreign currency contracts                                         10,125,070
- -----------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Interest, dividends and principal paydowns                                                    10,008,101
 Investments sold                                                                               8,278,397
 Shares of beneficial interest sold                                                             6,800,655
 Swap contract                                                                                     40,502
 Futures margins                                                                                   30,711
 Other                                                                                              1,318
                                                                                             --------------
 Total assets                                                                                 700,773,274

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

 Bank overdraft                                                                                 3,051,625
- -----------------------------------------------------------------------------------------------------------
 Unrealized depreciation on foreign currency contracts                                          4,455,025
- -----------------------------------------------------------------------------------------------------------
 Options written, at value (premiums received $1,980,353)--see accompanying statement           1,362,450
- -----------------------------------------------------------------------------------------------------------
 Swaptions written, at value (premiums received $694,082)--see accompanying statement             385,103
- -----------------------------------------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased (including $19,627,024 purchased on a delayed settlement basis)         28,851,761
 Shares of beneficial interest redeemed                                                         1,478,665
 Closed foreign currency contracts                                                              1,411,015
 Distribution and service plan fees                                                               358,108
 Dividends                                                                                        323,390
 Transfer and shareholder servicing agent fees                                                    109,770
 Shareholder reports                                                                               69,354
 Trustees' compensation                                                                             3,818
 Other                                                                                             80,979
                                                                                             --------------
 Total liabilities                                                                             41,941,063

- -----------------------------------------------------------------------------------------------------------
 Net Assets                                                                                  $658,832,211
                                                                                             ==============

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

 Par value of shares of beneficial interest                                                  $    123,769
- -----------------------------------------------------------------------------------------------------------
 Additional paid-in capital                                                                   605,854,999
- -----------------------------------------------------------------------------------------------------------
 Undistributed net investment income                                                           16,341,168
- -----------------------------------------------------------------------------------------------------------
 Accumulated net realized loss on investments and foreign currency transactions                (2,526,989)
- -----------------------------------------------------------------------------------------------------------
 Net unrealized appreciation on investments and translation of assets and
 liabilities denominated in foreign currencies                                                 39,039,264
                                                                                             --------------
 Net Assets                                                                                  $658,832,211
                                                                                             ==============

18 | OPPENHEIMER INTERNATIONAL BOND FUND

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

 Net Asset Value Per Share

 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $429,283,472 and 80,561,757 shares of beneficial interest outstanding)                 $5.33
 Maximum offering price per share (net asset value plus sales charge of 4.75% of
 offering price)                                                                        $5.60
- -----------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $134,660,832
 and 25,342,022 shares of beneficial interest outstanding)                              $5.31
- -----------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $90,247,950
 and 16,992,803 shares of beneficial interest outstanding)                              $5.31
- -----------------------------------------------------------------------------------------------
 Class N Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $4,639,957
 and 872,550 shares of beneficial interest outstanding)                                 $5.32

See accompanying Notes to Financial Statements. 19 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF OPERATIONS For the Year Ended September 30, 2003

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

 Investment Income

 Interest (net of foreign withholding taxes of $415,233)                      $ 24,161,698
- --------------------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $25,472)                           210,167
                                                                              --------------
 Total investment income                                                        24,371,865

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

 Management fees                                                                 3,415,246
- --------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                                           686,288
 Class B                                                                         1,191,405
 Class C                                                                           630,580
 Class N                                                                            13,217
- --------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A                                                                           546,180
 Class B                                                                           288,433
 Class C                                                                           145,602
 Class N                                                                             7,552
- --------------------------------------------------------------------------------------------
 Custodian fees and expenses                                                       152,643
- --------------------------------------------------------------------------------------------
 Shareholder reports                                                                62,606
- --------------------------------------------------------------------------------------------
 Trustees' compensation                                                             17,813
- --------------------------------------------------------------------------------------------
 Other                                                                              67,350
                                                                              --------------
 Total expenses                                                                  7,224,915
 Less reduction to custodian expenses                                              (10,974)
                                                                              --------------
 Net expenses                                                                    7,213,941

- --------------------------------------------------------------------------------------------
 Net Investment Income                                                          17,157,924

- --------------------------------------------------------------------------------------------
 Realized and Unrealized Gain

 Net realized gain on:
 Investments (including premiums on options exercised)                          30,092,917
 Closing of futures contracts                                                    1,352,893
 Closing and expiration of option contracts written                                464,723
 Foreign currency transactions                                                  19,673,918
                                                                              --------------
 Net realized gain                                                              51,584,451
- --------------------------------------------------------------------------------------------
 Net change in unrealized appreciation on:
 Investments                                                                    14,853,158
 Translation of assets and liabilities denominated in foreign currencies        22,000,665
 Futures contracts                                                                 660,842
                                                                              --------------
 Net change in unrealized appreciation                                          37,514,665

- --------------------------------------------------------------------------------------------
 Net Increase in Net Assets Resulting from Operations                         $106,257,040
                                                                              ==============

See accompanying Notes to Financial Statements. 20 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENTS OF CHANGES IN NET ASSETS

 Year Ended September 30,                                                              2003             2002
- --------------------------------------------------------------------------------------------------------------

 Operations

 Net investment income                                                        $  17,157,924    $  11,988,533
- --------------------------------------------------------------------------------------------------------------
 Net realized gain                                                               51,584,451       16,219,263
- --------------------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation                                           37,514,665        6,716,986
                                                                              --------------------------------
 Net increase in net assets resulting from operations                           106,257,040       34,924,782

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

 Dividends from net investment income:
 Class A                                                                        (11,257,243)      (5,960,008)
 Class B                                                                         (3,817,825)      (3,128,518)
 Class C                                                                         (1,988,035)      (1,038,402)
 Class N                                                                            (94,512)         (12,245)
- --------------------------------------------------------------------------------------------------------------
 Tax return of capital distribution:
 Class A                                                                               --         (1,001,844)
 Class B                                                                               --           (633,014)
 Class C                                                                               --           (212,641)
 Class N                                                                               --             (2,205)

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

 Net increase in net assets resulting from beneficial interest transactions:
 Class A                                                                        193,984,034       50,685,955
 Class B                                                                         11,875,148        7,421,458
 Class C                                                                         39,379,694       10,958,666
 Class N                                                                          2,842,914        1,158,705

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

 Total increase                                                                 337,181,215       93,160,689
- --------------------------------------------------------------------------------------------------------------
 Beginning of period                                                            321,650,996      228,490,307
                                                                              --------------------------------
 End of period [including undistributed (overdistributed) net
 investment income of $16,341,168 and $(896,072), respectively]               $ 658,832,211    $ 321,650,996
                                                                              ================================

See accompanying Notes to Financial Statements. 21 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS

 Class A      Year Ended September 30,              2003        2002        2001        2000        1999
- ------------------------------------------------------------------------------------------------------------

 Per Share Operating Data

 Net asset value, beginning of period              $4.38       $3.95       $4.19       $4.23       $4.32
- ------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                               .20         .24         .30         .45         .58
 Net realized and unrealized gain (loss)             .95         .41        (.24)       (.08)       (.14)
                                                ------------------------------------------------------------
 Total from investment operations                   1.15         .65         .06         .37         .44
- ------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income               (.20)       (.19)         --        (.21)       (.53)
 Tax return of capital distribution                   --        (.03)       (.30)       (.20)         --
                                                ------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                    (.20)       (.22)       (.30)       (.41)       (.53)
- ------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $5.33       $4.38       $3.95       $4.19       $4.23
                                                ============================================================

- ------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                26.67%      16.78%       1.40%       8.93%      10.58%

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

 Net assets, end of period (in thousands)       $429,283    $181,456    $118,733    $100,928    $102,236
- ------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)              $285,391    $134,912    $117,000    $110,968    $101,948
- ------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2
 Net investment income                              3.94%       5.16%       7.10%      10.23%      13.47%
 Total expenses                                     1.22%       1.37%       1.38%       1.31%       1.26%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses         N/A 3       N/A 3       N/A 3       1.29%       1.25%
- ------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                             341%        372%        377%        288%        285%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.

See accompanying Notes to Financial Statements. 22 | OPPENHEIMER INTERNATIONAL BOND FUND

 Class B      Year Ended September 30,              2003        2002        2001        2000        1999
- ------------------------------------------------------------------------------------------------------------

 Per Share Operating Data

 Net asset value, beginning of period              $4.37       $3.94       $4.17       $4.22       $4.31
- ------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                               .16         .21         .26         .42         .55
 Net realized and unrealized gain (loss)             .94         .40        (.22)       (.09)       (.14)
                                                ------------------------------------------------------------
 Total from investment operations                   1.10         .61         .04         .33         .41
- ------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income               (.16)       (.15)         --        (.20)       (.50)
 Tax return of capital distribution                   --        (.03)       (.27)       (.18)         --
                                                ------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                    (.16)       (.18)       (.27)       (.38)       (.50)
- ------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $5.31       $4.37       $3.94       $4.17       $4.22
                                                ============================================================

- ------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                25.48%      15.90%       0.85%       7.94%       9.79%

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

 Net assets, end of period (in thousands)       $134,661    $100,049     $84,427    $ 98,272    $118,632
- ------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)              $119,232    $ 85,244     $93,455    $115,116    $122,878
- ------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2

 Net investment income                              3.20%       4.41%       6.40%       9.63%      12.70%
 Total expenses                                     2.03%       2.14%       2.14%       2.05%       2.02%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses         N/A 3       N/A 3       N/A 3       2.03%       2.01%
- ------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                             341%        372%        377%        288%        285%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.

See accompanying Notes to Financial Statements. 23 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued

 Class C      Year Ended September 30,              2003        2002        2001        2000        1999
- ------------------------------------------------------------------------------------------------------------

 Per Share Operating Data

 Net asset value, beginning of period              $4.37       $3.94       $4.17       $4.22       $4.31
- ------------------------------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                               .16         .21         .26         .41         .55
 Net realized and unrealized gain (loss)             .94         .40        (.22)       (.08)       (.14)
                                                ------------------------------------------------------------
 Total from investment operations                   1.10         .61         .04         .33         .41
- ------------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income               (.16)       (.15)         --        (.19)       (.50)
 Tax return of capital distribution                   --        (.03)       (.27)       (.19)         --
                                                ------------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                    (.16)       (.18)       (.27)       (.38)       (.50)
- ------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $5.31       $4.37       $3.94       $4.17       $4.22
                                                ============================================================

- ------------------------------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 1                25.48%      15.90%       0.85%       7.95%       9.80%

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

 Net assets, end of period (in thousands)        $90,248     $38,865     $25,221     $27,663     $29,456
- ------------------------------------------------------------------------------------------------------------
 Average net assets (in thousands)               $63,198     $28,635     $27,125     $30,710     $28,918
- ------------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 2

 Net investment income                              3.15%       4.37%       6.39%       9.55%      12.76%
 Total expenses                                     2.02%       2.14%       2.14%       2.05%       2.02%
 Expenses after expense reimbursement or fee
 waiver and reduction to custodian expenses         N/A 3       N/A 3       N/A 3       2.03%       2.01%
- ------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                             341%        372%        377%        288%        285%


1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.

See accompanying Notes to Financial Statements.

24 | OPPENHEIMER INTERNATIONAL BOND FUND

 Class N      Year Ended September 30,              2003        2002      2001 1
- ------------------------------------------------------------------------------------

 Per Share Operating Data

 Net asset value, beginning of period              $4.37       $3.95       $4.23
- ------------------------------------------------------------------------------------
 Income (loss) from investment operations:
 Net investment income                               .18         .21         .16
 Net realized and unrealized gain (loss)             .95         .42        (.28)
                                                ------------------------------------
 Total from investment operations                   1.13         .63        (.12)
- ------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income               (.18)       (.18)         --
 Tax return of capital distribution                   --        (.03)       (.16)
                                                ------------------------------------
 Total dividends and/or distributions
 to shareholders                                    (.18)       (.21)       (.16)
- ------------------------------------------------------------------------------------
 Net asset value, end of period                    $5.32       $4.37       $3.95
                                                ====================================

- ------------------------------------------------------------------------------------
 Total Return, at Net Asset Value 2                26.31%      16.23%      (2.88)%

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

 Net assets, end of period (in thousands)         $4,640      $1,280        $109
- ------------------------------------------------------------------------------------
 Average net assets (in thousands)                $2,653      $  297        $ 34
- ------------------------------------------------------------------------------------
 Ratios to average net assets: 3

 Net investment income                              3.56%       4.87%       6.56%
 Total expenses                                     1.57% 4     1.57% 4     1.39% 4
- ------------------------------------------------------------------------------------
 Portfolio turnover rate                             341%        372%        377%


1. For the period from March 1, 2001 (inception of offering) to September 30,
2001.
2. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.

See accompanying Notes to Financial Statements.

25 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Significant Accounting Policies

  Oppenheimer International Bond Fund (the Fund) is a registered investment company organized as a Massachusetts Business Trust. The Fund is registered as a non-diversified, open-end management investment company under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek total return. The Fund’s investment advisor is OppenheimerFunds, Inc. (the Manager).

  The Fund offers Class A, Class B, Class C and Class N shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase.

  The following is a summary of significant accounting policies consistently followed by the Fund.

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

  Securities Valuation. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund’s assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term “money market type” debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value).

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

  Structured Notes. The Fund invests in foreign currency-linked structured notes whose market values and redemption prices are linked to foreign currency exchange rates. The Fund also invests in “index-linked” notes whose principal and/or interest payments depend on the performance of an underlying index. The structured notes are leveraged, increasing the volatility of each note’s market value relative to the change in the underlying foreign currency exchange rate or underlying index. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of September 30, 2003, the market value of these securities comprised 9.2% of the Fund’s net assets and resulted in unrealized gains of $1,198,616. The Fund also

26 | OPPENHEIMER INTERNATIONAL BOND FUND - --------------------------------------------------------------------------------

  hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5.

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

  Securities on a Delayed Settlement Basis. Delivery and payment for securities that have been purchased by the Fund on a delayed settlement basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a delayed settlement basis may increase the volatility of the Fund’s net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of September 30, 2003, the Fund had entered into delayed settlement purchase commitments of $19,627,024.

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

  Security Credit Risk. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, market fluctuations and loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of September 30, 2003, securities with an aggregate market value of $6,655,323, representing 1.01% of the Fund’s net assets, were in default.

- -------------------------------------------------------------------------------- Foreign Currency Translation. The Fund's accounting records are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions.

  The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

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

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

27 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued

  Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

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

  Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required.

  The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

Net Unrealized Appreciation Based on Cost of Securities and Undistributed Undistributed Accumulated Other Investments Net Investment Long-Term Loss for Federal Income Income Gain Carryforward 1,2 Tax Purposes -------------------------------------------------------------------

  $23,532,998 $-- $2,082,181 $33,151,592 1. As of September 30, 2003, the Fund had $2,082,181 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of September 30, 2003, details of the capital loss carryforwards were as follows:

Expiring 2008 $ 783,099 2009 1,299,082 Total $2,082,181 ========== 2. During the fiscal years ended September 30, 2003 and September 30, 2002, the Fund utilized $34,133,620 and $32,731, respectively, of capital loss carryforwards to offset capital gains realized in the respective fiscal years. During the fiscal year $3,670,346 of unused capital loss carryforward expired.

  Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for September 30, 2003. Net assets of the Fund were unaffected by the reclassifications.

From From Net Ordinary Capital Tax Return Investment Loss Gain of Capital Loss ------------------------------------------------------- $17,236,931 $20,246,886 $-- $-- 28 | OPPENHEIMER INTERNATIONAL BOND FUND

  The tax character of distributions paid during the years ended September 30, 2003 and September 30, 2002 was as follows:

Year Ended Year Ended September 30, 2003 September 30, 2002 --------------------------------------------------------------- Distributions paid from: Ordinary income $17,157,615 $10,139,173 Return of capital -- 1,849,704 ------------------------------- Total $17,157,615 $11,988,877 ===============================

  The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of September 30, 2003 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities and other investments $1,073,747,443 ============== Gross unrealized appreciation $ 42,029,461 Gross unrealized depreciation (8,877,869) -------------- Net unrealized appreciation $ 33,151,592 ==============

  The Manager believes that an additional ordinary income distribution for tax purposes is likely to occur in December, 2003. The dollar and per share amounts cannot be estimated as of September 30, 2003.

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

  Trustees’ Compensation. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or are invested in other selected Oppenheimer funds. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan.

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

  Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually.

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

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

29 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued Expense Offset Arrangement. The reduction of custodian fees represents earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest

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

                            Year Ended September 30, 2003      Year Ended September 30, 2002
                                  Shares           Amount           Shares           Amount
- ---------------------------------------------------------------------------------------------

 Class A
 Sold                         66,619,226    $ 327,783,210       29,697,373    $ 129,350,915
 Dividends and/or
 distributions reinvested      1,800,877        8,831,110        1,145,883        4,834,797
 Redeemed                    (29,286,342)    (142,630,286)     (19,476,112)     (83,499,757)
                             ----------------------------------------------------------------
 Net increase                 39,133,761    $ 193,984,034       11,367,144    $  50,685,955
                             ================================================================

- ---------------------------------------------------------------------------------------------
 Class B
 Sold                         14,881,963    $  71,989,537        9,030,170    $  39,252,375
 Dividends and/or
 distributions reinvested        560,961        2,725,698          515,987        2,162,691
 Redeemed                    (13,006,585)     (62,840,087)      (8,090,580)     (33,993,608)
                             ----------------------------------------------------------------
 Net increase                  2,436,339    $  11,875,148        1,455,577    $   7,421,458
                             ================================================================

- ---------------------------------------------------------------------------------------------
 Class C
 Sold                         12,729,289    $  62,063,352        4,734,148    $  20,471,644
 Dividends and/or
 distributions reinvested        292,444        1,431,897          180,877          759,597
 Redeemed                     (4,932,108)     (24,115,555)      (2,420,774)     (10,272,575)
                             ----------------------------------------------------------------
 Net increase                  8,089,625    $  39,379,694        2,494,251    $  10,958,666
                             ================================================================

- ---------------------------------------------------------------------------------------------
 Class N
 Sold                            682,672    $   3,342,355          292,426    $   1,277,397
 Dividends and/or
 distributions reinvested         15,660           77,211            2,942           12,571
 Redeemed                       (118,748)        (576,652)         (29,964)        (131,263)
                             ----------------------------------------------------------------
 Net increase                    579,584    $   2,842,914          265,404    $   1,158,705
                             ================================================================

30 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 3. Purchases and Sales of Securities

  The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended September 30, 2003, were $1,553,007,279 and $1,297,399,494, respectively.

- -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates

  Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for fee at an annual rate of 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200 million and 0.50% of average annual net assets in excess of $1 billion.

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

  Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended September 30, 2003, the Fund paid $933,703 to OFS for services to the Fund.

  OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes, up to an annual rate of 0.35% of average net assets per class. This undertaking may be amended or withdrawn at any time.

- -------------------------------------------------------------------------------- Distribution and Service Plan (12b-1) Fees. Under its General Distributor's Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund.

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

                       Aggregate        Class A   Concessions   Concessions   Concessions    Concessions
                       Front-End      Front-End    on Class A    on Class B    on Class C     on Class N
                   Sales Charges  Sales Charges        Shares        Shares        Shares         Shares
                      on Class A    Retained by   Advanced by   Advanced by   Advanced by    Advanced by
 Year Ended               Shares    Distributor Distributor 1 Distributor 1 Distributor 1  Distributor 1
- ----------------------------------------------------------------------------------------------------------

 September 30, 2003   $1,607,039       $328,223      $366,872    $1,414,536      $474,412        $21,566

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

Class A Class B Class C Class N Contingent Contingent Contingent Contingent Deferred Deferred Deferred Deferred Sales Charges Sales Charges Sales Charges Sales Charges Retained by Retained by Retained by Retained by Year Ended Distributor Distributor Distributor Distributor - -------------------------------------------------------------------------------- September 30, 2003 $10,937 $475,852 $57,864 $6,737 - --------------------------------------------------------------------------------

  Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. For the

31 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates Continued

  year ended September 30, 2003, expense under the Class A Plan totaled $686,288, all of which were paid by the Distributor to recipients, which included $523 retained by the Distributor and $24,208 which was paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years.

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

  Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares and the Fund pays the Distributor an annual asset-based sales charge of 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan.

  Distribution fees paid to the Distributor for the year ended September 30, 2003, were as follows:

Distributor's Distributor's Aggregate Aggregate Uncompensated Uncompensated Expenses as % Total Expenses Amount Retained Expenses of Net Assets Under Plan by Distributor Under Plan of Class - -------------------------------------------------------------------------------- Class B Plan $1,191,405 $892,047 $5,656,823 4.20% Class C Plan 630,580 290,571 1,803,279 2.00 Class N Plan 13,217 11,378 56,311 1.21 - -------------------------------------------------------------------------------- 5. Foreign Currency Contracts

  A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract.

  The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation.

  The Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Contracts closed or settled with the same broker are recorded as net realized gain or loss. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations.

32 | OPPENHEIMER INTERNATIONAL BOND FUND

  As of September 30, 2003, the Fund had outstanding foreign currency contracts as follows:

                                                       Contract        Valuation
                                     Expiration          Amount            as of    Unrealized    Unrealized
 Contract Description                     Dates          (000s)   Sept. 30, 2003  Appreciation  Depreciation
- --------------------------------------------------------------------------------------------------------------
 Contracts to Purchase

 Argentine Peso [ARP]            5/27/04-7/16/04         32,730ARP  $ 10,539,381   $   197,932      $125,478
 British Pound Sterling [GBP]           11/20/03          4,310GBP     7,134,689       329,199            --
 Chilean Peso [CLP]                     11/25/03      4,402,364CLP     6,656,299       368,555            --
 Euro [EUR]                     11/26/03-6/17/04         50,030EUR    58,111,611     2,885,159            --
 Japanese Yen [JPY]             10/14/03-3/17/04     17,543,000JPY   157,573,070     6,247,851         4,062
 Swiss Franc [CHF]                      10/29/03          5,430CHF     4,114,960        79,586            --
 Turkish Lira [TRL]                     10/27/03  1,831,456,000TRL     1,291,176            --         9,573
                                                                                   ---------------------------
                                                                                    10,108,282       139,113
                                                                                   ===========================
 Contracts to Sell
 Australian Dollar [AUD]                10/29/03          6,765AUD     4,564,176        14,376            --
 British Pound Sterling [GBP]           10/29/03          2,345GBP     3,887,686            --         9,642
 Euro [EUR]                     10/14/03-4/27/04        102,245EUR   118,707,215            --     4,075,920
 Indonesia Rupiah [IDR]                 11/12/03     38,581,800IDR     4,595,825            --       191,912
 Japanese Yen [JPY]                      4/27/04         89,000JPY       802,059            --        38,438
 New Zealand Dollar [NZD]               10/29/03          7,310NZD     4,326,936         2,412            --
                                                                                   ---------------------------
                                                                                        16,788     4,315,912
                                                                                   ---------------------------
 Total unrealized appreciation and depreciation                                    $10,125,070    $4,455,025
                                                                                   ===========================

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

  A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices “financial futures” or debt securities “interest rate futures” in order to gain exposure to or protection from changes in market value of stock and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts.

  The Fund generally sells futures contracts as a hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying fixed income securities.

  Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or has expired.

  Cash held by the broker to cover initial margin requirements on open futures contracts is noted in the Statement of Assets and Liabilities. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and

33 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 6. Futures Contracts Continued

  losses are reported on the Statement of Operations as closing and expiration of futures contracts. The net change in unrealized appreciation and depreciation is reported on the Statement of Operations.

  Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities.

        As of September 30, 2003, the Fund had outstanding futures contracts as follows:

                                                                                 Unrealized
                                    Expiration  Number of   Valuation as of    Appreciation
 Contract Description                    Dates  Contracts    Sept. 30, 2003  (Depreciation)
- ---------------------------------------------------------------------------------------------

 Contracts to Purchase
 U.S. Long Bonds                      12/19/03         43       $ 4,822,719        $218,887
                                                                                   ----------
 Contracts to Sell
 Japan (Government of) Bonds, 10 yr.  12/11/03         22        26,975,429         299,333
 Standard & Poor's 500 E-Mini         12/19/03         39         1,938,300          38,020
 Standard & Poor's 500 Index          12/18/03         37         9,195,425         214,133
 U.S. Treasury Nts., 5 yr.            12/19/03        153        17,360,719         (94,640)
                                                                                   ----------
                                                                                    456,846
                                                                                   ----------
                                                                                   $675,733
                                                                                   ==========

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

  The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities.

  The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option.

  Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid.

  Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations.

  The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases

34 | OPPENHEIMER INTERNATIONAL BOND FUND - --------------------------------------------------------------------------------

  and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.

        Written option activity for the year ended September 30, 2003 was as follows:

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

 Options outstanding as of
 September 30, 2002                           --    $       --             1,970    $ 175,330
 Options written                   9,925,025,897     1,969,367     2,175,847,745      761,424
 Options closed or expired            (4,000,000)      (44,400)      (12,189,715)    (522,593)
 Options exercised                   (33,722,100)     (358,775)               --           --
                                   ------------------------------------------------------------
 Options outstanding as of
 September 30, 2003                9,887,303,797    $1,566,192     2,163,660,000     $414,161
                                   ============================================================

- -------------------------------------------------------------------------------- 8. Interest Rate Swap Contracts

  The Fund may enter into an interest rate swap transaction to maintain a total return or yield spread on a particular investment, or portion of its portfolio, or for other non-speculative purposes. Interest rate swaps involve the exchange of commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The coupon payments are based on an agreed upon principal amount and a specified index. Because the principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as notional. The Fund records an increase or decrease to interest income, in the amount due to or owed by the Fund at termination or settlement.

  Interest rate swaps are subject to credit risk (if the counterparty fails to meet its obligations) and interest rate risk. The Fund could be obligated to pay more under its swap agreements than it receives under them, as a result of interest rate changes.

  As of September 30, 2003, the Fund had entered into the following interest rate swap agreements:

                                            Floating Rate
                              Rate Paid by    Received by
                               the Fund at    the Fund at                                 Unrealized
 Swap              Notional  September 30,  September 30,      Floating  Termination    Appreciation
 Counterparty     Principal           2003           2003    Rate Index        Dates  (Depreciation)
- ------------------------------------------------------------------------------------------------------

 JPMorgan                                                   Three-Month
 Chase Bank  $   13,500,000          3.342%      1.289999%   Libor Flat      3/31/08        $(86,011)
 JPMorgan                                                     Six-Month
 Chase Bank       8,000,000       1.289999           2.92    LIBOR flat      5/13/08          19,144
 JPMorgan                                                     Six-Month
 Chase Bank       3,880,000          3.135          2.081    LIBOR flat      7/14/08          40,449
 JPMorgan                                                     Six-Month
 Chase Bank   1,080,000,000           9.13           7.00    LIBOR flat      7/14/08         (42,644)
                                                                                            -----------
                                                                                            $(69,062)
                                                                                            ===========

35 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 9. Credit Swap Contracts

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

  During the year ended September 30, 2003, the Fund entered into a transaction to hedge credit risk. The Fund pays an annual 2% interest fee on the notional amount in exchange for the counterparty paying in a potential credit event. Information regarding the credit swap is as follows:

                                                                                      Unrealized
                                      Expiration      Notional   Valuation as of    Appreciation
 Contract Description                      Dates        Amount    Sept. 30, 2003  (Depreciation)
- --------------------------------------------------------------------------------------------------

 Deutsche Bank AG, Colombia
 (Republic of) Credit Nts.               9/20/13    $5,725,000          $123,931        $123,931
 Deutsche Bank AG, Colombia
 (Republic of) Credit Nts.               9/20/13     5,725,000           197,839         197,839
 Deutsche Bank AG, Costa Rica
 (Republic of) Certificate of Deposit    5/10/08     1,835,000           (12,858)        (12,858)
 Deutsche Bank AG, Costa Rica
 (Republic of) Credit Bonds              4/25/08       990,000           (32,135)        (32,135)
 Deutsche Bank AG, United Mexican
 States Credit Bonds                     9/20/13     2,790,000           (28,453)        (28,453)
 Deutsche Bank AG, Panama
 (Republic of) Certificate of Deposit    5/13/08     1,835,000           (27,691)        (27,691)
 Deutsche Bank AG, Philippines
 (Republic of) 5 yr. Credit Notes        7/25/08     2,335,000            (1,685)         (1,685)
 Deutsche Bank AG, Philippines
 (Republic of) 10 yr. Credit Bonds       7/25/13     2,335,000             2,265           2,265
 Deutsche Bank AG, Philippines
 (Republic of) Credit Nts.              12/20/08       670,000              (714)           (714)
 Deutsche Bank AG, Russia Federation
 Credit Bonds                            9/10/13     2,570,000            17,729          17,729
 Deutsche Bank AG, Russia Federation
 Credit Bonds                            9/20/13     3,490,000            11,405          11,405
 Deutsche Bank AG, Turkey
 (Republic of) Credit Nts.               9/20/10     1,595,000            (9,182)         (9,182)
 JPMorgan Chase Bank, Jordan
 (Kingdom of) Credit Nts.                 6/6/06       390,000             2,333           2,333
 JPMorgan Chase Bank, Peru
 (Republic of) Credit Default Bonds      9/20/08     1,800,000           (87,576)        (87,576)
 JPMorgan Chase Bank, Peru
 (Republic of) Credit Default Bonds      9/20/08       900,000           (45,644)        (45,644)
                                                                                        ----------
                                                                                        $109,564
                                                                                        ==========

36 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 10. Swaption Transactions

  The Fund may enter into a swaption transaction, whereby a contract that grants the holder, in return for payment of the purchase price (the “premium”) of the option, the right, but not the obligation, to enter into an interest rate swap at a preset rate within a specified period of time, with the writer of the contract. The writer receives premiums and bears the risk of unfavorable changes in the preset rate on the underlying interest rate swap. Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. Swaptions written are reported as a liability in the Statement of Assets and Liabilities.

  As of September 30, 2003, the Fund had entered into the following swaption contracts:

                            Contracts  Expiration     Exercise     Premium  Market Value
 Swaptions            Subject to Call       Dates        Price    Received    See Note 1
- ------------------------------------------------------------------------------------------

 Deutsche Swaption         49,335,000     5/17/04        2.825%   $439,082      $233,668
 JPMorgan Chase Bank
 Swaption                  30,000,000     5/10/04        2.920     255,000       151,435
                                                                  ------------------------
                                                                  $694,082      $385,103
                                                                  ========================

- -------------------------------------------------------------------------------- 11. Illiquid or Restricted Securities

  As of September 30, 2003, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of September 30, 2003 was $21,714,353, which represents 3.30% of the Fund’s net assets, of which $56,910 is considered restricted. Information concerning restricted securities is as follows:

Acquisition Valuation as of Unrealized Security Date Cost Sept. 30, 2003 Appreciation - ------------------------------------------------------------------------------- Currency Argentine Peso 8/6/03 $56,551 $56,910 $359 37 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 12. Borrowing and Lending Arrangements

  The Fund entered into an “interfund borrowing and lending arrangement” with other funds in the Oppenheimer funds complex, to allow funds to borrow for liquidity purposes. The arrangement was initiated pursuant to exemptive relief granted by the Securities and Exchange Commission to allow these affiliated funds to lend money to, and borrow money from, each other, in an attempt to reduce borrowing costs below those of bank loan facilities. Under the arrangement the Fund may lend money to other Oppenheimer funds and may borrow from other Oppenheimer funds at a rate set by the Fund’s Board of Trustees, based upon a recommendation by the Manager. The Fund’s borrowings, if any, are subject to asset coverage requirements under the Investment Company Act and the provisions of the SEC order and other applicable regulations. If the Fund borrows money, there is a risk that the loan could be called on one day’s notice, in which case the Fund might have to borrow from a bank at higher rates if a loan were not available from another Oppenheimer fund. If the Fund lends money to another fund, it will be subject to the risk that the other fund might not repay the loan in a timely manner, or at all.

  The Fund had no interfund borrowings or loans outstanding during the year ended or at September 30, 2003.

38 | OPPENHEIMER INTERNATIONAL BOND FUND

                                       A-1

                                   Appendix A

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


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


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


LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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

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

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

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

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

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

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

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

C:  Bonds and preferred stock rated "C" are the lowest class of rated bonds and
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in
the lower end of that generic rating category. Advanced refunded issues that
are secured by certain assets are identified with a # symbol.

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


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

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

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

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

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

LONG-TERM ISSUE CREDIT RATINGS

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

AAA: An  obligation  rated "AAA" have the highest  rating  assigned by Standard &
Poor's.  The  obligor's  capacity  to  meet  its  financial   commitment  on  the
obligation is extremely strong.
AA: An obligation  rated "AA" differ from the highest rated  obligations  only in
small  degree.  The obligor's  capacity to meet its  financial  commitment on the
obligation is very strong.
A: An obligation  rated "A" are somewhat more  susceptible to the adverse effects
of  changes  in  circumstances  and  economic   conditions  than  obligations  in
higher-rated  categories.  However,  the obligor's capacity to meet its financial
commitment on the obligation is still strong.

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


BB, B, CCC, CC, and C

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

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

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

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

CC: An obligation rated "CC" are currently highly vulnerable to nonpayment.


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


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

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.









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

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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

A-2: A short-term obligation rated "A-2" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated "A-3" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

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

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

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

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

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

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

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

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

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

Investment Grade:

AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.


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

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

Speculative Grade:

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


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

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

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

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

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

INTERNATIONAL SHORT-TERM CREDIT RATINGS

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


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

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

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

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

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

D: Default. Denotes actual or imminent payment default.









                                       B-1
                                   Appendix B

                            Industry Classifications

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













                                      C-11

                                   Appendix C

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

In certain cases, the initial sales charge that applies to purchases of Class A
shares1 of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.2  That is
because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors.

Not all waivers apply to all funds. For example, waivers relating to Retirement
Plans do not apply to Oppenheimer municipal funds, because shares of those
funds are not available for purchase by or on behalf of retirement plans. Other
waivers apply only to shareholders of certain funds.

For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds,
the term "Retirement Plan" refers to the following types of plans:
         1) plans qualified under Sections 401(a) or 401(k) of the Internal
            Revenue Code,
         2) non-qualified deferred compensation plans,
         3) employee benefit plans3
         4) Group Retirement Plans4
         5) 403(b)(7) custodial plan accounts
         6) Individual Retirement Accounts ("IRAs"), including traditional
            IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

The interpretation of these provisions as to the applicability of a special
arrangement or waiver in a particular case is in the sole discretion of the
Distributor or the transfer agent (referred to in this document as the
"Transfer Agent") of the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the
"Manager").

Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
I.       Applicability of Class A Contingent Deferred Sales Charges in Certain
                                       Cases
- ---------------------------------------------------------------------------------

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

      There is no initial sales charge on purchases of Class A shares of any of
the Oppenheimer funds in the cases listed below. However, these purchases may
be subject to the Class A contingent deferred sales charge if redeemed within
18 months (24 months in the case of Oppenheimer Rochester National Municipals
and Rochester Fund Municipals) of the beginning of the calendar month of their
purchase, as described in the Prospectus (unless a waiver described elsewhere
in this Appendix applies to the redemption). Additionally, on shares purchased
under these waivers that are subject to the Class A contingent deferred sales
charge, the Distributor will pay the applicable concession described in the
Prospectus under "Class A Contingent Deferred Sales Charge."5 This waiver
provision applies to:
|_|   Purchases of Class A shares aggregating $1 million or more.
|_|   Purchases of Class A shares by a Retirement Plan that was permitted to
         purchase such shares at net asset value but subject to a contingent
         deferred sales charge prior to March 1, 2001. That included plans
         (other than IRA or 403(b)(7) Custodial Plans) that: 1) bought shares
         costing $500,000 or more, 2) had at the time of purchase 100 or more
         eligible employees or total plan assets of $500,000 or more, or 3)
         certified to the Distributor that it projects to have annual plan
         purchases of $200,000 or more.
|_|   Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases
         are made:
         1) through a broker, dealer, bank or registered investment adviser
            that has made special arrangements with the Distributor for those
            purchases, or
         2) by a direct rollover of a distribution from a qualified Retirement
            Plan if the administrator of that Plan has made special
            arrangements with the Distributor for those purchases.
|_|   Purchases of Class A shares by Retirement Plans that have any of the
         following record-keeping arrangements:
         1) The record keeping is performed by Merrill Lynch Pierce Fenner &
            Smith, Inc. ("Merrill Lynch") on a daily valuation basis for the
            Retirement Plan. On the date the plan sponsor signs the
            record-keeping service agreement with Merrill Lynch, the Plan must
            have $3 million or more of its assets invested in (a) mutual funds,
            other than those advised or managed by Merrill Lynch Investment
            Management, L.P. ("MLIM"), that are made available under a Service
            Agreement between Merrill Lynch and the mutual fund's principal
            underwriter or distributor, and  (b)  funds advised or managed by
            MLIM (the funds described in (a) and (b) are referred to as
            "Applicable Investments").
         2) The record keeping for the Retirement Plan is performed on a daily
            valuation basis by a record keeper whose services are provided
            under a contract or arrangement between the Retirement Plan and
            Merrill Lynch. On the date the plan sponsor signs the record
            keeping service agreement with Merrill Lynch, the Plan must have $3
            million or more of its assets (excluding assets invested in money
            market funds) invested in Applicable Investments.
         3) The record keeping for a Retirement Plan is handled under a service
            agreement with Merrill Lynch and on the date the plan sponsor signs
            that agreement, the Plan has 500 or more eligible employees (as
            determined by the Merrill Lynch plan conversion manager).
II.






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

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

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





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

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

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

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

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

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

A. Waivers for Redemptions in Certain Cases.

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

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

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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







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

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

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

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

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

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

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

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

|X|





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

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

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

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

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







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

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

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

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

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

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

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

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

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge:
|_|   the Manager and its affiliates,
|_|   present or former officers, directors, trustees and employees (and their
         "immediate families" as defined in the Fund's Statement of Additional
         Information) of the Fund, the Manager and its affiliates, and
         retirement plans established by them or the prior investment advisor
         of the Fund for their employees,
|-|





      egistered management investment companies or separate accounts of
         insurance companies that had an agreement with the Fund's prior
         investment advisor or distributor for that purpose,
|_|   dealers or brokers that have a sales agreement with the Distributor, if
         they purchase shares for their own accounts or for retirement plans
         for their employees,
|_|   employees and registered representatives (and their spouses) of dealers
         or brokers described in the preceding section or financial
         institutions that have entered into sales arrangements with those
         dealers or brokers (and whose identity is made known to the
         Distributor) or with the Distributor, but only if the purchaser
         certifies to the Distributor at the time of purchase that the
         purchaser meets these qualifications,
|_|   dealers, brokers, or registered investment advisors that had entered into
         an agreement with the Distributor or the prior distributor of the Fund
         specifically providing for the use of Class M shares of the Fund in
         specific investment products made available to their clients, and
|_|   dealers, brokers or registered investment advisors that had entered into
         an agreement with the Distributor or prior distributor of the Fund's
         shares to sell shares to defined contribution employee retirement
         plans for which the dealer, broker, or investment advisor provides
         administrative services.









Oppenheimer International Bond Fund

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

Investment Advisor
      OppenheimerFunds, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, NY 10080

Distributor
      OppenheimerFunds Distributor, Inc.
      Two World Financial Center
      225 Liberty Street, 11th Floor
      New York, NY 10080

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

Custodian Bank
      J. P. Morgan Chase Bank
      4 Chase Metro Tech Center
      Brooklyn, New York 11245

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

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

Counsel to the Independent Trustees
      Mayer, Brown, Rowe & Maw
      1675 Broadway
      New York, New York 10019
1234

PX880.0021103(Rev. 12/03)


- --------
1 In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan.
1 Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
2 In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered
closed-end fund, references to contingent deferred sales charges mean the
Fund's Early Withdrawal Charges and references to "redemptions" mean
"repurchases" of shares.
3 An "employee benefit plan" means any plan or arrangement, whether or not it
is "qualified" under the Internal Revenue Code, under which Class N shares of
an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single
employer or of affiliated employers. These may include, for example, medical
savings accounts, payroll deduction plans or similar plans. The fund accounts
must be registered in the name of the fiduciary or administrator purchasing the
shares for the benefit of participants in the plan.
4 The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship, members
and employees of a partnership or association or other organized group of
persons (the members of which may include other groups), if the group has made
special arrangements with the Distributor and all members of the group
participating in (or who are eligible to participate in) the plan purchase
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans
include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term "Group Retirement Plan" also
includes qualified retirement plans and non-qualified deferred compensation
plans and IRAs that purchase shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution that has made
special arrangements with the Distributor.
5 However, that concession will not be paid on purchases of shares in amounts
of $1 million or more (including any right of accumulation) by a Retirement
Plan that pays for the purchase with the redemption proceeds of Class C shares
of one or more Oppenheimer funds held by the Plan for more than one year.
6 This provision does not apply to IRAs.
7 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.
8 The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
9 This provision does not apply to IRAs.
10 This provision does not apply to loans from 403(b)(7) custodial plans and
loans from the OppenheimerFunds-sponsored Single K retirement plan.
11 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.