OPPENHEIMER SENIOR FLOATING RATE FUND

N-2 1 body.htm N-2 SCHEDULE, PROSPECTUS, SAI, PART C OPPENHEIMER SENIOR FLOATING RATE FUND


As filed with the Securities and Exchange Commission on October 6, 2005
                                                   1933 Act File No. 333-82579
                                                   1940 Act File No. 811-09373


                   U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM N-2
                       (Check appropriate box or boxes)

[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
            [   ] Pre-Effective Amendment No. __
            [   ] Post-Effective Amendment No. __
                                    and/or

[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
            [X] Amendment No. 16


                    OPPENHEIMER SENIOR FLOATING RATE FUND
               (Exact Name of Registrant Specified in Charter)

                 6803 South Tucson Way, Centennial, CO 80112
  (Address of Principal Executive Offices) (Number, Street, City, State, Zip
                                    Code)

                                1.800.525.9310
             (Registrant's Telephone Number, Including Area Code)

                                Robert G. Zack
                            OppenheimerFunds, Inc.
  Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New
                               York 10281-1008
  (Name and Address (Number, Street, State, Zip Code) of Agent for Service)


Approximate Date of Proposed Public Offering:  November 21, 2005


If any securities being registered on this form will be offered on a delayed
or continuous basis in reliance on Rule 415 under the Securities Act of 1933,
other than securities offered in connection with a dividend reinvestment
plan, check the following box [X]


It is proposed that this filing will become effective (check applicable box):
[X ] when declared effective pursuant to section 8(c), or as follows:
The following boxes are included on the basis that the Registrant makes
repurchase offers under Rule 23c-3 under the Investment Company Act of 1940
and is making this filing in accordance with Rule 486 under the Securities
Act of 1933.
[   ] immediately upon filing pursuant to paragraph (b)
[   ] on (date) pursuant to paragraph (b)
[   ] 60 days after filing pursuant to paragraph (a)
[   ] on ______________ pursuant to paragraph (a) of Rule 486.

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

[ ] This  form is filed to  register  additional  securities  for an  offering
pursuant  to Rule  462(b)  under the  Securities  Act and the  Securities  Act
registration  statement number of the earlier effective registration statement
for the same offering is ________.

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The Registrant hereby amends the Registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to Section
8(a), shall determine.


This Registration  Statement includes a combined  Prospectus  pursuant to Rule
429 of the  Securities  Act of 1933  which  relates to the  following  earlier
Registration Statements filed by the Registrant:
(1)   July 9, 1999, which registered  100,000 Class A shares,  6,000,000 Class
    B shares and  3,900,000  Class C shares,  each being shares of  beneficial
    interest having a par value of $0.001 per share;
(2)   December 6, 1999,  which registered  10,000,000  shares each of Class A,
    Class B, and Class C, each being shares of  beneficial  interest  having a
    par value of $0.001 per share;
(3)   May 18, 2000, which  registered  10,000,000 Class C shares of beneficial
    interest having a par value of $0.001 per share;
(4)   August  21,  2000,  which  registered   10,000,000  Class  C  shares  of
    beneficial interest having a par value of $0.001 per share;
(5)   November  30,  2000,   which   registered   5,000,000  Class  A  Shares,
    10,000,000  Class B Shares  and  20,000,000  Class C  Shares,  each  being
    shares of beneficial interest having a par value of $0.001 per share;
(6)   June 4, 2000, which registered  10,000,000 Class B Shares, of beneficial
    interest having a par value of $0.001 per share; and
(7)   November  17,  2003,  which  registered  10,000,000  Class A  Shares  of
    beneficial interest having a par value of $0.001 per share;
(8)   June 3, 2004,  which registered  50,000,000  Class A shares,  10,000,000
    Class B shares  and  25,000,000  Class C  shares,  each  being  shares  of
    beneficial interest having a par value of $0.001 per shares.
(9)   March 2, 2005, which registered  100,000,000 Class A shares,  50,000,000
    Class B shares  and  100,000,000  Class C  shares,  each  being  shares of
    beneficial interest having a par value of $0.001 per shares.

(10)  May 16, 2005, which registered  50,000,000 Class A shares and 100,000,00
    Class C shares,  each being  shares of  beneficial  interest  having a par
    value of $0.001 per shares.
(11)  May 18, 2005, which registered  12,674,506 Class A shares and 40,941,078
    Class C shares,  each  being  share of  beneficial  interest  having a par
    value of $0.001 per shares.


         CALCULATION OF REGISTRATION FEE UNDER SECURITIES ACT OF 1933

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----------------                 Proposed        Proposed
                 Amount Being    Maximum Price   Maximum         Amount of
Title         of Registered      Per Unit        Aggregate       Registration
Securities                                       Offering Price  Fee
Being Registered
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A Shares   N/A

of Beneficial
Interest (par
value $.001 per
share)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B Shares   N/A
of Beneficial
Interest (par
value $.001 per
share)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class C Shares   N/A

of Beneficial
Interest (par
value $.001 per
share)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class Y Shares   50,000,000      $9.57           478,500,000     $56,319.45(1)
of Beneficial
Interest (par
value $.001 per
share)

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

(1)   Calculated  pursuant  to Rule  457(d)  based on the net asset  value per
   share of $9.57 on October 3, 2005.


This  Registration  Statement  carries forward the 237,774,506 Class A shares,
96,000,000  Class B  shares  and  319,841,078  Class C  shares  of  beneficial
interest,  par value $0.001 per share,  of Registrant  previously  registered,
for  which an  aggregate  of  $291,128.51,  $162,039.80,  and  $446,722.87  of
registration fees were paid to register shares of the respective classes.

(OppenheimerFunds logo)
Oppenheimer
Senior Floating Rate Fund

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Prospectus dated November 21, 2005

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Oppenheimer Senior Floating Rate Fund seeks as high a level of current
income and preservation of capital as is consistent with investing
primarily in senior floating rate loans and other debt securities. The
Fund seeks to achieve its goal primarily by investing at least 80% of its
net assets (plus the amount of borrowings for investment purposes) in
floating or adjustable rate senior loans that are made to U.S. and
foreign borrowers. Under normal market conditions the Fund can invest the
remainder of its net assets in other securities. The Fund is a
diversified closed-end management investment company that continuously
offers its shares.

The Fund can invest up to 100% of its assets in Senior Loans and other debt
securities that are high risk securities rated below investment grade or in
unrated securities deemed to be below investment grade. These investments
may be considered speculative and have greater risks than investment grade
securities, including the possible loss of income and principal. Many of the
Fund's investments are illiquid. Please refer to "Main Risks of Investing in
the Fund."

This Prospectus sets forth concisely the information about the Fund that
a prospective investor ought to know before investing. It also contains
important information about how to buy shares of the Fund and other
account features. Please read this Prospectus carefully before you
invest and keep it for future reference about your account.

The Fund's Statement of Additional Information dated November 21, 2005, which
the Fund may amend from time to time, has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. The Table of Contents of the Statement of Additional Information
appears on page ___ of this Prospectus. For a free copy of the Statement of
Additional Information, call your investment representative or call the
Fund's Distributor at 1.800.CALL OPP (225.5677), visit our website at
www.oppenheimerfunds.com or write to the Distributor at the address on the
back cover.

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

The Fund has four classes of shares: Class A shares, Class B
shares, Class C and Class Y shares. Please refer to "How to Buy Shares."
As a business trust, the Fund is authorized to issue an unlimited number
of shares of each Class and to date has registered 237,774,506 Class A
shares, 96,000,000 Class B shares, 319,841,078 Class C shares and
50,000,000 Class Y shares.

Class A shares are sold at their offering price, which is normally
net asset value plus an initial sales charge. Class A shares are subject
to an annual service fee and an Early Withdrawal Charge may apply. Class
B and Class C shares are offered without any initial sales charge, but
those shares are subject to an annual service fee, an annual asset-based
distribution fee, and an Early Withdrawal Charge. Certain waivers of the
Early Withdrawal Charges may apply. Class Y shares are offered only to
certain institutional investors that have a special agreement with the
Distributor. The price of the Fund's shares of each Class will fluctuate,
depending on the respective net asset values per share. The Distributor
will pay sales concessions to participating dealers from its own assets
at the time of sale.

The Fund intends to invest the net proceeds of the sale of its
shares in portfolio securities as soon as is practicable after receipt of
the proceeds.

No trading market currently exists for the Fund's shares and shares are not
redeemable daily. The Fund does not currently anticipate that a secondary
market will develop for its shares. As a result, you should consider the
Fund's shares to be an illiquid investment. This means that you may not be
able to readily sell your shares. See "Illiquidity of the Fund's Shares" and
"Periodic Repurchase Offers."

To provide shareholders with liquidity, the Fund will make quarterly
Repurchase Offers for a percentage (between 5% and 25%) of the Fund's shares
at net asset value each January, April, July and October. There is no
guarantee that the Fund will be able to repurchase all shares that are
tendered in a Repurchase Offer. See "Periodic Repurchase Offers."

The Fund has received an exemptive order from the Securities and
Exchange Commission with respect to the Fund's distribution fee arrangements,
Early Withdrawal Charges and multi-class structure. As a condition of that
order, the Fund is required to comply with certain regulations that would not
otherwise apply to the Fund.

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

CONTENTS

A B O U T T H E F U ND

Fees and Expenses of the Fund
A Brief Overview of the Fund
Financial Highlights
Main Risks of Investing in the Fund
Use of Proceeds of the Fund's Offering
The Fund and Its Investments
Performance Information
How the Fund is Managed

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

How to Buy Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans
Periodic Repurchase Offers
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Table of Contents of the Statement of Additional Information
Appendix A - Ratings Definitions

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

Fees and Expenses of the Fund

The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services. Those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset
values per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as Early Withdrawal Charges
and account transaction charges.

These tables are provided to help you understand the fees and expenses you
may bear directly (shareholder transaction expenses) or indirectly (annual
expenses) if you buy and hold shares of the Fund. The numbers shown are
based on the Fund's expenses during its fiscal year ended July 31, 2005
except that the numbers for Class Y shares, which is a new class, are based
on the Fund's anticipated expenses for Class Y shares during the upcoming
year.

Shareholder Transaction Expenses

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Class A shares Class B shares Class C shares Class Y shares

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Sales Charge (Load) on 3.50% None None None
purchases
-------------------------
(as % of offering
price)(1)

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Dividend Reinvestment None None None None
Fees

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Early Withdrawal
Charges (Load) (as % of None(2) 3%(3) 1%(4) None
the lower of the
original purchase price
or repurchase price)

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Annual Expenses
(as a % of average annual net assets attributable to shares)

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Class A shares Class B shares Class C shares Class Y shares

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Management Fees(5) 0.64% 0.64% 0.64% 0.64%

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Distribution and/or 0.24% 0.75%(6) 0.75%(6) None
Service Fees

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Other Expenses(7) 0.21% 0.27% 0.21% 0.21%

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Total Annual Expenses 1.09% 1.66% 1.60% 0.85%

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Expenses may vary in future years.
1. If a securities dealer handles your purchase transaction, it may charge
you a fee.
2. An Early Withdrawal Charge may apply to redemptions of investments of
$1 million or more ($500,000 for certain retirement plan accounts) of
Class A shares. See "How to Buy Shares" for details.
3. The 3% Early Withdrawal Charge applies to shares repurchased in the
first year after you bought them. The Early Withdrawal Charge is 2.0% for
shares repurchased during the second year after purchase, 1.5% during the
third and fourth years, and 1% during the fifth year. There is no Early
Withdrawal Charge after the fifth anniversary of purchase. Class B shares
automatically convert to Class A shares 72 months after purchase. See "How
to Buy Shares" for details.
4. The Early Withdrawal Charge applies to shares repurchased within 12 months
after you bought them. See "How to Buy Shares" for details.

5. The management fee is based on a percentage of the Fund's average annual
net assets and is shown without giving effect to a voluntary reduction by
the Manager of 0.20% of the management fee annually, which may be
withdrawn or amended at any time. After that waiver, the management fee
was 0.44% for each class of shares and the Total Annual Expenses were
0.89% for Class A, 1.46% for Class B, 1.40% for Class C.

6 Under the Fund's Distribution Plans, Class B shares and Class C shares pay
an annual asset-based sales charge of 0.50% of average daily net assets
(the Board of Trustees can increase the fee to 0.75%). Class A shares are
not subject to any asset-based sales charges. Each class of shares is
subject to an annual service fee of up to 0.25% of average annual net
assets. Because of the asset-based sales charge, long-term shareholders
of Class C may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of
Securities Dealers, Inc.

7. "Other Expenses" include transfer agent fees, custodial expenses, and
accounting and legal expenses the Fund pays. The Transfer Agent has
voluntarily undertaken to the Fund to limit the transfer agent fees to
0.35% per annum of all classes. That undertaking may be amended or
withdrawn at any time. For the Fund's fiscal year ended July 31, 2005, the
transfer agent fees did not exceed the expense limitation described above.
For Class Y shares, "Other Expenses" are estimates based on the Manager's
projections of what those expenses will be during the first fiscal year
that Class Y shares are offered.
8. Class Y shares were not offered for sale during the Fund's last fiscal
year. The expenses shown are based on the expected expenses for Class Y
shares for the current fiscal year.

EXAMPLES. These examples are intended to help you understand the cost of
investing in the Fund. The examples assume that you invest $1,000 in a class
of shares of the Fund for the time periods indicated and reinvest your
dividends and distributions.

The first example assumes that you keep your shares. The second
example assumes that your shares are repurchased by the Fund at the end of
those periods. Both examples also assume that your investment has a 5%
return each year and that a class's operating expenses remain the same as the
expenses in the Annual Expense table above. Based on these assumptions your
expenses would be as follows:

--------------------------------------------------------------------------------
Assuming you do not
tender shares for 1 Year 3 Years 5 Years 10 Years
repurchase by the Fund:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Class A shares $46 $68 $93 $163

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Class B shares $47 $67 $100 $168(1)

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Class C shares $26 $51 $87 $190

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Class Y shares $9 $27 $48 $110

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--------------------------------------------------------------------------------
Assuming you tender
your shares for
repurchase by the Fund 1 Year 3 Years 5 Years 10 Years
on the last day of the
period and an Early
Withdrawal Charge
applies:
--------------------------------------------------------------------------------
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Class A shares $46 $68 $93 $163

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Class B shares $17 $52 $90 $168(1)

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Class C shares $16 $51 $87 $190

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Class Y shares $9 $27 $48 $110

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In the first example, the expenses include the initial sales charge for Class
A, but the expenses of Class B and Class C do not include the Early
Withdrawal Charges. In the second example, expenses include the initial
sales charge for Class A and the applicable Class B or Class C Early
Withdrawal Charges.
1. Class B expenses for years seven through 10 are based on Class A
expenses, since Class B shares automatically convert to Class A shares 72
months after repurchase.

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The examples should not be considered a representation of future expenses,
and actual expenses may be greater or less than those shown.
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A Brief Overview of the Fund

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This section summarizes information that is discussed in more detail later in
this Prospectus. You should carefully read the more detailed information.

For a detailed discussion of risks of investing in the Fund, please refer to
"Main Risks of Investing in the Fund," on page ___.

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What is the Fund? The Fund is a diversified closed-end, management
investment company, organized as a Massachusetts business trust on June 2,
1999.

What is the Fund's Investment Objective? The Fund seeks as high a level of
current income and preservation of capital as is consistent with investing
primarily in senior floating rate loans and other debt securities.

What does the Fund Invest In? Under normal circumstances, the Fund will
invest at least 80% of its net assets plus the amount of any Fund borrowings
for investment purposes in floating (sometimes referred to as "adjustable")
rate loans made to U.S. and foreign borrowers that are corporations,
partnerships or other business entities. Although this is not a fundamental
policy, the amount so invested will not be changed by the Fund's Board of
Trustees without providing shareholders at least 60 days prior notice of the
change. While most of these loans will be collateralized, the Fund can also
under normal circumstances invest up to 10% of its net assets (plus the
amount of borrowings for investment purposes) in uncollateralized floating
rate loans. Collectively, these investments are referred to as "Senior Loans"
in this Prospectus. These Senior Loans pay interest at rates that float
above (or are adjusted periodically based on) a benchmark that reflects
current interest rates, such as the prime rate offered by one or more major
U.S. banks (referred to as the "Prime Rate"), the certificate of deposit
("CD") rate or the London Inter-Bank Offered Rate (referred to as "LIBOR").

The Fund can invest the remainder of its net assets in cash and other
securities, such as unsecured floating rate loans, secured or unsecured
fixed-rate loans, collateralized loan obligations, floating rate notes or
bonds, investment-grade short-term debt obligations and repurchase
agreements, under normal circumstances. The Fund can use derivative
instruments, including options, futures contracts, asset-backed securities,
interest rate swaps, credit default swaps and total return swaps, to hedge
its portfolio. The Fund can borrow money and use other techniques to manage
its cash flow, to finance repurchase offers, or to purchase assets, a
technique referred to as "leverage."

The Fund will principally invest in debt obligations, including Senior
Loans, that are rated "B" or higher by one or more of the ratings
organizations or, if unrated, determined by the Manager to be of comparable
quality, although, the Fund can invest up to 15% of its net assets in
investments rated below "B." See "Does The Fund Have Credit Quality
Standards for Senior Loans?" below. Many of the Fund's investments are below
investment grade and involve high risk, as described in "Special Risks of
Lower-Grade Securities," below.

What are the Main Risks of Investing in the Fund? The Fund is subject to a
number of investment risks, described in "Main Risks of Investing in the
Fund," below. In summary, the Fund's investments in debt securities are
subject to credit risks, including the risk that the borrower will not pay
interest and will not repay the principal amount of the obligation in a
timely manner. Most, but not all, of the Fund's investments in Senior Loans
must be collateralized, however, the Fund's other investments need not be
collateralized. The risk of default is greater in the case of the
obligations below investment grade in which the Fund can invest without
limit. In the event of a default, the Fund would not have the ability to
collect on any collateral for an uncollateralized loan. Many Senior Loans
and many of the Fund's other investments are illiquid, which may make it
difficult for the Fund to value them or dispose of them at an acceptable
price when it wants to.

There are other risks of investing in the Fund. The Fund's
investments, to some degree, may be subject to interest rate risk, the risk
of fluctuation in price from changes in prevailing interest rates, although
investments in floating rate loans are expected to be less affected by
changes in short-term interest rates than fixed-rate debt securities. The
Fund can borrow for investment leverage, which can subject it to greater
expenses, and greater volatility in its share prices, than funds that do not
borrow.

Unlike an open-end mutual fund, the Fund does not offer to redeem its shares
daily. No market currently exists for the Fund's shares and the Fund does
not anticipate that a secondary market will develop for its shares. The Fund
does not intend to list its shares on any national securities exchange or
arrange for the quotation of the prices of its shares on any over-the-counter
market. Even though the Fund will make quarterly tender offers to repurchase
a portion of its shares to try to provide liquidity to shareholders, you
should consider an investment in the Fund to be illiquid.

Who is the Fund Designed For? The Fund is designed for investors seeking
high current income and relative stability of principal from a fund that will
invest primarily in senior loan obligations that may have higher risks than
conventional debt securities. The Fund's investment strategy allows investors
to participate in the corporate loan market, which may be difficult for
individuals to invest in directly because Senior Loans have very large
minimum investments, typically $1 million or more. Since the Fund's income
level will fluctuate, it is not designed for investors needing an assured
level of current income. The Fund does not seek capital appreciation.

The Fund is designed as a long-term investment and not as a short-term
trading vehicle. It may be appropriate for a portion of an investor's
overall investment portfolio. However, the Fund is not a complete investment
program. Because of the limited liquidity of Fund shares through Repurchase
Offers, the Fund may not be an appropriate investment for retirement plans
whose owners need to make periodic distributions at a fixed level. The Fund
is not an appropriate investment for investors needing ready access to their
money, since Fund shares are not redeemable daily and are not traded in a
secondary market.

How Can You Buy Shares? The Fund's Distributor, OppenheimerFunds
Distributor, Inc., offers the Fund's shares in a continuous public offering
through securities dealers. The offering price for shares will be equal to
the net asset value per share of the respective class plus the applicable
sales charge calculated each regular business day. The minimum initial
investment is $1,000 ($500 for retirement accounts). Minimum subsequent
investments are $50.

The Distributor reserves the right to waive any minimum investment
requirements and to refuse any order for the purchase of shares. The
Distributor may suspend the continuous offering of shares at any time.

How Do the Fund's Repurchase Offers Provide Liquidity? The Fund intends to
make quarterly offers to repurchase a portion of its shares from
shareholders. Each quarter the Fund will offer to repurchase between 5% and
25% of its outstanding shares. In response to each Repurchase Offer,
shareholders may choose to tender some or all of their shares to the Fund for
repurchase. Shares accepted for repurchase will be repurchased at a price
equal to the net asset value per share. If more shares are tendered than the
amount of the Repurchase Offer, the repurchases will be pro-rated. There can
be no assurance that the Fund will be able to repurchase all shares that you
tender. Please refer to "Periodic Repurchase Offers" below for details. The
Fund does not currently charge a repurchase fee, but the Board of Trustees
could impose that type of fee in the future, to help cover Fund expenses.

Are There Any Sales Charges for Investing in the Fund? If you buy Class A
shares, you pay an initial sales charge (on investments up to $1 million for
regular accounts or lesser amounts for certain retirement plans). The amount
of that sales charge will vary depending on the amount you invest. The sales
charge rates are listed in "How Can You Buy Class A Shares?" below.

How Early Withdrawal Charges Affect Repurchases. If you tender shares for
repurchase and if your shares are repurchased by the Fund during the
applicable holding period for the class of shares, in some cases you may be
subject to Early Withdrawal Charges that apply to Class A, Class B and Class
C shares:
o If you acquire Class A shares of the Fund that are subject to Class A
share's Early Withdrawal Charge or by exchanging Class A shares of
another Oppenheimer fund that were still subject to that other
fund's Class A contingent deferred sales charge at the time you
exchanged them, they will become subject to the Fund's Class A Early
Withdrawal Charge. If any of those Class A shares of the Fund are
repurchased within 18 months of the original purchase date of the
shares of the fund from which they were exchanged, the Fund's Class
A Early Withdrawal Charge of 1.0% will apply (explained in "How Can
You Buy Class A Shares?" below).
o If your Class B shares are repurchased by the Fund within five years of
the beginning of the month in which you originally purchased them,
the Early Withdrawal Charge is 3% for repurchases during the first
year; 2% during the second year; 1.5% during the third and fourth
years; and 1.0% during the fifth year. There is no Early Withdrawal
Charge for repurchases after five years.
o If your Class C shares are repurchased by the Fund within 12 months of
the beginning of the month in which you originally purchased them,
you will pay a 1.0% Early Withdrawal Charge.

The Early Withdrawal Charge is based on the lesser of the then current
net asset value or the original purchase price of the repurchased shares.
The Early Withdrawal Charge does not apply to shares purchased by reinvesting
dividends or capital gains distributions. Please refer to "How to Buy Shares"
and "Periodic Repurchase Offers." The Fund may waive the Early Withdrawal
Charge in specified transactions and for certain classes of investors
described in Appendix B to the Statement of Additional Information.

Who Manages the Fund? OppenheimerFunds, Inc. is the Fund's investment
advisor (and is referred to as the "Manager" in this Prospectus). The Fund's
portfolio managers are employed by the Manager.

Financial Highlights

FINANCIAL HIGHLIGHTS


CLASS A     YEAR ENDED JULY 31,                         2005          2004       2003       2002         2001
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PER SHARE OPERATING DATA
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Net asset value, beginning of period              $     9.56     $    9.24    $  9.03     $  9.51    $   9.96
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Income (loss) from investment operations:
Net investment income                                    .53 1         .49        .55         .54         .80
Net realized and unrealized gain (loss)                 (.02)          .30        .14        (.50)       (.46)
                                                  ------------------------------------------------------------
Total from investment operations                         .51           .79        .69         .04         .34
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Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.53)         (.47)      (.48)       (.52)       (.79)
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Net asset value, end of period                    $     9.54     $    9.56    $  9.24     $  9.03    $   9.51
                                                  ============================================================

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TOTAL RETURN, AT NET ASSET VALUE 2                      5.45%         8.78%      7.91%       0.44%       3.52%
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RATIOS/SUPPLEMENTAL DATA
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Net assets, end of period (in thousands)          $1,038,746     $ 376,001    $44,028     $33,905    $ 44,985
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Average net assets (in thousands)                 $  776,029     $ 146,224    $35,298     $41,195    $ 41,457
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.63%         5.56%      6.23%       5.84%       8.11%
Total expenses                                          1.09%         1.19%      1.39%       1.42%       1.20%
Expenses after payments and waivers and
reduction to custodian expenses                         0.89%         0.99%      1.19%       1.22%       1.00%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%         9%         92%         47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

2.     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 repurchase at the net asset value calculated on the last business day of the fiscal period. 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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

   37 | OPPENHEIMER SENIOR FLOATING RATE FUND

FINANCIAL HIGHLIGHTS Continued


CLASS B  YEAR ENDED JULY 31,                            2005          2004        2003        2002       2001
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $     9.56     $    9.24    $   9.04    $   9.51   $   9.97
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .48 1         .46         .52         .49        .76
Net realized and unrealized gain (loss)                 (.02)          .28         .11        (.49)      (.47)
                                                  ------------------------------------------------------------
Total from investment operations                         .46           .74         .63          --        .29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.48)         (.42)       (.43)       (.47)      (.75)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $     9.54     $    9.56    $   9.24    $   9.04   $   9.51
                                                  ============================================================

--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      4.86%         8.18%       7.21%       0.05%      2.96%
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $  344,337     $ 277,043    $157,057    $176,760   $220,328
--------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $  327,996     $ 201,260    $163,238    $206,869   $177,025
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.06%         5.04%       5.70%       5.33%      7.56%
Total expenses                                          1.66%         1.76%       1.93%       1.92%      1.64%
Expenses after payments and waivers and
reduction to custodian expenses                         1.46%         1.56%       1.73%       1.72%      1.44%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%          9%         92%        47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

   38 | OPPENHEIMER SENIOR FLOATING RATE FUND


CLASS C      YEAR ENDED JULY 31,                        2005          2004        2003        2002       2001
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $     9.57     $    9.25    $   9.04    $   9.51   $   9.97
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .48 1         .45         .52         .50        .76
Net realized and unrealized gain (loss)                 (.02)          .29         .12        (.50)      (.47)
                                                  ------------------------------------------------------------
Total from investment operations                         .46           .74         .64          --        .29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.48)         (.42)       (.43)       (.47)      (.75)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $     9.55     $    9.57    $   9.25    $   9.04   $   9.51
                                                  ============================================================

--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      4.92%         8.21%       7.35%       0.05%      2.96%
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $1,350,656     $ 615,744    $207,433    $236,111   $350,126
--------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $1,065,783     $ 346,347    $210,987    $303,123   $323,725
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.11%         5.05%       5.73%       5.37%      7.60%
Total expenses                                          1.60%         1.71%       1.91%       1.92%      1.65%
Expenses after payments and waivers and
reduction to custodian expenses                         1.40%         1.51%       1.71%       1.72%      1.45%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%          9%         92%        47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

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



Main Risks of Investing in the Fund

All investments carry risks to some degree.  The Fund's investments in Senior
Loans and other debt securities are subject to changes in their value from a
number of factors, described below. There is also the risk that poor security
selection by the Manager will cause the Fund to underperform other funds
having a similar objective.

Credit Risk.  Debt securities are subject to credit risk.  Credit risk
relates to the ability of the borrower under a Senior Loan or the issuer of a
debt security to make interest and principal payments on the loan or security
as they become due.  If the borrower or issuer fails to pay interest, the
Fund's income might be reduced.  If the borrower or issuer fails to repay
principal, the value of that security and the net asset values of the Fund's
shares might be reduced.  A downgrade in an issuer's credit rating or other
adverse news about an issuer can reduce the value of that issuer's
securities. The Fund's investments in Senior Loans and other debt securities,
particularly those below investment grade, are subject to risks of default.

      For the Fund's collateralized investments, lenders may have difficulty
liquidating the collateral or enforcing their rights under the terms of the
loans if a borrower defaults. Collateral may be insufficient or set aside by
a court. Also, the Fund can invest part of its assets in loans and other debt
obligations that are not collateralized.  See "What Are the Risks of Default
on Senior Loans?" below.


Interest Rate Risk.  In general, the value of a debt security changes as
prevailing interest rates change. For fixed-rate debt securities, when
prevailing interest rates fall, the values of already-issued debt securities
generally rise.  When prevailing interest rates rise, the values of
already-issued debt securities generally fall, and they may sell at a
discount from their face amount.


      The Senior Loans in which the Fund invests have floating or adjustable
interest rates.  For that reason, the Manager expects that when interest
rates change, the values of Senior Loans will fluctuate less than the values
of fixed-rate debt securities, and that the net asset values of the Fund's
shares will fluctuate less than the shares of funds that invest mainly in
fixed-rate debt obligations.  However, the interest rates of some Senior
Loans adjust only periodically.  Between the times that interest rates on
Senior Loans adjust, the interest rates on those Senior Loans may not
correlate to prevailing interest rates.  That will affect the value of the
loans and may cause the net asset values of the Fund's shares to fluctuate.

Borrowing.  The Fund can borrow money in an amount up to 33 1/3% of its total
assets (after counting the assets purchased with the amount borrowed).  The
Fund may borrow if necessary to obtain short-term credit to allow it to
repurchase shares during Repurchase Offers, to manage cash flows, and to fund
additional purchase commitments under Senior Loans. The Fund may also borrow
to acquire additional investments (a technique known as "leverage").  To the
extent that the costs of borrowing exceed the return on the investments
purchased with borrowed amounts, the Fund's returns will be adversely
affected.  Borrowing for leverage also increases the risk of volatility in
the net asset values of the Fund's shares.

      Borrowing may entail other risks. Lenders to the Fund will have
preference over the Fund's shareholders as to payments of interest and
repayments of principal on amounts that the Fund borrows and preference to
the Fund's assets in the event of its liquidation.  Lending terms may limit
the Fund's ability to pay dividends to shareholders.  Lending agreements may
also grant the lenders certain voting rights if the Fund defaults in the
payment of interest or principal on the loan.

Limited Secondary Market for Senior Loans. Due to restrictions on transfers
in loan agreements and the nature of the private syndication of Senior Loans,
many Senior Loans are not as easily purchased or sold as publicly-traded
securities.  While the secondary market for Senior Loans is growing among
institutional investors, many Senior Loans are illiquid, which means that the
Fund may be limited in its ability to sell those Senior Loans at an
acceptable price when it wants to in order to generate cash, avoid losses or
to meet repurchase requests.

      Highly leveraged Senior Loans and Senior Loans in default also may be
less liquid than other Senior Loans.  If the Fund voluntarily or
involuntarily sold those types of Senior Loans, it might not receive the full
value it expected. The market for illiquid securities is more volatile than
the market for liquid securities and it may be more difficult to obtain
accurate valuations for the Fund's investments. The inability to dispose of
assets may make it difficult for the Fund to raise the money needed to
repurchase shares in a Repurchase Offer, causing it to resort to borrowing to
meet its commitments.  The Board of Trustees will consider the liquidity of
the Fund's portfolio securities to determine whether to suspend or postpone a
Repurchase Offer.

Possible Limited Availability of Senior Loans. Direct investments in Senior
Loans and, to a lesser degree, investments in participation interests in or
assignments of Senior Loans may be limited.  There is a risk that the Fund
may not be able to invest a sufficient amount in Senior Loans at all times to
meet its 80% asset investment requirement.  The limited availability may be
due to a number of factors.  There may be more willing purchasers of direct
loans than there are willing purchasers of participation interests or
assignments.  Direct lenders may allocate only a small number of Senior Loans
to new investors, including the Fund.  There may be fewer loans available for
investment that meet the Fund's credit standards, particularly in times of
economic downturns.  Also, lenders or Agents may have an incentive to market
the less desirable Senior Loans to investors such as the Fund while retaining
attractive loans for themselves.  This would reduce the amount of attractive
investments for the Fund.  If market demand for Senior Loans increases, the
interest paid by Senior Loans that the Fund holds may decrease.

Special Risks of Lower-Grade Securities. The Fund can invest up to 100% of
its total assets in Senior Loans and other securities that are below
investment grade. Those are loans or securities rated below BBB- by Standard
& Poor's Rating Services ("S&P") or Baa3 by Moody's Investors Service, Inc.,
("Moody's") or that have comparable ratings by another rating organization,
or, if unrated, that are considered by the Manager to be of comparable
quality. Additionally, the Fund can invest up to 15% of the Fund's net assets
in debt obligations, including Senior Loans, rated below "B" (at the time the
Fund buys them) by a rating organization such as S&P or Moody's, or, if
unrated, determined by the Manager to be of comparable quality. Some of these
securities may be in default at the time the Fund buys them which means that
the credit risks of these securities is higher. The Fund may invest in
obligations of borrowers in connection with a restructuring under Chapter 11
of the U.S. Bankruptcy Code if the obligations meet the credit standards of
the Manager. Debt securities and loans below investment grade tend to offer
higher yields than investment-grade securities and loans to compensate
investors for the higher risk of default, and are commonly referred to as
"high risk securities" or, in the case of bonds, "junk bonds."

      To the extent that the Fund holds lower-grade securities, its net asset
values are likely to fluctuate more, especially in response to economic
downturns.  A projection of an economic downturn or a period of rising
interest rates, for example, could cause a decline in the prices of
lower-grade securities. In addition, the secondary market for lower-grade
securities generally is less liquid than the market for investment-grade
bonds.  The lack of liquidity could adversely affect the price at which the
Fund could sell a lower-grade security.  See "Does The Fund Have Credit
Quality Standards for Senior Loans?" below.

Illiquidity of Fund Shares. The Fund is a closed-end investment company
designed primarily for long-term investors and not as a trading vehicle.  The
Fund does not intend to list its shares on any national securities exchange
or arrange for their quotation on any over-the-counter market.  The Fund's
shares are not readily marketable, and you should consider them to be
illiquid.  For these reasons, the Fund has adopted a policy to offer each
quarter to repurchase between 5% and 25% of the shares outstanding. There is
no guarantee that you will be able to sell all the shares that you want to
sell during a Repurchase Offer. See "Periodic Repurchase Offers" and "How to
Buy Shares," below.

Concentration.  Although the Fund cannot invest 25% or more of its total
assets in securities or obligations of borrowers in a single industry, the
Fund may look to the creditworthiness of the agent bank and other
intermediate participants in a Senior Loan, in addition to the borrower.
That is because it may be necessary to assert through the agent bank or
intermediate participant any rights that may exist under the loan against the
borrower if the borrower defaults. Those parties typically are commercial
banks, thrift institutions, insurance companies and finance companies (and
their holding companies).  Because the Fund regards the "issuer" of a Senior
Loan as including the borrower under the loan agreement, the agent bank and
any intermediate participant, the Fund may invest 25% or more of its total
assets in securities of issuers in the group of industries in the financial
services sector, including banks, bank holding companies, commercial finance,
consumer finance, diversified financial, insurance, savings and loans and
special purpose financial.  The Fund will be subject to the risks associated
with financial institutions in those industries.

      Companies in the financial services industries may be more susceptible
to particular economic and regulatory events such as fluctuations in interest
rates, changes in the monetary policy of the Board of Governors of the
Federal Reserve System, governmental regulations concerning those industries
and affecting capital raising activities and fluctuations in the financial
markets.







Risks of Foreign Investing.   The Fund can invest up to 20% of its total
assets in Senior Loans and unsecured loans that are made to foreign
borrowers, or other debt securities issued by them.  The Fund's foreign
Senior Loans must be dollar-denominated, and interest and principal payments
must be payable in U.S. dollars, which may reduce risks of currency
fluctuations on the values of those Senior Loans.  However, foreign
obligations have risks not typically involved in domestic investments.

      Foreign investing can result in higher transaction and operating costs
for the Fund.  Foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. issuers are subject to.  The value of
foreign investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes, delays
in settlement of transactions, changes in governmental economic or monetary
policies in the U.S. or abroad, or other political and economic factors.
Other risks are described in "Foreign Securities," below.

How Risky is the Fund Overall?      The risks summarized above collectively
form the overall risk profile of the Fund and can affect the value of the
Fund's investments, its investment performance and its net asset values per
share.  Particular investments and investment strategies also have risks.
These risks mean that you can lose money by investing in the Fund.  When you
sell your shares, they may be worth more or less than what you paid for them.
There is no assurance that the Fund will achieve its investment objective.

      Investing in a closed-end fund like the Fund presents the risk that you
may not be able to dispose of your investment readily when you want to, even
though the Fund will make quarterly Repurchase Offers for a portion of its
shares.  The Fund's investment risks mean that the Fund's share prices can go
up or down, despite the expectation that investments in adjustable rate
Senior Loans may reduce short-term price volatility. The Fund's other fixed
income investments are also subject to short-term price volatility.  The
Fund's emphasis on investments in loans of issuers that are below investment
grade exposes the Fund to the credit risks of the borrowers who might not
meet their debt service requirement in a timely fashion, which could reduce
the Fund's income and subject it to losses of principal value as well, even
though most of the Fund's investments are collateralized.  The illiquidity of
the loan market poses greater risks than are present in funds that invest in
more liquid securities.

      The Fund seeks to maintain relatively stable net asset values, but has
significantly more risks than investment grade bond funds or money market
funds.  The Fund is expected to have less share price volatility than bond
funds emphasizing investments in fixed-rate debt investments.  The Fund is
designed for long-term investors.

Use of Proceeds of the Fund's Offering

The Fund will use the proceeds of the offering of its shares to invest in
accordance with its investment objective and policies. The investment of the
proceeds it receives from the sale of its shares in Senior Loans and other
debt securities will depend upon the amount and timing of proceeds available
to the Fund as well as the availability of Senior Loans and other debt
securities.  At times, the Fund may invest a substantial portion of its
assets in short-term money market obligations and other high-quality
short-term debt securities.  That may occur to a greater extent during
repurchase periods, to maintain sufficient liquidity to meet repurchase
requests, if the Fund chooses not to sell investments or borrow money to meet
its obligations. This may result in a lower level of income for the Fund
during those periods and possibly more volatility in the Fund's share prices.

The Fund and Its Investments

What is the Fund's Investment Objective?  The Fund seeks as high a level of
current income and preservation of capital as is consistent with investing
primarily in senior floating rate loans and other debt obligations.

What Are the Fund's Principal Investment Policies?  The allocation of the
Fund's portfolio among the different types of permitted investments will
vary over time based upon the evaluation of economic and market trends by
the Manager. Under normal market conditions:
o     The Fund will invest at least 80% of its net assets plus the amount of
         any Fund borrowings for investment purpose in Senior Loans.
o     While most of those loans will be collateralized, the Fund can also
         under normal market circumstances invest up to 10% of its net assets
         (plus the amount of any borrowings for investment purposes) in
         uncollateralized floating rate loans.
o     The Fund can invest up to 15% of the Fund's net assets in debt
         obligations, including Senior Loans, rated below "B" (at the time
         the Fund buys them) by a rating organization such as S&P or Moody's,
         or, if unrated, determined by the Manager to be of comparable
         quality.
o     The Fund may invest the remainder of its assets in other investments,
         including:

o     unsecured floating rate loans
o     fixed or floating rate bonds or notes

o     secured or unsecured short-term investment-grade debt obligations
o     debt obligations (other than senior loans) of foreign issuers and

            foreign governments (but not in emerging markets)
o     secured or unsecured fixed-rate loans and other debt obligations
o     equity securities, including stocks and warrants
o     repurchase agreements
o     asset-backed securities, such as collateralized loan obligations
o     cash and cash equivalents
o     credit default swaps
o     derivative instruments, such as options, currency and interest rate

            swap agreements, futures and structured investments, to hedge the
            Fund's portfolio.

      These investments and strategies are described in detail below.

How Do the Portfolio Managers Decide What Investments to Buy or Sell?  In
selecting investments for the Fund, the Fund's portfolio managers evaluate
overall investment opportunities and risks among the types of investments the
Fund can hold.  They analyze the credit standing and risks of borrowers whose
loans or debt securities they are considering for the Fund's portfolio.  They
evaluate information about borrowers from their own research or research
supplied by agent banks or other sources. They select only those Senior Loans
made to borrowers and debt securities issued by borrowers that they believe
are likely to pay the interest and repay the principal on their indebtedness
when it becomes due.  The portfolio managers consider many factors, including
among others,
o     the borrower's past and expected future financial performance
o     the experience and depth of the borrower's management
o     the collateral for the loan or other debt security in which the Fund
         proposes to invest
o     the borrower's tangible assets and cash flows
o     the credit quality of the debt obligations of the agent bank servicing
         the loan and other intermediaries imposed between the borrower and
         the Fund, to assure the indebtedness of those agents and
         intermediaries is investment grade.

Can the Fund's Investment Objective and Policies Change?  The Fund's
Board of Trustees can change non-fundamental investment policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus.  Fundamental policies cannot be changed
without the approval of a "majority" (as defined in the Investment
Company Act of 1940) of the Fund's outstanding voting shares. The Fund's
investment objective is not a fundamental policy.  However, the objective
will not be changed without prior notice to shareholders. Some of the
Fund's investment restrictions that are fundamental policies are listed in
the Statement of Additional Information.  An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.

Senior Loans.  The Senior Loans the Fund invests in are loans made to U.S. or
foreign corporations, partnerships or other business entities (referred to as
"borrowers"). Senior Loans are often issued in connection with
recapitalizations, acquisitions, leveraged buyouts, and refinancings of
borrowers. Most, but not all, of the Fund's investments in Senior Loans must
be collateralized, and the Fund's other investments need not be
collateralized, as discussed below.

      What Are Floating or Adjustable Interest Rates? Senior loans are debt
obligations on which interest is payable at rates that adjust periodically,
using a base rate plus a premium or spread above the base rate.  The base
rate usually is a benchmark that "floats" or changes to reflect current
interest rates, such as:
o     the prime rate offered by one or more major U.S. banks (referred to as
         the "Prime Rate"), or
o     the London Inter-Bank Offered Rate ("LIBOR"), or
o     the certificate of deposit ("CD") rate or other base rate used by
         commercial lenders.

      The applicable rate is defined in the loan agreement. Borrowers tend to
select the base lending rate that results in the lowest interest cost, and
the rate selected may change from time to time. If the benchmark interest
rate on a Senior Loan changes, the rate payable to lenders under the Senior
Loan will, in turn, change at the next scheduled adjustment date.  If the
benchmark rate increases, the Fund would earn interest at a higher rate on
that Senior Loan, but after the adjustment date.  If the benchmark rate
decreases, the Fund would earn interest at a lower rate on that Senior Loan
after the adjustment date.

      Interest rates may adjust daily, monthly, quarterly, semi-annually or
annually.  The Fund does not intend to invest more than 5% of its total
assets in Senior Loans with interest rates that adjust less often than
semi-annually. The Fund may use interest rate swap agreements and other
hedging practices to shorten the effective interest rate adjustment period of
a Senior Loan.  Because investments in Senior Loans with longer interest rate
adjustment periods may increase fluctuations in the Fund's net asset values
as a result of interest rate changes, the Fund will attempt to maintain a
dollar-weighted average time until the next interest rate adjustment of 90
days or less for its portfolio of Senior Loans.

      How Are Senior Loans Created? Senior Loans typically are negotiated
between a borrower and one or more commercial banks or other financial
institutions as lenders.  The lenders are represented by one or more
lenders acting as agent of all of the lenders.  The Senior Loans then are
syndicated among a group of commercial banks and financial institutions.

      The agent is responsible for negotiating the terms and conditions of
the Senior Loan and the rights of the borrower and the lenders. The agent
typically administers and enforces the loan on behalf of the other lenders in
the syndicate. The agent normally is responsible to collect principal and
interest payments from the borrower and to apportion those payments among the
lenders that are parties to the agreement. The borrower compensates the agent
for its services. That compensation may include fees for funding and
structuring the loan as well as fees on a continuing basis for other
services. A purchaser of a Senior Loan may receive syndication or
participation fees in connection with its purchase. Other fees payable with
respect to a Senior Loan, which are separate from interest payments, may
include facility, commitment, amendment and prepayment fees.

      The Fund will generally rely on the agent under a particular Senior
Loan to collect the Fund's portion of the loan payments and to use any
appropriate remedies against the borrower if necessary. In addition, an
institution (which may or may not be the agent) holds any collateral under
the loan on behalf of the lenders. If the agent under a Senior Loan became
insolvent or was declared a bankrupt or had a receiver appointed, the agent's
appointment under the Senior Loan could be terminated and a successor would
be appointed. While in that case the assets held under the loan should remain
available to the lenders, if those assets were determined by a court or
regulatory authority to be subject to the claims of the agent's creditors,
the Fund might incur delays and costs in realizing payment on the loan, or it
might suffer a loss of principal and/or interest.

      Senior Loans often have restrictive covenants designed to limit the
activities of the borrower in an effort to protect the right of Lenders
to receive timely payments of interest on and repayment of principal of
the Senior Loans.  Senior loans include debt obligations of foreign
borrowers that are in the form of dollar-denominated notes rather than
loan agreements.

      How Does the Fund Invest in Senior Loans? The Fund may act as one of
the original lenders originating a Senior Loan, or it may purchase
assignments of interests in Senior Loans, or it may invest in participation
interests in Senior Loans.

      The Fund may be required to pay and may receive various fees and
commissions in connection with buying, selling and holding interests in
Senior Loans. Borrowers typically pay a variety of fees to lenders when a
Senior Loan is originated. The Fund may receive those fees directly if it
acts as an original lender or if it acquires an assignment of a Senior Loan.
When the Fund buys an assignment, it may be required to pay a fee to the
assigning lender or forgo a portion of the interest or fees payable to it.
The seller of a participation interest may deduct a portion of the interest
and any fees payable to the Fund as an administrative fee. Similarly, the
Fund might be required to pass along to a buyer of a Senior Loan from the
Fund a portion of the fees that the Fund is entitled to.

      The Fund may have obligations under a Senior Loan, including the
obligation to make additional loans in certain circumstances. In that case,
the Fund will reserve against that contingency by identifying on its books
cash or other liquid securities in an amount equal to the obligation. The
amounts identified in that manner may reduce the Fund's income. The Fund will
not purchase a Senior Loan that would require the Fund to make additional
loans, if as a result of that purchase, all of the Fund's additional loan
commitments would exceed 20% of the Fund's total assets or would cause the
Fund to fail to meet the diversification requirements imposed under the
Internal Revenue Code to qualify as a regulated investment company.

o     Acting as an Original Lender. When the Fund acts as an original lender,
         it participates in structuring the Senior Loan. As an original
         lender it will have a direct contractual relationship with the
         borrower and may enforce the borrower's compliance with the terms of
         the loan agreement. The Fund may also have rights with respect to
         any funds acquired by other lenders under the Loan Agreement as a
         set-off against the borrower.  Lenders have full voting and consent
         rights as to the provisions under loan agreements. Action by lender
         votes or consent may require approval of a specified percentage of
         lenders, or, in some cases, unanimous consent. The Fund will not act
         as the agent or collateral holder for a Senior Loan, nor as a
         guarantor or sole negotiator with respect to a Senior Loan.

o     Buying Assignments of Loans.  If the Fund purchases an assignment from
         a lender, the Fund typically will succeed to all of the rights and
         obligations under the loan agreement of the assigning lender and
         will generally become a "lender" for the purposes of the particular
         loan agreement. In that case, the Fund will have direct contractual
         rights under the loan agreement and any related collateral security
         documents in favor of the lenders under that loan agreement. In some
         cases the rights and obligations acquired by a purchaser of an
         assignment may differ from, and be more limited than, those held by
         the assigning lender.

o     Buying Participation Interests.  Participation interests may be
         acquired from a lender or from other holders of participation
         interests. If the Fund buys a participation interest from a lender
         or other participant, the Fund will not have a direct contractual
         relationship with the borrower. It will be required to rely on the
         lender or participant that sold the participation interest to
         enforce the Fund's rights against the borrower, to collect payments
         due under the Senior Loan and to foreclose on collateral in the
         event of the borrower's default. In that case, the Fund is subject
         to the credit risk of both the borrower and the selling lender or
         participant interposed between the borrower and the Fund under the
         loan (these are referred to as intermediate participants).

               In the case of participation interests, the Fund might have to
         assert any rights it may have against the borrower through an
         intermediate participant if the borrower fails to pay interest and
         principal when due. In that case, the Fund might be subject to
         greater delays, risks and expenses than if the Fund could assert its
         rights directly against the borrower. The Fund may not have any
         right to vote on whether to waive enforcement of restrictive
         covenants breached by a borrower and might not benefit directly from
         collateral supporting the Senior Loan in which it has purchased a
         participation interest.

               Also, under a participation interest the Fund might be deemed
         to be a creditor of the intermediate participant rather than the
         borrower, so that the Fund will be exposed to the credit risks of
         the intermediate participant. The Fund will principally invest in
         loans through the purchase of participation interests that are rated
         "B" or higher by one or more of the ratings organizations or, if
         unrated, determined by the Manager to be of comparable quality,
         although, the Fund can invest up to 15% of its net assets in
         investments, including participation interests, rated below "B."

      What is the Priority of a Senior Loan?  Senior Loans generally hold a
senior position in the capital structure of the borrower.  They may include
loans that hold the most senior position, loans that hold an equal ranking
with other senior debt, or loans that are, in the judgment of the Manager, in
the category of senior debt of the borrower.  That senior position in the
borrower's capital structure generally gives the holders of Senior Loans a
claim on some or all of the borrower's assets that is senior to that of
subordinated debt, preferred stock and common stock of the borrower in the
event that the borrower defaults or becomes bankrupt.

      Does the Fund Have Collateral Requirements for Senior Loans?  Most, but
not all, of the Senior Loans in which the Fund invests must be fully
collateralized with one or more of (1) working capital assets, such as
accounts receivable and inventory, (2) tangible fixed assets, such as real
property, buildings and equipment, (3) intangible assets such as trademarks
or patents, or (4) security interests in shares of stock of the borrower or
its subsidiaries or affiliates.  A loan agreement may or may not require the
borrower to pledge additional collateral to secure a Senior Loan if the value
of the initial collateral declines.

      Collateral may consist of assets that may not be readily liquidated,
and there is no assurance that the liquidation of those assets would satisfy
a borrower's obligations under a Senior Loan. In the case of loans to a
non-public company, the company's shareholders or owners may provide
collateral in the form of secured guarantees and/or security interests in
assets that they own.

      The Fund may invest in corporate loans that are not secured by specific
collateral, as described below in "Other Investments."  Unsecured loans
involve a greater risk of loss.

      Does the Fund Have Credit Quality Standards for Senior Loans?  Rating
organizations, such as S&P or Moody's, rate debt obligations by rating the
issuer, after evaluating the issuer's financial soundness. Generally, the
lower the investment rating, the more risky the investment. Debt securities
rated below "BBB-" by S&P or "Baa3" by Moody's are commonly referred to as
"high risk" securities or "junk bonds." The Fund will principally invest in
collateralized Senior Loans that are rated "B" or higher or in
uncollateralized Senior Loans that are rated "B" or higher by one or more of
the ratings organizations or, if unrated, determined by the Manager to be of
comparable quality, although, the Fund can invest up to 15% of its net assets
in investments, including Senior Loans, rated below "B."  Senior Loans rated
"B" are below investment grade and are regarded by rating organizations as
predominantly speculative with respect to the borrower's ability to repay
interest and principal when due over a long period.  While securities rated
Baa by Moody's or BBB by S&P are considered to be "investment grade," they
have some speculative characteristics.

      The Fund may invest in Senior Loans that are rated both investment
grade and below investment grade by different rating organizations. The Fund
can invest up to 100% of its assets in Senior Loans that are below investment
grade.  Additionally, the Fund can invest up to 15% of its net assets in debt
obligations, including Senior Loans, rated below B (at the time the Fund buys
them).  Some of these securities may be in default at the time the Fund buys
them.  The Fund is not obligated to dispose of its investment in a Senior
Loan if its rating drops below "B," but the Manager will monitor the loan to
determine if any action is warranted or desirable. Many Senior Loans are not
rated by rating organizations.  The lack of a rating does not necessarily
imply that a loan is of lesser investment quality.  There is no limit on the
Fund's investment in unrated Senior Loans if the limitations set forth above
are met. Appendix A to this Prospectus includes the definitions of the rating
categories of the principal rating organizations.

      How Does the Manager Analyze Senior Loans?  The Manager performs its
own credit analysis of Senior Loans.  The Manager obtains information from
the agents that originate or administer the loans, other lenders and other
sources.  If a Senior Loan is rated, the Manager will also evaluate the
rating organization's information about the borrower. The Manager will
continue to monitor the credit quality of a Senior Loan while the Fund owns
that Senior Loan.

      In its analysis, the Manager may consider many factors, including the
borrower's past and future projected financial performance; the quality and
depth of management; the quality of the collateral; the borrower's cash flow;
factors affecting the borrower's industry; the borrower's position in the
market and its tangible assets.  Typically, the borrowers use the proceeds of
Senior Loans to finance leveraged buyouts, recapitalizations, mergers,
acquisitions, stock repurchases, debt refinancings, and, to a lesser extent,
other purposes.  Those may be highly leveraged transactions that pose special
risks.

      The Manager will consider a Senior Loan for the Fund's portfolio only
if the Manager believes that a borrower under a Senior Loan is likely to
repay its obligations.  For example, the Manager may determine that a
borrower can meet debt service requirements from cash flow or other sources,
including the sale of assets, despite the borrower's low credit rating.  The
Manager may determine that Senior Loans of borrowers that are experiencing
financial distress, but that appear able to pay their interest, present
attractive investment opportunities. There can be no assurance that the
Manager's analysis will disclose factors that may impair the value of a
Senior Loan.

      Does the Fund Have Maturity Limits for Senior Loans?  The Fund has no
limits as to the maturity of Senior Loans it may purchase. Senior Loans in
general have a stated term of between five and nine years.  However, because
Senior Loans typically amortize principal over their stated life and
frequently are prepaid, their average credit exposure is expected to be two
to three years.

      Senior Loans usually have mandatory and optional prepayment provisions.
If a borrower prepays a Senior Loan, the Fund will have to reinvest the
proceeds in other Senior Loans or securities that may pay lower interest
rates.  However, prepayment and facility fees the Fund receives may help
reduce any adverse impact on the Fund's yield.  Because the interest rates on
Senior Loans adjust periodically, the Manager believes that the Fund should
generally be able to reinvest prepayments in Senior Loans that have yields
similar to those that have been prepaid.

      What are the Risks of Default on Senior Loans? Generally, Senior Loans
involve less risk from default than other debt obligations, because in most
instances they take preference over subordinated debt obligations and common
stock with respect to payment of interest and principal.  However, the Fund
is subject to the risk that the borrower under a Senior Loan will default on
scheduled interest or principal payments.  The risk of default will increase
in the event of an economic downturn or a substantial increase in interest
rates (which will increase the cost of the borrower's debt service as the
interest rate on its Senior Loan is upwardly adjusted).  The Fund may own a
debt obligation of a borrower that is about to become insolvent.  The Fund
can also purchase debt obligations that are issued in connection with a
restructuring of the borrower under bankruptcy laws.

o     Collateral.  Most, but not all, of the Senior Loans that the Fund will
         purchase must be backed by collateral, as discussed in "Does the
         Fund Have Collateral Requirements for Senior Loans?" above.
         However, the value of the collateral may decline after the Fund buys
         the Senior Loan, particularly if the collateral consists of equity
         securities of the borrower or its affiliates.  If a borrower
         defaults, insolvency laws may limit the Fund's access to the
         collateral, or the lenders may be unable to liquidate the
         collateral.  If the collateral becomes illiquid or loses some or all
         of its value, the collateral may not be sufficient to protect the
         Fund in the event of a default of scheduled interest or principal
         payments.

            If a borrower defaults on a collateralized Senior Loan, the Fund
         may receive assets other than cash or securities in full or partial
         satisfaction of the borrower's obligation under the Senior Loan.
         Those assets may be illiquid, and the Fund might not be able to
         realize the benefit of the assets for legal, practical or other
         reasons.  The Fund might hold those assets until the Manager
         determined it was appropriate to dispose of them.

o     Highly Leveraged Transactions.  The Fund can invest a significant
         portion of its assets in Senior Loans made in connection with highly
         leveraged transactions.  These transactions may include operating
         loans, leveraged buyout loans, leveraged capitalization loans and
         other types of acquisition financing.  The Fund can also invest in
         Senior Loans of borrowers that are experiencing, or are likely to
         experience, financial difficulty.  In addition, the Fund can invest
         in Senior Loans of borrowers that have filed for bankruptcy
         protection or that have had involuntary bankruptcy petitions filed
         against them by creditors.  Those Senior Loans are subject to
         greater credit and liquidity risks than other Senior Loans.

o     Restrictive Loan Covenants.  Borrowers must comply with various
         restrictive covenants typically contained in loan agreements.  They
         may include restrictions on dividend payments and other
         distributions to stockholders, provisions requiring the borrower to
         maintain specific financial ratios, and limits on total debt.  They
         may include requirements that the borrower prepay the loan with any
         free cash flow.  A break of a covenant that is not waived by the
         agent bank (or the lenders) is normally an event of default that
         provides the agent bank or the lenders the right to call the
         outstanding amount on the loan. If a lender accelerates the
         repayment of a Senior Loan because of the borrower's violation of a
         restrictive covenant under the loan agreement, the borrower might
         default in payment of the loan.

o     Insolvency of Borrowers.  Various laws enacted for the protection of
         debtors may apply to Senior Loans. A bankruptcy proceeding against a
         borrower could delay or limit the ability of the Fund to collect the
         principal and interest payments on that borrower's Senior Loans.  If
         a lawsuit is brought by creditors of a borrower under a Senior Loan,
         a court or a trustee in bankruptcy could take certain actions that
         would be adverse to the Fund.  For example:
o     Other creditors might convince the court to set aside a Senior Loan or
               the collateralization of the loan as a "fraudulent conveyance"
               or "preferential transfer."  In that event, the court could
               recover from the Fund the interest and principal payments that
               the borrower made before becoming insolvent. There can be no
               assurance that the Fund would be able to prevent that
               recapture.
o     A bankruptcy court may restructure the payment obligations under the
               Senior Loan so as to reduce the amount to which the Fund would
               be entitled.
o     The court might discharge the amount of the Senior Loan that exceeds
               the value of the collateral.
o     The court could subordinate the Fund's rights to the rights of other
               creditors of the borrower under applicable law.

            A bankruptcy court might find that the collateral securing the
         Senior Loan is invalid or require the borrower to use the collateral
         to pay other outstanding obligations.  If the collateral consists of
         stock of the borrower or its subsidiaries, the stock may lose all of
         its value in the event of a bankruptcy, which would leave the Fund
         exposed to greater potential loss.

o     Decline in Fund Share Prices.  If a borrower defaults on a scheduled
         interest or principal payment on a Senior Loan, the Fund may
         experience a reduction of its income.  In addition, the value of the
         Senior Loan would decline, which may, in turn, cause the Fund's net
         asset values to fall.

Other Investments.  Under normal circumstances, the Fund can invest the
balance of its assets in investments other than Senior Loans. Those other
investments are described below. More information can be found about them in
the Statement of Additional Information.

      Subordinated Debt Obligations. The Fund can purchase fixed-rate and
adjustable-rate subordinated debt obligations.  The Fund will principally
invest in subordinated debt obligations that are rated "B" or higher by one
or more of the ratings organizations or, if unrated, determined by the
Manager to be of comparable quality, although, the Fund can invest up to 15%
of its net assets in investments, including subordinated debt obligations,
rated below "B."  Subordinated debt obligations do not have the same level of
priority as Senior Loans and accordingly involve more risk than Senior
Loans.  If a borrower becomes insolvent, the borrower's assets may be
insufficient to meet its obligations to the holders of its subordinated
debt.

      Short-Term, Investment-Grade Debt Obligations.  The Fund can hold cash
and invest in cash equivalents such as highly-rated commercial paper, bank
obligations, repurchase agreements, Treasury bills and short-term U.S.
government securities that are investment grade.

      Repurchase Agreements.  The Fund can acquire securities subject to
repurchase agreements.  It might do so for liquidity purposes to meet
anticipated repurchases 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.

      Unsecured Loans.  The Fund can invest in floating rate Senior Loans
that are not secured by any specific collateral of the borrower. If the
borrower is unable to pay interest or defaults in the payment of principal,
there will be no collateral on which the Fund can foreclose. Therefore, these
loans present greater risks than collateralized Senior Loans.  The Fund
applies the same investment and credit standards to unsecured Senior Loans as
to secured Senior Loans, except for collateral requirements.

      U.S. Government Securities.  The Fund can invest in securities issued
or guaranteed by the U.S. Treasury or other U.S. government agencies or
federally-chartered corporate entities referred to as "instrumentalities."
These are referred to as "U.S. government securities" in this Prospectus.

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

o     Obligations Issued or Guaranteed by U.S. Government Agencies or
         Instrumentalities. These include direct obligations and
         mortgage-related securities that have different levels of credit
         support from the U.S. 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").

      Asset-Backed Securities.  The Fund can buy asset-backed securities,
which are fractional interests in pools of receivables or loans that are
collateralized by the loans, other assets or receivables.  They are issued by
trusts and special purpose corporations that pass the income from the
underlying pool to the buyer of the interest.  These securities are subject
to the risk of default by the issuer as well as by the borrowers of the
underlying loans in the pool.

      Neither the Fund nor the Manager selects the borrowers whose loans are
included in the pools or the collateral backing those loans. Collateralized
loan obligations are subject to the credit risk of the borrower and the
institution that creates the pool, as well as prepayment risks.

      Equity Securities and Warrants.  The Fund can acquire warrants and
other equity securities as part of a unit combining the Senior Loan and
equity securities of a borrower or its affiliates.  The acquisition of equity
securities will be incidental to the Fund's purchase of a loan. The Fund may
also acquire equity securities and warrants issued in exchange for a Senior
Loan or in connection with the restructuring of a Senior Loan, subordinated
and unsecured loans and high-yield securities.  Equity securities include
common stocks, preferred stocks and securities convertible into common stock.
Equity securities are subject to market risks and the risks of changes to the
financial condition of the issuer, and fluctuations in value.

      Investments in Other Investment Companies.  The Fund can purchase
shares of other investment companies to the extent permitted by the
Investment Company Act.  Investment companies typically pay management,
custodian and other transaction costs.  Therefore, the Fund would be subject
to duplicate expenses to the extent that it purchases shares of other
investment companies.

Other Investment Strategies.  In seeking its objective, the Fund can also use
the investment techniques and strategies described below.  The Manager might
not always use all of the different types of techniques and investments
described below.  These techniques have risks, although some are designed to
help reduce overall investment or market risks.

      High-Yield, Lower-Grade Debt Securities of U.S. Issuers.  The Fund can
purchase a variety of lower-grade, high-yield debt securities of U.S.
issuers, including bonds, debentures, notes, preferred stocks, loan
participation interests, structured investments, and asset-backed securities,
among others, to seek high current income. The Fund has no requirements as to
the maturity of the debt securities it can buy, or as to the market
capitalization range of the issuers of those securities.  There are no
restrictions on the amount that the Fund may invest in debt securities below
investment grade. The Fund will principally invest in investments that are
rated "B" or higher by one or more of the ratings organizations or, if
unrated, determined by the Manager to be of comparable quality, although, the
Fund can invest up to 15% of its net assets in investments rated below "B."
While securities rated Baa by Moody's or BBB by S&P are considered
"investment grade," they have some speculative characteristics.

      Although investment-grade securities are subject to risks of
non-payment of interest and principal, lower-grade debt securities, whether
rated or unrated, have greater risks than investment-grade securities.  They
may be subject to greater market fluctuations and risk of loss of income and
principal than investment-grade securities.  There may be less of a market
for them and therefore they may be harder to sell at an acceptable price.
There is a relatively greater possibility that the issuer's earnings may be
insufficient to make the payments of interest and principal due on the
bonds.  These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset values per share
may be affected by declines in value of these securities.

      Foreign Securities.  The Fund can invest in U.S. dollar-denominated
Senior Loans and can buy debt securities of governments and companies in
countries that the Manager deems to be developed countries. Not more than 20%
of the Fund's total assets may be invested in foreign securities, including
Senior Loans.  While foreign securities offer special investment
opportunities, there are also special risks that can reduce the Fund's share
prices and returns.

      The change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated in that
foreign currency.  Currency rate changes can also affect the distributions
the Fund makes from the income it receives from foreign securities as foreign
currency values change against the U.S. dollar.  Foreign investing can result
in higher transaction and operating costs for the Fund.  Foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to.  The differences in foreign laws affecting
creditors' rights may pose special risks in the case of Senior Loans and
other loans to foreign borrowers.

      The value of foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental economic
or monetary policies in the U.S. or abroad, or other political and economic
factors. The Fund may experience difficulty in repatriating foreign assets to
the U.S.  The Fund will not invest in securities of issuers in developing or
emerging market countries.

      Zero-Coupon and "Stripped" Securities.  Some of the government and
corporate debt securities the Fund can buy are zero-coupon obligations that
pay no interest.  These securities are issued at a substantial discount from
their face value. "Stripped" securities are the separate income or principal
components of a debt security.  Some collateralized loan obligations may be
stripped, with each component having a different proportion of principal or
interest payments.  One class might receive all the interest and the other
all the principal payments.

      Zero-coupon and stripped securities are subject to greater fluctuations
in price from interest rate changes than interest-bearing securities.  The
Fund may have to pay out the imputed income on zero-coupon securities without
receiving the actual cash currently.  Interest-only and principal-only
securities are particularly sensitive to changes in interest rates.

      The values of interest-only securities are also very sensitive to
prepayments of underlying obligations. When prepayments tend to fall, the
timing of the cash flows to principal-only securities increases, making them
more sensitive to changes in interest rates. The market for some of these
securities may be limited, making it difficult for the Fund to value them or
to dispose of its holdings at an acceptable price. The Fund can invest up to
20% of its total assets in zero-coupon securities issued by either the U.S.
government or U.S. companies.


      Derivative Investments.  The Fund can invest in a variety of
"derivative" investments, including futures contracts, put and call options,
forward contracts, options on futures and broadly-based securities indices,
interest rate swaps, credit default swaps, currency swaps, total return swaps
and structured investments. In general terms, a derivative investment is an
investment contract whose value depends on (or is derived from) the value of
an underlying asset, interest rate or index.  The Fund may use strategies
with derivative instruments to hedge the Fund's portfolio against price
fluctuations. The Fund may also use derivative investments because they offer
the potential for a reduction of interest rate risk (by reducing the
effective maturity of an obligation).  The Fund will not use derivative
instruments for speculative purposes. The Fund has established limits on its
use of derivative instruments.  The Fund is not required to use them in
seeking its goal, and currently does not use them to a significant degree.


o     Options, Futures and Options on Futures.  The Fund can buy and sell
         options, futures contracts and options on futures contracts for a
         number of purposes. It might do so to try to manage its exposure to
         the possibility that the prices of its portfolio securities may
         decline, or to establish a position in the securities market as a
         temporary substitute for purchasing individual securities.  It might
         do so to try to manage its exposure to changing interest rates. The
         Fund will use them only as a means to hedge or manage the risks
         associated with the assets it holds, or in anticipation of buying or
         selling assets. Writing covered call options could be used to
         provide income to the Fund for liquidity purposes or to raise cash
         to distribute to shareholders.

o     Forward Contracts.  Forward contracts can be used to try to manage
         foreign currency risks on the Fund's foreign investments.  Foreign
         currency options may be used to try to protect against declines in
         the dollar value of foreign securities the Fund owns, or to protect
         against an increase in the dollar cost of buying foreign securities.

o     Interest Rate Swaps, Currency Swaps and Total Return Swaps.  Interest
         rate swaps involve the exchange by the Fund with another party of
         their respective commitments or rights to pay or receive interest,
         such as an exchange of fixed rate payments for adjustable rate
         payments on Senior Loans.  For example, if the Fund holds a Senior
         Loan with an interest rate that is adjusted only twice a year, it
         might swap the right to receive interest at that adjustable rate
         payments on that rate for the right to receive interest at a rate
         that is adjusted every week.  In that case, if interest rates rise,
         the increased interest received by the Fund would help offset a
         decline in the value of the Senior Loan.  On the other hand, if
         interest rates fall, the Fund's benefit from falling interest rates
         would decrease.

            Foreign currency swaps involve the exchange by the Fund and a
         counterparty of the right to receive foreign currency for the right
         to receive U.S. dollars.  The relative amounts of the currencies to
         be received by each party are fixed at the time the swap is entered
         into.  This locks in the right of the parties to receive a
         predetermined amount of a particular currency. The Fund may use
         these swaps to try to protect against fluctuations in exchange rates
         as to the currencies in which its foreign investments are
         denominated.

            In addition, the Fund can invest in total return swaps with
         appropriate counterparties. Total return swaps involve the payment
         by the Fund of a floating rate of interest in exchange for the total
         rate of return on a Senior Loan.  For example, instead of investing
         in a particular Senior Loan, the Fund could instead enter into a
         total return swap and receive the total return of the Senior Loan,
         in return for a floating rate payment to the counterparty.

            Under a swap, the Fund typically pays a fee determined by
         multiplying the face value of the swap agreement by an agreed-upon
         interest rate.  If the value of the underlying asset declines over
         the term of the swap, the Fund would be required to pay the dollar
         value of that decline to the counterparty in addition to the swap
         fees. The Fund intends to invest in swap transactions only if they
         are exempt from regulation by the Commodity Futures Trading
         Commission under the Commodity Exchange Act.

            The risk of loss with respect to interest rate swaps and total
         return swaps is limited to the current market value of the hedge at
         the time of its expiration or termination.  If the other party to a
         swap defaults, then the Fund's risk of loss consists of the market
         value of the cost of replacement. The Manager will evaluate the
         creditworthiness of interest rate swap counterparties.

            There is no central exchange or market for swap transactions and
         therefore they are less liquid investments than exchange-traded
         instruments.  If the Fund were to sell a swap it owned to a third
         party, the Fund would still remain primarily liable for the
         obligations under the swap contract.

o     "Structured"  Investments.  The Fund can buy  "structured"  investments,
         which  are  specially-designed  derivative  debt  investments.  Their
         principal  repayments or interest payments are linked to the value of
         one or more loans,  other  security,  an index (such as a currency or
         securities  index) or commodity.  The terms of the  instrument may be
         "structured"  by the  purchaser  (the Fund) and the borrower  issuing
         the note.

            The principal and/or interest payments depend on the performance
         of one or more other securities or indices, and the values of these
         investments will therefore fall or rise in response to the changes
         in the values of the underlying loan, security or index. These
         investments are subject to both credit and interest rate risks and
         therefore the Fund could receive more or less than it originally
         invested when the investments mature, or it might receive less
         interest than the stated coupon payment if the underlying investment
         or index does not perform as anticipated. Structured investments may
         have volatile values and they may have a limited trading market,
         making it difficult for the Fund to sell its investment at an
         acceptable price.

o     Risks of Derivative Instruments.  Markets underlying securities and
         indices may move in a direction not anticipated by the Manager.
         Interest rate and stock market changes in the U.S. and abroad may
         also influence the performance of derivatives.  As a result of these
         risks, the Fund could realize less principal or income from the
         investment than expected.  The Fund may hold derivative investments
         that are illiquid.

            Options trading involves the payment of premiums and has special
         tax effects on the Fund.  There are also special risks in particular
         hedging strategies.  For example, 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 and
         will not be able to realize any profit if the investment has
         increased in value above the call price.  In writing a put, there is
         a risk that the Fund may be required to buy the underlying security
         at a disadvantageous price.

            If the Manager used a hedging instrument at the wrong time or
         judged market conditions incorrectly, the strategy could reduce the
         Fund's return and share prices.  The Fund could also experience
         losses if the prices of its futures and options positions were not
         correlated with its other investments or if it could not close out a
         position because of an illiquid market.

      "When-Issued" and "Delayed Delivery" Transactions. The Fund can
purchase municipal securities on a "when-issued" basis and can purchase or
sell such securities on a "delayed delivery" basis. Between the purchase and
settlement, no payment is made for the security and no interest accrues to
the buyer from the investment. There is a risk of loss to the Fund if the
value of the security declines prior to the settlement date.

      Borrowing.  The Fund can borrow money in amounts up to 33 1/3% of the
value of its total assets at the time of the borrowings.  The Fund may borrow
money to finance share repurchases during Repurchase Offers and to finance
the purchase of additional investments (a technique referred to as
"leverage").  The Fund might borrow for leverage to attempt to maintain the
desired level of investment in Senior Loans after accounting for anticipated
cash flow from prepayments of Senior Loans, the sale of Fund shares, cash
outflows to fulfill settlement obligations (including obligations under
revolving Senior Loans  to fund additional commitments) and repurchase of
Fund shares.

      The Fund might borrow to acquire additional investments when the
Manager believes that the interest payments and costs associated with
borrowing will not exceed the total return on the investments acquired with
those borrowings.  However, the success of that type of leverage strategy
depends on the Manager's ability to predict correctly interest rate and
market movements, and there is no assurance that a leveraging strategy will
be successful. Unless the income and appreciation, if any, on assets acquired
with borrowed funds exceed the costs of borrowing, the use of leverage will
reduce the Fund's investment performance compared to what it would have been
without leveraging. The Fund can also borrow money in anticipation of cash
flows in and out of the Fund.  The Fund may obtain a line of credit from a
financial institution.  Typically, that type of line of credit will bear
interest at a floating rate.

      This policy is not fundamental, and the Trustees may change this policy
without shareholder approval.  The Fund will not purchase additional
portfolio securities at any time that borrowings exceed 5% of the Fund's
total assets (excluding the amount borrowed). Borrowing money involves
transaction and interest costs.  The Fund may pay a commitment fee or other
fee to maintain a line of credit, and will pay interest on amounts it
borrows.  These costs can reduce the income the Fund has available for
distribution to investors.

      Under the Investment Company Act, the Fund may not incur indebtedness
unless immediately after it incurs debt it has "asset coverage" of at least
300% of the aggregate outstanding principal amount of the indebtedness.  If
the Fund fails to meet that test, it may be restricted from declaring or
paying dividends.  Failure to pay certain dividends could cause the Fund to
fail to qualify as a regulated investment company, which could make the Fund
liable for income and excise taxes.  The Fund may be required to dispose of
portfolio investments on unfavorable terms if market fluctuations reduce its
asset coverage to less than 300%.

      Lending Portfolio Securities.  To raise cash for liquidity purposes or
income, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions under procedures approved by the Fund's
Board of Trustees and administered by the Manager.  These loans are limited
to not more than 25% of the value of the Fund's total assets.  The Fund
currently does not intend to lend securities, but if it does so, such loans
will not likely exceed 5% of the Fund's total assets.

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

         Temporary Defensive and Interim Investments. In times of unstable
market or economic conditions, the Fund can invest up to 100% of its assets
in temporary defensive investments that are inconsistent with the Fund's
principal investment strategies.  Generally these would be short-term U.S.
government securities, highly-rated commercial paper, bank obligations or
repurchase agreements.  The Fund may also hold these types of securities
pending the investment of proceeds from the repurchase of Fund shares for the
sale of portfolio securities or to meet anticipated repurchase requests of
Fund shares.  To the extent the Fund invests defensively in these securities,
it might not achieve the primary aspect of its investment objective, high
current income.


PORTFOLIO HOLDINGS.  The Fund's portfolio holdings are included in
      semi-annual and annual reports that are distributed to shareholders of
      the Fund within 60 days after the close of the period for which such
      report is being made. The Fund also discloses its portfolio holdings in
      its Statements of Investments on Form N-Q, which are filed with the SEC
      no later than 60 days after the close of its first and third fiscal
      quarters. These required filings are publicly available at the SEC.
      Therefore, portfolio holdings of the Fund are made publicly available
      no later than 60 days after the close of each of the Fund's fiscal
      quarters.

            A description of the Fund's policies and procedures with respect
      to the disclosure of the Fund's portfolio securities is available in
      the Fund's Statement of Additional Information


Performance Information

Explanation of Performance Terminology.  The Fund uses a variety of terms to
illustrate its performance. These terms include "dividend yield," "average
annual total return," and "cumulative total return."  The Statement of
Additional Information contains an explanation of how yields and total
returns are calculated. You can obtain current performance information for
the Fund by calling the Fund's Transfer Agent at 1.800.225.5677 or by
visiting the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

How the Fund Is Managed

The Board of Trustees.  The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under Massachusetts
law.  The Board is elected by shareholders and meets periodically throughout
the year to oversee the Fund's business, review its performance, and review
the actions of the Manager.  "Trustees and Officers of the Fund" in the
Statement of Additional Information identifies the Trustees and officers of
the Fund (who are elected by the Trustees) and provides more information
about them.

The Manager.  The Fund's Manager, OppenheimerFunds, Inc., chooses the Fund's
investments and handles its day-to-day business.  The Manager selects the
Fund's portfolio securities and the brokers through which the Fund executes
its portfolio transactions, furnishes offices, facilities, and equipment, and
provides the services of its employees to carry out the Fund's business and
regulatory filings.  The Manager performs its duties, subject to certain
policies established by the Fund's Board of Trustees, under an investment
advisory agreement that states the Manager's responsibilities.  The agreement
sets the fees paid by the Fund to the Manager and describes the expenses that
the Fund is responsible to pay to conduct its business.  For example, the
Fund pays for its own brokerage costs, and custodian, transfer agent,
accounting and legal fees.  The agreement permits the Manager to employ
broker-dealers that are affiliates of the Fund or the Manager in executing
the Fund's portfolio transactions.  However, it is expected that most of the
Fund's portfolio transactions will be principal trades at net prices, for
which no broker-dealer is used.


The Manager has been an investment advisor since January 1960.  The Manager
and its subsidiaries and controlled affiliates managed more than $180 billion
in assets as of September 30, 2005, including other Oppenheimer funds with
more than seven million shareholder accounts.  The Manager is located at Two
World Financial Center, 225 Liberty Street-11th Floor, New York, NY 10281.
The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding
company ultimately controlled by Massachusetts Mutual Life Insurance Company.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines as the Fund's assets
grow: 0.75% of the first $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, and 0.60% of average annual net assets in excess of
$800 million.  The Manager has voluntarily agreed to reduce its management
fee by 0.20% of average annual net assets.  It can amend or terminate that
voluntary waiver at any time. That fee reduction has the effect of reducing
the Fund's overall expenses, thereby increasing its yield.  The Fund's
management fee for its last fiscal year ended July 31, 2005, was 0.44% of the
Fund's average annual net assets after taking into account the voluntary
waiver.  Without giving effect to the voluntary waiver, the management fee
would have been 0.64%.

      A discussion regarding the basis for the Board of Trustees approval of
the Fund's investment advisory agreement is available in the Fund's annual
report to shareholders for the period ended July 31, 2005.

Portfolio Managers.  The Fund's portfolio is managed by Arthur Zimmer, Joseph
Welsh and Margaret Hui who are primarily responsible for the day-to-day
management of the Fund's investments.

Mr. Zimmer has been a manager of the Fund's portfolio since September 1999.
Mr. Zimmer has been a Senior Vice President of the Manager since June 1997
and of HarbourView Asset Management Corporation since April 1999.  He was
formerly Vice President of the Manager from October 1990 to June 1997 and
Vice President of Centennial Asset Management Corporation from June 1997 to
November 2001.

Mr. Welsh has been a manager of the Fund's portfolio since September 1999.
Mr. Welsh has been a Vice President of the Manager since December 2000, a
high yield bond analyst since January 1995, an Assistant Vice President of
the Manager from December 1996 to November 2000 and a Vice President of
HarbourView Asset Management Corporation since September 2002.

Ms. Hui has been an associate portfolio manager of the Fund since October
1999.  Ms. Hui has been an Assistant Vice President of the Manager since
October 1999.

The Statement of Additional Information provides additional information about
the portfolio management team's compensation, other accounts they manage and
their ownership of Fund shares.

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


      The Manager and the Distributor believe the claims asserted in these
law suits to be without merit, and intend to defend the suits vigorously. The
Manager and the Distributor do not believe that the pending actions are
likely to have a material adverse effect on the Fund or on their ability to
perform their respective investment advisory or distribution agreements with
the Fund.


A b o u t   Y o u r   A c c o u n t

How to Buy Shares


How Do You Buy Shares? The Fund offers its Class A, Class B, Class C and
Class Y shares continuously at the respective offering price for each class
of shares.  The Fund's shares are sold through the Fund's general
distributor, OppenheimerFunds Distributor, Inc., a wholly-owned subsidiary of
the Manager (the "Distributor") on a "best-efforts" basis.  That means the
Distributor is not required to sell a specific number of shares, and it does
not make a market in the Fund's shares.


      You can buy shares several ways, as described below. The Distributor
may appoint servicing agents to accept purchase orders.  The Distributor, in
its sole discretion, may reject any purchase order for the Fund's shares.
Investors considering purchase of shares of the Fund for retirement plan
accounts from which required minimum distributions must be taken starting at
age 701/2should consider the limitations on repurchases of shares described
in "Retirement Plans," below.


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

o     Buying Shares Through the Distributor.  Complete an OppenheimerFunds
         new account application and return it with a check payable to
         "OppenheimerFunds Distributor, Inc."  Mail it to P.O. Box 5270,
         Denver, Colorado 80217.  If you do not list a dealer on the
         application, the Distributor will act as your agent in buying the
         shares. Class B or Class C shares may not be purchased by an
         investor directly from the Distributor without the investor
         designating another registered broker-dealer.  However, we recommend
         that you discuss your investment with a financial advisor before you
         make a purchase to be sure that the Fund is appropriate for you.

      Paying by Federal Funds Wire. Shares purchased through the Distributor
         may be paid for by Federal Funds wire.  The minimum investment is
         $2,500.  Before sending a wire, call the Distributor's Wire
         Department at 1.800.225.5677 to notify the Distributor of the wire,
         and to receive further instructions.


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

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

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

At What Price Are Shares Sold?  Shares are sold at their offering price which
is the net asset value per share plus any initial sales charge that applies.
The offering price that applies to a purchase order is the net asset value
per share next calculated after the Distributor receives the purchase order
at its offices in Colorado, or after any agent appointed by the Distributor
receives the order.


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

o     To buy shares at the offering price for a particular day, the
         Distributor or its designated agent must receive your order by the
         time of day the NYSE closes that day.  If your order is received on
         a day when the NYSE is closed or after it has closed, the order will
         receive the next offering price that is determined after your order
         is received.

o     If you buy shares through a dealer, your dealer must receive the order
         by the close of the NYSE and transmit it to the Distributor so that
         it is received before the Distributor's close of business on a
         regular business day (normally 5:00 P.M.) to receive that day's
         offering price, unless your dealer has made alternative
         arrangements.  Otherwise, the order will receive the next offering
         price that the Fund determines.


      How the Fund Calculates its Net Asset Values. The Fund determines the
net asset value per share of a class of shares by dividing the value of the
Fund's net assets attributable to that class by the number of shares of that
class that are outstanding.  To determine net asset values, the Fund's Board
of Trustees has established procedures to value the Fund's securities.  For
debt securities traded in a recognized market, the valuations are, in general
based on market value.  The Board has adopted special procedures for valuing
illiquid and restricted securities and obligations for which market values
cannot be readily obtained.

      The Manager values Senior Loans (and other loans) held by the Fund for
which an active secondary market exists (in the opinion of the Manager) on
the basis of market value, which may include valuations provided by a pricing
service approved by the Board of Trustees.  The pricing service may use
"matrix" comparisons to the prices of comparable loans on the basis of
quality, yield and maturity.  Loans for which no reliable market valuations
are available will be valued by the Manager at fair value, following
procedures established by the Fund's Board of Trustees.  In making such
valuations, the Manager considers such factors and data as:
(1)    fundamental analytical data relating to the Senior Loan, including the
         cost, size, current interest rate and base lending rate of the
         Senior Loan, the terms and conditions of the loan agreement and any
         related agreements, and the position of the loan in the borrower's
         capital structure,
(2)    the creditworthiness of the borrower based upon an evaluation of its
         financial condition, financial statements and information about its
         business, cash flows, capital structure and future prospects,
(3)    the nature, adequacy and value of the loan collateral,
(4)    information relating to the market for the loan, including any price
         quotations from reliable dealers for trading in interests in similar
         loans,
(5)    the market environment and investor attitude toward the loan and
         similar loans,
(6)    the reputation and financial condition of the agent and any
         intermediate participants, and
(7)    general economic and market conditions that the Manager believes
         affect the fair value of the loan.

      Because some foreign securities trade in markets and on exchanges that
operate on weekends and U. S. holidays, the value of some of the Fund's
foreign investments might change on days when investors cannot buy shares.
If, after the close of the principal market on which a security held by the
Fund is traded, and before the time the Fund's securities are priced that
day, an event occurs that the Manager deems likely to cause a material change
in the value of such security, the Fund's Board of Trustees has authorized
the Manager, subject to the Board's review, to ascertain a fair value for
such security.  A security's valuation may differ depending on the method
used for determining value.


What Classes of Shares Does the Fund Offer? The Fund has four different
classes of shares. The different classes of shares represent investments in
the same portfolio of securities, but the classes are subject to different
expenses and will likely have different share prices.  When you buy shares,
be sure to specify the class of shares.  If you do not choose a class, your
investment will be made in Class A shares.


o     Class A Shares.  If you buy Class A shares, you pay an initial sales
         charge (on investments up to $1 million for regular accounts or
         lesser amounts for certain retirement plans). The amount of that
         sales charge will vary depending on the amount you invest. The sales
         charge rates are listed in "How Can You Buy Class A Shares?" below.

o     Class B Shares.  If you buy Class B shares, you pay no sales charge at
         the time of purchase, but your shares will be subject to an annual
         asset-based sales charge.  If you tender your shares for repurchase
         and they are repurchased by the Fund within five years after you
         originally bought them, normally you will pay an Early Withdrawal
         Charge.  That Early Withdrawal Charge varies depending on how long
         you own your shares, as described in "How Can You Buy Class B
         Shares?" below.

o     Class C Shares.  If you buy Class C shares, you pay no sales charge at
         the time of purchase, but your shares will be subject to an annual
         asset-based sales charge.  If tender your shares for repurchase and
         they are repurchased within 12 months after your originally bought
         them, normally you will pay an Early Withdrawal Charge of 1.0%, as
         described in "How Can You Buy Class C Shares?" below.


o     Class Y Shares. Class Y shares are offered only to certain
         institutional investors that have a special agreement with the
         Distributor.


Which Class of Shares  Should You Choose?  Once you decide that the Fund is an
appropriate  investment for you, deciding which class of shares is best suited
to your  needs  depends on a number of factors  that you should  discuss  with
your  financial  advisor.  Some  factors to consider  are how much you plan to
invest  and how long you  plan to hold  your  investment.  If your  goals  and
objectives change over time and you plan to purchase  additional  shares,  you
should  re-evaluate  those factors to see if you should consider another class
of shares.  The Fund's operating costs that apply to a class of shares and the
effect  of  the  different  types  of  asset-based  sales  charges  and  Early
Withdrawal  Charges on your investment will vary your investment  results over
time.

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

      How Long Do You Expect to Hold Your Investment?  While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of
shares.  Because of the effect of class-based expenses, your choice will also
depend on how much you plan to invest.  For example, the reduced sales
charges available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your investment,
compared to the effect over time of higher class-based expenses on shares of
Class B or Class C.

o     Investing for the Shorter Term.  While the Fund is intended as a
         long-term investment, if you have a relatively short-term investment
         horizon (that is, you plan to hold your shares for less than six
         years), you should most likely invest in Class A or Class C shares
         rather than Class B shares.  That is because of the effect of the
         Class B Early Withdrawal Charge if you tender your shares for
         repurchase within five years of buying them, as well as the effect
         of the Class B asset-based sales charge on the investment return for
         that class in the short term.  Class C shares might be the
         appropriate choice (especially for investments of less than
         $100,000), because there is no initial sales charge on Class C
         shares, and the Early Withdrawal Charge does not apply to amounts
         you tender for repurchase after holding them one year.

         However, if you plan to invest more than $100,000 for the shorter
         term, then as your investment horizon increases toward six years,
         Class C shares might not be as advantageous as Class A shares. That
         is because the annual asset-based sales charge on Class C shares
         will have a greater impact on your account over the longer term than
         the reduced front-end sales charge available for larger purchases of
         Class A shares.

         If you invest $1 million or more, in most cases Class A shares will
         be the most advantageous choice, no matter how long you intend to
         hold your shares. For that reason, the Distributor normally will not
         accept purchase orders of $100,000 or more of Class B shares or $1
         million or more of Class C shares from a single investor.  Dealers
         or other financial intermediaries purchasing shares for their
         customers in omnibus accounts are responsible for compliance with
         those limits.


o     Investing for the Longer Term.  If you are investing less than $100,000
         for the longer-term, for example for retirement, and do not expect
         to need access to your money for five years or more, Class B shares
         may be appropriate.


Are There Differences in Account Features That Matter to You? Some account
features may not be available to Class B and Class C shareholders. Other
features may not be advisable (because of the effect of the Early Withdrawal
Charges) for Class B and Class C shareholders. Therefore, you should
carefully review how you plan to use your investment account before deciding
which class of shares to buy.


      Additionally,  the dividends payable to Class B and Class C shareholders
will be reduced by the  additional  expenses  borne by those  classes that are
not  borne by  Class A or  Class Y  shares,  such as the  Class B and  Class C
asset-based  sales charge  described  below and in the Statement of Additional
Information.


How Do Share Classes Affect Payments to Your Broker?  A financial advisor may
receive different compensation for selling one class of shares than for
selling another class.  It is important to remember that Class B and Class C
Early Withdrawal Charges have the same purpose as the front-end sales charge
on sales of Class A shares: to compensate the Distributor for concessions and
expense reimbursements it pays to dealers and financial institutions for
selling shares.  The Distributor may pay additional compensation from its own
resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for
its own account or for its customers.

Are There Any Early Withdrawal Charge Waivers?  Appendix B to the Statement
of Additional Information details the conditions for the waiver of Early
Withdrawal Charges that apply in certain cases, or that apply to purchases of
shares of the Fund by certain groups, or under specified retirement plan
arrangements or in other special types of transactions.  The Class B and
Class C Early Withdrawal Charges are waived in the case of repurchases of
shares owned by present and former officers, directors, trustees or employees
(and their "immediate families" as that term is defined in Appendix B to the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees.  To
receive a waiver, you must advise the Distributor when buying shares or the
Transfer Agent when submitting a repurchase request that a special condition
applies.

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

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


 ------------------------------------------------------------------------------
 Amount of Purchase       Front-End Sales   Front-End Sales    Concession As
                                              Charge As a
                            Charge As a      Percentage of
                           Percentage of      Net Amount       Percentage of
                           Offering Price      Invested       Offering Price
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $100,000            3.50%             3.63%             3.00%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.00%             3.09%             2.50%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.00%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.50%
 less than $1 million
 ------------------------------------------------------------------------------

  Due to rounding, the actual sales charge for a particular transaction may
be higher or lower than the rates listed above.


Can You Reduce Class A Sales Charges?  You and your spouse may be eligible to
buy Class A shares of the Fund at reduced sales charge rates set forth in the
table above under the Fund's "Right of Accumulation" or a "Letter of Intent."
The Fund reserves the right to modify or to cease offering these programs at
any time.

o     Right of Accumulation. To qualify for the reduced Class A sales charge
         that would apply to a larger purchase than you are currently
         making (as shown in the table above), you can add the value of
         any Class A, Class B or, Class C shares of the Fund or other
         Oppenheimer funds that you or your spouse currently own, or
         are currently purchasing, to the value of your Class A share
         purchase. Your Class A shares of Oppenheimer Money Market
         Fund, Inc. or Oppenheimer Cash Reserves on which you have not
         paid a sales charge will not be counted for this purpose. In
         totaling your holdings, you may count shares held in your
         individual accounts (including IRAs and 403(b) plans), your
         joint accounts with your spouse, or accounts you or your
         spouse hold as trustees or custodians on behalf of your
         children who are minors. A fiduciary can count all shares
         purchased for a trust, estate or other fiduciary account
         (including employee benefit plans for the same employer) that
         has multiple accounts. To qualify for this Right of
         Accumulation, if you are buying shares directly from the Fund
         you must inform the Fund's Distributor of your eligibility and
         holdings at the time of your purchase. If you are buying
         shares through your financial intermediary you must notify
         your intermediary of your eligibility for this Right of
         Accumulation at the time of your purchase.


               To count shares of eligible Oppenheimer funds held in
         accounts at other intermediaries under this Right of
         Accumulation, you may be requested to provide the Distributor
         or your current intermediary (depending on the way you are
         buying your shares) a copy of each account statement showing
         your current holdings of the Fund or other eligible
         Oppenheimer funds, including statements for accounts held by
         you and your spouse or in retirement plans or trust or
         custodial accounts for minor children as described above. The
         Distributor or intermediary through which you are buying
         shares will combine the value of all your eligible Oppenheimer
         fund accounts based on the current offering price per share to
         determine what Class A sales charge breakpoints you may
         qualify for on your current purchase.


o     Letters of Intent. You may also qualify for reduced Class A sales
         charges by submitting a Letter of Intent to the Distributor. A
         Letter of Intent is a written statement of your intention to
         purchase a specified value of Class A, Class B or Class C
         shares of the Fund or other Oppenheimer funds over a 13-month
         period. The total amount of your intended purchases of Class
         A, Class B and Class C shares will determine the reduced sales
         charge rate that will apply to your Class A share purchases of
         the Fund during that period. You can choose to include
         purchases made up to 90 days before the date that you submit a
         Letter. Your Class A shares of Oppenheimer Money Market Fund
         or Oppenheimer Cash Reserves on which you have not paid a
         sales charge will not be counted for this purpose. Submitting
         a Letter of Intent does not obligate you to purchase the
         specified amount of shares.  You may also be able to also
         apply the Right of Accumulation to these purchases.


            If you do not complete the Letter of Intent, the front-end
         sales charge you paid on your purchases will be recalculated
         to reflect the actual value of shares you purchased.  A
         certain portion of your shares will be held in escrow by the
         Fund's Transfer Agent for this purpose. Please refer to "How
         to Buy Shares - Letters of Intent" in the Fund's Statement of
         Additional Information for more complete information.


Other Special Sales Charge Arrangements and Waivers.  The Fund and the
Distributor offer other opportunities to purchase shares without
front-end sales charge or early withdrawal charge under the programs
described below. The Fund reserves the right to amend or discontinue
these programs at any time without prior notice.

o     Dividend Reinvestment.  Dividends and/or capital gains distributions
         received by a shareholder from the Fund may be reinvested in
         shares of the Fund or any of the other Oppenheimer funds
         without a sales charge, at the net asset value per share in
         effect on the payable date. You must notify the Transfer Agent
         in writing to elect this option and must have an existing
         account in the fund selected for reinvestment.

o     Exchanges of Shares.  Shares of the Fund may be exchanged for shares of
         certain other Oppenheimer funds at net asset value per share
         at the time of exchange, without sales charge, and shares of
         the Fund can be purchased by exchange of shares of certain
         other Oppenheimer funds on the same basis. Please refer to
         "How to Exchange Shares" in this Prospectus and in the
         Statement of Additional Information for more details,
         including a discussion of circumstances in which sales charges
         may apply on exchanges.

      o     Reinvestment Privilege.  Within six months of a repurchase
         of certain Class A and Class B shares, the proceeds may be
         reinvested in Class A shares of the Fund without sales charge.
         This privilege applies to repurchases of Class A shares that
         were subject to an initial sales charge or Class A or Class B
         shares that were subject to a contingent deferred sales charge
         or early withdrawal charge when redeemed. The investor must
         ask the Transfer Agent for that privilege at the time of
         reinvestment and must identify the account from which the
         repurchase was made.
      o     Other Special Reductions and Waivers. The Fund and the
         Distributor offer additional arrangements to reduce or
         eliminate front-end sales charges or to waive early withdrawal
         charges for certain types of transactions and for certain
         classes of investors (primarily retirement plans that purchase
         shares in special programs through the Distributor). These are
         described in greater detail in Appendix B to the Statement of
         Additional Information, which may be ordered by calling
         800.225.5677 or through the OppenheimerFunds website, at
         www.oppenheimerfunds.com (follow the hyperlinks: "Access
         Accounts and Services" - "Forms & Literature" - "Order
         Literature" - "Statements of Additional Information"). A
         description of these waivers and special sales charge
         arrangements is also available for viewing on the
         OppenheimerFunds website (follow the hyperlinks: "Research
         Funds" - "Fund Documents" - "View a description . . ."). To
         receive a waiver or special sales charge rate under these
         programs, the purchaser must notify the Distributor (or other
         financial intermediary through which shares are being
         purchased) at the time of purchase, or notify the Transfer
         Agent at the time of redeeming shares for those waivers that
         apply to early withdrawal charges.

o     Purchases by Certain Retirement Plans. There is no initial sales charge
         on purchases of Class A shares of the Fund by retirement plans
         that have $5 million or more in plan assets. In that case the
         Distributor may pay from its own resources, at the time of
         sale, concessions in an amount equal to 0.25% of the purchase
         price of Class A shares purchased within the forst six months
         of account establishment by those retirement plans to dealers
         of record, subject to certain exceptions described in
         "Retirement Plans" in the Statement of Additional Information.
         No contingent deferred sales charge is charged upon the
         redemption of such shares.

         There is also no initial sales charge on purchases of Class A
         shares of the Fund by certain retirement plans that are part
         of a retirement plan or platform offered by banks,
         broker-dealers, financial advisors, insurance companies or
         recordkeepers. No contingent deferred sales charge is charged
         upon the redemption of such shares.


Class A Early Withdrawal Charge. There is no initial sales charge
      on purchases of Class A shares of any one or more of the
      Oppenheimer funds aggregating $1 million or more, or on
      purchases of Class A shares by certain retirement plans that
      satisfied certain requirements prior to March 1, 2001
      ("grandfathered retirement accounts").  However, those Class
      A shares may be subject to a Class A early withdrawal
      charge, as described below.  Retirement plans holding shares
      of Oppenheimer funds in an omnibus account(s) for the
      benefit of plan participants in the name of a fiduciary or
      financial intermediary (other than
      OppenheimerFunds-sponsored Single DB Plus plans) are not
      permitted to make initial purchases of Class A shares
      subject to a contingent deferred sales charge.


      The Distributor pays dealers of record concessions in an amount equal
      to 0.50% of purchases of $1 million or more other than purchases by
      grandfathered retirement accounts.  For grandfathered retirement
      accounts, the concession is 0.75% of the first $2.5 million of
      purchases plus 0.25% of purchases in excess of $2.5 million.  In either
      case, the concession will not be paid on purchases of shares by
      exchange or that were previously subject to a front-end sales charge
      and dealer concession.


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

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

How Can You Buy Class B Shares?  The Fund sells Class B shares at their
current net asset value per share without an initial sales charge.  However,
if you tender your Class B shares for repurchase in a Repurchase Offer and
they are accepted for repurchase within a holding period of five years from
the beginning of the calendar month of their purchase, the Fund will deduct
an Early Withdrawal Charge from the repurchase proceeds.  The Class B Early
Withdrawal Charge is used to compensate the Distributor for its expenses in
providing distribution-related services to the Fund in connection with the
sale of Class B shares.

      The amount of the Early  Withdrawal  Charge will depend on the number of
years  since  you  bought  the  shares  and the  dollar  amount  the  Fund has
repurchased,  according  to the  following  schedule  for  the  Class  B Early
Withdrawal Charge holding period:

---------------------------------------------------------------------------------
Years Since the Date on Which the        Early Withdrawal Charge on Shares
Purchase Order was Accepted              Accepted for Repurchase in That Year
                                         (As % of Amount Subject to Charge)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                 0 - 1                                    3.0%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                 1 - 2                                    2.0%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                 2 - 3                                    1.5%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                 3 - 4                                    1.5%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                 4 - 5                                    1.0%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
            5 and following                               None
---------------------------------------------------------------------------------
In the table, a "year" is a 12-month period.  In applying the Early
Withdrawal Charge, all purchases are considered to have been made on the
first regular business day of the month during which the purchase was made.
If your Class B shares that are repurchased were acquired by exchange of
Class B shares of another Oppenheimer fund, they will be subject to the Class
B Early Withdrawal Charge rate of this Fund for a comparable holding period.

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

How Can You Buy Class C Shares?  The Fund sells Class C shares at net asset
value per share without an initial sales charge.  However, if you tender your
Class C shares for purchase in a Repurchase Offer within a holding period of
12 months from the beginning of the calendar month of their purchase, the
Fund will deduct an Early Withdrawal Charge of 1.0% from the repurchase
proceeds.  The Class C Early Withdrawal Charge is used to compensate the
Distributor for its expenses in providing distribution-related services to
the Fund in connection with the sale of Class C shares.


WHO CAN BUY CLASS Y SHARES? Class Y shares are sold at net asset value per
share without a sales charge directly to institutional investors that have
special agreements with the Distributor for this purpose. They may include
insurance companies, registered investment companies, employee benefit plans
and Section 529 plans, among others. Individual investors cannot buy Class Y
shares directly.

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


Distribution and Service Plans


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


      Distribution and Service Plans for Class B and Class C Shares.  The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to pay the Distributor for its services and costs in distributing
Class B and Class C shares and servicing accounts.  Under the plans, the Fund
pays the Distributor a distribution fee (which is deemed to be an
"asset-based sales charge") of up to 0.75% of average annual net assets on
Class B shares and on Class C shares.  The Board of Trustees has currently
set that fee rate at 0.50% of average annual net assets of the respective
class per year under each plan but may increase it up to 0.75% in the future.
The Fund also pays the Distributor a service fee of 0.25% of average annual
net assets under each plan.

      The distribution fee and service fees increase Class B and Class C
expenses by 0.75% of the average annual net assets of the respective class.
Because these fees are paid out of the Fund's assets on an ongoing basis,
over time these fees will increase the cost of your investment.

      The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares.  The Distributor normally pays the 0.25% service fees to dealers in
advance for the first year after the dealer sold the shares.  After the
shares have been held for one year, the Distributor pays the service fees to
dealers on a quarterly basis.

      The Distributor currently pays a sales concession of 2.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale.  Including the advance of the service fee, the total amount
that the Distributor pays to the dealer at the time of sale of Class B shares
is therefore 3.00% of the purchase price.  The Distributor normally retains
the Class B distribution fee. See the Statement of Additional Information for
exceptions.

      The Distributor currently pays a sales concession of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the
time of sale.  Including the advance of the service fee, the total amount
that the Distributor pays to the dealer at the time of sale of Class C shares
is therefore 1.00% of the purchase price.  The Distributor pays the
distribution fee as an ongoing concession to the dealer on Class C shares
that have been outstanding for a year or more. The Distributor normally
retains the asset-based sales charge on Class C shares during the first year
after the purchase of Class C shares.  See the Statement of Additional
Information for exceptions.

      Under certain circumstances, the Distributor will pay the full Class B
or Class C asset-based sales charge and the service fee to the dealer
beginning in the first year of purchase of such shares in lieu of paying the
dealer the sales concession and the advance of the first year's service fee
at the time of purchase, if there is a special agreement between the dealer
and the Distributor.  In those circumstances, the sales concession will not
be paid to the dealer.

In addition, the Manager and the Distributor may make substantial payments to
dealers or other financial intermediaries and service providers for
distribution and/or shareholder servicing activities, out of their own
resources, including the profits from the advisory fees the Manager receives
from the Fund.  Some of these distribution-related payments may be made to
dealers or financial intermediaries for marketing, promotional or related
expenses; these payments are often referred to as "revenue sharing."  In some
circumstances, those types of payments may create an incentive for a dealer
or financial intermediary or its representatives to recommend or offer shares
of the Fund or other Oppenheimer funds to its customers.  You should ask your
dealer or financial intermediary for more details about any such payments it
receives.


Special Investor Services

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

      You may purchase shares by telephone only after the Fund has
established your account. You can then purchase shares in amounts up to
$250,000 through a telephone representative.  To do so, call the Distributor
at 1.800.225.5677.  The Fund will debit the purchase payment from your bank
account.


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


PhoneLink.  PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. You may use PhoneLink on already
established Fund accounts after you obtain a Personal Identification Number
(PIN), by calling the PhoneLink number, 1.800.225.5677.

      Purchasing Shares.  You may purchase shares in amounts up to $100,000
by phone, by calling 1.800.225.5677.  You must have established AccountLink
privileges to link your bank account with the Fund to pay for these purchases.

      Exchanging Shares.  With the OppenheimerFunds Exchange Privilege,
described below, you can request exchanges of your Fund shares by phone to
another OppenheimerFunds account you have already established by calling the
special PhoneLink number.  You can exchange shares only in connection with a
repurchase through a Repurchase Offer, described below.

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

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

Retirement Plans.  You may buy shares of the Fund for your retirement plan
account.  If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that can be
used by individuals and employers:
Individual Retirement Accounts (IRAs). These include regular IRAs, Roth IRAs,
      SIMPLE IRAs, and rollover IRAs.
SEP-IRAs. These are Simplified Employee Pensions Plan IRAs for small business
      owners or self-employed individuals.
403(b)(7) Custodial Plans. These are tax-deferred plans for employees of
      eligible tax-exempt organizations, such as schools, hospitals and
      charitable organizations.

      The Fund's shares are not offered to 401(k) plans or other
profit-sharing or pension plans. Please call the Distributor for
OppenheimerFunds retirement plan documents, which include applications and
important plan information.

      Special Considerations for Retirement Plan Investors. Unlike shares of
an open-end fund, the Fund's shares are not redeemable daily, and unlike
traditional closed-end funds, the Fund has not registered its shares on an
exchange.  Therefore there is no market on which the Fund's shares can be
readily sold.  Although the Fund has adopted a policy of making quarterly
Repurchase Offers, they may not provide retirement plan investors with the
degree of liquidity they may need to make mandatory retirement plan
distributions after age 701/2.  Even during a Repurchase Offer, a retirement
plan investor might not be able to have all of the shares repurchased that
are necessary to meet minimum distribution requirements. Because of the
limited liquidity of Fund shares, the Fund may not be appropriate for 401(k),
pension, or profit-sharing plans and is normally not offered to those plans.
Other retirement plan investors may wish to consider limiting the amount of
their retirement plan assets that are invested in the Fund.

Periodic Repurchase Offers

      The Fund has adopted repurchase policies, described below. Each
quarter, the Fund intends to make a "Repurchase Offer," to repurchase a
portion of the Fund's outstanding shares from shareholders. The Repurchase
Offers are designed to provide some liquidity for Fund investors who wish to
sell some or all of their shares, because currently there is no secondary
market for the Fund's shares, and it is not anticipated that a secondary
market will develop.  A secondary market is a market, exchange facility or
system for quoting bid and asked prices where investors can readily buy and
sell securities after their initial distribution.  Without a secondary
market, Fund shares are not liquid, which means that you may not be able to
readily sell them.


      For purposes of Repurchase Offers, all of the Fund's classes of shares
are considered to be a single class, and Repurchase Offers are not pro-rated
among the classes of shares.  The Fund normally will repurchase shares that
are tendered by the Repurchase Request Deadlines and accepted for repurchase
at the net asset values per share determined as of the Fund's close of
business (which is the close of business of the NYSE, normally 4:00 p.m.) on
the Repurchase Pricing Date.  The Repurchase Pricing Date is normally
expected to be the regular business day that is the Repurchase Request
Deadline.  That is the day the Repurchase Offer ends, and under SEC
regulations may not be more than 14 days after the Repurchase Request
Deadline (or the next business day if the l4th day is not a business day), as
described below.


Repurchase Offer Notices. The Fund will send shareholders a written
notification of each Repurchase Offer. The Fund will send the notification to
shareholders at least 21 days but not more than 42 days before the Repurchase
Request Deadline for a Repurchase Offer. The notification will include
information about the Repurchase Offer, including:
o     the percentage of the Fund's shares to be repurchased (the "Repurchase
         Amount")
o     how you may request the Fund to repurchase your shares
o     the Repurchase Request Deadline, which is the date that the Repurchase
         Offer ends and the date by which the Transfer Agent must receive
         your repurchase request
o     the Repurchase Pricing Date, which is the day the Fund calculates the
         net asset values per share that apply to shares repurchased in a
         Repurchase Offer, and
o     the Repurchase Payment Deadline, which is the date by which the Fund
         will send the payment to shareholders for Fund shares accepted for
         repurchase.  That date will be not more than seven days after the
         Repurchase Pricing Date.

      A shareholder may tender all or some of his or her shares for
repurchase.  There is no minimum number of shares that must be tendered. You
may withdraw or change a Repurchase Request at any time up until the
Repurchase Request Deadline for a particular Repurchase Offer, but not after
that date. The Repurchase Request Deadline will be strictly observed.

      Repurchase Request Deadline.  The Fund's Board of Trustees will
establish the Repurchase Request Deadline for each Repurchase Offer based on
factors such as market conditions, the level of the Fund's assets and
shareholder servicing considerations. It is anticipated that the Repurchase
Request Deadline for each quarterly Repurchase Offer will be the close of
business on the last regular business day of January, April, July and
October.


      Repurchase Pricing Date. The repurchase price of the Fund's shares for
a particular Repurchase Offer will be the net asset value determined as of
the close of the NYSE on the Repurchase Pricing Date for that Offer.  The
Fund anticipates that the Repurchase Pricing Date for an Offer normally will
be the same date as the Repurchase Request Deadline for that Offer.  In that
case, the Fund will set the Repurchase Request Deadline for a time no later
than the close of the NYSE on that date.  The Fund, however, may choose to
make the Repurchase Pricing Date for a Repurchase Offer as many as 14 days
after the Repurchase Request Deadline for that Offer.  If that day is not a
regular business day, then the Repurchase Pricing Date for that Offer will be
the following regular business day.


      The Fund does not presently plan to deduct any special servicing or
repurchase fees from the repurchase proceeds (other than any applicable Early
Withdrawal Charges.) However, in the future the Board of Trustees may
determine to impose a repurchase fee payable to the Fund to help it defray
its expenses of making Repurchase Offers.  If that fee is imposed, it may not
exceed 2% of the repurchase proceeds.

      Repurchase Payment Deadline.  The Fund will pay repurchase proceeds in
cash, usually within seven days after each Repurchase Pricing Date.  The
payment date is referred to as the "Repurchase Payment Deadline."

      Repurchase Offer Amounts.  Each quarter, the Fund's Board, in its sole
discretion, will determine the number of shares that the Fund will offer to
repurchase (the "Repurchase Offer Amount") for a particular Repurchase
Offer.  The Repurchase Offer Amount will be at least 5% but not more than 25%
of the total number of shares of all classes of the Fund (in the aggregate)
outstanding on the Repurchase Request Deadline.  If shareholders tender more
than the Repurchase Offer Amount for a particular Repurchase Offer, the Fund
may repurchase up to an additional 2% of the shares outstanding on the
Repurchase Request Deadline.

      Oversubscribed Repurchase Offers. The Fund may not be able to
repurchase the entire amount of shares a shareholder has tendered in a
Repurchase Request for a particular Repurchase Offer if the aggregate tenders
exceed the Repurchase Offer Amount. If shareholders tender more shares than
the Fund has decided to repurchase, the Fund will repurchase the tendered
shares on a pro-rata basis rounded down to the nearest full share. If you
tender fewer than 100 shares, however, the Fund may decide to accept all of
those shares before repurchasing shares tendered by other shareholders on a
pro-rata basis.

      If a Repurchase Offer is oversubscribed, shareholders may be unable to
liquidate some or all of their investment during that Repurchase Offer.  In
that case, the shareholder may have to wait until a later Repurchase Offer to
tender shares for repurchase and would be subject to the risk of share price
fluctuations during that period. There is a risk that because of the
potential for pro-ration, some investors might tender more shares than they
wish to have repurchased to try to ensure the repurchase of at least some
shares.

Fundamental Policies on Repurchases.  The following policies of the Fund
concerning Repurchase Offers are fundamental, which means that the Board of
Trustees cannot change these policies without the vote of the holders of a
"majority of the Fund's outstanding voting securities," as that term is
defined in the Investment Company Act:
o     Periodic Repurchase Offers.  The Fund will make periodic Repurchase
         Offers, pursuant to Rule 23c-3 under the Investment Company Act (as
         that Rule may be amended from time to time).
o     Repurchase Request Deadline.  Repurchase Offers shall be made at
         periodic intervals of three months between Repurchase Request
         Deadlines.  The Repurchase Request Deadlines will be at the time on
         a regular business day (normally the last regular business day) in
         the months of January, April, July and October to be determined by
         the Fund's Board of Trustees.
o     Repurchase Pricing Date.  The Repurchase Pricing Date for a particular
         Repurchase Offer shall be not more than 14 days after the Repurchase
         Request Deadline for that Repurchase Offer. If that day is not a
         regular business day, then the Repurchase Pricing Date will be the
         following regular business day.

Other Repurchase Policies. Other policies in this Prospectus describing
Repurchase Offers and related procedures are not fundamental, which means
that the Board can change them without approval of shareholders.  The Fund's
Board of Trustees may establish other policies for repurchases of shares that
are consistent with the Investment Company Act and other relevant laws and
regulations.  For example, once every two years, the Board may, if it
chooses, make an additional Repurchase Offer to repurchase shares in addition
to regular quarterly Repurchase Offers.

Special Considerations and Risks of Repurchases.  In addition to the
limitations and risks discussed elsewhere in this Prospectus, there are a
number of other factors affecting Repurchase Offers that investors should
consider, as summarized below:

o     Early Withdrawal Charges.  You may be subject to Early Withdrawal
         Charges if the Fund repurchases your Class B shares within five
         years after the beginning of the month in which you purchased them
         or repurchases your Class C shares within one year after the
         beginning of the month in which you purchased them.  You may be
         subject to an Early Withdrawal charge on Class A shares that are
         repurchased if any of those shares were acquired subject to an Early
         Withdrawal Charge or that were acquired by exchange of Class A
         shares of another Oppenheimer fund that were originally purchased
         subject to a Class A contingent deferred sales charge and are
         repurchased by the Fund within 18 months of the beginning of the
         calendar month in which the original purchase occurred (see "How
         Early Withdrawal Charges Affect Repurchases," below).

o     Borrowing.  The Fund intends to raise cash to repurchase shares by the
         sale of liquid portfolio securities or the use of cash on hand. The
         Fund may borrow money to finance the repurchase of shares in
         Repurchase Offers, subject to its investment restrictions on
         borrowing. Interest on the borrowings may increase the Fund's
         expenses and reduce the Fund's net investment income for
         shareholders who do not tender their shares for repurchase. See
         "Investment Restrictions" in the Statement of Additional Information.

o     Differences Between Market Value and Net Asset Value.  If a secondary
         market were to develop for the Fund's shares, the shares could,
         at times, trade in that market at a discount from the net asset
         value per share. A number of factors could cause those
         differences, including the relative demand for and supply of
         shares and the performance of the Fund.  The Fund's policy of
         making quarterly Repurchase Offers for shares at net asset value
         might not alleviate the discount of the market price from net
         asset value per share.

o     Decrease in Fund Assets.  Although the Board believes that the Fund's
         policy of making quarterly Repurchase Offers will generally benefit
         shareholders by providing liquidity, the repurchase of shares could
         cause the Fund's total assets to decrease unless offset by new sales
         of shares.  The Fund's expense ratio might therefore increase as a
         result of repurchases.  Repurchase Offers might also decrease the
         Fund's investment flexibility, in part because of the Fund's need to
         hold liquid assets to satisfy repurchase requests.  The impact may
         depend on the number of shares that the Fund repurchases and the
         ability of the Fund to sell additional shares.

o     Asset Coverage for Borrowings.  Repurchases of Fund shares may
         significantly reduce the asset coverage for any Fund borrowings.
         The Fund may not repurchase shares if the repurchase results in its
         asset coverage levels falling below the requirements of the
         Investment Company Act.  As a result, in order to be able to
         repurchase shares tendered, the Fund may be forced to repay all or a
         part of its outstanding borrowings to maintain the required asset
         coverage.

o     Forced Sale of Portfolio Securities.  During the period from
         notification to shareholders of a Repurchase Offer until the
         Repurchase Pricing Date, the Fund will maintain liquid assets or
         securities that mature prior to the repurchase date equal to 100% of
         the Repurchase Offer Amount. The Fund intends to finance Repurchase
         Offers with cash on hand, cash raised through borrowings, or the
         sale of portfolio securities.  To complete a Repurchase Offer, the
         Fund might be required to sell portfolio securities to raise cash.
         This might cause the Fund to realize gains or losses at a time when
         the Manager would otherwise not want the Fund to do so.  It might
         increase portfolio turnover and the Fund's portfolio transaction
         expenses, reducing the Fund's net income to distribute to
         shareholders.

o     Alternative Means to Provide Liquidity to Shareholders.  The Board may
         consider other means to provide liquidity for shareholders if
         Repurchase Offers do not consistently enable the Fund to repurchase
         the amount of shares tendered by shareholders measured over a number
         of quarterly periods.  Those actions might include evaluating any
         secondary market that may exist for shares and determining whether
         that market provides liquidity for shareholders. The Board might
         consider all available options to provide liquidity.  One
         possibility that the Board may consider is listing the shares on a
         major domestic stock exchange or arranging for the quotation of
         shares on an over-the-counter market.

o     Taxes.  The Fund's repurchase of shares is a taxable event to the
         tendering shareholder.  See "Dividends, Capital Gains and Taxes."

Suspension or Postponement of Repurchase Offers. The Fund may postpone or
suspend Repurchase Offers, but only in accordance with certain regulatory
requirements. A postponement or suspension may occur only if approved by a
vote of a majority of the Board of Trustees, including a majority of the
Independent Trustees. The Fund will send shareholders a notice if there is a
suspension or postponement of a Repurchase Offer and if it is renewed after a
suspension or postponement. A suspension or postponement may be done only in
limited circumstances. These circumstances include the following:
o     If the repurchase of shares would cause the Fund to lose its status as
        a regulated investment company under Subchapter M of the Internal
        Revenue Code,
o     During an emergency that makes it impractical for the Fund to dispose
        of securities it owns or to determine the Net Asset Values of the
        Fund's shares,
o     During other periods that the SEC permits the suspension or
        postponement of offers by the Fund for the protection of its
        shareholders,

If the Fund's shares were to be listed on a stock exchange or are quoted on
an inter-dealer quotation system of a national securities association (such
as Nasdaq(R)
o     ) and the repurchase would cause the shares to lose that listing or

        quotation, or

o     During any period in which the NYSE or any other market on which the
        Fund's portfolio securities are traded is closed (other than
        customary weekend or holiday closings) or trading in those markets is
        restricted.


Repurchase Procedures. You can tender some or all of your Fund shares for
repurchase after you receive Notification of a Repurchase Offer. You can
tender shares by written instructions or by telephone.  Your Repurchase
Request must be received by the Fund's Transfer Agent by its close of
business on the Repurchase Request Deadline. That deadline will be enforced
strictly and if your request is not received by that time, you will have to
wait until the next Repurchase Offer is made to tender your shares for
repurchase.

      Your Repurchase Request must be in proper form (which means that it
must comply with the procedures described below) and must first be accepted
by the Fund, as described above. If you have questions about any of these
procedures, and especially if you are tendering shares in a special
situation, such as due to the death of the owner or from a retirement plan
account, please call the Transfer Agent first at 1.800.225.5677 for
assistance.

      If your repurchase request is for a dollar value rather than a
specified number of shares, and if the Fund would be required to repurchase
shares subject to an Early Withdrawal Charge to meet your request, the Fund
will treat the request as a request to provide you with the net proceeds you
have requested after payment of the Early Withdrawal Charge and will
repurchase an additional number of shares to pay the Early Withdrawal Charge
(assuming that your request is accepted).

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

o     You wish to have the Fund  repurchase  shares worth $100,000 or more and
        send you a check.
o     The check for the repurchase is not payable to all shareholders listed
        on the account statement.
o     The repurchase check is not sent to the address of record on your
        account statement.
o     Your shares are being transferred to the name of a different owner.
o     Shares are being tendered for repurchase by someone (such as an
        Executor) other than. the owners listed in the account registration.


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

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


      Receiving Repurchase Proceeds by Wire. While the Fund normally sends
your money by check, you can arrange to have the proceeds of repurchased
shares sent by Federal Funds wire to a bank account you designate. The
account must be at a commercial bank that is a member of the Federal Reserve
wire system. The minimum amount you can have sent by wire is $2,500. There is
a $10 fee for each request. To find out how to set up this feature on your
account or to arrange a wire, call the Transfer Agent at 1.800.225.5677.


      How Do You Tender Shares for Repurchase by Mail?   You can use the
Fund's Repurchase Request Form or you can write a letter to the Transfer
Agent that includes:

o     Your name,
o     The Fund's name,
o     Your Fund account number (from your account statement),
o     The dollar amount or number of shares you request to be repurchased,
o     Any special payment instructions,
o     The signatures of all registered owners exactly as listed in the

        account statement,    and
o     Any special documents requested by the Transfer Agent to assure proper
        authorization of the person asking the Fund to repurchase the shares
        (such as  Letters Testamentary of an Executor).

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

      Can You Submit Repurchase Requests by Telephone?  You and your dealer
representative of record may also submit Repurchase Requests by telephone.
You may not submit Repurchase Requests by telephone for Fund shares held in
an OppenheimerFunds retirement plan account.
o     To request repurchase through a service representative or to request
        repurchase on PhoneLink, call 1.800.225.5677.

      Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

      Are There Limits on Repurchase Requests Submitted by Telephone?  If you
request payment by check, you may request repurchase of up to $100,000 by
telephone in a single Repurchase Offer.  The check must be payable to all
owners of record of the shares and must be sent to the address on the account
statement.  This service is not available within 30 days of changing the
address on an account.

      There are no dollar limits on repurchase requests submitted by
telephone if you have the proceeds sent to a bank account you designate when
you establish AccountLink.  Normally the ACH transfer to your bank is
initiated on the business day after the Repurchase Payment Deadline.  You do
not receive dividends on the proceeds of the shares while they are waiting to
be transferred.

How Early Withdrawal Charges Affect Repurchases.   If you purchase shares
subject to Class A, Class B or Class C Early Withdrawal Charges and those
shares are accepted for repurchase during the applicable holding period for
the class of shares, the Early Withdrawal Charge will be deducted from the
repurchase proceeds, unless you are eligible for a waiver of that charge
based on the categories listed in Appendix B to the Statement of Additional
Information and advise the Transfer Agent of your eligibility for the waiver
when you submit your repurchase request.

      The Early Withdrawal Charge will be based on the lesser of the net
asset value of the repurchased shares at the time of repurchase or the
original net asset value.  The Early Withdrawal Charge is not imposed on:
o     the amount of your share value  represented  by an increase in net asset
         value over the initial purchase price,
o     shares  purchased by the  reinvestment  of  dividends  or capital  gains
         distributions, or
o     shares repurchased in the special circumstances  described in Appendix B
         to the Statement of Additional Information.

      To determine whether an Early Withdrawal Charge applies to a
repurchase, the Fund repurchases shares in the following order:
1.    shares acquired by reinvestment of dividends and capital gains
         distributions,
2.    shares held for the holding period that applies to that class, and
3.    shares held the longest during the holding period.

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


How to Exchange Shares


If you want to change all or part of your investment from one Oppenheimer
fund to another, you can exchange your shares for shares of the same class of
another Oppenheimer fund that offers the exchange privilege. For example, you
can exchange Class A shares of the Fund only for Class A shares of another
fund. You may exchange your shares of the Fund only in connection with a
quarterly Repurchase Offer.  To exchange shares, you must meet several
conditions:


o     Your request must comply with the terms of the Repurchase Offer.
o     Shares of the fund selected for exchange must be available for sale in
      your state of residence.

   o  The prospectuses of the selected fund must offer the exchange privilege.
   o  When you establish an account, you must hold the shares you buy when
      you establish an account for at least seven days before Repurchase
      Request Deadline before you can exchange them in a Repurchase Offer.
      After your account is open for seven days, you can exchange shares in
      accordance with the Repurchase Procedures as described above, subject
      to the limitations described below.
   o  You must meet the minimum purchase requirements for the selected fund.
   o  Generally, exchanges may be made only between identically registered
      accounts, unless all account owners send written exchange instructions
      with a signature guarantee.
   o  Before exchanging into a fund, you must obtain its prospectus and
      should read it carefully.

      For tax purposes, an exchange of shares of the Fund is considered a
   sale of those shares and a purchase of the shares of the fund to which you
   are exchanging. An exchange may result in a capital gain or loss.

         You can find a list of the Oppenheimer funds that are currently
   available for exchanges in the Statement of Additional Information or you
   can obtain a list by calling a service representative at 1.800.225.5677.
   The funds available for exchange can change from time to time.

          There are a number of other special conditions and limitations that
   apply to certain types of exchanges. In some cases, Early Withdrawal
   Charges may be imposed on exchange transactions. In general, an Early
   Withdrawal Charge is not imposed on exchanges of shares that are subject
   to an Early Withdrawal Charge. However, if you exchange shares that are
   subject to an Early Withdrawal Charge, the Early Withdrawal Charge holding
   period will be carried over to the acquired shares and the contingent
   deferred sales charge applicable to that Fund may be imposed if those
   shares are redeemed before the end of that holding period. These
   conditions and circumstances are described in detail in the "How to
   Exchange Shares" section in the Statement of Additional Information.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? When you receive notice of a Repurchase
Offer, you may submit your exchange request in writing by telephone.

Written Exchange Requests. Send an OppenheimerFunds Exchange Request form,
      signed by all owners of the account, to the Transfer Agent at the
      address on the back cover before the Repurchase Request Deadline.
      Exchanges of shares for which share certificates have been issued
      cannot be processed unless the Transfer Agent receives the certificates
      with the request.

Telephone and Exchange Requests. Telephone exchange requests may be made
      either by calling a service representative or by using PhoneLink by
      calling 1.800.225.5677.  Telephone and exchanges may be made only
      during a Repurchase Offer and between accounts that are registered with
      the same name(s) and address. Shares for which share certificates have
      been issued may not be exchanged by telephone.

Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REPURCHASES AND EXCHANGES?

Risks from Excessive Purchase, Repurchase and Short-Term Exchange Activity.
The OppenheimerFunds exchange privilege affords investors the ability to
switch their investments among Oppenheimer funds if their investment needs
change. However, there are limits on that privilege. Frequent purchases,
repurchases and exchanges of fund shares may interfere with the Manager's
ability to manage the fund's investments efficiently, increase the fund's
transaction and administrative costs and/or affect the fund's performance,
depending on various factors, such as the size of the fund, the nature of its
investments, the amount of fund assets the portfolio manager maintains in
cash or cash equivalents, the aggregate dollar amount and the number and
frequency of trades. If large dollar amounts are involved in exchange and/or
repurchase transactions, the Fund might be required to sell portfolio
securities at unfavorable times to meet repurchase or exchange requests, and
the Fund's brokerage or administrative expenses might be increased.

Therefore, the Manager and the Fund's Board of Trustees have adopted the
following policies and procedures to detect and prevent frequent and/or
excessive exchanges, and/or purchase and repurchase activity, while balancing
the needs of investors who seek liquidity from their investment and the
ability to exchange shares as investment needs change. There is no guarantee
that the policies and procedures described below will be sufficient to
identify and deter excessive short-term trading.

o     Timing of Exchanges.  Exchanged shares are normally redeemed from one
         fund and the proceeds are reinvested in the fund selected for
         exchange on the same regular business day on which the Transfer
         Agent or its agent (such as a financial intermediary holding the
         investor's shares in an "omnibus" or "street name" account) receives
         an exchange request that conforms to these policies. The request
         must be received by the close of the NYSE that day, which is
         normally 4:00 p.m., but may be earlier on some days, in order to
         receive that day's net asset value on the exchanged shares. For the
         Fund, requests to exchange shares of the Fund for shares of another
         Fund may only be submitted during a Repurchase Offer and must be
         received by no later than the close of business (which is normally
         4:00 p.m.) on the Repurchase Request Deadline. Exchange requests
         received after the close of the NYSE will receive the next net asset
         value calculated after the request is received. However, the
         Transfer Agent may delay the reinvestment of transmitting the
         proceeds from an exchange for up to five business days if it
         determines, in its discretion, that an earlier transmittal of the
         repurchase proceeds to the receiving fund would be detrimental to
         either the fund from which the exchange is being made or the fund
         into which the exchange is being made. The proceeds will be invested
         in the fund into which the exchange is being made at the next net
         asset value calculated after the proceeds are received. In the event
         that such a delay in the reinvestment of proceeds occurs, the
         Transfer Agent will notify you or your financial representative.

o     Limits on Disruptive Activity. The Transfer Agent may, in its
         discretion, limit or terminate trading activity by any person, group
         or account that it believes would be disruptive, even if the
         activity has not exceeded the policy outlined in this Prospectus.
         The Transfer Agent may review and consider the history of frequent
         trading activity in all accounts in the Oppenheimer funds known to
         be under common ownership or control as part of the Transfer Agent's
         procedures to detect and deter excessive trading activity.

o     Exchanges of Client Accounts by Financial Advisers.  The Fund and the
      Transfer Agent permit dealers and financial intermediaries to submit
      exchange requests on behalf of their customers (unless the customer has
      revoked that authority). The Distributor and/or the Transfer Agent have
      agreements with a number of financial intermediaries that permit them
      to submit exchange orders in bulk on behalf of their clients. Those
      intermediaries are required to follow the exchange policies stated in
      this Prospectus and to comply with additional, more stringent
      restrictions. Those additional restrictions include limitations on the
      funds available for exchanges, the requirement to give advance notice
      of exchanges to the Transfer Agent, and limits on the amount of client
      assets that may be invested in a particular fund. A fund or the
      Transfer Agent may limit or refuse bulk exchange requests submitted by
      such financial intermediaries if, in the Transfer Agent's judgment,
      exercised in its discretion, the exchanges would be disruptive to any
      of the funds involved in the transaction.

o     Repurchases of Shares.  These exchange policy limits do not apply to
      repurchases of shares. Shareholders are permitted tender their shares
      for repurchase during a Repurchase Offer.

o     Right to Refuse Exchange and Purchase Orders.  The Distributor and/or
      the Transfer Agent may refuse any purchase or exchange order in their
      discretion and are not obligated to provide notice before rejecting an
      order. The Fund may amend, suspend or terminate the exchange privilege
      at any time. You will receive 60 days' notice of any material change in
      the exchange privilege unless applicable law allows otherwise.

o     Right to Terminate or Suspend Account Privileges.  The Transfer Agent
      may send a written warning to direct shareholders that the Transfer
      Agent believes may be engaging in excessive purchases, repurchases
      and/or exchange activity and reserves the right to suspend or terminate
      the ability to purchase shares and/or exchange privileges for any
      account that the Transfer Agent determines, in carrying out these
      policies and in the exercise of its discretion, has engaged in
      disruptive or excessive trading activity, with or without such warning.

o     Omnibus Accounts.  If you hold your shares of the Fund through a
      financial intermediary such as a broker-dealer, a bank, an insurance
      company separate account, an investment adviser, an administrator or
      trustee of a retirement plan or 529 plan, that holds your shares in an
      account under its name (these are sometimes referred to as "omnibus" or
      "street name" accounts), that financial intermediary may impose its own
      restrictions or limitations to discourage short-term or excessive
      trading. You should consult your financial intermediary to find out
      what trading restrictions, including limitations on exchanges, they may
      apply.


While the Fund, the Distributor, the Manager and the Transfer Agent encourage
financial intermediaries to apply the Fund's policies to their customers who
invest indirectly in the Fund, the Transfer Agent may not be able to detect
excessive short term trading activity facilitated by, or in accounts
maintained in, the "omnibus" or "street name" accounts of a financial
intermediary. Therefore the Transfer Agent might not be able to apply this
policy to accounts such as (a) accounts held in omnibus form in the name of a
broker-dealer or other financial institution, or (b) omnibus accounts held in
the name of a retirement plan or 529 plan trustee or administrator, or (c)
accounts held in the name of an insurance company for its separate
account(s), or (d) other accounts having multiple underlying owners but
registered in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

Therefore the Transfer Agent might not be able to detect excessive short term
trading activity facilitated by, or in accounts maintained in, the "omnibus"
or "street name" accounts of a financial intermediary. However, the Transfer
Agent will attempt to monitor overall purchase and repurchase activity in
those accounts to seek to identify patterns that may suggest excessive
trading by the underlying owners.  If evidence of possible excessive trading
activity is observed by the Transfer Agent, the financial intermediary that
is the registered owner will be asked to review account activity, and to
confirm to the Transfer Agent and the fund that appropriate action has been
taken to curtail any excessive trading activity. However, the Transfer
Agent's ability to monitor and deter excessive short-term trading in omnibus
or street name accounts ultimately depends on the capability and cooperation
of the financial intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted the
following additional policies and procedures to detect and prevent frequent
and/or excessive exchanges and purchase and repurchase activity:

o     30-Day Limit.  A direct shareholder may exchange some or all of the
         shares of the Fund held in his or her account to another eligible
         Oppenheimer fund once in a 30 calendar-day period and only during a
         Repurchase Offer. When shares are exchanged into a fund account,
         that account will be "blocked" from further exchanges into another
         fund for a period of 30 calendar days from the date of the exchange.
         The block will apply to the full account balance and not just to the
         amount exchanged into the account. For example, if a shareholder
         exchanged $1,000 from one fund into another fund in which the
         shareholder already owned shares worth $10,000, then, following the
         exchange, the full account balance ($11,000 in this example) would
         be blocked from further exchanges into another fund for a period of
         30 calendar days. A "direct shareholder" is one whose account is
         registered on the Fund's books showing the name, address and tax ID
         number of the beneficial owner.

o     Exchanges Into Money Market Funds.  A direct shareholder will be
         permitted to exchange shares of a stock or bond fund for shares of a
         money market fund at any time, even if the shareholder has exchanged
         shares into the stock or bond fund during the prior 30 days.
         However, all of the shares held in that money market fund would then
         be blocked from further exchanges into another fund for 30 calendar
         days. Please remember that shares of the Fund can only be exchanged
         for shares of another Fund during a Repurchase Offer.

o     Dividend Reinvestments/B Share Conversions.  Reinvestment of dividends
         or distributions from one fund to purchase shares of another fund
         and the conversion of Class B shares into Class A shares will not be
         considered exchanges for purposes of imposing the 30-day limit.

o     Asset Allocation.  Third-party asset allocation and rebalancing
         programs will be subject to the 30-day limit described above. Asset
         allocation firms that want to exchange shares held in accounts on
         behalf of their customers must identify themselves to the Transfer
         Agent and execute an acknowledgement and agreement to abide by these
         policies with respect to their customers' accounts. "On-demand"
         exchanges outside the parameters of portfolio rebalancing programs
         will be subject to the 30-day limit. However, investment programs by
         other Oppenheimer "funds-of-funds" that entail rebalancing of
         investments in underlying Oppenheimer funds will not be subject to
         these limits.

o     Automatic Exchange Plans.  Accounts that receive exchange proceeds
         through automatic or systematic exchange plans that are established
         through the Transfer Agent will not be subject to the 30-day block
         as a result of those automatic or systematic exchanges (but may be
         blocked from exchanges, under the 30-day limit, if they receive
         proceeds from other exchanges).


Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying shares,
tendering shares for repurchase, and exchanging shares is contained in the
Statement of Additional Information.


A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a
value of less than $500. The fee is automatically deducted from each
applicable Fund account annually in September. See the Statement of
Additional Information to learn how you can avoid this fee and for
circumstances under which this fee will not be assessed.


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

Telephone Transaction Privileges.  The Fund may modify, suspend or terminate
telephone transaction privileges at any time. The Fund will provide you
notice whenever it is required to do so by applicable law.  If an account has
more than one owner, the Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of
the account and the dealer representative of record for the account unless
the Transfer Agent receives cancellation instructions from an owner of the
account.

Recording of Calls.  The Transfer Agent will record telephone calls to verify
data concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the Fund will
not be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine.

Requests Must Be In Proper Form.  The Transfer Agent will not honor a request
to repurchase or exchange shares in a Repurchase Offer unless it is received
by the Repurchase Request Deadline in proper form and, if applicable, it
includes all required documents.

Networking Arrangements.  Dealers that can perform account transactions for
their clients by participating in Networking through the National Securities
Clearing Corporation must obtain their clients' permission to perform those
transactions.  Those dealers are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction erroneously
or improperly.

The Fund's Net Asset Values Will Vary.  The net asset values for the Fund's
different classes of shares will vary from day to day because the values of
the securities in the Fund's portfolio fluctuate. The repurchase price, which
is the applicable net asset value per share, will normally differ for each
class of shares.  The repurchase value of your shares may be more or less
than their original cost.

Payment for Repurchased Shares.  The Fund ordinarily makes payment for
repurchased shares in cash.  It is forwarded by check, or through AccountLink
or by Federal Funds wire (as elected by the shareholder) within seven days
after the Repurchase Pricing Date for the relevant Repurchase Order (if the
Transfer Agent has received repurchase documentation in proper form by the
Regular Request Deadline). However, under unusual circumstances determined by
the Securities and Exchange Commission, payment may be delayed or suspended.

Involuntary Repurchases of Small Accounts.  The Fund may involuntarily
repurchase the shares in your account if the account value has fallen below
$200 for reasons other than the fact that the market value of the shares has
dropped.  In some cases, the Fund may make involuntary repurchases to repay
the Distributor for losses from the cancellation of share purchase orders.
The Fund will provide notice to shareholders prior to making an involuntary
repurchase of shares, including information about how to avoid that
repurchase by increasing the size of the account.

Federal regulations may require the Fund to obtain your name, your date of
birth (for a natural person), your residential street address or principal
place of business and your Social Security Number, Employer Identification
Number or other government issued identification when you open an account.
Additional information may be required in certain circumstances or to open
corporate accounts.  The Fund or the Transfer Agent may use this information
to attempt to verify your identity.  The Fund may not be able to establish an
account if the necessary information is not received.  The Fund may also
place limits on account transactions while it is in the process of attempting
to verify your identity.  Additionally, if the Fund is unable to verify your
identity after your account is established, the Fund may be required to close
your account.

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

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

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

Dividends, Capital Gains and Taxes

Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income on each regular business day and to pay
those dividends to shareholders monthly on a date selected by the Board of
Trustees.  The Fund will not pay or declare daily dividends on
newly-purchased shares until Federal Funds are available to the Fund from the
purchase payment for the shares.


      The amount of any dividends the Fund pays may vary over time, depending
on market conditions, the composition of the Fund's investment portfolio and
the expenses borne by the particular class of shares.  Dividends and other
distributions paid to Class A and Class Y shares will generally be higher
than dividends for Class B and Class C shares, because they normally have
higher expenses than Class A or Class Y shares. The Fund has no fixed
dividend rate and cannot guarantee that it will pay any dividends or other
distributions.


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

What Choices Do You Have for Receiving Distributions?  When you open your
account, specify on your application how you want to receive your dividends
and distributions.  If you do not select an option, all dividends and
distributions will be reinvested in Fund shares for your account. You have
four options:

      Reinvest All  Distributions  in the Fund.  You can elect to reinvest all
dividends and capital gains distributions in additional shares of the Fund.

      Reinvest Certain Types of Distributions.  You can elect to reinvest
some distributions (dividends, short-term capital gains or long-term capital
gains) in the Fund while receiving your other distributions by check or
having them sent to your bank account through AccountLink.

      Receive All Distributions in Cash.  You can elect to receive a check
for all dividends and capital gains distributions or have them sent to your
bank through AccountLink.

      Reinvest Your Distributions in Another OppenheimerFunds Account.  You
can reinvest all distributions in the same class of shares of another
Oppenheimer fund in which you have established an account.

Taxes.  The Fund intends to qualify as a regulated investment company under
the Internal Revenue Code.  That means that in each year it qualifies, it
will pay no federal income tax on the earnings or capital gains it
distributes to its shareholders. It qualified its last fiscal year.  The Fund
reserves the right not to qualify.  If your Fund shares are not held in a
tax-deferred retirement account, you should be aware of the following tax
implications of investing in the Fund.
o     Whether you receive them in cash or reinvest them, dividends and
         capital gains distributions are subject to federal income tax and
         may be subject to state and local taxes.
o     Dividends paid from net investment income and short-term capital gains
         are taxable as ordinary income.  Distributions of the Fund's
         long-term capital gains are taxable as long-term capital gains.  It
         does not matter how long you have held your shares.
o     Every year the Fund will send you and the IRS a statement showing the
         amount of any taxable dividends and other distributions the Fund
         paid to you in the previous year.  The tax information the Fund
         sends you will separately identify any long-term capital gains
         distribution the Fund paid to you.
o     Because the Fund's share prices fluctuate, you may have a capital gain
         or loss when your shares are repurchased or you exchange them.  A
         capital gain or loss is the difference between the price you paid
         for the shares and the price you received when they were accepted
         for repurchase or exchange.  Generally, when shares of the Fund you
         have tendered are repurchased, you must recognize any capital gain
         or loss on those shares.
o     It is possible (although the Fund believes it is unlikely) that if a
         shareholder tenders less than all of his or her shares in a
         Repurchase Offer, the offer might not be treated as a sale or
         exchange for federal income tax purposes. In that case the payment
         of the repurchase proceeds may be subject to income tax as ordinary
         income, a return of capital or capital gain, depending on the Fund's
         earnings and profits and the shareholder's basis in the shares. If
         that occurs, there is a risk that non-tendering shareholders could
         be considered to have received a "deemed" distribution subject to
         tax in whole or in part as ordinary income. The income tax
         consequences of the repurchase of shares pursuant to Repurchase
         Offers will be disclosed in the related Repurchase Offer documents.
o     If you buy shares on the date or just before the date the Fund declares
         a capital gains distribution, a portion of the purchase price for
         the shares will be returned to you as a taxable distribution.
o     You should review the more detailed discussion of federal income tax
         considerations in the Statement of Additional Information.

Returns of Capital Can Occur.  In certain cases, distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.  The
Fund will identify returns of capital in shareholder notices.

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







Additional Information About the Fund

The Fund's Voting Shares.  Shares of the Fund are freely transferable, and
each share of the Fund represents an interest in the Fund proportionately
equal to the interests of each other share of the same class. Each class of
shares of the Fund pays its own dividends and other distributions, and pays
certain expenses which may be different from those of other classes.

      Each share of each class has one vote at shareholder meetings, with
fractional shares voting proportionally, on matters submitted to the vote of
shareholders. There are no cumulative voting rights. Shares of all classes
are voted in the aggregate and not by class, except when voting by class is
required by law or when matters affect a particular class or classes. Each
class may have separate voting rights on matters in which the interests of
that class are different from the interests of another class.


      The Fund's classes of shares do not have pre-emptive or conversion
rights (other than the automatic conversion of Class B shares for Class A
shares described above) or repurchase provisions. In the event of a
liquidation of the Fund, shareholders are entitled to share pro rata in the
net assets of the Fund available for distribution to shareholders of a class
after all expenses and debts have been paid.


Anti-Takeover Provisions. The Fund has certain anti-takeover provisions in
its Declaration of Trust. They are intended to limit the ability of entities
or persons to acquire control of the Fund, to cause it to engage in certain
transactions or to modify its structure.  The affirmative vote or consent of
the holders of two-thirds of the outstanding shares of the Fund is required
for the following transactions involving a "Principal Shareholder" (a person,
corporation or other entity that owns 5% or more of the outstanding shares of
the Fund):
o     Merger or consolidation of the Fund into any Principal Shareholder,
o     Conversion of the Fund from a closed-end to an open-end investment
           company (except that if the Board of Trustees recommends such
           conversion, the approval of a majority of the Fund's outstanding
           voting shares will be sufficient),
o     Issuance of any securities of the Fund to any Principal Shareholder
           (other than the Manager or Distributor) for cash,
o     Sale, lease, or exchange of all or any substantial part of the assets
           of the Fund to any Principal Shareholder  (except assets having an
           aggregate market value of less than $1 million),
o     Sale, lease or exchange to the Fund, in exchange for securities of the
           Fund, of any assets of any Principal Shareholder (except assets
           having an aggregate market value of less than $1 million).

      However, the affirmative vote or consent of two-thirds of the
outstanding shares of the Fund will not be required for those transactions if
the Board of Trustees under certain conditions approves the transaction.
Additionally, the provisions of the Fund's Declaration of Trust containing
the above anti-takeover provisions cannot be amended without the affirmative
vote of two-thirds of the outstanding voting shares of the Fund.

      These provisions may make it more difficult to convert the Fund to an
open-end investment company or to consummate any of the other transactions
without the approval of the Board of Trustees or approval by the owners of
two-thirds of the Fund's outstanding voting shares. The anti-takeover
provisions could also deprive shareholders of the Fund of the opportunity to
sell their Fund shares at a premium over Net Asset Value in the event that a
secondary market for the Fund's shares develops, by discouraging third
parties from seeking to obtain control of the Fund by a tender offer or
similar transaction.  The Board has considered these provisions and has
concluded that they are in the best interests of the Fund and its
shareholders because they will likely require persons seeking control of the
Fund to negotiate with its management regarding the price to be paid.







Table of Contents of the Statement of Additional Information dated November
21, 2005

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, 2005.  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..
    More Information About Senior Loans................................
            Main Risks of Debt Securities..............................
            Other Debt Securities the Fund Can Buy.....................

    Other Investment Techniques and Strategies.........................
    Portfolio Turnover.................................................
    Other Investment Restrictions......................................
    Disclosure of Portfolio Holdings...................................
    How the Fund is Managed............................................

Organization and History...............................................
    Board of Trustees and Oversight Committees.........................
    Trustees and Officers of the Fund..................................
    The Manager........................................................
Brokerage Policies of the Fund.........................................
Distribution and Service Plans.........................................
Performance of the Fund................................................

About Your Account
How To Buy Shares......................................................
Periodic Offers to Repurchase Shares...................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................

Financial Information About the Fund
Report of Independent Registered Public Accounting Firms...............
Financial Statements...................................................
Appendix A:  Industry Classifications.................................. A-1
Appendix B:  Special Sales Charge Arrangements and Waivers............. B-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 (TAXABLE) BOND RATINGS

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

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

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

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

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

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

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

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

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

Con. (...):  Bonds for which the security  depends on the completion of some act
or the fulfillment of some condition are rated conditionally.  These bonds are
secured by (a)  earnings  of  projects  under  construction,  (b)  earnings of
projects  unseasoned  in  operating  experience,  (c) rentals  that begin when
facilities  are  completed,  or (d)  payments  to which  some  other  limiting
condition attaches.  The parenthetical  rating denotes probable credit stature
upon completion of construction or elimination of the basis of the condition.

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

Short-Term Ratings - Taxable Debt

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

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

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

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

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


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

LONG-TERM CREDIT RATINGS

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

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

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

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

            BB, B, CCC, CC, and C

Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
significant speculative characteristics. `BB' indicates the least degree of
speculation and `C' the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
BB: Bonds rated "BB" are less vulnerable to nonpayment than other  speculative
issues.  However, they face major ongoing uncertainties or exposure to adverse
business,  financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

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

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

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

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

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

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

            SHORT-TERM ISSUE CREDIT RATINGS
------------------------------------------------------------------------------

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

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

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

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

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

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












Oppenheimer Senior Floating Rate Fund
6803 South Tucson Way
Centennial, Colorado  80112
1.800.225.5677

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

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

Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado  80217
1.800.225.5677

Custodian Bank
Deutsche Bank and Trust Company Americas
60 Wall Street, 17th floor
NYC60-1701
New York, New York  10005-2848

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
555 Seventeenth Street, Suite 3600
Denver, Colorado 80202-3942

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

Legal Counsel to the Independent Trustees

Bell, Boyd & Lloyd, LLC
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-42079









INFORMATION AND SERVICES
For More Information on Oppenheimer Senior Floating Rate Fund

The following additional information about the Fund is available without charge
upon request:

Statement  of  Additional  Information.   This  document  includes  additional
information about the Fund's investment  policies,  risks, and operations.  It
is incorporated  by reference into this Prospectus  (which means it is legally
part of this Prospectus).

Annual  and  Semi-Annual  Reports.  Additional  information  about the  Fund's
investments  and performance is available in the Fund's Annual and Semi-Annual
Reports to  shareholders.  The Annual  Report  includes a discussion of market
conditions and investment  strategies that  significantly  affected the Fund's
performance during its last fiscal year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Fund's privacy policy and
other information about the Fund or your account:

-----------------------------------------------------------------------------------
By Telephone:                  Call OppenheimerFunds Services toll-free:
                               -----------------------------------------------
                               1.800.CALL OPP (225.5677)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
By Mail:                       Write to:
                               OppenheimerFunds Services
                               P.O. Box 5270
                               Denver, Colorado 80217-5270
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

On the Internet:               You can request these documents by e-mail
                               through the OppenheimerFunds website. You may
                               also read or download certain documents on the
                               OppenheimerFunds website at:
                               www.oppenheimerfunds.com

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

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

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


The Fund's SEC File No.: 811-09373        The     Fund's     shares     are
distributed by:
PRO291.001.1105                           OppenheimerFunds     Distributor,
Inc.

Printed on recycled paper

------------------------------------------------------------------------------
Oppenheimer Senior Floating Rate Fund
------------------------------------------------------------------------------


6803 South Tucson Way, Centennial, Colorado 80112
1.800.CALL OPP (225.5677)
Statement of Additional Information dated November 21, 2005

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, 2005.  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..
    More Information About Senior Loans................................
            Main Risks of Debt Securities..............................
            Other Debt Securities the Fund Can Buy.....................
    Other Investment Techniques and Strategies.........................
    Portfolio Turnover.................................................
    Other Investment Restrictions......................................

Disclosure of Portfolio Holdings

How the Fund is Managed................................................
Organization and History...............................................
    Board of Trustees and Oversight Committees.........................
    Trustees and Officers of the Fund..................................
    The Manager........................................................
Brokerage Policies of the Fund.........................................
Distribution and Service Plans.........................................
Performance of the Fund................................................
About Your Account
How To Buy Shares......................................................
Periodic Offers to Repurchase Shares...................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm................
Financial Statements...................................................
Appendix A:  Industry Classifications.................................. A-1
Appendix B:  Special Sales Charge Arrangements and Waivers............. B-1
------------------------------------------------------------------------------






ABOUT THE FUND
------------------------------------------------------------------------------

Additional Information About the Fund's Investment Policies and Risks

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

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

      In general, the Fund engages in portfolio transactions when the Manager
believes that the sale of a portfolio security, or the purchase of another
security, can enhance the Fund's principal or increase its income.  The
Manager may sell a security to avoid a potential decline in market value or
the Manager may buy a security in anticipation of a market rise.  The Manager
may buy and sell similar securities at the same time to take advantage of
disparities in the normal yield and price relationship between the two
securities.

      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.

      Additionally, in analyzing a particular issuer, the Manager may
consider the trading activity in the issuer's securities, present and
anticipated cash flow, estimated current value of its assets in relation to
their historical cost, the issuer's experience and managerial expertise,
responsiveness to changes in interest rates and business conditions, debt
maturity schedules, current and future borrowing requirements, and any change
in the financial condition of an issuer and the issuer's continuing ability
to meet its future obligations.  The Manager also may consider anticipated
changes in general business conditions, levels of interest rates on bonds
compared to levels of cash dividends, industry and regional prospects, the
availability of new investment opportunities and the general economic,
legislative and monetary outlook for specific industries, the nation and the
world.

More Information About Senior Loans. Senior Loans typically are arranged
through private negotiations between a borrower and one or more financial
institutions ("Lenders"). Usually the Lenders are represented by an agent
("Agent"), which usually is one of the Lenders.







      Senior Loans generally hold the most senior position in a borrower's
capital structure. Borrowers generally are required contractually to pay the
holders of Senior Loans before they pay the holders of unsecured bank loans,
corporate bonds or subordinated debt, trade creditors, and preferred or
common stockholders. Lenders obtain priority liens that typically provide the
first right to cash flows or proceeds from the sale of a borrower's
collateral, if any, if the borrower becomes insolvent. That right is subject
to the limitations of bankruptcy law, which may provide higher priority to
certain other claims such as, for example, employee salaries, employee
pensions and taxes.

      Senior Loans have contractual terms designed to protect lenders.  Loan
agreements often include restrictive covenants that limit the activities of
the borrower. A restrictive covenant is a promise by the borrower to not take
certain actions that might impair the rights of lenders.  Those covenants
typically require the scheduled payment of interest and principal and may
include restrictions on dividend payments and other distributions to the
borrower's shareholders, provisions requiring the borrower to maintain
specific financial ratios or relationships and limits on the borrower's total
debt.  In addition, a covenant may require the borrower to prepay the Senior
Loan or debt obligation with any excess cash flow.  Excess cash flow
generally includes net cash flow after scheduled debt service payments and
permitted capital expenditures, among other things, as well as the proceeds
from asset dispositions or sales of securities.

      A breach of a covenant (after the expiration of any cure period) in a
loan agreement that is not waived by the Agent and the lending syndicate
normally is an event of acceleration.  This means that the Agent has the
right to demand immediate repayment in full of the outstanding loan.
Acceleration may cause the non-payment of the principal or interest on the
loan, in whole or in part, which may result in a reduction in value of the
loan (and possibly the Fund's net asset values) if the loan is not paid.
Acceleration may also occur in the case of the breach of a covenant in a debt
obligation agreement.

      Lenders typically also have certain voting and consent rights under a
Senior Loan agreement.  Action subject to a Lender vote or consent generally
requires the vote or consent of the holders of some specified percentage of
the outstanding principal amount of a Senior Loan, and the Fund might not
agree with the actions of the holders of that specified percentage of a
particular Senior Loan. Certain decisions, such as reducing the amount or
increasing the time for payment of interest on or repayment of principal of a
Senior Loan, or releasing collateral for the Senior Loan, frequently require
the unanimous vote or consent of all Lenders affected.

      |X|  Collateral.  Most, but not all, of the Senior Loans in which the
Fund invests are secured by the borrower's collateral.  Collateral may
include tangible assets, such as cash, accounts receivable, inventory, real
estate, buildings and equipment, common and/or preferred stock of
subsidiaries, and intangible assets including trademarks, copyrights, patent
rights and franchise value.  The Fund may also receive guarantees or other
credit support as a form of collateral.  In some instances, the Fund may
invest in Senior Loans that are secured only by stock of the borrower or its
subsidiaries or affiliates.

      Generally, as discussed below, the Agent for a particular Senior Loan
is responsible for monitoring collateral and for exercising remedies
available to the lenders such as foreclosure upon collateral in the event of
the borrower's default. In certain circumstances, the loan agreement may
authorize the Agent to liquidate the collateral and to distribute the
liquidation proceeds pro rata among the lenders.  The Fund may invest in
Senior Loans that are not secured by specific collateral.  Those loans may
not constitute more than 10% of the Fund's net assets (plus the amount of
borrowings for investment purposes).  Unsecured senior loans involve
additional risk.

      |X|  Interest Rate Benchmarks. Interest rates on Senior Loans adjust
periodically.  The interest rates adjust based on a base rate plus a premium
or spread over the base rate. The base rate usually is the London Inter-Bank
Offered Rate ("LIBOR"), the Federal Reserve federal funds rate, the Prime
Rate or the certificate of deposit ("CD") rate or other base lending rates
used by commercial lenders (each as defined in the applicable loan
agreement). The interest rate on Prime Rate-based corporate loans and
corporate debt securities floats daily as the Prime Rate changes, while the
interest rate on LIBOR-based and CD-based Corporate Loans and Corporate Debt
Securities is reset periodically, typically between 30 days and one year.

o     LIBOR usually is an average of the interest rates quoted by several
         designated banks as the rates at which they pay interest to major
         depositors in the London interbank market on U.S. dollar denominated
         deposits.  The market views changes in short-term LIBOR rates as
         closely related to changes in the Federal Reserve federal funds
         rate, although the two are not officially related.
o     The Federal Reserve federal funds rate is the rate that the Federal
         Reserve Bank charges member banks for borrowing money.
o     The Prime Rate quoted by a major U.S. bank is generally the interest
         rate at which that bank is willing to lend U.S. dollars to its most
         creditworthy borrowers, although it may not be the bank's lowest
         available rate.
o     The CD rate, as provided for in loan agreements, usually is the average
         rate paid on large certificates of deposit traded in the secondary
         market.

      Certain floating or variable rate Senior Loans may permit the borrower
to select an interest rate reset period of up to one year.  A portion of the
Fund's investments may consist of Senior Loans with interest rates that are
fixed for the term of the loan.  Investing in Senior Loans with longer
interest rate reset periods or fixed interest rates may increase fluctuations
in the Fund's net asset value as a result of changes in interest rates.
However, the Fund may attempt to hedge all of its fixed rate Senior Loans
against interest rate fluctuations by entering into interest rate swaps or
total return swap transactions.  The Fund also will attempt to maintain a
dollar-weighted average time period to the next interest rate adjustment of
90 days or less for its portfolio of Senior Loans.

      Senior Loans are generally structured so that borrowers pay higher
margins when they elect LIBOR and CD-based borrower options. This permits
lenders to obtain generally consistent yields on Senior Loans, regardless of
whether borrowers select the LIBOR or CD-based options, or the Prime-based
option.  In recent years, however, the differential between the lower LIBOR
and CD base rates and the higher Prime Rate base rates prevailing in the
commercial bank markets has widened to the point that the higher margins paid
by borrowers for LIBOR and CD-based pricing options do not currently
compensate for the differential between the Prime Rate and the LIBOR and CD
base rates.  Consequently, borrowers have increasingly selected the
LIBOR-based pricing option, resulting in a yield on Senior Loans that is
consistently lower than
the yield available from the Prime Rate-based pricing option.  If this trend
continues, it will significantly limit the ability of the Fund to achieve a
net return to shareholders that consistently approximates the average
published Prime Rate of leading U.S. banks. The Manager cannot predict
whether this trend will continue.

      |X|  The Manager's Credit Analysis of Senior Loans.  The Manager
performs its own credit analysis of Senior Loans.  The Manager obtains
information from the agents that originate or administer the loans, other
lenders and other sources.  The Manager will continue to monitor the credit
of Senior Loans while the Fund owns them.

      In its analysis, the Manager may consider many factors, including the
borrower's past and future projected financial performance; the quality of
management; collateral; cash flow; industry; position in the market; and
tangible assets. When evaluating Senior Loans, the Manager may consider, and
may rely in part, on analysis performed by Agents and other Lenders.  This
analysis may include an evaluation of the value and sufficiency of any
collateral securing Senior Loans.

      A borrower's capital structure may include Senior Loans, senior and
junior unsubordinated debt, preferred stock and common stock.  Senior Loans
typically have the most senior claim on the borrower's assets, while common
stock has the lowest priority.  Typically, the borrowers use the proceeds of
Senior Loans to finance leveraged buyouts, recapitalizations, mergers,
acquisitions, stock repurchases, debt refinancings, and, to a lesser extent,
other purposes.

      When the Manager determines that a borrower of a Senior Loan is likely
to repay its obligations, it will consider that Senior Loan for investment in
the Fund.  For example, the Manager may determine that a borrower can meet
debt service requirements from cash flow or other sources, including the sale
of assets, despite the borrower's low credit rating.  The Manager may
determine that Senior Loans of borrowers that are experiencing financial
distress, but that appear able to pay their interest, may present investment
opportunities.

      |X|  How Senior Loans Are Arranged. The Fund generally will acquire
Senior Loans from and sell Senior Loans to the following types of Lenders:
money center banks, selected regional banks and selected non-banks,
investment banks, insurance companies, finance companies, other investment
companies, private investment funds, and lending companies. The Fund may also
acquire Senior Loans from and sell Senior Loans to U.S. branches of foreign
banks that are regulated by the Federal Reserve System or appropriate state
regulatory authorities.

      The Fund may have obligations under a loan agreement, including the
obligation to make additional loans in certain circumstances. The Fund
intends to establish a reserve against such contingent obligations by
identifying on its books cash, liquid securities and liquid Senior Loans. The
Fund will not purchase a Senior Loan that would require the Fund to make
additional loans if as a result of that purchase all of the Fund's additional
loan commitments in the aggregate would exceed 20% of the Fund's total assets
or would cause the Fund to fail to meet the asset composition requirements
set forth in "Investment Restrictions," below in this Statement of Additional
Information.

o     The Agent.  Agents that arrange Senior Loans typically are commercial
or investment banks or other entities that originate Senior Loans and invite
other parties to join the lending syndicate.  In larger transactions, it is
common to have several Agents. However, usually only one Agent has primary
responsibility for documentation and administration of the Senior Loan.
Agents are normally paid fees by the borrower for their services. While the
Fund can serve as the Agent or co-agent for a Senior Loan, the Fund currently
does not intend to act as an Agent or co-Agent.

      Agents, acting on behalf of the Lenders, generally are primarily
responsible for negotiating the loan agreement, which establishes the terms
and conditions of the Senior Loan and the rights of the borrower and the
Lenders.  Agents usually monitor the adequacy of assets that collateralize
Senior Loans.  Agents may rely on independent appraisals of specific
collateral.  In reliance upon the opinions of their legal counsel, Agents
generally are also responsible for determining that the Lenders have obtained
a perfected security interest in the collateral securing Senior Loans.

      The Fund will rely on Agents to collect payments of principal and
interest on a Senior Loan.  The Fund also will rely in part on Agents to
monitor compliance by the borrower with the restrictive covenants in the loan
agreement and to notify the Fund (or the Lender from whom the Fund has
purchased a participation) of any adverse change in the borrower's financial
condition.

      Financial difficulties of Agents can pose a risk to the Fund. If an
Agent for a particular Senior Loan becomes insolvent, the Fund could incur
losses in connection with its investment in that Senior Loan. An Agent could
declare bankruptcy, and a regulatory authority could appoint a receiver or
conservator.  Should this occur, the assets that the Agent holds under the
Senior Loan should continue to be available to the holders of the Senior
Loans, including the Fund.  A regulator or a court, however, might determine
that the assets that the Agent holds for the benefit of the Fund are subject
to the claims of the Agent's general or secured creditors.  If that occurs,
the Fund might incur costs and delays in realizing final payment on a Senior
Loan, or the Fund might suffer a loss of principal or interest.  The Fund may
be subject to similar risks when it buys a Participation Interest or an
Assignment from an intermediary.

      |X|  How the Fund Invests in Senior Loans.  The Fund may invest in
Senior Loans in one or more of three ways:

o     The Fund may invest directly in a Senior Loan by acting as an original
         Lender.
o     The Fund may purchase a Senior Loan by an assignment of the loan (an
         "Assignment") from the Agent or other Lender.
o     The Fund may purchase a participation interest in a Senior Loan
         ("Participation Interest") from an Agent or other Lender.

o     Direct Investments.  The Fund can invest directly in Senior Loans,
generally "at par" (a price for the Senior Loan equal approximately to 100%
of the funded principal amount of the loan).  When the Fund directly invests
in a Senior Loan, it may receive a return at the full interest rate for the
Senior Loan.

      When the Fund is an original lender, it will have a direct contractual
relationship with the borrower and will have direct recourse against the
borrower in the event the borrower fails to pay scheduled principal or
interest.  In all other cases, the Fund looks to the Agent to enforce
appropriate remedies against the borrower.

o     Assignments.  When the Fund purchases a Senior Loan by Assignment, the
Fund typically succeeds to the rights of the assigning lender under the
Senior Loan agreement and becomes a "Lender" under the Senior Loan
agreement.  Subject to the terms of the loan agreement, the Fund may enforce
compliance by the borrower with the terms of the loan agreement and may have
rights with respect to any funds acquired by other lenders through set-off.

      However, Assignments are arranged through private negotiations between
potential assignees and potential assignors, and the rights and obligations
acquired by the purchaser of an Assignment may be more limited than those
held by the assigning lender. The Fund will purchase an Assignment or act as
lender with respect to a syndicated Senior Loan only when the Manager
determines that the Agent is creditworthy.

o     Participation Interests. A participation interest is an undivided
interest in a loan made by the issuing financial institution in the
proportion that the buyer's participation interest bears to the total
principal amount of the loan. 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. Holders of Participation
Interests are referred to as "Participants."

      Participation Interests involve special risks for the Fund.
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.

      The Fund's rights under a Participation Interest with respect to a
particular Senior Loan may be more limited than the rights of original
Lenders or of investors who acquire an Assignment of that Loan. The Fund has
the right to receive payments of principal, interest and any fees to which it
is entitled only from the Lender selling the Participation Interest and only
when the Lender receives the payments from the borrower.  In purchasing
Participation Interests, the Fund will usually have a contractual
relationship only with the selling institution and not the underlying
borrower.  The Fund generally will have no right directly to enforce
compliance by the borrower with the terms of the related loan agreement, nor
will the Fund generally have the right to object to certain changes to the
loan agreement agreed to by the selling institution.  The Fund generally will
have no right to compel the lender from whom it purchased the Participation
Interest to enforce compliance by the borrower with the terms of the Senior
Loan agreement.

      In buying a Participation Interest, the Fund might not directly benefit
from the collateral supporting the related Senior Loan and may be subject to
any rights of set off the borrower has against the selling institution.  As a
result, the Fund may be subject to delays, expenses and risks that are
greater than those that exist when the Fund is an original Lender.

      Due to restrictions and conditions on transfer in loan agreements and
in the participation agreement negotiated by the Fund and the selling
institution, Participation Interests are not as easily purchased or sold as a
publicly traded security.  Accordingly, investments in participation
interests may be illiquid.

      In buying a Participation Interest, the Fund assumes the credit risk of
both the borrower and the Lender selling the Participation Interest.  If a
Lender that sells the Fund a Participation Interest becomes insolvent, the
Fund may be treated as a general creditor of the Lender.  As a general
creditor, the Fund may not benefit from a right of set off that the Lender
has against the borrower.  In the event of bankruptcy or insolvency of the
borrower, the obligation of the borrower to repay the Senior Loan may be
subject to certain defenses that can be asserted by the borrower as a result
of any improper conduct of the Lender selling the participation.  The Fund
will acquire a Participation Interest only if the Manager determines that the
Lender (or other intermediary Participant) selling the Participation Interest
is creditworthy.

      |X|  Fees.  The Fund may be required to pay and may receive various
fees and commissions in connection with purchasing, selling and holding
interests in Senior Loans.  Borrowers typically pay three kinds of fees to
Lenders:

o     facility fees when a Senior Loan is originated;
o     commitment fees on an ongoing basis based on the unused portion of a
         Senior Loan commitment; and
o     prepayment penalties when a borrower prepays a Senior Loan.

      The Fund receives these fees directly from the borrower if the Fund is
an original Lender or, in the case of commitment fees and prepayment
penalties, if the Fund acquires an Assignment. Whether the Fund receives a
facility fee in the case of an assignment, or any fees in the case of a
Participation Interest, depends on negotiations between the Fund and the
Lender selling the interests.

      When the Fund buys an Assignment, it may be required to pay a fee, or
forgo a portion of interest and fees payable to it, to the Lender selling the
assignment.  Occasionally, the assignor pays a fee to the assignee.  In
addition, the Fund may be required to pay a transfer fee to the Agent. The
seller of a Participation Interest to the Fund may deduct a portion of the
interest and any fees payable to the Fund, as an administrative fee. The Fund
may be required to pass along to a buyer of a Senior Loan from the Fund a
portion of any fees that the Fund is entitled to.  If the Fund sells a
Participation Interest, the Fund may be required to pay a transfer fee to the
Lender that holds the nominal interest in the Senior Loan.







Main Risks of Debt Securities.   In addition to Senior Loans, the Fund can
invest up to 20% of its net assets in a variety of debt securities to seek
its objective.  Foreign debt securities are subject to the risks of foreign
securities described below, and in general, all debt securities (including
Senior Loans) are subject to credit risk and interest rate risk.

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

      The Fund does not have investment policies establishing specific
maturity ranges for its investments, and they may be within any maturity
range (short, medium or long) depending on the Manager's evaluation of
investment opportunities available within the debt securities markets. The
Manager expects that the Senior Loans the Fund will invest in will have
maturities ranging from 1 to ten years. However, Senior Loans typically have
mandatory and optional prepayment provisions. Because of prepayments, the
actual remaining maturity of a Senior Loan may be considerably less than its
stated maturity. The reinvestment by the Fund of the proceeds of prepaid
Senior Loans could result in a reduction of income to the Fund in falling
interest rate environments.  Prepayment penalty fees that may be assessed in
some cases may help offset the loss of income to the Fund in those cases.

      Because the interest rates on Senior Loans adjust periodically to
reflect current market rates, falling short-term interest rates should tend
to decrease the income payable to the Fund on its Senior Loan investments and
rising rates should tend to increase that income. The Fund may also use
interest rate swaps and other derivative investments to try to shorten the
average maturity of its portfolio of debt securities.

      However, investments in floating rate obligations should also mitigate
the fluctuations in the Fund's net asset values during periods of changing
interest rates, compared to changes in values of longer-term fixed-rate debt
securities. Nevertheless, changes in interest rates can affect the value of
the Fund's Senior Loans, especially if rates change sharply in a short
period, because the resets of the interest rates on the underlying portfolio
of Senior Loans occur periodically and will not all happen simultaneously
with changes in prevailing rates. Having a shorter average reset period for
its portfolio of Senior Loans may help mitigate that risk.

      The Fund's other investments in debt securities that have fixed
interest rates will be subject to the general effects of changes in interest
rates, described above. For those investments, the Fund may shift its focus
for new investments to securities having longer maturities as interest rates
decline and to securities having shorter maturities as interest rates rise.







      |X|  Credit Risk.  Credit risk relates to the ability of an issuer of a
debt security to meet interest or principal payments (or both) as they become
due.  In general, lower-grade, higher-yield debt securities are subject to
credit risk to a greater extent than higher-quality investments.

      The Fund's investments in Senior Loans and other debt securities can
include high-yield, non-investment-grade securities (commonly referred to as
"high risk" securities, or, in the case of bonds, "junk bonds"). It is
expected that most of the Fund's Senior Loans will be below investment grade.
Investment-grade securities are securities rated at least "Baa" by Moody's
Investors Service, Inc., at least "BBB" by Standard & Poor's Ratings Service
or Fitch, Inc., or that have comparable ratings by another
nationally-recognized statistical rating organization ("NRSRO"). If the debt
securities the Fund buys are unrated, they are assigned a rating by the
Manager of comparable quality to securities having similar yield and risk
characteristics within a rating category of a rating organization.

      "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 Duff & Phelps, or similar ratings by other
rating organizations.  If debt securities 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. Although the Fund will normally invest in Senior
Loans rated "B" or better (or that have, in the Manager's judgment, a
comparable quality, if unrated), it can invest up to 15% of its net assets in
investments rated below "B."  A "B" rating is below investment grade.

      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.

o     Special Credit Risks of Lower-Grade Securities.  The Fund can invest
without limit in lower-grade Senior Loans and other debt securities, if the
Manager believes it is consistent with the Fund's objective of seeking high
income and preservation of capital.  Because lower-quality securities tend to
offer higher yields than investment-grade securities, the Fund may invest in
lower-grade securities to try to achieve higher income.

      Senior Loans, like other debt obligations, are subject to the risk of
the borrower's non-payment of scheduled interest and/or principal. While most
of the Fund's investments in Senior Loans will be secured by collateral that
the Manager believes to be equal to or exceed the principal amount of the
Senior Loan at the time of investment, there can be no assurance that the
liquidation of such collateral would satisfy the borrower's obligations in
the event of non-payment of scheduled interest or principal payments, or that
the collateral could be readily liquidated. In the event of a borrower's
bankruptcy, the Fund could experience delays or






limitations in its ability to realize the benefits of collateral securing a
loan. A Senior Loan might be collateralized by the stock of the borrower or
its subsidiaries, but that stock may lose all of its value in the event of
the borrower's bankruptcy. Additionally, some Senior Loans are subject to the
risk that a court could subordinate the Senior Loan to presently existing or
future indebtedness of the borrower under fraudulent conveyance or similar
laws, or take other actions detrimental to the interests of holders of Senior
Loans, including invalidating the loan. Nevertheless, in general, the Manager
believes that below-investment-grade Senior Loans currently have more
favorable loss recovery rates than other below-investment-grade debt
securities.

      While Senior Loans are increasingly being rated by national rating
organizations, it is possible that many of the Senior Loans in which the Fund
will invest will not be rated by an independent rating agency. While the Fund
expects to have access to financial and other information of the borrower
that has been made available to the Lenders under a Senior Loan, it may not
have such information in connection with Participation Interests and certain
Assignments. Additionally, the amount of public information available with
respect to Senior Loans will generally be less extensive than what is
available for exchange-listed or otherwise registered securities.

      Unlike collateralized Senior Loans, other debt securities the Fund can
buy may have no collateral supporting the borrower's obligation to pay
interest and repay principal. The Fund can invest in that type of debt
securities that are below investment-grade (but they must be rated at least
"B" or have a comparable rating assigned by the Manager if unrated).

      There is a greater risk that the issuer of a below-investment-grade
debt security 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 debt
securities, 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
debt securities, since stock may be more liquid and less affected by some of
these risk factors.

Other Debt Securities the Fund Can Buy. Under normal market circumstances and
as part of its regular investment program, the Fund can invest up to 20% of
its net assets in debt securities other than Senior Loans. Those types of
securities are described below.







      |X|  U.S. Government Securities.  These are securities issued or
guaranteed by the U.S. Treasury, other government agencies or
federally-charted 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 not be able to assert a claim against the United
States if the issuing agency or instrumentality does not meet its
commitment.

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

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

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     Zero-Coupon U.S. Government Securities.  The Fund can buy zero-coupon
U.S. government securities. These will typically be U.S. Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons, the
coupons themselves, or certificates representing interests in those stripped
debt obligations and coupons.

      Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value at maturity.  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.  The discount typically decreases as the maturity date approaches.

      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 that pay
interest.  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.

Other Investment Techniques and Strategies.  In seeking its objective, from
time to time the Fund can 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 the Fund might not use them.

      |X|  Foreign Securities.  The Fund can invest up to 20% of its total
assets in foreign securities. "Foreign securities" include equity and debt
securities (including Senior Loans) 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.

      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.
Generally, the Fund will purchase Senior Loans of foreign issuers or
borrowers only if they are denominated and payable in U.S. dollars, to reduce
the risks of currency fluctuations on the values of the loans.

      The Fund limits its investments in "foreign securities" to securities
of companies and governments in "developed" markets, which the Manager
currently defines to include the United Kingdom, Germany, France, Italy,
Belgium, The Netherlands, Luxembourg, Ireland, Sweden, Finland, Switzerland,
Austria, Denmark, Norway, Spain, Canada, Australia, New Zealand and Japan as
well as securities issued by "supra-national" entities. 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 percentage of the Fund's assets that will be allocated to foreign
securities will vary over time depending on a number of factors. Those
factors may include the relative yields of foreign and U.S. securities, the
economies of foreign countries, the condition of a country's financial
markets, the interest rate climate of particular foreign countries and the
relationship of  particular foreign currencies to the U.S. dollar.  The
Manager analyzes fundamental economic criteria (for example, relative
inflation levels and trends, growth rate forecasts, balance of payments
status, and economic policies) as well as technical and political data.

      Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in securities of foreign issuers that appear to offer
high income potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce fluctuations
in portfolio value by taking advantage of foreign securities markets that do
not move in a manner parallel to U.S. markets. The Fund will hold foreign
currency only in connection with the purchase or sale of foreign securities.

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

o     Risks of Foreign Investing.  Investments in foreign securities may
offer special opportunities for investing but also present special additional
risks and considerations not typically associated with investments in
domestic securities.  Some of these additional risks are:
o     reduction of income by foreign taxes;
o     fluctuation in value of foreign investments due to changes in currency
            rates or currency 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.

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

      |X|  Other Zero-Coupon Securities.  The Fund may buy zero-coupon and
delayed interest securities, and "stripped" securities of U.S. and foreign
corporations and of foreign government issuers.  These are similar in
structure to zero-coupon and "stripped" U.S. government securities, but in
the case of foreign government securities may or may not be backed by the
"full faith and credit" of the issuing foreign government.  Zero-coupon
securities issued by foreign governments and by corporations will be subject
to greater credit risks than U.S. government zero-coupon securities.

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

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

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

|X|  Preferred Stocks.  Preferred stock, unlike common stock, has a stated
dividend rate payable from the corporation's earnings.  Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction
rate. "Cumulative" dividend provisions require all or a portion of prior
unpaid dividends to be paid. Preferred stock may be "participating" stock,
which means that it may be entitled to a dividend exceeding the stated
dividend in certain cases.

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

      |X|  Other Floating Rate and Variable Rate Obligations.  The Fund can
invest in debt securities other than Senior Loans that have floating or
variable interest rates. Those variable rate obligations may have a demand
feature that allows the Fund to tender the obligation to the issuer or a
third party prior to its maturity.  The tender may be at par value plus
accrued interest, according to the terms of the obligations.

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

      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. The Fund can also buy
step-coupon bonds that have a coupon rate that changes periodically during
the life of the security on pre-determined dates that are set when the
security is issued.

      |X|  "When-Issued" and "Delayed-Delivery" Transactions.  The Fund may
invest in securities on a "when-issued" basis and may purchase or sell
securities on a "delayed-delivery" (or "forward-commitment") 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, the Fund makes no payment to the issuer and no
interest accrues to the Fund from the investment until it receives the
security at settlement.

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

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

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

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

      |X|  Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It might do so:
o     for liquidity purposes to meet anticipated repurchases of Fund shares,
            or
o     pending the investment of the proceeds from sales of Fund shares, or
o     pending the settlement of portfolio securities transactions, or
o     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 may be
deemed to be illiquid investments. The Fund will not enter into a repurchase
agreement that causes more than 15% 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 requirements 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 ("SEC"), the Fund, along with other affiliated entities managed by
the Manager, may transfer uninvested cash balances into one or more joint
repurchase accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities that are
pledged as collateral for repurchase agreements are held by a custodian bank
until the agreements mature. Each joint repurchase arrangement requires that
the market value of the collateral be sufficient to cover payments of
interest and principal; however, in the event of default by the other party
to the agreement, retention or sale of the collateral may be subject to legal
proceedings.


      |X|  Reverse Repurchase Agreements. The Fund can use reverse repurchase
agreements on debt obligations it owns, as a cash management tool, but not as
a means of leveraging investments. Under a reverse repurchase agreement, the
Fund sells an underlying debt obligation and simultaneously obtains the
commitment of the purchaser to sell the security back to the Fund at an
agreed-upon price at an agreed-upon date. The Fund will identify on its books
liquid assets in an amount sufficient to cover its obligations under reverse
repurchase agreements, including interest, until payment is made to the
seller. Before the Fund enters into a reverse repurchase agreement, the
Manager must be satisfied that the seller, typically a bank or broker-dealer,
is creditworthy.

      These transactions involve the risk of default or insolvency by the
seller, including possible delays in the Fund's ability to dispose of the
underlying collateral. An additional risk is that the market value of the
securities sold by the Fund under a reverse repurchase agreement could
decline below the price at which the Fund is obligated to repurchase them.
These agreements will be considered borrowings by the Fund and will be
subject to the asset coverage requirement under the Fund's policy on
borrowing discussed elsewhere in this Statement of Additional Information.
The Fund will not hold more than 5% of the value of its total assets in
reverse repurchase agreements.

      |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.  Because many
Senior Loans are not actively traded in securities markets and are
not listed on exchanges, many of the Fund's holdings may be deemed to be
"illiquid."  Since the Fund has fundamental policies requiring it to make
periodic offers to repurchase a portion of its shares, the Investment Company
Act imposes certain liquidity requirements on the Fund in connection with
repurchases.  That liquidity requirement extends from the time the Fund sends
out a notice to shareholders of the offer of repurchase until the repurchase
pricing date.  During that period, a percentage of the Fund's assets equal to
100% of the repurchase offer amount must consist of:
o     assets that can be sold or disposed of in the ordinary course of
            business at approximately the price at which the Fund has valued
            the assets and which can be sold at that price within the period
            between the repurchase request deadline and the repurchase
            payment deadline, or
o     assets that mature by the next repurchase payment deadline.

      If at any time the Fund does not meet those liquidity requirements in
connection with repurchases, the Board of Trustees is required to cause the
Fund to take appropriate action to assure compliance. That might include the
requirement to sell securities or to terminate borrowings, which could cause
losses or additional expenses to the Fund on its investment or loan.

      If the Fund buys a restricted security, one that is not registered
under the Securities Act of 1933, the Fund may have to cause that security to
be registered before it can dispose of its holdings.  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.
Illiquid securities include repurchase agreements maturing in more than seven
days and participation interests that do not have puts exercisable within
seven days, as well as Rule 144A securities the Fund holds for which there is
a lack of a trading market among institutional purchasers.

      |X|  Investments in Equity Securities. The Fund can invest in
securities other than debt securities, including certain types of equity
securities of both foreign and U.S. companies, if such investments are
consistent with the Fund's investment objective. The Fund does not anticipate
investing significant amounts of its assets in these securities as part of
its normal investment strategy.  The Fund's equity securities principally
will be securities acquired in connection with purchasing, restructuring or
disposing of Senior Loans.  Those equity securities include preferred stocks
(described above), rights and warrants, and securities convertible into
common stock.  Certain equity securities may be purchased because they may
provide dividend income.

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

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

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

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

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

o     Rights and Warrants.  The Fund can hold warrants or rights, however,
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.

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

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

o     Bank Obligations. The Fund can buy time deposits, certificates of
deposit and bankers' acceptances. They must be:
               o obligations issued or guaranteed by a domestic bank
                 (including a foreign branch of a domestic bank) having total
                 assets of at least U.S. $1 billion, or
o     obligations of a foreign bank with total assets of at least U.S. $1
                  billion.

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

o     Commercial Paper. The Fund can invest in commercial paper if it is
rated within the top three rating categories of Standard & Poor's and Moody's
or other rating organizations. If the paper is not rated, it may be purchased
if the Manager determines that it is comparable to rated commercial paper in
the top three rating categories of national rating organizations.

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

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

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

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

      |X|  Loans of Portfolio Securities.  To raise cash for income or
liquidity purposes, the Fund can lend its portfolio securities to brokers,
dealers and other types of financial institutions approved by the Fund's
Board of Trustees. When it lends securities, the Fund receives amounts equal
to the dividends or interest on loaned securities. It also receives one or
more of (a) negotiated loan fees, (b) interest on securities used as
collateral, and (c) interest on any short-term debt securities purchased with
such loan collateral. Each type of interest may be shared with the borrower.
The Fund may also pay reasonable finders', custodian and administrative fees
in connection with these loans.  The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.

      |X|  Borrowing.  The Fund has the ability to borrow from banks on an
unsecured basis to raise cash in order to repurchase its shares in a
Repurchase Offer, to fund additional commitments under Senior Loans and for
temporary, emergency purposes.  The Fund can also borrow money on a long-term
basis to acquire additional investments, which is a speculative technique
known as "leverage." The Fund may borrow only from banks, although the Fund
may enter into reverse repurchase agreements, which are considered to be
borrowings, with dealers and other financial institutions.

      Under current regulatory requirements, the Fund can borrow only to the
extent that the value of the Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings (including the
proposed borrowing). If the value of the Fund's assets fails to meet this
300% asset coverage requirement, the Fund will reduce its bank debt within
three days to meet the requirement. To do so, the Fund might have to sell a
portion of its investments at a disadvantageous time.

      The Fund expects to meet its commitments to repurchase shares in the
amount set by the Board of Trustees by using cash from sales of additional
shares of the Fund to the public, sales of portfolio securities, and income
from loans or repayments on loans held in its portfolio. However, to the
extent needed to enable the Fund to meet the asset coverage requirements for
those repurchases under the Investment Company Act, any borrowing by the Fund
will either mature by the next Repurchase Request Deadline or provide for its
redemption, call, or repayment by the Fund by the next Repurchase Request
Deadline.

      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 value per share might
fluctuate more than that of funds that do not borrow. Currently, the Fund
does not contemplate using leverage to a substantial degree, but it may do so
if the cash available from sales of additional shares, repayment of loans and
other sources is insufficient to meet the Fund's cash flow needs.


      In addition, pursuant to an exemptive order issued by the SEC to
Citicorp North America, Inc. ("Citicorp"), the Fund also has the ability to
borrow, subject to the limits established by its investment policies, from
commercial paper and medium-term note conduits administered by Citicorp that
issue promissory notes to fund loans to investment companies such as the
Fund. These loans may be secured by assets of the Fund, so long as the Fund's
policies permit it to pledge its assets to secure a debt. Liquidity support
for these loans will be provided by banks obligated to make loans to the Fund
in the event the conduit or conduits are unable or unwilling to make such
loans. The Fund will have the right to prepay such loans and terminate its
participation in the conduit loan facility at any time upon prior notice. As
a borrower under a conduit loan facility, the Fund maintains rights and
remedies under state and federal law comparable to those it would maintain
with respect to a loan from a bank.


      |X|  Asset-Backed Securities.  Asset-backed securities are fractional
interests in pools of assets, typically accounts receivable or loans. Asset
backed securities that are collateralized loan obligations may include
domestic and foreign senior secured loans, unsecured senior loans and
subordinate corporate loans, all of which may be investment grade or below
investment grade in quality. The Fund currently intends to limit its
investments in these securities to not more than 10% of its total assets.

      These securities 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 interest or
repayments of principal are not made, the Fund could suffer losses on its
investment or delays in receiving payment.

      In general, asset backed securities are subject to prepayment risks,
interest rate risks and the credit risks of both the borrowers and of the
entity that issues the security. 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 main risks of investing in asset-backed securities are
ultimately related to payment of the underlying loans by the individual
borrowers.

      The Fund does not select either the borrowers or the collateral under
these arrangements. 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. Some asset-backed
securities do not have the benefit of a security interest in the underlying
collateral. Even if the obligations are collateralized, there may be
significant delays in collecting on the collateral in the case of a default
on an underlying loan, and as an investor in the asset-backed security the
Fund may have limited rights or no rights to enforce the terms of underlying
loan agreements, to object to amendments to the lending agreement or to any
set-off against the borrower.

      |X|  Derivatives.  The Fund can invest in a variety of derivative
investments to seek income or for hedging purposes. Derivative investments
the Fund can use include the mortgage-backed and asset-backed securities
described above, and the swaps, structured notes and other hedging
instruments described below in this Statement of Additional Information.

      |X|  Hedging.  The Fund can use hedging instruments, although it is not
obligated to use them in seeking its objective. The Fund may uses these
techniques to try to preserve returns on a particular investment in its
portfolio, or to try to protect against anticipated decreases in the interest
rates on floating rate investments or for other risk-management purposes,
such as managing the effective dollar-weighted average maturity of the Fund's
portfolio. To attempt to protect against declines in the market value of the
Fund's portfolio holdings from changes in
interest rates or other market factors, to permit the Fund to retain
unrealized gains in the value of portfolio securities that have appreciated,
or to facilitate selling securities for investment reasons, the Fund could:
sell futures contracts, buy puts on such futures or on securities, or 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:  buy futures, or buy calls on such futures or on securities.

      The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Manager's discretion, as described below.  The
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's activities in the underlying cash market.  Because
these hedging transactions are entered into for risk management purposes, the
Manager does not believe that these obligations are "senior securities"
subject to the Fund's asset-coverage requirements for senior securities. The
particular hedging instruments the Fund can use are described below.  The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective and are permissible under applicable regulations
governing the Fund.

o     Futures.  The Fund can buy and sell futures contracts that relate to
(1) broadly-based securities indices (these are referred to as "financial
futures"), (2) an individual stock ("single stock futures"), (3) commodities
(these are referred to as "commodity index futures"), (4) debt securities
(these are referred to as "interest rate futures"), and (5) 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.

      A single stock future obligates the seller to deliver (and the
purchaser to take) cash or a specified equity security to settle the futures
transaction.  Either party could also enter into an offsetting contract to
close out the position.  Single stock futures trade on a very limited number
of exchanges, with contracts typically not fungible among the exchanges.

      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.

      The Fund does not pay or receive money 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.  Alternatively, the Fund may maintain accounts with
futures brokers, provided that the Fund and the futures brokers comply with
the requirements of the rules under the Investment Company Act.

      At any time prior to the expiration of a futures contract, 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 (other
than forward contracts) are effected through a clearinghouse associated with
the exchange on which the contracts are traded.

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

o     Writing Covered Call Options.  The Fund can write (that is, sell)
covered calls. If the Fund sells a call option, it must be covered.  That
means the Fund must own the security subject to the call while the call is
outstanding, or, for certain types of calls, the call may be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if
the call is exercised.  There is no limit on the amount of the Fund's total
assets that may be subject to covered calls the Fund writes, although the
Fund does not expect to engage in this practice extensively.

      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 the specified multiple that determines the
total value of the call for each point of difference.  If the value of the
underlying investment does not rise above the call price, it is likely that
the call will lapse without being exercised.  In that case the Fund would
keep the cash premium.

      The Fund's custodian bank, or a securities depository acting for the
custodian, 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 the mark-to-market value of any OTC option it
holds, unless the option is subject to a buy-back agreement by the executing
broker.

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

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

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

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

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

      When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will identify on its books 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 on securities,
broadly-based securities indices, foreign currencies and futures. It may do
so to protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the Fund
buys a call (other than in a closing purchase transaction), it pays a
premium. The Fund then has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price.

      The Fund benefits only if it sells the call at a profit or if, during
the call period, the market price of the underlying investment is above the
sum of the call price plus the transaction costs and the premium paid for the
call and the Fund exercises the call.  If the Fund does not exercise the call
or sell it (whether or not at a profit), the call will become worthless at
its expiration date. In that case the Fund will have paid the premium but
lost the right to purchase the underlying investment.
      The Fund can buy puts on securities, broadly-based securities indices,
foreign currencies and futures, whether or not it owns the underlying
investment. When the Fund purchases a put, it pays a premium and, except as
to puts on indices, has the right to sell the underlying investment to a
seller of a put on a corresponding investment during the put period at a
fixed exercise price.

      Buying a put on 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 also purchase calls and puts on spread options.  Spread
options pay the difference between two interest rates, two exchange rates or
two referenced assets.  Spread options are used to hedge the decline in the
value of an interest rate, currency or asset compared to a reference or base
interest rate, currency or asset.  The risks associated with spread options
are similar to those of interest rate options, foreign exchange options and
debt or equity options.

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

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

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

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

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

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 other portfolio management
decisions.  If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments.

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

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

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

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

      There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against
declines in the value of the Fund's portfolio securities. The risk is that
the prices of the futures or the applicable index will correlate imperfectly
with the behavior of the cash prices of the Fund's securities.  For example,
it is possible that while the Fund has used hedging instruments in a short
hedge, the market might advance and the value of the securities held in the
Fund's portfolio might decline. If that occurred, the Fund would lose money
on the hedging instruments and also experience a decline in the value of its
portfolio securities.  However, while this could occur for a very brief
period or to a very small degree, over time the value of a 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 can use 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 could enter into a forward contract
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction, in a fixed amount of U.S. dollars per unit of the
foreign currency. This is called a "transaction hedge." The transaction hedge
will protect the Fund against a loss from an adverse change in the currency
exchange rates during the period between the date on which the security is
purchased or sold or on which the payment is declared, and the date on which
the payments are made or received.

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

      The Fund will identify on its books liquid assets in an amount
sufficient to cover its obligations 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 as or higher than the forward contract 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 Swaps and Total Return Swaps.  In an interest rate swap,
the Fund and another party exchange their right to receive or their
obligation to pay interest on a security. For example, they might swap the
right to receive fixed rate payments for floating rate payments.  If the Fund
held a Senior Loan with an interest rate that is reset only once a year, it
might swap the right to receive interest at that rate for the right to
receive interest at a rate that is reset every week. In that case, if
interest rates were to rise, the increased interest received by the Fund
would offset a decline in the value of the Senior Loan.  On the other hand,
if interest rates were to fall, the Fund's benefit from the effect of falling
interest rates on the value of the Senior Loan would decrease.

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

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

      The Fund intends to invest only in swap transactions that are exempt
from regulation by the Commodity Futures Trading Commission under the
Commodity Exchange Act.

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

      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 are generally referred to as "aggregation."

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


      o  Regulatory Aspects of Hedging Instruments.  The Commodities Futures
Trading Commission (the "CFTC") has 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 interpretations of the staff of the SEC regarding applicable
provisions of the Investment Company Act, when the Fund purchases a future,
it must identify liquid assets on its books in an amount equal to the
purchase price of the future, less the margin deposit applicable to it.


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

|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 Manager is not limited in the amount
of portfolio trading it may conduct on behalf of the Fund and will buy and
sell securities as it deems appropriate. The Fund's portfolio turnover rate
will fluctuate from year to year, and the Fund could have a portfolio
turnover rate of more than 100% annually.  The portfolio turnover rate may
vary greatly from year to year.  The Fund can engage in short-term trading to
try to achieve its objective. However, the Manager currently does not expect
the Fund's annual portfolio turnover rate to exceed 100%.

      Increased portfolio turnover creates higher transaction costs for the
Fund, which may reduce its overall performance. Additionally, the realization
of capital gains from selling portfolio securities may result in
distributions of taxable long-term capital gains to shareholders, since the
Fund will normally distribute all of its capital gains realized each year, to
avoid excise taxes under the Internal Revenue Code. If the Fund repurchases
large amounts of shares during Repurchase Offers, it may have to sell
portions of its securities holdings to raise cash to pay for those
repurchases.  That might may result in a higher than usual portfolio turnover
rate.

      |X| Temporary Defensive Investments.  When market 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 reinvest cash received from the sale of other portfolio
securities. The Fund's temporary defensive investments can include the
following short-term (maturing in one year or less) dollar-denominated debt
obligations:
o     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,
o     debt obligations of domestic or foreign corporate issuers,
o     certificates of deposit and bankers' acceptances of domestic and
               foreign banks  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.

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

Other Investment Restrictions. In addition to having a number of investment
policies and restrictions identified in the Prospectus or elsewhere as
"fundamental policies," the Fund has other investment restrictions that are
fundamental policies, described below.

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

      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|  What Are the Fund's Additional Fundamental Policies?  The
following investment restrictions are fundamental policies of the Fund:
o     The Fund cannot invest 25% or more of its total assets in securities of
         issuers having their principal business activities in the same
         industry. The Fund can invest 25% or more of its total assets and
         can invest up to 100% of its total assets in securities of issuers
         in the group of financial services industries, which under the
         Fund's currently-used industry classifications include the following
         industries (this group of industries and the Fund's industry
         classifications can be changed by the Fund without shareholder
         approval): banks, bank holding companies, commercial finance,
         consumer finance, diversified financial, insurance, savings and
         loans, and special purpose financial.  For the purpose of this
         investment restriction, the term "issuer" includes the borrower
         under a loan, the agent bank for a loan, and any intermediate
         participant in the loan interposed between the borrower and the
         Fund. The percentage limitation in this investment restriction does
         not apply to securities issued or guaranteed by the U.S. government
         or its agencies and instrumentalities. For the purposes of
         interpreting this investment restriction, each foreign national
         government is treated as an "industry" and utilities are divided
         according to the services they provide.

o     The Fund cannot borrow money in excess of 33 1/3% of the value of its
         total assets at the time of the borrowings. The Fund's borrowings
         must comply with the 300% asset coverage requirement under the
         Investment Company Act, as such requirement may be amended from time
         to time.

o     The Fund cannot make loans to other persons. However, the Fund can
         invest in loans (including by direct investments or purchasing
         assignments or participation interests) and other debt obligations
         in accordance with its investment objective and policies.  The Fund
         may also lend its portfolio securities and may purchase securities
         subject to repurchase agreements.

o     The Fund cannot buy or sell real estate. However, the Fund can purchase
         securities secured by real estate or interests in real estate, or
         issued by issuers (including real estate investment trusts) that
         invest in real estate or interests in real estate.  The Fund may
         hold and sell real estate as acquired as a result of the Fund's
         ownership of securities.

o     The Fund cannot buy or sell commodities or commodity contracts.
         However, the Fund can buy and sell derivative instruments and other
         hedging instruments, such as futures contracts, options and swaps.

o     The Fund cannot underwrite securities of other companies.  A permitted
         exception is in case the Fund 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 buy securities on margin.  However, the Fund can make
         margin deposits in connection with its use of derivative instruments
         and hedging instruments.

o     The Fund cannot issue "senior securities," except as permitted under
         the Investment Company Act. This limitation 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.

      Notwithstanding the Fund's investment policies and restrictions, the
Fund may invest all or part of its investable assets in a management
investment company with substantially the same investment objective, policies
and restrictions as the Fund. This could allow creation of a "master/feeder"
structure in the future, although the Fund has no current intention to
restructure in this manner.

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

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

|X|   Additional Fundamental Policies Concerning Repurchase Offers. The
following policies concerning the Repurchase Offers are fundamental, which
means that the Board of Trustees cannot change the policies without the vote
of the holders of a "majority of the fund's outstanding voting securities,"
as that term is defined in the Investment Company Act:

o     The Fund will make periodic Repurchase Offers, pursuant to Rule 23c-3
         under the Investment Company Act (as that Rule may be amended from
         time to time).
o     Repurchase Offers shall be made at periodic intervals of three months
         between Repurchase Request Deadlines.  The Repurchase Request
         Deadlines will be at the time on the regular business day (normally
         the last regular business day) in the months of January, April, July
         and October to be determined by the Fund's Board of Trustees.
o     The Repurchase Pricing Date for a particular Repurchase Offer shall be
         not more than 14 days after the Repurchase Request Deadline for that
         Repurchase Offer. If that day is not a regular business day, then
         the Repurchase Pricing Date will be the following  regular business
         day.


Disclosure of Portfolio Holdings.  The Fund has adopted policies and
procedures concerning the dissemination of information by employees, officers
and/or directors of the Manager, Distributor, and Transfer Agent.  These
policies are designed to assure that non-public information about portfolio
securities is distributed only for a legitimate business purpose, and is done
in a manner that (a) conforms to applicable laws and regulations and (b) is
designed to prevent that information from being used in a way that could
negatively affect the Fund's investment program or enable third parties to
use that information in a manner that is harmful to the Fund.

o     Public Disclosure. The Fund's portfolio holdings are made publicly
      available no later than 60 days after the close of each of the Fund's
      fiscal quarters in semi-annual and annual reports to shareholders, or
      in its Statements of Investments on Form N-Q, which are publicly
      available at the SEC. In addition, the top 10 or more holdings are
      posted on the OppenheimerFunds' website at www.oppenheimerfunds.com in
      the "Fund Profiles" section. Other general information about the Fund's
      portfolio investments, such as portfolio composition by asset class,
      industry, country, currency, credit rating or maturity, may also be
      posted with a 15-day lag.

      Until publicly disclosed, the Fund's portfolio holdings are
proprietary, confidential business information. While recognizing the
importance of providing Fund shareholders with information about their Fund's
investments and providing portfolio information to a variety of third parties
to assist with the management, distribution and administrative process, the
need for transparency must be balanced against the risk that third parties
who gain access to the Fund's portfolio holdings information could attempt to
use that information to trade ahead of or against the Fund, which could
negatively affect the prices the Fund is able to obtain in portfolio
transactions or the availability of the securities that portfolio managers
are trading on the Fund's behalf.

      The Fund, the Manager and its subsidiaries and affiliates, employees,
officers, and directors, shall neither solicit nor accept any compensation or
other consideration (including any agreement to maintain assets in the Fund
or in other investment companies or accounts managed by the Manager or any
affiliated person of the Manager) in connection with the disclosure of the
Fund's non-public portfolio holdings. The receipt of investment advisory fees
or other fees and compensation paid to the Manager and their subsidiaries
pursuant to agreements approved by the Fund's Board shall not be deemed to be
"compensation" or "consideration" for these purposes.  It is a violation of
the Code of Ethics for any covered person to release holdings in
contravention of portfolio holdings disclosure policies and procedures
adopted by the Fund.

      A list of the top 10 or more portfolio securities holdings (based on
invested assets), listed by security or by issuer, as of the end of each
month may be disclosed to third parties (subject to the procedures below) no
sooner than 15 days after month-end.

      Except under special limited circumstances discussed below, month-end
lists of the Fund's complete portfolio holdings may be disclosed no sooner
than 30-days after the relevant month-end, subject to the procedures below.
If the Fund's complete portfolio holdings have not been disclosed publicly,
they may be disclosed pursuant to special requests for legitimate business
reasons, provided that:

o     The third-party recipient must first submit a request for release of
      Fund portfolio holdings, explaining the business reason for the request;
o     Senior officers (a Senior Vice President or above) in the Manager's
      Portfolio and Legal departments must approve the completed request for
      release of Fund portfolio holdings; and
o     The third-party recipient must sign the Manager's portfolio holdings
      non-disclosure agreement before receiving the data, agreeing to keep
      information that is not publicly available regarding the Fund's
      holdings confidential and agreeing not to trade directly or indirectly
      based on the information.

      The Fund's complete portfolio holdings positions may be released to the
      following categories of entities or individuals on an ongoing basis,
      provided that such entity or individual either (1) has signed an
      agreement to keep such information confidential and not trade on the
      basis of such information or (2) is subject to fiduciary obligations,
      as a member of the Fund's Board, or as an employee, officer and/or
      director of the Manager, Distributor, or Transfer Agent, or their
      respective legal counsel, not to disclose such information except in
      conformity with these policies and procedures and not to trade for
      his/her personal account on the basis of such information:

o     Employees of the Fund's Manager, Distributor and Transfer Agent who
      need to have access to such information (as determined by senior
      officers of such entity),
o     The Fund's certified public accountants and independent registered
      public accounting firm,
o     Members of the Fund's Board and the Board's legal counsel,
o     The Fund's custodian bank,
o     A proxy voting service designated by the Fund and its Board,
o     Rating/ranking organizations (such as Lipper and Morningstar),
o     Portfolio pricing services retained by the Manager to provide portfolio
      security prices, and
o     Dealers, to obtain bids (price quotations, if securities are not priced
      by the Fund's regular pricing services).

      Portfolio holdings information of a Fund may be provided, under limited
circumstances, to brokers and/or dealers with whom the Fund trades and/or
entities that provide investment coverage and/or analytical information
regarding the Fund's portfolio, provided that there is a legitimate
investment reason for providing the information to the broker, dealer or
other entity.  Month-end portfolio holdings information may, under this
procedure, be provided to vendors providing research information and/or
analytics to the fund, with at least a 15-day delay after the month end, but
in certain cases may be provided to a broker or analytical vendor with a 1- 2
day lag to facilitate the provision of requested investment information to
the manager to facilitate a particular trade or the portfolio manager's
investment process for the Fund.  Any third party receiving such information
must first sign the Manager's portfolio holdings non-disclosure agreement as
a pre-condition to receiving this information.

      Portfolio holdings information (which may include information on
individual securities positions or multiple securities) may be provided to
the entities listed below (1) by portfolio traders employed by the Manager in
connection with portfolio trading, and (2) by the members of the Manager's
Security Valuation Group and Accounting Departments in connection with
portfolio pricing or other portfolio evaluation purposes:

o     Brokers and dealers in connection with portfolio transactions
      (purchases and sales)
o     Brokers and dealers to obtain bids or bid and asked prices (if
      securities held by the Fund are not priced by the fund's regular
      pricing services)
o     Dealers to obtain price quotations where the Fund is not identified as
      the owner

      Portfolio holdings information (which may include information on the
Fund's entire portfolio or individual securities therein) may be provided by
senior officers of the Manager or attorneys on the legal staff of the
Manager, Distributor, or Transfer Agent, in the following circumstances:

o     Response to legal process in litigation matters, such as responses to
      subpoenas or in class action matters where the Fund may be part of the
      plaintiff class (and seeks recovery for losses on a security) or a
      defendant,
o     Response to regulatory requests for information (the SEC, NASD, state
      securities regulators, and/or foreign securities authorities, including
      without limitation requests for information in inspections or for
      position reporting purposes),
o     To potential sub-advisors of portfolios (pursuant to confidentiality
      agreements),
o     To consultants for retirement plans for plan sponsors/discussions at
      due diligence meetings (pursuant to confidentiality agreements),
o     Investment bankers in connection with merger discussions (pursuant to
      confidentiality agreements)

      Portfolio managers and analysts may, subject to the Manager's policies
on communications with the press and other media, discuss portfolio
information in interviews with members of the media, or in due diligence or
similar meetings with clients or prospective purchasers of Fund shares or
their financial intermediary representatives.

      The Fund's shareholders may, under unusual circumstances (such as a
lack of liquidity in the Fund's portfolio to meet redemptions), receive
redemption proceeds of their Fund shares paid as pro rata shares of
securities held in the Fund's portfolio.  In such circumstances, disclosure
of the Fund's portfolio holdings may be made to such shareholders.

      The Chief Compliance Officer of the Fund and the Manager, Distributor,
and Transfer Agent (the "CCO") shall oversee the compliance by the Manager,
Distributor, Transfer Agent, and their personnel with these policies and
procedures. At least annually, the CCO shall report to the Fund's Board on
such compliance oversight and on the categories of entities and individuals
to which disclosure of portfolio holdings of the Fund has been made during
the preceding year pursuant to these policies. The CCO shall report to the
Fund's Board any material violation of these policies and procedures during
the previous calendar quarter and shall make recommendations to the Board as
to any amendments that the CCO believes are necessary and desirable to carry
out or improve these policies and procedures.

      The Manager and/or the Fund have entered into ongoing arrangements to
make available information about the Fund's portfolio holdings.  One or more
of the Oppenheimer funds may currently disclose portfolio holdings
information based on ongoing arrangements to the following parties:


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

          A.G. Edwards & Sons           Keijser Securities

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

          ABG Securities                Kempen & Co. USA Inc.

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

          ABN AMRO                      Kepler Equities/Julius
                                        Baer Sec

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

          Advest                        KeyBanc Capital Markets

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

          AG Edwards                    Leerink Swan

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

          American Technology Research  Legg Mason

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

          Auerbach Grayson              Lehman

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

          Banc of America Securities    Lehman Brothers

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

          Barclays                      Lipper

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

          Baseline                      Loop Capital Markets

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

          Bear Stearns                  MainFirst Bank AG

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

          Belle Haven                   Makinson Cowell US Ltd

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

          Bloomberg                     Maxcor Financial

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

          BNP Paribas                   Merrill

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

          BS Financial Services         Merrill Lynch

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

          Buckingham Research Group     Midwest Research

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

          Caris & Co.                   Mizuho Securities

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

          CIBC World Markets            Morgan Stanley

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

          Citigroup                     Morningstar

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

          Citigroup Global Markets      Natexis Bleichroeder

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

          Collins Stewart               Ned Davis Research Group

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

          Craig-Hallum Capital Group LLCNomura Securities

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

          Credit Agricole Cheuvreux     Pacific Crest
          N.A. Inc.

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

          Credit Suisse First Boston    Pacific Crest Securities

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

          Daiwa Securities              Pacific Growth Equities

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

          Davy                          Petrie Parkman

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

          Deutsche Bank                 Pictet

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

          Deutsche Bank Securities      Piper Jaffray Inc.

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

          Dresdner Kleinwort WassersteinPlexus

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

          Emmet & Co                    Prager Sealy & Co.

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

          Empirical Research            Prudential Securities

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

          Enskilda Securities           Ramirez & Co.

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

          Essex Capital Markets         Raymond James

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

          Exane BNP Paribas             RBC Capital Markets

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

          Factset                       RBC Dain Rauscher

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

          Fidelity Capital Markets      Research Direct

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

          Fimat USA Inc.                Robert W. Baird

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

          First Albany                  Roosevelt & Cross

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

          First Albany Corporation      Russell Mellon

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

          Fixed Income Securities       Ryan Beck & Co.

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

          Fortis Securities             Sanford C. Bernstein

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

          Fox-Pitt, Kelton              Scotia Capital Markets

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

          Friedman, Billing, Ramsey     SG Cowen & Co.

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

          Fulcrum Global Partners       SG Cowen Securities

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

          Garp Research                 Soleil Securities Group

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

          George K Baum & Co.           Standard & Poors

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

          Goldman                       Stone & Youngberg

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

          Goldman Sachs                 SWS Group

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

          HSBC                          Taylor Rafferty

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

          HSBC Securities Inc           Think Equity Partners

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

          ING Barings                   Thomas Weisel Partners

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

          ISI Group                     UBS

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

          Janney Montgomery             Wachovia

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

          Jefferies                     Wachovia Corp

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

          Jeffries & Co.                Wachovia Securities

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

          JP Morgan                     Wescott Financial

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

          JP Morgan Securities          William Blair

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

          JPP Eurosecurities            Yieldbook

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

          Keefe, Bruyette & Woods

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

How the Fund is Managed

Organization and History. The Fund is a closed-end, diversified management
investment company with an unlimited number of authorized shares of
beneficial interest. The Fund was organized as a Massachusetts business trust
in June 1999.

      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 Y.  All classes invest in the same investment portfolio.  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.


Meetings of Shareholders.  As a Massachusetts business trust, the Fund is not
required to hold, and does not plan to hold, regular annual meetings of
shareholders, but may hold shareholder meetings from time to time on
important matters or when required to do so by the Investment Company Act or
other applicable law. Shareholders have the right, upon a vote or declaration
in writing of two-thirds of the outstanding shares of the Fund, to remove a
Trustee or to take other action described in the Fund's Declaration of Trust.

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


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


      The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund and that 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, a Review Committee and a
Governance Committee. Each of the Committees is comprised solely of
Independent Trustees.

      The members of the Audit Committee are Edward L. Cameron (Chairman),
George C. Bowen, Robert J. Malone and F. William Marshall, Jr. The Audit
Committee held 7 meetings during the Fund's fiscal year ended July 31, 2005.
The Audit Committee furnishes the Board with recommendations regarding the
selection of the Fund's independent registered public accounting firm (also
referred to as the "independent Auditors"). Other main functions of the Audit
Committee outlined in the Audit Committee Charter, 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) reviewing reports from the Manager's Internal Audit
Department; (iv) maintaining a separate line of communication between the
Fund's independent Auditors and the Trustees who are not "interested persons"
under the Investment Company Act (the "Independent Trustees"); (v) reviewing
the independence of the Fund's independent Auditors; (vi) pre-approving the
provision of any non-audit services by the Fund's independent Auditors,
including tax services, that are not prohibited by the Sarbanes-Oxley Act, to
the Fund, the Manager and certain affiliates of the Manager (vii) review
certain reports from and meet periodically with the Fund's Chief Compliance
Officer.

            The members of the Review Committee are Jon S. Fossel (Chairman),
Robert G. Avis, Sam Freedman and Beverly Hamilton. The Review Committee held
6 meetings during the Fund's fiscal year ended July 31, 2005. Among other
duties, as set forth in the Review Committee's Charter, the Review Committee
reports and makes recommendations to the Board concerning the fees paid to
the Fund's transfer agent and the Manager and the services provided to the
Fund by the transfer agent and the Manager. The Review Committee also reviews
the Fund's investment performance as well as the policies and procedures
adopted by the Fund to comply with the Investment Company Act and other
applicable law.
The members of the Governance Committee are, Robert J. Malone (Chairman),
William Armstrong, Beverly Hamilton and F. William Marshall, Jr. The
Governance Committee held 5 meetings during the Fund's fiscal year ended July
31, 2005. The Governance Committee has adopted a charter setting forth its
duties and responsibilities. Among other duties, the Governance Committee
reviews and oversees the Fund's governance guidelines, the adequacy of the
Fund's Codes of Ethics and the nomination of Trustees, including Independent
Trustees. The Governance Committee has adopted a process for shareholder
submission of nominees for board positions. Shareholders may submit names of
individuals, accompanied by complete and properly supported resumes, for the
Governance Committee's consideration by mailing such information to the
Governance Committee in care of the Fund. The Governance Committee may
consider such persons at such time as it meets to consider possible nominees.
The Governance Committee, however, reserves sole discretion to determine
which candidates for Trustees and independent Trustees it will recommend to
the Board and/or shareholders and it may identify candidates other than those
submitted by Shareholders.  The Governance Committee may, but need not,
consider the advice and recommendation of the Manager and/or its affiliates
in selecting nominees. The full Board elects new Trustees except for those
instances when a shareholder vote is required.

      Shareholders who desire to communicate with the Board should address
correspondence to the Board or an individual Board member and may submit
their correspondence electronically at www.oppenheimerfunds.com under the
caption "contact us" or by mail to the Fund at the address above. The
Governance Committee will consider if a different process should by
recommended to the Board.

Trustees and Officers of the Trust. Except for Mr. Murphy, each of the
Trustees is an "Independent Trustee" under the Investment Company Act. All of
the Trustees are also trustees or directors of the following
Oppenheimer/Centennial funds (referred to as "Board II Funds"):

Oppenheimer Cash Reserves                  Oppenheimer   Principal   Protected
                                           Trust II
                                           Oppenheimer   Principal   Protected
Oppenheimer Capital Income Fund            Trust III
Oppenheimer Champion Income Fund           Oppenheimer Real Asset Fund

                                           Oppenheimer  Senior  Floating  Rate

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


                                           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 charge on Class A shares is
waived for that group because of the reduced sales efforts realized by the
Distributor.

      Messrs. Zimmer, Welsh, Gillespie, Murphy, Petersen, Vandehey, Votterio,
Wixted, and Zack and Mses. Hui, Bloomberg 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 __, 2005, the Trustees and officers
of the Fund, as a group, owned of record or beneficially less than 1% of each
class of shares of the Fund.  The foregoing statement does not reflect
ownership of shares 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, none of the Independent
Trustees (nor any of their immediate family members) own securities of either
the Manager or the Distributor or of any entity directly or indirectly
controlling, controlled by or under common control with the Manager or the
Distributor of the Board II Funds.

Biographical Information. The Trustees and officers, their positions with the
Fund, length of service in such position(s), and principal occupations and
business affiliations during at least the past five years are listed in the
charts below. The charts also include information about each Trustee's
beneficial share ownership in the Fund and in all of the registered
investment companies that the Trustee oversees in the Oppenheimer family of
funds ("Supervised Funds"). The address of each Trustee in the chart below is
6803 S. Tucson Way, Centennial, CO 80112-3924. Each Trustee serves for an
indefinite term, or 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,

                                                                       2004

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

William L.          Chairman of the following private         None       Over
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), and The El Paso Mortgage Company

1999                (since 1993); Chairman of the following

Age: 68             private companies: Ambassador Media
                    Corporation (since 1984) and Broadway
                    Ventures (since 1984); Director of the
                    following: Helmerich & Payne, Inc. (oil
                    and gas drilling/production company)
                    (since 1992), Campus Crusade for Christ
                    (since 1991) and The Lynde and Harry
                    Bradley Foundation, Inc. (non-profit
                    organization) (since 2002); former
                    Chairman of the following: Transland
                    Financial Services, Inc. (private
                    mortgage banking company) (1997-2003),
                    Great Frontier Insurance (insurance
                    agency) (1995-2000), Frontier Real
                    Estate, Inc. (residential real estate
                    brokerage) (1994-2000) and Frontier
                    Title (title insurance agency)
                    (1995-2000); former Director of the
                    following: UNUMProvident (insurance
                    company) (1991-2004), Storage Technology
                    Corporation (computer equipment company)
                    (1991-2003) and International Family
                    Entertainment (television channel)
                    (1992-1997); U.S. Senator (January
                    1979-January 1991). Oversees 38
                    portfolios in the OppenheimerFunds
                    complex.

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

Robert G. Avis,     Director and President of A.G. Edwards    None       Over
Trustee since 1999  Capital, Inc. (General Partner of                    $100,000
Age: 74             private equity funds) (until February

                    2001); Chairman, President and Chief
                    Executive Officer of A.G. Edwards
                    Capital, Inc. (until March 2000);

                    Director of A.G. Edwards & Sons, Inc.
                    (brokerage company) (until 2000) and
                    A.G. Edwards Trust Company (investment
                    adviser) (until 2000); Vice Chairman and
                    Director of A.G. Edwards, Inc. (until
                    March 1999); Vice Chairman of A.G.
                    Edwards & Sons, Inc. (until March 1999);
                    Chairman of A.G. Edwards Trust Company
                    (until March 1999) and A.G.E. Asset
                    Management (investment adviser) (until
                    March 1999). Oversees 38 portfolios in
                    the OppenheimerFunds complex.

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

George C. Bowen,    Assistant Secretary and Director of       None       Over
Trustee since 1999  Centennial Asset Management Corporation              $100,000
Age: 69             (December 1991-April 1999); President,
                    Treasurer and Director of Centennial
                    Capital Corporation (June 1989-April
                    1999); Chief Executive Officer and
                    Director of MultiSource Services, Inc.
                    (March 1996-April 1999); Mr. Bowen held
                    several positions with the Manager and
                    with subsidiary or affiliated companies
                    of the Manager (September 1987-April
                    1999). Oversees 38 portfolios in the
                    OppenheimerFunds complex.

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

Edward L. Cameron,  Member of The Life Guard of Mount Vernon  None       Over
Trustee since 1999  (George Washington historical site)                  $100,000
Age: 67             (since June 2000); Director of Genetic
                    ID, Inc. (biotech company) (March
                    2001-May 2002); Partner at
                    PricewaterhouseCoopers LLP (accounting
                    firm) (July 1974-June 1999); Chairman of
                    Price Waterhouse LLP Global Investment
                    Management Industry Services Group (July
                    1994-June 1998). Oversees 38 portfolios
                    in the OppenheimerFunds complex.

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

Jon S. Fossel,      Director of UNUMProvident (insurance      Over       Over
Trustee since 1999  company) (since June 2002); Director of   $100,000   $100,000
Age: 63             Northwestern Energy Corp. (public
                    utility corporation) (since November
                    2004); Director of P.R. Pharmaceuticals
                    (October 1999-October 2003); Director of
                    Rocky Mountain Elk Foundation
                    (non-profit organization) (February
                    1998-February 2003); Chairman and
                    Director (until October 1996) and
                    President and Chief Executive Officer
                    (until October 1995) of the Manager;
                    President, Chief Executive Officer and
                    Director of the following: Oppenheimer
                    Acquisition Corp. ("OAC") (parent
                    holding company of the Manager),
                    Shareholders Services, Inc. and
                    Shareholder Financial Services, Inc.
                    (until October 1995). Oversees 38
                    portfolios in the OppenheimerFunds
                    complex.

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

Sam Freedman,       Director of Colorado Uplift (charitable   None       Over
Trustee since 1999  organization) (since September 1984).                $100,000
Age: 64             Mr. Freedman held several positions with
                    the Manager and with subsidiary or

                    affiliated companies of the Manager

                    (until October 1994). Oversees 38

                    portfolios in the OppenheimerFunds
                    complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Beverly L.          Trustee of Monterey Institute for         None       Over
Hamilton,           International Studies (educational                   $100,000
Trustee since 2005  organization) (since February 2000);
Age: 58             Director of The California Endowment
                    (philanthropic organization) (since
                    April 2002); Director of Community
                    Hospital of Monterey Peninsula (since
                    February 2002); Director of American
                    Funds' Emerging Markets Growth Fund,
                    Inc. (mutual fund) (since October 1991);
                    President of ARCO Investment Management
                    Company (February 1991-April 2000);
                    Member of the investment committees of
                    The Rockefeller Foundation and The
                    University of Michigan; Advisor at
                    Credit Suisse First Boston's Sprout
                    venture capital unit (venture capital
                    fund) (1994-January 2005); Trustee of
                    MassMutual Institutional Funds
                    (investment company) (1996-June 2004);
                    Trustee of MML Series Investment Fund
                    (investment company) (April 1989-June
                    2004); Member of the investment
                    committee of Hartford Hospital
                    (2000-2003); and Advisor to Unilever
                    (Holland) pension fund (2000-2003).
                    Oversees 38 portfolios in the
                    OppenheimerFunds complex.

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

Robert J. Malone,   Director of Jones International           None       Over
Trustee since 2005  University (educational organization)                $100,000
Age: 61             (since August 2005); Chairman, Chief
                    Executive Officer and Director of Steele
                    Street State Bank (commercial banking)
                    (since August 2003); Director of
                    Colorado UpLIFT (charitable
                    organization) (since 1986); Trustee of
                    the Gallagher Family Foundation
                    (non-profit organization) (since 2000);
                    Former Chairman of U.S. Bank-Colorado
                    (subsidiary of U.S. Bancorp and formerly
                    Colorado National Bank) (July 1996-April
                    1999); Director of Commercial Assets,
                    Inc. (real estate investment trust)
                    (1993-2000); Director of Jones
                    Knowledge, Inc. (2001-July 2004); and
                    Director of U.S. Exploration, Inc. (oil
                    and gas exploration) (1997-February
                    2004). Oversees 38 portfolios in the
                    OppenheimerFunds complex.

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

F. William          Trustee of MassMutual Select Funds        None       Over
Marshall, Jr.,      (formerly MassMutual Institutional                   $100,000
Trustee since 2000  Funds) (investment company) (since 1996)
Age: 63             and MML Series Investment Fund
                    (investment company) (since 1996), the
                    Springfield Library and Museum
                    Association (museums) (since 1995) and
                    the Community Music School of
                    Springfield (music school) (since 1996);
                    Chairman and Trustee (since 2003) and
                    Chairman of the Investment Committee
                    (since 1994) of the Worcester Polytech
                    Institute (private university);
                    President and Treasurer of the SIS Funds
                    (private charitable fund) (since January
                    1999); Chairman of SIS & Family Bank,
                    F.S.B. (formerly SIS Bank) (commercial
                    bank) (January 1999-July 1999); Member
                    of the Investment Committee of the
                    Community Foundation of Western
                    Massachusetts (1998-2003); and Executive
                    Vice President of Peoples Heritage
                    Financial Group, Inc. (commercial bank)
                    (January 1999-July 1999). Oversees 40
                    portfolios in the OppenheimerFunds
                    complex.*

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

*     Includes two open-end investment companies: MassMutual Select Funds and
   MML Series Investment Fund. In accordance with the instructions for Form
   N-1A, for purposes of this section only, MassMutual Select Funds and MML
   Series Investment Fund are included in the "Fund Complex." The Manager
   does not consider MassMutual Select Funds and MML Series Investment Fund
   to be part of the OppenheimerFunds' "Fund Complex" as that term may be
   otherwise interpreted.


      The address of Mr. Murphy in the chart below is Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, NY 10281-1008. Mr. Murphy
serves for an indefinite term, until his resignation, death or removal.

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

                                                                       2004

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

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: 56            President and Director or Trustee of
                   other Oppenheimer funds; President and
                   Director of OAC and of Oppenheimer
                   Partnership Holdings, Inc. (holding
                   company subsidiary of the Manager) (since
                   July 2001); Director of OppenheimerFunds
                   Distributor, Inc. (subsidiary of the
                   Manager) (since November 2001); Chairman
                   and Director of Shareholder Services,
                   Inc. and of Shareholder Financial
                   Services, Inc. (transfer agent
                   subsidiaries of the Manager) (since July
                   2001); President and Director of
                   OppenheimerFunds Legacy Program
                   (charitable trust program established by
                   the Manager) (since July 2001); Director
                   of the following investment advisory
                   subsidiaries of the Manager: OFI
                   Institutional Asset Management, Inc.,
                   Centennial Asset Management Corporation,
                   Trinity Investment Management Corporation
                   and Tremont Capital Management, Inc.
                   (since November 2001), HarbourView Asset
                   Management Corporation and OFI Private
                   Investments, Inc. (since July 2001);
                   President (since November 2001) and
                   Director (since July 2001) of Oppenheimer
                   Real Asset Management, Inc.; Executive
                   Vice President of Massachusetts Mutual
                   Life Insurance Company (OAC's parent
                   company) (since February 1997); Director
                   of DLB Acquisition Corporation (holding
                   company parent of Babson Capital
                   Management LLC) (since June 1995); Member
                   of the Investment Company Institute's
                   Board of Governors (since October 3,
                   2003); Chief Operating Officer of the
                   Manager (September 2000-June 2001);
                   President and Trustee of MML Series
                   Investment Fund and MassMutual Select
                   Funds (open-end investment companies)
                   (November 1999-November 2001); Director
                   of C.M. Life Insurance Company (September
                   1999-August 2000); President, Chief
                   Executive Officer and Director of MML Bay
                   State Life Insurance Company (September
                   1999-August 2000); Director of Emerald
                   Isle Bancorp and Hibernia Savings Bank
                   (wholly-owned subsidiary of Emerald Isle
                   Bancorp) (June 1989-June 1998). Oversees
                   87 portfolios as a Trustee or Director
                   and officer in the OppenheimerFunds
                   complex.

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



      The address of the Officers in the chart below is as follows: for Mr.
Gillespie and  Zack and Ms. Bloomberg, Two World Financial Center, 225
Liberty Street, 11th Floor, New York, NY 10281-1008, for Messrs. Petersen,
Vandehey, Vottiero, Welsh, Wixted and Zimmer and Mses., Hui and Ives, 6803 S.
Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an annual term
or until his or her earlier resignation, retirement, death or removal.


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

Arthur Zimmer,          Senior Vice President of the Manager (since June 1997) and
Vice President and      of HarbourView Asset Management Corporation (since April
Portfolio Manager       1999); an officer of 1 portfolio in the OppenheimerFunds
since 1999              complex; formerly Vice President of the Manager (October
Age:  59                1990 - June 1997); Vice President of Centennial Asset

                        Management Corporation (June 1997 - November 2001).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Joseph Welsh,           Vice President of the Manager (since December 2000); a high
Vice President and      yield bond analyst for the Manager (since January 1995);
Portfolio Manager       Vice President of Harbour View Asset Management Corporation
since 1999              (since 2002); an officer of 1 portfolio in the
Age:  41                OppenheimerFunds complex; formerly, Assistant Vice

                        President of the Manager (December 1996-November 2000).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Margaret Hui,           Assistant Vice President of the Manager (since October
Assistant Vice
President and
Associate Portfolio     1999); an officer of 1 portfolio in the OppenheimerFunds
Manager                 complex; before joining the Manager, she was Vice President

since 1999              - Syndications of Sanwa Bank California (January 1998 -
Age:  47                September 1999).

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

Mark S. Vandehey,       Senior Vice President and Chief Compliance Officer of the
Chief Compliance        Manager (since March 2004); Vice President of
Officer since 2004      OppenheimerFunds Distributor, Inc., Centennial Asset
Age: 55                 Management Corporation and Shareholder Services, Inc.
                        (since June 1983); Vice President and Director of Internal
                        Audit of the Manager (1997-February 2004). An officer of 87
                        portfolios in the OppenheimerFunds complex.

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

Brian W. Wixted,        Senior Vice President and Treasurer of the Manager (since
Treasurer since 1999    March 1999); Treasurer of the following: HarbourView Asset
Age: 45                 Management Corporation, Shareholder Financial Services,
                        Inc., Shareholder Services, Inc., Oppenheimer Real Asset
                        Management Corporation, and Oppenheimer Partnership
                        Holdings, Inc. (since March 1999), OFI Private Investments,
                        Inc. (since March 2000), OppenheimerFunds International
                        Ltd. and OppenheimerFunds plc (since May 2000), OFI
                        Institutional Asset Management, Inc. (since November 2000),
                        and OppenheimerFunds Legacy Program (since June 2003);
                        Treasurer and Chief Financial Officer of OFI Trust Company
                        (trust company subsidiary of the Manager) (since May 2000);
                        Assistant Treasurer of the following: OAC (since March
                        1999), Centennial Asset Management Corporation (March
                        1999-October 2003) and OppenheimerFunds Legacy Program
                        (April 2000-June 2003); Principal and Chief Operating
                        Officer of Bankers Trust Company-Mutual Fund Services
                        Division (March 1995-March 1999). An officer of 87
                        portfolios in the OppenheimerFunds complex.

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

Brian Petersen,         Assistant Vice President of the Manager (since August
Assistant Treasurer     2002); Manager/Financial Product Accounting of the Manager
since 2004              (November 1998-July 2002). An officer of 87 portfolios in
Age: 35                 the OppenheimerFunds complex.

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

Philip Vottiero,        Vice President/Fund Accounting of the Manager (since March
Assistant Treasurer     2002); Vice President/Corporate Accounting of the Manager
since 2002              (July 1999-March 2002); Chief Financial Officer of Sovlink
Age: 42                 Corporation (April 1996-June 1999). An officer of 87

                        portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Robert G. Zack,         Executive Vice President (since January 2004) and General
Vice President &        Counsel (since March 2002) of the Manager; General Counsel
Secretary since 2001    and Director of the Distributor (since December 2001);
Age: 57                 General Counsel of Centennial Asset Management Corporation
                        (since December 2001); Senior Vice President and General
                        Counsel of HarbourView Asset Management Corporation (since
                        December 2001); Secretary and General Counsel of OAC (since
                        November 2001); Assistant Secretary (since September 1997)
                        and Director (since November 2001) of OppenheimerFunds
                        International Ltd. and OppenheimerFunds plc; Vice President
                        and Director of Oppenheimer Partnership Holdings, Inc.
                        (since December 2002); Director of Oppenheimer Real Asset
                        Management, Inc. (since November 2001); Senior Vice
                        President, General Counsel and Director of Shareholder
                        Financial Services, Inc. and Shareholder Services, Inc.
                        (since December 2001); Senior Vice President, General
                        Counsel and Director of OFI Private Investments, Inc. and
                        OFI Trust Company (since November 2001); Vice President of
                        OppenheimerFunds Legacy Program (since June 2003); Senior
                        Vice President and General Counsel of OFI Institutional
                        Asset Management, Inc. (since November 2001); Director of
                        OppenheimerFunds (Asia) Limited (since December 2003);
                        Senior Vice President (May 1985-December 2003), Acting
                        General Counsel (November 2001-February 2002) and Associate
                        General Counsel (May 1981-October 2001) of the Manager;
                        Assistant Secretary of the following: Shareholder Services,
                        Inc. (May 1985-November 2001), Shareholder Financial
                        Services, Inc. (November 1989-November 2001), and
                        OppenheimerFunds International Ltd. (September
                        1997-November 2001). An officer of 87 portfolios in the
                        OppenheimerFunds complex.

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

Lisa I. Bloomberg,      Vice President and Associate Counsel of the Manager (since
Assistant Secretary     May 2004); First Vice President (April 2001-April 2004),
since 2004              Associate General Counsel (December 2000-April 2004),
Age: 37                 Corporate Vice President (May 1999-April 2001) and
                        Assistant General Counsel (May 1999-December 2000) of UBS
                        Financial Services Inc. (formerly, PaineWebber
                        Incorporated). An officer of 87 portfolios in the
                        OppenheimerFunds complex.

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

Kathleen T. Ives,       Vice President (since June 1998) and Senior Counsel and
Assistant Secretary     Assistant Secretary (since October 2003) of the Manager;
since 2001              Vice President (since 1999) and Assistant Secretary (since
Age: 39                 October 2003) of the Distributor; Assistant Secretary of
                        Centennial Asset Management Corporation (since October
                        2003); Vice President and Assistant Secretary of
                        Shareholder Services, Inc. (since 1999); Assistant
                        Secretary of OppenheimerFunds Legacy Program and
                        Shareholder Financial Services, Inc. (since December 2001);
                        Assistant Counsel of the Manager (August 1994-October
                        2003). An officer of 87 portfolios in the OppenheimerFunds
                        complex.

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

Phillip S. Gillespie,   Senior Vice President and Deputy General Counsel of the
Assistant Secretary     Manager (since September 2004); First Vice President
since 2004              (2000-September 2004), Director (2000-September 2004) and
Age: 41                 Vice President (1998-2000) of Merrill Lynch Investment
                        Management. An officer of 87 portfolios in the
                        OppenheimerFunds complex.

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


|X|  Remuneration of Trustees.
The Trustees of the Fund who are
affiliated with the Manager
receive no salary or fee from
the Fund. The Independent
Trustees received the
compensation shown below from
the Fund for serving as a
Trustee and member of a
committee (if applicable), with
respect to the Fund's fiscal
year ended July 31, 2005. The
total compensation, including
accrued retirement benefits,
from the Fund and fund complex
represents compensation received
for serving as a Trustee and
member of a committee (if
applicable) of the boards of the
Fund and other funds in the
OppenheimerFunds complex during
the calendar year ended
December 31, 2004 (including the
Boards of certain MassMutual
funds as is indicated below.










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

Trustee Name and Other Fund             Aggregate         Total Compensation
                                                          From Fund and Fund
                                    Compensation from       Complex Paid to
Position(s) (as applicable)             Fund((1))             Trustees(2)

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

William L. Armstrong                      $5,464                $178,00
Chairman of the Board and
Governance  Committee Member

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

Robert G. Avis                            $3,637                $118,500
Review Committee Member

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

George C. Bowen                           $3,637                $118,500
Audit Committee Member

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

Edward L. Cameron                         $4,174                $136,000
Audit Committee Chairman

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

Jon S. Fossel                             $4,714                $136,000
Review Committee Chairman

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

Sam Freedman                              $3,637                $118,500
Review Committee Member

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

Beverly Hamilton
Review Committee Member and               $705(3)             $152,355(4)
Governance Committee Member

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

Robert J. Malone
Governance Committee Chairman and         $810(5)               $121,726
Audit Committee Member

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

F. William Marshall, Jr.
Audit Committee Member and                $3,637              $167,500(6)
Governance Committee Member

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


1.   "Aggregate   Compensation   From  the  Fund"  includes  fees  and  deferred
     compensation, if any.

2.   In  accordance  with SEC  regulations,  for purposes of this section  only,
     "Fund Complex" includes the Oppenheimer  funds, the MassMutual Select Funds
     and the 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 following:  MassMutual Premier  International Equity
     Fund,  MassMutual  Premier Main Street Fund,  MassMutual  Premier Strategic
     Income Fund,  MassMutual Premier Capital  Appreciation Fund, and MassMutual
     Premier Global Fund. The Manager does not consider MassMutual Institutional
     Funds, MassMutual Select Funds and MML Series Investment Fund to be part of
     the  OppenheimerFunds'  "Fund  Complex"  as  that  term  may  be  otherwise
     interpreted.
3.   Includes $705  deferred by Ms.  Hamilton  under the "Deferred  Compensation
     Plan" described below.
4.   Includes $810 deferred by Mr. Malone under the "Deferred Compensation Plan"
     described below.
5.   Includes $36,654 deferred by Ms. Hamilton under the a deferred compensation
     plan for serving as a Trustee for  MassMutual  Institutional  Funds and MML
     Series Investment Fund (until June 30, 2004).
6.   Includes $49,000 compensation paid to Mr. Marshall for serving as a Trustee
     for MassMutual Select Funds and MML Series Investment Fund.

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

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

|X| Major  Shareholders.  As of September 30, 2005, the only person 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 was the following:

Charles Schwab & Co. Inc. Special Custody Account for the Exclusive  Benefit
of  Customers,   Attn  Mutual  Funds,  101  Montgomery  St.  San  Francisco,  CA
94104-4122,  which  owned  6,555,073.730  Class A shares  (5.40%  of the Class C
shares then outstanding).

Merrill  Lynch  Pierce  Fenner  &  Smith,  Inc.  for the sole benefit of its
customers,  Attn  Fund  ADMN/#,  4800  Deer  Lake  Dr E Fl 3,  Jacksonville,  Fl
32246-6484,  which owned  16,731,471.445  Class C shares  (10.99% of the Class C
shares then outstanding).

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

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

     The Code of Ethics is an exhibit to the Fund's registration statement filed
with the SEC and can be reviewed and copied at the SEC's Public  Reference  Room
in Washington,  D.C. You can obtain  information about the hours of operation of
the Public  Reference  Room by calling  the SEC at  1.202.942.8090.  The Code of
Ethics can also be viewed as part of the Fund's  registration  statement  on the
SEC's EDGAR database at the SEC's Internet website at http://www.sec.gov. Copies
may be obtained,  after paying a duplicating  fee, by electronic  request at the
following E-mail address: publicinfo@sec.gov., or by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102.

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

o    The Fund  votes  with the  recommendation  of the  issuer's  management  on
     routine matters,  including  election of directors  nominated by management
     and ratification of auditors, unless circumstances indicate otherwise.

o    In  general,  the  Fund  opposes   anti-takeover   proposals  and  supports
     elimination of anti-takeover proposals, absent unusual circumstances.

o    The Fund supports  shareholder  proposals to reduce a  super-majority  vote
     requirement,  and opposes management proposals to add a super-majority vote
     requirement.

o    The Fund opposes proposals to classify the board of directors.

o    The Fund support proposals to eliminate cumulative voting.

o    The Fund opposes re-pricing of stock options.

o    The Fund generally considers executive compensation questions such as stock
     option  plans and bonus plans to be ordinary  business  activity.  The Fund
     analyzes stock option plans, paying particular  attention to their dilutive
     effect.  While the Fund generally supports management  proposals,  the Fund
     opposes plans it considers to be excessive.


     The Fund is required to file 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 Fund's Form N-PX filing is available (i) without charge, upon request,
by calling the Fund toll-free at  1.800.525.7048,  and (ii) on the SEC's website
at www.sec.gov.

     |X| The Investment  Advisory  Agreement.  The Manager  provides  investment
advisory  and  management  services  to the Fund  under an  investment  advisory
agreement between the Manager and the Fund. The Manager selects  investments for
the Fund's  portfolio  and  handles  its  day-to-day  business.  That  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   corporate   administration   for  the   Fund.   Those
responsibilities include the compilation and maintenance of records with respect
to the Fund's operations,  the preparation and filing of specified reports,  and
the  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 or by the Management Fees Paid to  OppenheimerFunds,  Inc. Distributor
under the general distributor  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.  Under its
voluntary expense limitation undertaking,  for the period from March 1, 2000, to
March 31, 2000, the Manager  waived 0.50% of the management  fee. From and after
April  1,  2000,  the  Manager  waived  0.20%  of  its  fee  under  its  current
undertaking, which can be amended or terminated at any time.

  Fiscal Year Ended 7/31:

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

           2003                               $3,005,772(1)

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

           2004                               $4,877,584(2)

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

           2005                               $13,819,083(3)

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

1.    Amount is without considering a voluntary waiver in the amount of
   $819,450.
2.    Amount is without considering a voluntary waiver in the amount of
   $1,384,053.
3.    Amount is without considering a voluntary waiver in the amount of
   $4,326,710.

      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.

Portfolio Managers. The Fund's portfolio is managed by Arthur Zimmer, Joseph
Welsh and Margaret Hui (each is referred to as a "Portfolio Manager" and
collectively they are referred to as the "Portfolio Managers"). They are the
persons who are responsible for the day-to-day management of the Fund's
investments.

             Other Accounts Managed.  In addition to managing the
Fund's investment portfolio, each Portfolio Manager also manages other
investment portfolios and other accounts on behalf of the Manager or its
affiliates.  The following table provides information regarding the other
portfolios and accounts managed by each Portfolio Manager as of July 31,
2005. No account has a performance-based advisory fee:

     Portfolio                 Total                   Total           Total
                                                     Assets in
                               Assets in  Other        Other
                      RegistereRegistered Pooled      Pooled            Assets
                      InvestmenInvestment InvestmentInvestment  Other  in Other
                      CompaniesCompanies  Vehicles   Vehicles   AccountAccounts
     Manager          Managed   Managed*   Managed   Managed*   ManagedManaged*

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

                         1                  None                613,140.2
      Arthur J.                  $2,969.3                    $0
      Zimmer                                                            613,140.2

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

                                                                       .2
      Joseph Welsh       1       $2,969.3   None             $0 613,140
                                                                        613,140.2

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

                                                                       .2
      Margaret Hui       1       $2,969.3   None             $0 613,140
                                                                        613,140.2

     *  In millions.

           As indicated above, the Portfolio Managers also manage other funds
      and accounts.  Potentially, at times, those responsibilities could
      conflict with the interests of the Fund.  That may occur whether the
      investment strategies of the other fund or account are the same as, or
      different from, the Fund's investment objectives and strategies.  For
      example, the Portfolio Managers may need to allocate investment
      opportunities between the Fund and another fund or account having
      similar objectives or strategies, or he may need to execute
      transactions for another fund or account that could have a negative
      impact on the value of securities held by the Fund.  Not all funds and
      accounts advised by the Manager have the same management fee.  If the
      management fee structure of another fund or account is more
      advantageous to the Manager than the fee structure of the Fund, the
      Manager could have an incentive to favor the other fund or account.
      However, the Manager's compliance procedures and Code of Ethics
      recognize the Manager's fiduciary obligations to treat all of its
      clients, including the Fund, fairly and equitably, and are designed to
      preclude the Portfolio Managers from favoring one client over another.
      It is possible, of course, that those compliance procedures and the
      Code of Ethics may not always be adequate to do so.  At different
      times, the Fund's Portfolio Managers may manage other funds or accounts
      with investment objectives and strategies that are similar to those of
      the Fund, or may manage funds or accounts with investment objectives
      and strategies that are different from those of the Fund.

     Compensation of the Portfolio Manager.  The Fund's Portfolio Managers
      are employed and compensated by the Manager, not the Fund. Under the
      Manager's compensation program for its portfolio managers and portfolio
      analysts, their compensation is based primarily on the investment
      performance results of the funds and accounts they manage, rather than
      on the financial success of the Manager. This is intended to align the
      portfolio managers and analysts interests with the success of the funds
      and accounts and their shareholders. The Manager's compensation
      structure is designed to attract and retain highly qualified investment
      management professionals and to reward individual and team
      contributions toward creating shareholder value. As of July 31, 2005
      the Portfolio Managers' compensation consisted of three elements: a
      base salary, an annual discretionary bonus and eligibility to
      participate in long-term awards of options and appreciation rights in
      regard to the common stock of the Manager's holding company parent.
      Senior portfolio managers may also be eligible to participate in the
      Manager's deferred compensation plan.

      To help the Manager attract and retain talent, the base pay component
      of each portfolio manager is reviewed regularly to ensure that it
      reflects the performance of the individual, is commensurate with the
      requirements of the particular portfolio, reflects any specific
      competence or specialty of the individual manager, and is competitive
      with other comparable positions. The annual discretionary bonus is
      determined by senior management of the Manager and is based on a number
      of factors, including a fund's pre-tax performance for periods of up to
      five years, measured against an appropriate Lipper benchmark selected
      by management. The Lipper benchmark with respect to the Fund is Lipper
      - Loan Participation Funds. Other factors considered include management
      quality (such as style consistency, risk management, sector coverage,
      team leadership and coaching) and organizational development. The
      Portfolio Managers' compensation is not based on the total value of the
      Fund's portfolio assets, although the Fund's investment performance may
      increase those assets. The compensation structure is also intended to
      be internally equitable and serve to reduce potential conflicts of
      interest between the Fund and other funds and accounts managed by the
      Portfolio Managers. The compensation structure of the other funds and
      accounts managed by the Portfolio Managers is the same as the
      compensation structure of the Fund, described above.

            Ownership of Fund Shares.  As of July 31, 2005, the
      Portfolio Managers did not beneficially own any shares of the Fund.


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

      Under the investment advisory agreement, in choosing brokers to
execute portfolio transactions for the Fund, the Manager may select brokers
(other than affiliates) that provide brokerage and/or research services to
the Fund and/or the other accounts over which the Manager or its affiliates
have investment discretion.  The concessions paid to those brokers may be
higher than another qualified broker would charge, if the Manager makes a
good faith determination that the concession is fair and reasonable in
relation to the services provided.

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

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

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

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

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

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

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

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







-------------------------------------------------------------------------------
 Fiscal Year Ended 7/31:     Total Brokerage Commissions Paid by the Fund(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
           2003                                 $162,936
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
           2004                                 $197,684
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

           2005                                 $108,390

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

Distribution and Service Plans

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

      The sales charges and concessions paid to, or retained by, the
Distributor from the sale of shares or on the repurchase of shares during the
two most recent Fiscal years and the Early Withdrawal Charges retained by the
Distributor on the repurchased shares for the most recent Fiscal year are
shown in the table below.

--------------------------------------------------------------------------------
Fiscal Year       Concessions on Class B Shares  Concessions on Class C Shares
Ended 7/31:       Advanced by the Distributor(1) Advanced by the Distributor(1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
      2003                   $283,962                       $273,673
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
      2004                  $1,965,548                     $3,615,881
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

      2005                  $2,338,864                     $8,573,506

--------------------------------------------------------------------------------
1.    The Distributor advances concessions to dealers for sales of Class B
   and Class C shares from its own resources at the time of sale.  There are
   no concessions on sales of Class A shares.

---------------------------------------------------------------------------------
Fiscal Year       Class A Early        Class B Early        Class C Early
Ended 7/31:       Withdrawal Charges   Withdrawal Charges   Withdrawal Charges
                  Retained by          Retained by          Retained by
                  Distributor          Distributor          Distributor
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

      2003               $1,986              $509,271             $26,687

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
      2004               $2,355              $261,669             $51,818
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

      2005              $18,971              $332,290             $461,976

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

Distribution and Service Plans.  The Fund has adopted a Service Plan for
Class A shares and Distribution and Service Plans for Class B and Class C
shares.  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.

      Because the Fund is a closed-end fund and is not able to rely on the
provisions of Rule 12b-1 under the Investment Company Act that apply to
open-end funds, the Fund has requested and obtained from the SEC exemptive
relief from certain provisions of the Investment Company Act, to permit the
Fund to adopt Distribution and Service Plans and to make payments under those
plans to the Distributor. The operation of those plans is contingent upon the
continued availability of that exemptive relief from the SEC. That exemptive
order also permits the Fund to impose early withdrawal charges on its Class B
and Class C shares, under the circumstances described in the Prospectus and
elsewhere in this Statement of Additional Information.

      Each plan has been approved by a vote of the Board of Trustees,
including a majority of the Independent Trustees(1), cast in person at a
meeting called for the purpose of voting on that plan. Each plan has also
been approved by the holders of a "majority" (as defined in the Investment
Company Act) of the shares of the applicable class.  The shareholder votes
were cast by the Manager as the sole initial shareholder of each class of
shares of the Fund.

    Under the Plans, the Manager and the Distributor may make payments to
affiliates.  In their sole discretion, they may also from time to time make
substantial payments from their own resources, which include the profits the
Manager derives from the advisory fees it receives from the Fund, to
compensate brokers, dealers, financial institutions and other intermediaries
for providing distribution assistance and/or administrative services or that
otherwise promote sales of the Fund's shares.  These payments, some of which
may be referred to as "revenue sharing," may relate to the Fund's inclusion
on a financial intermediary's preferred list of funds offered to its clients.

    Financial intermediaries, brokers and dealers may receive other payments
from the Distributor or the Manager from their own resources in connection
with the promotion and/or sale of shares of the Fund, including payments to
defray expenses incurred in connection with educational seminars and
meetings.  The Manager or Distributor may share expenses incurred by
financial intermediaries in conducting training and educational meetings
about aspects of the Fund for employees of the intermediaries or for hosting
client seminars or meetings at which the Fund is discussed.  In their sole
discretion, the Manager and/or the Distributor may increase or decrease the
amount of payments they make from their own resources for these purposes.


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

      |X|  Class A Service Plan.  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 of up to 0.25% of the 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.


      For the fiscal year ended July 31, 2005 payments under the Class A plan
totaled $1,900,846, of which $288 was retained by the Distributor under the
arrangement described above, and included $76,561 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 and Class C Distribution and Service Plans. Under each
plan, distribution and service fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close of
each regular business day during the period. Each plan provides for the
Distributor to be compensated at a flat rate for its services, 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 fee on shares 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 and Class C shares are purchased. After the
first year 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 or Class C shares
are repurchased by the Fund 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 made on those shares.
Class B or Class C shares may not be purchased by an investor directly from
the Distributor without the investor designating another registered
broker-dealer.  If the investor no longer has another broker-dealer of record
for an existing account, the Distributor is automatically designated as the
broker-dealer of record, but solely for the purpose of acting as the
investor's agent to purchase the shares.  In those cases, the Distributor
retains the asset-based sales charge paid on Class B and Class C shares, but
does not retain any service fees as to the assets represented by that account.

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


      The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. 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 and/or Class C 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 and Class C 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 and Class C 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 and Class C
          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 and
          Class C 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 and Class C shares
may be more than the payments it receives from the early withdrawal charges
collected on repurchased shares and from the Fund under the plans.  If either
the Class B or the Class C 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 for the Year Ended 7/31/05*

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

Class B Plan  $2,454,032(1)    $1,847,816       $7,572,614           2.20%

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

Class C Plan  $79,667,124(2)   $5,034,495       $22,195,213          1.64%

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

1.    Includes  $33,266  paid  to an  affiliate  of the  Distributor's  parent
    company.
2.    Includes $122,256 paid to an affiliate of the Distributor's parent
    company.


      Under the exemptive order granted to the Fund by the SEC that allows
the Fund to establish the Distribution and Service Plans and to pay fees to
the Distributor under those plans, all payments under the Class B and the
Class C 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 performance. These terms include "dividend yield," "average
annual total return," and "cumulative total return."  An explanation of how
yields and total returns are calculated is set forth below. You can obtain
current performance information by calling the Fund's Transfer Agent at
1.800.225.5677 or by visiting the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

      The Fund's illustrations of its performance data in advertisements must
comply with rules of the SEC.  Advertisement by the Fund of its performance
data may include the average annual total returns for the advertised class of
shares of the Fund.  Those returns may 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) and/or cumulative total returns over a stated
period.  Dividend yields may also be shown for a class of shares.

      Use of performance calculations enables an investor to compare the
Fund's performance to the performance of other funds for the same periods.
However, you should consider a number of factors before using the Fund's
performance information as a basis for comparison with other investments:
o     Yields and total returns measure the performance of a hypothetical
         account in the Fund over various periods and do not show the
         performance of each shareholder's account.  Your account's
         performance will vary from the model performance data if your
         dividends are received in cash, or you buy or sell shares during the
         period, or you bought your shares at a different time and price than
         the shares used in the model.
o     The Fund's performance returns do not reflect the effect of taxes on
         dividends and capital gains distributions.
      o  An investment in the Fund is not insured by the FDIC or any other
         government agency.
o     The principal value of the Fund's shares, and its yields and total
         returns, are not guaranteed and normally will fluctuate on a daily
         basis.
o     When you sell your shares, 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.
o     The performance of each class of shares is shown separately.  The
         performance of each class of shares will usually be different,
         because each class bears different expenses.  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.
o     Unlike open-end mutual funds, closed-end funds are not required to
         calculate or depict performance in a standardized manner. However,
         the Fund may choose to follow the performance calculation
         methodology used by open-end funds.

      |X| Dividend Yield. Each class of shares calculates its dividend yield
separately because of the different expenses that affect each class. Dividend
yield is a distribution return 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 / No. of days in period x No. of days
in calendar year)
------------------------------------------------------------------------------
                              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 Early Withdrawal Charges. There is no sales charge on Class Y
shares. The Class A dividend yield may also be quoted without deducting the
maximum initial sales charge.


        -------------------------------------------------------------
        The Fund's Dividend Yields for the 30-Day Period Ended

        7/31/05

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

        Class A                             5.96%          5.75%

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

        Class B                             5.45%           N/A

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

        Class C                             5.41%           N/A

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

      |X|  Total Return Information.  There are different types of "total
returns" to measure the Fund's performance.  Total return is the change in
value of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is repurchased 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 for open-end funds. The methodology is
discussed below.


      In calculating total returns for Class A shares, the current maximum
sales charge of 3.50% (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, the applicable early
withdrawal charge is applied, depending on the period for which the return is
shown: 3.0% in the first year, 2.0% in the second year, 1.5% in the third and
fourth years, 1.0% in the fifth year, and none thereafter.  For Class C
shares, the 1% early withdrawal charge is deducted for returns for the 1-year
period. There is no sales charge on Class Y shares.


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

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

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

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 Redemptions)
  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



|X|   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 B or Class C shares. There is no
sales charge on Class Y shares.  Each is based on the difference in net asset
value per share at the beginning and the end of the period for a hypothetical
investment in that class of |X|     shares (without considering front-end or
early withdrawal charges) and takes into consideration the reinvestment of
dividends and capital gains distributions.


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

             The Fund's Total Returns for the Periods Ended 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class of     Cumulative Total             Average Annual Total Returns
           Returns (10 years or
Shares        Life of Class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                         1-Year              Life-of-class

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
          After       Without    After      Without     After Early  Without
          Early       Early      Early      Early                    Early
          Withdrawal  Withdrawal Withdrawal Withdrawal  Withdrawal   Withdrawal
          Charges     Charges    Charges    Charges     Charges      Charges
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class          32.80%     37.62%      1.76%       5.45%        4.93%       5.56%

  A(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class          33.49%     33.49%      1.87%       4.86%        5.02%       5.02%

  B(2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class          33.72%     33.72%      3.92%       4.92%        5.05%       5.05%

  C(3)
---------------------------------------------------------------------------------
1. Inception of Class A:      9/8/99.
2. Inception of Class B:      9/8/99.  Because Class B shares convert to Class
   A shares 72 months  after  purchase,  Class B  "life-of-class"  performance
   does not include any Early Withdrawal Charges.
3.    Inception of Class C:   9/8/99.


---------------------------------------------------------------------
  Average Annual Total Returns for Class A(1) Shares (After Sales
               Charge) For the Periods Ended 7/31/04
---------------------------------------------------------------------
---------------------------------------------------------------------

                                   1-Year           Life-of-class

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

After Taxes on Distributions       -0.18%               2.50%

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

After Taxes on                      1.12%               2.68%

Distributions and
Redemption of Fund Shares
---------------------------------------------------------------------
1.    Inception date of Class A: 9/8/99.

Other Performance Comparisons.  The Fund may compares its performance to that
of an appropriate broadly-based market index. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use ratings or rankings of its performance by independent ranking entities.
Examples of these performance comparisons are set forth below.

|X|   Lipper Rankings. From time to time the Fund may publish the ranking of
the performance of its classes of shares by Lipper, Inc. ("Lipper"). Lipper
is a widely-recognized independent mutual fund monitoring service.  Lipper
monitors the performance of regulated investment companies 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. The Fund is ranked in the
"Loan Participation Funds" category. Lipper publishes "peer-group" indices of
the performance of all funds in a category that it monitors and averages of
the performance of the funds in particular categories.

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

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

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

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

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

o     information  about the performance of certain  securities or commodities
         markets or segments of those markets,
o     information  about  the  performance  of  the  economies  of  particular
         countries or regions,
o     the   earnings  of   companies   included  in  segments  of   particular
         industries, sectors, securities markets, countries or regions,
o     the  availability  of  different  types of  securities  or  offerings of
         securities,
o     information relating to the gross national or gross domestic product of
         the United States or other countries or regions, 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 B contains more information about the
special early withdrawal arrangements and waivers offered by the Fund, and
the circumstances in which early withdrawal charges may be reduced or waived
for certain classes of investors.

When you purchase shares of the Fund, your ownership interest in the shares
of the Fund will be recorded as a book entry on the records of the Fund.  The
Fund will not issue or re-register physical share certificates.


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 NYSE"). The NYSE 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 NYSE, 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 B to this Statement of Additional Information because the
Distributor or dealer or broker incurs little or no selling expenses.

      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 Balanced Fund                 Oppenheimer Main Street Opportunity Fund
Oppenheimer Core Bond Fund                Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund     Oppenheimer MidCap Fund
Oppenheimer Capital Appreciation 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   Principal  Protected  Main
Oppenheimer Developing Markets Fund       Street Fund III
Oppenheimer Disciplined Allocation Fund   Oppenheimer Quest Balanced Fund
                                          Oppenheimer  Quest  Capital  Value Fund,

Oppenheimer Discovery Fund                Inc.

                                          Oppenheimer  Quest  International  Value
Oppenheimer Dividend Growth 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 Select Value Fund
Oppenheimer Gold & Special Minerals Fund  Oppenheimer Senior Floating Rate Fund

                                          Oppenheimer  Small-  &  Mid-  Cap  Value
Oppenheimer Growth Fund                   Fund
Oppenheimer High Yield Fund               Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund       Oppenheimer Total Return Bond Fund
Oppenheimer International Growth Fund     Oppenheimer U.S. Government Trust
Oppenheimer  International  Small Company
Fund                                      Oppenheimer Value Fund
Oppenheimer International Value Fund      Limited-Term New York Municipal Fund
Oppenheimer   Limited   Term   California
Municipal Fund                            Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund  Oppenheimer Portfolio Series:
                                            Active Allocation Fund
                                            Aggressive Investor Fund
                                            Conservative Investor Fund
                                              Moderate Investor Fund


And the following money market funds:


Oppenheimer Cash Reserves                 Centennial Money Market Trust
Oppenheimer Money Market Fund, Inc.       Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust    Centennial Tax Exempt Trust
Centennial Government 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"), you can reduce the
sales charge rate that applies to your purchases of Class A shares if you
purchase Class A, Class B or Class C shares of the Fund or other Oppenheimer
funds during a 13-month period. The total amount of your purchases of Class
A, Class B and Class C shares will determine the sales charge rate that
applies to your Class A share purchases during that period. You can choose to
include purchases that you made up to 90 days before the date of the Letter.
Class A shares of Oppenheimer Money Market Fund and Oppenheimer Cash Reserves
on which you have not paid a sales charge and any Class N shares you
purchase, or may have purchased, will not be counted towards satisfying the
purchases specified in a Letter.

      A Letter is an investor's statement in writing to the Distributor of
his or her intention to purchase a specified value of Class A, Class B and
Class C 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 will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or capital gains distributions
and purchases made at net asset value (i.e. without a sales charge) do not
count toward satisfying the amount of the Letter.

      Each purchase of Class A shares under the Letter will be made at the
offering price (including the sales charge) that would apply to a single
lump-sum purchase of shares in the amount intended to be purchased under the
Letter.


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

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

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


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


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

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

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

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

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

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

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

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

      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.  As stated in the Prospectus, the Fund does not offer to
redeem its shares daily, and the quarterly repurchase offers cannot guarantee
that the entire number of shares tendered by a shareholder will be
repurchased by the Fund in a particular repurchase offer. Therefore, the Fund
may not be an appropriate investment for retirement plans, especially if the
investor must take regular periodic distributions of a specific amount from
the plan to satisfy the minimum distribution requirements of the Internal
Revenue Code that apply to plans after the investor reaches age 701/2.  The
same limitations apply to plans that would otherwise wish to offer the Fund
as part of a "multi-manager" product, because investments in the Fund could
not be readily liquidated to fund investments in other plan investment
choices. Additionally, because exchanges of Fund shares for shares of other
Oppenheimer funds are limited to quarterly repurchase offers, the Fund may
not be appropriate for plans that need to offer their participants the
ability to make more frequent exchanges.

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 repurchasing shares from any account registered in that
investor's name, or the Fund or the Distributor may seek other redress.

Classes of Shares.  The Fund's multiple class structure is available because
the Fund has obtained from the Securities and Exchange Commission an
exemptive order (discussed in "Distribution Plans") permitting it to offer
more than one class of shares.  The availability of the Fund's share classes
is contingent upon the continued availability of the relief under that order.

      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
or Class C shares and the dividends payable on Class B or Class C shares will
be reduced by incremental expenses borne solely by that class.  Those
expenses include the asset-based sales charges to which Class B and Class C
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
and Class C shares have no initial sales charge, the purpose of the early
withdrawal charge and asset-based sales charge on Class B and Class C 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 a purchase order of $100,000 or more
for Class B shares or a purchase order of $1 million or more to purchase
Class C shares on behalf of a single investor (not including dealer "street
name" or omnibus accounts).

      Class B or Class C shares may not be purchased by an investor directly
from the Distributor without the investor designating another registered
broker-dealer


|X|   Class A Shares Subject to an Early Withdrawal Charge. For purchases of
Class A shares at net asset value whether or not subject to an Early
Withdrawal 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 an exchange,
Class B shares might continue to be subject to the asset-based sales charge
for longer than six years.

|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).

Fund Account Fees. As stated in the Prospectus, a $12 annual "Minimum Balance
Fee" is assessed on each Fund account with a share balance valued under $500.
The Minimum Balance Fee is automatically deducted from each such Fund account
on or about the second to last business day of September.

      Listed below are certain cases in which the Fund has elected, in its
      discretion, not to assess the Fund Account Fees.  These exceptions are
      subject to change:
o     A fund account whose shares were acquired after September 30th of the
               prior year;
o     A fund account that has a balance below $500 due to the automatic
               conversion of shares from Class B to Class A shares. However,
               once all Class B shares held in the account have been
               converted to Class A shares the new account balance may become
               subject to the Minimum Balance Fee;
o     Accounts of shareholders who elect to access their account documents
               electronically via eDoc Direct;
o     A fund account that has only certificated shares and, has a balance
               below $500 and is being escheated;
o     Accounts of shareholders that are held by broker-dealers under the NSCC
               Fund/SERV system;
o     Accounts held under the Oppenheimer Legacy Program and/or holding
               certain Oppenheimer Variable Account Funds;
o     Omnibus accounts holding shares pursuant to the Pinnacle, Ascender,
               Custom Plus, Recordkeeper Pro and Pension Alliance Retirement
               Plan programs; and
o     A fund account that falls below the $500 minimum solely due to market
               fluctuations within the 12-month period preceding the date the
               fee is deducted.

      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.

      The Fund reserves the authority to modify Fund Account Fees
      in its discretion.


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 NYSE on each day that the NYSE 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 NYSE
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 NYSE's most recent annual
announcement regarding holidays and days when the market may close early is
available on the NYSE's web site at www.nyse.com.

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


      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.

      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.

      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, to the extent such prices are
available for the debt security.

      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.

      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.

      In the case of Senior Loans and other loan obligations, 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 services 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.

      Securities (including Senior Loans and other loans for which reliable
bids are not available from dealers or pricing services, and other 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). The special factors used by the Manager to derive a fair
value for Senior Loans for which reliable market prices are not available are
discussed in the Prospectus.

      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(R), 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(R)on the valuation date.  If the put, call or
future is not traded on an exchange or on Nasdaq(R), 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.

Periodic Offers to Repurchase Shares

Information about the Fund's periodic offers to repurchase shares
("Repurchase Offers") is stated in the Prospectus. The information below
supplements the procedures and conditions for selling shares in a Repurchase
Offer set forth in the Prospectus.

Reinvestment Privilege.  Within six months after the Fund repurchases Class A
or Class B shares as part of a Repurchase offer, a shareholder may reinvest
all or part of the proceeds of:
o     Class A shares purchased subject to an initial sales charge or Class A
         shares on which an Early Withdrawal Charge was paid, or
o     Class B shares that were subject to the Class B Early Withdrawal Charge
         at the time of repurchase.

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

      Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on
that gain.  If there has been a capital loss on the repurchase, 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 repurchase
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 repurchased may not include the amount of the sales charge
paid.  That would reduce the loss or increase the gain recognized from the
repurchase.  However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the repurchase proceeds.

Involuntary Repurchases. The Fund's Board of Trustees has the right to cause
the involuntary repurchase 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 repurchase 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 repurchased.

Transfers of Shares.  A transfer of shares to a different registration is not
an event that triggers the payment of early withdrawal charges. Therefore,
shares are not subject to the payment of an early withdrawal 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 an early withdrawal charge are
transferred, the transferred shares will remain subject to the early
withdrawal 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 an early withdrawal
charge if sold in a Repurchase Offer at the time of transfer, the priorities
described in the Prospectus under "How to Buy Shares" for the imposition of
the Class A, Class B or Class C early withdrawal charge will be followed in
determining the order in which shares are transferred.

Distributions From Retirement Plans.  Distributions from Retirement plans
holding shares of the Fund may be made only in conjunction with quarterly
Repurchase offers by the Fund. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should accompany Repurchase Requests, and
should be sent to the Transfer Agent in the manner described in the Notice to
Shareholders of the Repurchase Offer.  The request for distributions 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 Repurchase
         Offer 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
the Fund to repurchase shares for 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.

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 at 1.800.225.5677.

o     You may exchange your shares of the Fund only in connection with a
         Repurchase Offer. You may not be able to exchange all of the shares
         you wish to exchange if a Repurchase is oversubscribed.
o     If any Class A shares of another Oppenheimer fund that are exchanged
         for shares of the Fund are subject to the Class A contingent
         deferred sales charge of the other Oppenheimer fund at the time of
         exchange, the holding period for that Class A contingent deferred
         sales charge will carry over to the Fund. The Fund shares acquired
         by exchange will be subject to the Fund's Class A Early Withdrawal
         Charge if they are repurchased before the expiration of that holding
         period.
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 California Tax Exempt Trust  Centennial New York Tax Exempt
                                              Trust
      Centennial Government Trust             Centennial Tax Exempt Trust


      Centennial Money Market Trust


      The following funds do not offer Class N shares:

    Limited Term New York Municipal Fund         Oppenheimer New Jersey Municipal
                                                 Fund

    Oppenheimer AMT-Free Municipals              Oppenheimer Pennsylvania Municipal
                                                 Fund II
    Oppenheimer AMT-Free New York Municipals     Oppenheimer Rochester National
                                                 Municipals

    Oppenheimer California Municipal Fund        Oppenheimer Senior Floating Rate
                                                 Fund
    Oppenheimer International Value Fund         Rochester Fund Municipals
    Oppenheimer Limited Term California
    Municipal Fund
    Oppenheimer Limited Term Municipal Fund
    Oppenheimer Money Market Fund, Inc.


      The following funds do not offer Class Y shares:

      Limited Term New York Municipal Fund   Oppenheimer International Small Company
                                             Fund
      Oppenheimer AMT-Free Municipals        Oppenheimer Limited Term Municipal Fund
      Oppenheimer AMT-Free New York          Oppenheimer New Jersey Municipal Fund
      Municipals
      Oppenheimer Balanced Fund              Oppenheimer Pennsylvania Municipal Fund
      Oppenheimer California Municipal Fund  Oppenheimer Principal Protected Main
                                             Street Fund
      Oppenheimer Capital Income Fund        Oppenheimer Principal Protected Main
                                             Street Fund II
      Oppenheimer Cash Reserves              Oppenheimer Principal Protected Main
                                             Street Fund III
      Oppenheimer Champion Income Fund       Oppenheimer Quest Capital Value Fund, Inc.
      Oppenheimer Convertible Securities     Oppenheimer Quest International Value

      Fund                                   Fund, Inc.

      Oppenheimer Developing Markets Fund    Oppenheimer Rochester National Municipals
      Oppenheimer Disciplined Allocation     Oppenheimer Small- & Mid- Cap Value Fund
      Fund
      Oppenheimer Dividend Growth Fund       Oppenheimer Total Return Bond Fund
      Oppenheimer Gold & Special Minerals
      Fund
      Oppenheimer International Growth Fund


o     This Fund does not offer Class N.
o     Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y
         shares.
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 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 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).

o     Shares of Oppenheimer Principal Protected Main Street Fund III 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 III until after the expiration of the
         warranty period (12/06/2011).


      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 Early Withdrawal Charges.  No contingent deferred
sales charge or early withdrawal charge is imposed on exchanges of shares of
any class purchased subject to a contingent deferred sales charge or an early
withdrawal charge with the following exceptions:

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

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

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

o     With respect to Class B shares (other than Limited-Term Government
   Fund, Limited Term Municipal Fund, Limited Term New York Municipal Fund,
   and Oppenheimer Senior Floating Rate Fund), 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 B shares of Limited-Term Government Fund, Limited
   Term Municipal Fund, Limited Term New York Municipal Fund, and Oppenheimer
   Senior Floating Rate Fund, the Class B contingent deferred sales charge is
   imposed on Class B shares acquired by exchange if they are redeemed within
   5 years of the initial purchase of the exchanged Class B shares.

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. 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. 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     When Class B or Class C shares are redeemed to effect an exchange, the
   priorities described in "How To Buy Shares" in the Prospectus for the
   imposition of the Class B or the Class C contingent deferred sales charge
   or early withdrawal 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 or early withdrawal charge that might be imposed in
   the subsequent redemption of remaining shares.

      However, if Class A, Class B or Class C shares of the Fund acquired by
exchange are subsequently repurchased by the Fund in a Repurchase Offer, this
Fund's applicable early withdrawal charge will be applied based on the
holding period of the shares measured from their initial purchase in the
original Oppenheimer fund. The Fund's Class A early withdrawal charge is
imposed on Class A shares of the Fund acquired by exchange from another
Oppenheimer fund if they were subject to the Class A contingent deferred
sales charge of that other fund at the time of exchange and are subsequently
repurchased by the Fund in a Repurchase Offer within 18 months of the initial
purchase of the exchanged Class A shares. The Fund's Class B early withdrawal
charge is imposed on Class B shares of the Fund acquired by exchange if they
are repurchased within five years of the initial purchase of the exchanged
Class B shares.  The Fund's Class C early withdrawal sales charge is imposed
on Class C shares of the Fund acquired by exchange if they are repurchased
within 12 months of the initial purchase of the exchanged Class C shares.

      When Class B or Class C shares are repurchased by the Fund to effect an
exchange to another Oppenheimer fund in a Repurchase Offer, the priorities
described in "How To Buy Shares" in the Prospectus for the imposition of the
Class B or the Class C early withdrawal  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
early withdrawal charge that might be imposed in the subsequent repurchase of
remaining shares.  Shareholders owning shares of more than one class must
specify which class of shares they wish to exchange.

      If Class B shares of another Oppenheimer fund are exchanged for shares
of the Fund and those shares acquired by exchanged are subsequently
repurchased, they will be subject to the applicable Early Withdrawal Charge
for the holding period since the shares were purchased.

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

|X|   Processing Exchange Requests. You may exchange your shares of the Fund
only in connection with a Repurchase Offer.  Shares to be exchanged are
governed by the terms of the Repurchase Offers described in the Prospectus.
The Transfer Agent must receive your exchange request no later than the close
of business (normally 4:00 P.M. Eastern time) on the Repurchase Request
Deadline.  Normally, shares of the fund to be acquired are purchased on the
Repurchase Pricing 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 exchange proceeds.

      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.  Additionally,
shares of the Fund tendered for exchange in a Repurchase Offer are subject to
possible pro-ration of the exchange request if the Repurchase Offer is
oversubscribed. 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 consult a
financial advisor to assure that the fund selected is appropriate for his or
her investment portfolio 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 repurchase proceeds in such cases. However, a
different tax treatment may apply to exchanges of less than all of a
shareholder's shares of the Fund, to the extent that the repurchase of Fund
shares to effect the exchange is not treated as a "sale" for tax purposes
(please refer to "Taxes" in the Prospectus). 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.

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

Dividends, Capital Gains and Taxes

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

      Shares that the Fund repurchases in a Repurchase Offer will be paid
dividends through and including the Repurchase Pricing Date.  If the Fund
repurchases all shares in an account, all dividends accrued on shares of the
same class in the account will be paid together with the repurchase proceeds.


      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 and Class C shares are
expected to be lower than dividends on Class A and Class Y shares. That is
because of the effect of the asset-based sales charge on Class B and Class C
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 purchases of shares by the
Fund 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 Repurchases.  The
federal tax treatment of the Fund's dividends and capital gains distributions
is briefly highlighted in the Prospectus. The following is only a summary of
certain additional tax considerations generally affecting the Fund and its
shareholders.

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

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

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

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

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

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

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

      Special provisions of the Internal Revenue Code govern the eligibility
of the Fund's dividends for the dividends-received deduction for corporate
shareholders.  Long-term capital gains distributions are not eligible for the
deduction.  The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less.  To the
extent the Fund's dividends are derived from gross income from option
premiums, interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for the
deduction. 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 treat its shareholders of record
on the last day of its taxable year as if each received a distribution of
their pro rata share of such gain. As a result, each shareholder will be
required to report his or her pro rata share of such gain on their tax return
as long-term capital gain, will receive a refundable tax credit for his/her
pro rata share of tax paid by the Fund on the gain, and will increase the tax
basis for his/her shares by an amount equal to the deemed distribution less
the tax credit.

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

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

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


      The Fund will be required in certain cases to withhold 28% of ordinary
income dividends, capital gains distributions and the proceeds of the
repurchase 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).  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 with a copy sent to
the IRS.


      |X|  Tax Effects of Repurchases of Shares.  If a shareholder tenders
all of his or her shares during a Repurchase Offer and they are repurchased
by the Fund, and as a result the shareholder is not considered to own any
shares of the Fund under the attribution rules under the Internal Revenue
Code, the shareholder will recognize a gain or loss on the repurchased shares
in an amount equal to the difference between the proceeds of the repurchased
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 repurchase.

      In general, any gain or loss arising from the repurchase 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
repurchase 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.

      Different tax effects may apply to tendering and non-tendering
shareholders in connection with a Repurchase Offer by the Fund, and these
consequences will be disclosed in the related offering documents. For
example, if a tendering shareholder tenders less than all shares owned by or
attributed to that shareholder, and if the payment to that shareholder does
not otherwise qualify under the Internal Revenue Code as a sale or exchange,
the proceeds received would be treated as a taxable dividend, a return of
capital or capital gain, depending on the Fund's earnings and profits and the
shareholder's basis in the repurchased shares. Additionally, there is a risk
that non-tendering shareholders might be deemed to have received a
distribution that may be a taxable dividend in whole or in part.

      |X|  Foreign Shareholders. Under U.S. tax law, taxation of a
shareholder who is a foreign person (including, 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. 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 with a copy sent to the IRS.

      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. 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 with
a copy sent to the IRS.


      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 Class B and Class C shares of certain
other Oppenheimer funds 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 the sub-distributor for funds managed by a
subsidiary of the Manager.

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

The Custodian. The Deutsche Bank Trust Company of Americas 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 Registered Public Accounting Firm.  Deloitte & Touche LLP is the
independent registered public accounting firm of the Fund. They audit the
Fund's financial statements and perform other related audit services.  They
also act as auditors 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER SENIOR FLOATING RATE FUND:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Senior Floating Rate Fund, including the statement of investments, as of July 31, 2005, 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 each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds 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 the standards of the Public Company Accounting Oversight Board (United States). 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. 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 Senior Floating Rate Fund as of July 31, 2005, 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 each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Denver, ColoradoSeptember
15, 2005

STATEMENT OF INVESTMENTS July 31, 2005


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

CORPORATE LOANS--106.8%
------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--32.9%
------------------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--8.1%
Affinia Group, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.40%, 11/30/11 1,2                                                                    $    13,641,213      $       13,713,688
------------------------------------------------------------------------------------------------------------------------------
Collins & Aikman Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
7.813%-9.616%, 8/31/11 2                                                                     3,942,481               3,241,282
------------------------------------------------------------------------------------------------------------------------------
Federal Mogul Corp., Sr. Sec. Credit Facilities Pre-Petition Revolving
Credit Loan, Tranche B, 5.24%, 9/30/05 1,2                                                  14,601,461              13,320,183
------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The), Sr. Sec. Credit Facilities 2nd Lien
Term Loan, 6.32%, 4/30/10 2                                                                 25,000,000              25,230,475
------------------------------------------------------------------------------------------------------------------------------
Grand Vehicle Works Holdings Corp., Sr. Sec. Credit Facilities 1st Lien
Term Loan, Tranche B, 8.42%-8.49%, 7/23/10 1,2                                               9,900,000               9,801,000
------------------------------------------------------------------------------------------------------------------------------
Hayes Lemmerz International, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.46%-7.12%, 6/3/09 2                                                            23,396,716              23,654,080
------------------------------------------------------------------------------------------------------------------------------
Intermet Corp., Sr. Sec. Credit Facilities Revolving Credit Loan, 1/8/09 1,2,3               5,534,904               5,507,229
------------------------------------------------------------------------------------------------------------------------------
Intermet Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B, 3/31/09 1,2,3               7,660,733               7,622,429
------------------------------------------------------------------------------------------------------------------------------
Key Plastics LLC, Sr. Sec. Credit Facilities Term Loan:
Tranche B, 6.32%-8.137%, 6/25/10 1,2                                                        11,550,471              11,608,223
Tranche C, 9.07%-9.18%, 6/25/11 1,2                                                          2,773,360               2,745,626
------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche B, 6/23/11 2,3                                                                       4,729,857               4,772,723
Tranche B, 6.37%-6.66%, 6/23/11 2                                                           15,752,546              15,895,312
------------------------------------------------------------------------------------------------------------------------------
Metaldyne Corp., Sr. Sec. Credit Facilities Term Loan, Tranche D,
8.016%, 12/31/09 1,2                                                                         3,272,183               3,226,372
------------------------------------------------------------------------------------------------------------------------------
Plastech Engineered Products, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 8.24%, 2/12/10 2                                                                 13,586,715              12,934,553
------------------------------------------------------------------------------------------------------------------------------
Tenneco Automotive, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.54%, 12/12/10 1,2                                                               8,088,286               8,202,873
------------------------------------------------------------------------------------------------------------------------------
TI Automotive Ltd., Sr. Sec. Credit Facilities Term Loan, Tranche C,
6.912%, 6/7/11 2                                                                            16,102,509              15,780,459
------------------------------------------------------------------------------------------------------------------------------
Tire Rack, Inc. (The), Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.73%-5.90%, 6/27/12 1,2                                                                    11,000,000              11,192,500
------------------------------------------------------------------------------------------------------------------------------
Tower Automotive, Inc., Sr. Sec. Credit Facilities Term Loan,
Debtor in Possession, 6.625%, 2/2/07 1,2                                                    26,000,000              26,354,796
------------------------------------------------------------------------------------------------------------------------------
TriMas Corp., Sr. Sec. Credit Facilities Revolving Credit Loan, 12/31/07 1,2,3               5,000,000               4,925,000
------------------------------------------------------------------------------------------------------------------------------
TriMas Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.90%, 12/31/09 1,2           1,862,059               1,878,352
                                                                                                            ------------------
                                                                                                                   221,607,155

------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--6.4%
Aladdin/OpBiz Gaming LLC, Sr. Sec. Credit Facilities Term Loan:
Tranche A, 6.504%, 8/31/10 1,2                                                              15,967,308              16,017,206
Tranche B, 7.531%, 8/31/10 1,2                                                                  38,392                  38,512

14 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

HOTELS, RESTAURANTS & LEISURE Continued
AMF Bowling Worldwide, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.16%-6.894%, 8/27/09 1,2                                                   $     1,600,371      $        1,613,875
------------------------------------------------------------------------------------------------------------------------------
Arby's LLC, Sr. Sec. Credit Facilities Term Loan, Tranche B, 7/25/12 1,2,3                  17,000,000              17,231,982
------------------------------------------------------------------------------------------------------------------------------
Buffets, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.99%-7.16%,
6/28/09 1,2                                                                                 12,783,497              12,879,374
------------------------------------------------------------------------------------------------------------------------------
CNL Hotels & Resorts, Inc., Sr. Sec. Credit Facilities Term Loan, 5.85%,
11/30/06 2                                                                                   4,914,171               4,926,456
------------------------------------------------------------------------------------------------------------------------------
Denny's Corp. Sr. Sec. Credit Facilities 1st Lien Term Loan, 6.48%-7.121%,
9/30/09 2                                                                                   10,945,049              11,239,196
------------------------------------------------------------------------------------------------------------------------------
Denny's Corp. Sr. Sec. Credit Facilities 2nd Lien Term Loan, 8/31/10 1,2,3                   2,000,000               2,063,750
------------------------------------------------------------------------------------------------------------------------------
Denny's Corp. Sr. Sec. Credit Facilities 2nd Lien Term Loan,
8.205%-8.996%, 8/31/10 1,2                                                                   3,000,000               3,095,628
------------------------------------------------------------------------------------------------------------------------------
Harmon Koval Partners, Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.80%, 6/30/07 1,2                                                                           9,000,000               9,067,500
------------------------------------------------------------------------------------------------------------------------------
Metro-Goldwyn-Mayer Studios, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche A, 5.74%, 4/8/11  1,2                                                                7,000,000               7,057,967
Tranche B, 5.74%, 4/8/12  1,2                                                               13,000,000              13,156,000
------------------------------------------------------------------------------------------------------------------------------
MotorCity Casino, Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.48%, 7/21/12 1,2                                                                          12,000,000              12,168,756
------------------------------------------------------------------------------------------------------------------------------
Penn National Gaming, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5/3/12 1,2,3                                                                     19,500,000              19,830,584
------------------------------------------------------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., Sr. Sec. Credit Facilities Term Loan,
Delayed Draw, 1%, 8/27/10 1,2                                                                1,993,456               2,002,177
------------------------------------------------------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., Sr. Sec. Credit Facilities Term Loan,
6.49%, 8/27/10 1,2                                                                             550,000                 558,250
------------------------------------------------------------------------------------------------------------------------------
Resorts International Hotel and Casino, Inc., Sr. Sec. Credit Facilities
1st Lien Term Loan, Tranche B, 5.99%, 3/3/12 1,2                                             9,817,913               9,946,774
------------------------------------------------------------------------------------------------------------------------------
Resorts International Hotel and Casino, Inc., Sr. Sec. Credit Facilities
2nd Lien Term Loan, 9.23%, 3/3/12 1,2                                                       10,900,000              10,983,450
------------------------------------------------------------------------------------------------------------------------------
Trump Entertainment Resorts, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche B1, 5.93%-6.14%, 4/22/12 1,2                                                         4,000,000               4,057,500
Tranche B2, 1%, 5/20/12 1,2                                                                  4,000,000               4,057,500
------------------------------------------------------------------------------------------------------------------------------
Wyndam International, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.625%, 3/31/11 1,2                                                              10,594,138              10,668,297
------------------------------------------------------------------------------------------------------------------------------
Wyndam International, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
Tranche C, 11.375%, 9/30/11 1,2                                                              2,992,500               3,151,477
                                                                                                            ------------------
                                                                                                                   175,812,211

------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.4%
Culligan International Co., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.88%, 9/30/11 2                                                                 10,000,000              10,143,750
------------------------------------------------------------------------------------------------------------------------------
Rexair, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, 7.74%, 8/2/10 1,2               3,500,000               3,517,500

15 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

HOUSEHOLD DURABLES Continued
Springs Industries, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.25%, 12/7/10 1,2                                                                     $    18,415,000      $       18,484,056
------------------------------------------------------------------------------------------------------------------------------
Technical Olympic USA, Inc., Sr. Sec. Credit Facilities Term Loan,
6.56%, 8/20/11 1,2                                                                           2,000,000               2,031,250
------------------------------------------------------------------------------------------------------------------------------
Werner Holding Co., Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
7.35%-7.55%, 6/11/09 1,2                                                                     3,368,034               3,356,810
                                                                                                            ------------------
                                                                                                                    37,533,366

------------------------------------------------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--1.1%
24 Hour Fitness, Inc., Sr. Sec. Credit Facilities Term Loan, 6.78%, 6/18/12 2               20,000,000              20,331,260
------------------------------------------------------------------------------------------------------------------------------
Latham International Ltd., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.95%, 12/29/10 1,2                                                                         10,449,994              10,502,244
                                                                                                            ------------------
                                                                                                                    30,833,504

------------------------------------------------------------------------------------------------------------------------------
MEDIA--11.1%
ALM Properties, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.99%, 3/4/10 2                                                                             14,962,500              14,999,906
------------------------------------------------------------------------------------------------------------------------------
American Reprographics Co., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
10.235%, 12/18/09 1,2                                                                        7,776,350               8,106,845
------------------------------------------------------------------------------------------------------------------------------
Atlantic Broadband LLC, Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.11%, 9/1/11 1,2                                                                           10,546,061              10,717,434
------------------------------------------------------------------------------------------------------------------------------
Bragg Communications, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.82%, 8/31/11 1,2                                                                9,925,000              10,042,859
------------------------------------------------------------------------------------------------------------------------------
Canon Communications LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 8.877%, 5/31/11 1,2                                                              10,500,000              10,500,000
------------------------------------------------------------------------------------------------------------------------------
Cebridge Connections Holding LLC, Sr. Sec. Credit Facilities 1st Lien
Term Loan, 6.40%-8.384%, 2/23/09 1,2                                                         2,474,938               2,484,219
------------------------------------------------------------------------------------------------------------------------------
Cebridge Connections Holding LLC, Sr. Sec. Credit Facilities 2nd Lien
Term Loan, Tranche C, 9.49%-9.774%, 2/23/10 1,2                                             20,255,037              20,280,356
------------------------------------------------------------------------------------------------------------------------------
Century-TCI California LP, Sr. Sec. Credit Facilities Revolving Credit Loan,
6.164%, 12/31/07 1,2                                                                        19,435,000              19,334,793
------------------------------------------------------------------------------------------------------------------------------
Century-TCI California LP, Sr. Sec. Credit Facilities Term Loan,
6.164%, 12/31/07 1,2                                                                        19,703,475              19,601,884
------------------------------------------------------------------------------------------------------------------------------
Charter Communications Operating LLC, Sr. Sec. Credit Facilities
Term Loan, Tranche A, 6.68%, 4/27/10 2                                                      50,744,653              50,384,467
------------------------------------------------------------------------------------------------------------------------------
Cygnus Business Media, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 7.51%, 12/31/08 1,2                                                               6,616,667               6,616,667
------------------------------------------------------------------------------------------------------------------------------
Endurance Business Media, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.13%, 3/7/12 1,2                                                                 7,000,000               7,109,375
------------------------------------------------------------------------------------------------------------------------------
Frontiervision Operating Partners LP, Sr. Sec. Credit Facilities Revolving
Credit Loan, 7.65%, 10/31/05 1,2                                                             2,363,636               2,369,545
------------------------------------------------------------------------------------------------------------------------------
Frontiervision Operating Partners LP, Sr. Sec. Credit Facilities Term Loan:
Tranche A, 7.65%, 9/30/05 1,2                                                                2,038,636               2,043,415
Tranche B, 7.775%, 3/31/06 1,2                                                               6,477,144               6,496,375

16 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

MEDIA Continued
Herald Media, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.99%, 7/22/11 1,2                                                                     $     9,900,000      $        9,986,625
------------------------------------------------------------------------------------------------------------------------------
Loews Cineplex Entertainment Corp., Sr. Sec. Credit Facilities Term Loan,
5.46%-5.80%, 7/22/11 2                                                                      10,303,849              10,388,372
------------------------------------------------------------------------------------------------------------------------------
NEP Supershooters LP, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B Add-On, 6.99%, 2/10/12 1,2                                                         5,870,500               5,982,409
------------------------------------------------------------------------------------------------------------------------------
North American Membership Group, Inc., Sr. Sec. Credit Facilities Term
Loan, Tranche B, 6.859%, 4/12/11 1,2                                                         7,481,250               7,518,656
------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.24%, 11/10/10 1,2                                                                          5,275,765               5,338,415
------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., Sr. Sec. Credit Facilities 1st Lien Term
Loan, Tranche B, 5.49%, 5/3/12 1,2                                                           8,475,000               8,602,125
------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., Sr. Sec. Credit Facilities 2nd Lien Term
Loan, 7.03%, 5/3/13 1,2                                                                      4,000,000               4,057,500
------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, Sr. Sec. Credit Facilities Term Loan:
Tranche F2, 7.19%, 2/1/12 1,2                                                               18,000,000              18,155,898
Tranche H2, 6.254%, 9/30/12 2                                                               32,000,000              32,266,656
------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., Sr. Sec. Credit Facilities Term Loan,
5.50%-5.75%, 4/11/12 1,2                                                                    10,000,000              10,104,171
                                                                                                            ------------------
                                                                                                                   303,488,967

------------------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--0.3%
Dollarama Group LP, Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.93%, 11/18/11 1,2                                                                          6,965,000               7,034,650
------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--3.3%
Eddie Bauer, Inc., Sr. Sec. Credit Facilities Term Loan, 6.31%, 6/24/11 1,2                  8,000,000               8,145,000
------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.22%-6.40%, 3/1/12 1,2                                                           7,980,001               8,042,347
------------------------------------------------------------------------------------------------------------------------------
General Growth Properties, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.49%, 11/24/08 2                                                                 9,508,609               9,643,707
------------------------------------------------------------------------------------------------------------------------------
Getty Petroleum Marketing, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.49%, 5/19/10 2                                                                  6,978,591               7,065,823
------------------------------------------------------------------------------------------------------------------------------
Harbor Freight Tools, Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.77%-5.914%, 7/15/10 2                                                                     14,892,497              15,086,100
------------------------------------------------------------------------------------------------------------------------------
Movie Gallery, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.49%, 4/27/11 1,2                                                                          15,000,000              15,154,695
------------------------------------------------------------------------------------------------------------------------------
Oriental Trading Co., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
8.25%, 1/8/11 1,2                                                                            5,000,000               5,018,750
------------------------------------------------------------------------------------------------------------------------------
Oriental Trading Co., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6%, 2/24/10 1,2                                                                             11,926,360              12,000,899
------------------------------------------------------------------------------------------------------------------------------
Savers, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, Tranche B,
5.983%-7.016%, 7/15/09 1,2                                                                   9,407,535               9,478,091
                                                                                                            ------------------
                                                                                                                    89,635,412

17 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

TEXTILES, APPAREL & LUXURY GOODS--1.2%
Levi Strauss & Co., Sr. Sec. Credit Facilities Term Loan, 10.105%-10.215%,
8/1/06 1,2                                                                             $     7,771,006      $        8,106,131
------------------------------------------------------------------------------------------------------------------------------
Maidenform, Inc., Sr. Sec. Credit Facilities Term Loan, 5.52%-7.50%, 6/7/10 1,2             10,000,000              10,075,000
------------------------------------------------------------------------------------------------------------------------------
William Carter Co. (The), Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.24%-5.65%, 6/29/12 1,2                                                                    15,000,000              15,229,695
                                                                                                            ------------------
                                                                                                                    33,410,826

------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--8.3%
------------------------------------------------------------------------------------------------------------------------------
BEVERAGES--0.1%
Le*Nature's, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.65%-6.78%, 5/20/10 1,2                                                                     3,945,050               3,994,363
------------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.3%
Bi-Lo Holdings LLC, Sr. Sec. Credit Facilities Term Loan, Tranche B,
7.56%, 7/29/11 1,2                                                                          41,000,000              41,205,000
------------------------------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche C, 5.84%, 6/28/12 1,2                                                               13,000,000              13,219,375
------------------------------------------------------------------------------------------------------------------------------
MAPCO, Inc., Sr. Sec. Credit Facilities Term Loan, 6.21%, 5/6/11 1,2                         7,000,000               7,122,500
                                                                                                            ------------------
                                                                                                                    61,546,875

------------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--1.0%
American Seafoods Group LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.74%, 3/31/09 1,2                                                                4,972,249               5,007,990
------------------------------------------------------------------------------------------------------------------------------
Atkins Nutritionals, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
12/1/09 1,4,5                                                                                9,648,034                 964,803
------------------------------------------------------------------------------------------------------------------------------
Atkins Nutritionals, Inc., Sr. Sec. Credit Facilities Term Loan, 12/1/09 1,4,5               3,663,795               2,344,828
------------------------------------------------------------------------------------------------------------------------------
Meow Mix, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.67%-7.09%, 7/13/11 1,2                                                                     5,747,368               5,839,567
------------------------------------------------------------------------------------------------------------------------------
Merisant Co., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.93%, 7/13/10 1,2            6,944,175               6,787,931
------------------------------------------------------------------------------------------------------------------------------
Windsor Quality Food Co., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.24%, 12/10/10 1,2                                                                          6,965,000               6,956,294
                                                                                                            ------------------
                                                                                                                    27,901,413

------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.3%
Amscan Holdings, Inc., Sr. Sec. Credit Facilities Term Loan,
6.13%-6.56%, 4/30/12 1,2                                                                     6,474,855               6,539,604
------------------------------------------------------------------------------------------------------------------------------
Jarden Corp., Sr. Sec. Credit Facilities Term Loan, 5.30%-5.49%, 1/24/12 1,2                12,235,883              12,352,784
------------------------------------------------------------------------------------------------------------------------------
Playpower, Inc., Sr. Sec. Credit Facilities Term Loan, 6.49%, 2/1/10 1,2                    10,367,521              10,497,116

18 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

HOUSEHOLD PRODUCTS Continued
Rayovac Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.27%-5.56%, 2/6/12 1,2                                                                $     5,985,000      $        6,069,789
                                                                                                            ------------------
                                                                                                                    35,459,293

------------------------------------------------------------------------------------------------------------------------------
PERSONAL PRODUCTS--3.2%
AAI.FosterGrant, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
8.48%-8.56%, 10/1/10 1,2                                                                    14,395,794              14,467,774
------------------------------------------------------------------------------------------------------------------------------
American Safety Razor Co., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.88%-6.07%, 2/1/12 1,2                                                                      6,982,500               7,069,781
------------------------------------------------------------------------------------------------------------------------------
American Safety Razor Co., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
9.38%, 8/1/12 1,2                                                                            7,000,000               7,052,500
------------------------------------------------------------------------------------------------------------------------------
Cosmetic Essence, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.01%-7.644%, 12/3/10 1,2                                                                   12,716,000              12,525,260
------------------------------------------------------------------------------------------------------------------------------
MD Beauty, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.60%-6.70%, 2/18/12 2                                                                      13,819,355              13,992,097
------------------------------------------------------------------------------------------------------------------------------
MD Beauty, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 9.90%,
2/18/13 1,2                                                                                  2,000,000               2,045,000
------------------------------------------------------------------------------------------------------------------------------
Natural Products Group, Sr. Sec. Credit Facilities Term Loan, 6.91%,
11/24/10 1,2                                                                                 8,887,500               8,920,828
------------------------------------------------------------------------------------------------------------------------------
Nice-Pak Products, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.71%, 6/18/10 1,2                                                                           4,812,500               4,848,594
------------------------------------------------------------------------------------------------------------------------------
Pure Fishing, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.48%-6.77%, 3/23/10 1,2                                                                    12,119,869              12,309,241
------------------------------------------------------------------------------------------------------------------------------
Riddell Bell Holdings, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.99%-6.16%, 9/30/11 1,2                                                          4,962,500               5,035,905
                                                                                                            ------------------
                                                                                                                    88,266,980

------------------------------------------------------------------------------------------------------------------------------
TOBACCO--0.4%
Alliance One International, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.73%, 5/13/10 1,2                                                                9,977,500              10,170,814
------------------------------------------------------------------------------------------------------------------------------
ENERGY--8.7%
------------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.4%
Headwaters, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.87%-7.397%, 4/30/11 1,2                                                                   15,380,673              15,556,905
------------------------------------------------------------------------------------------------------------------------------
LSP-Kendall Energy LLC, Sr. Sec. Credit Facilities Term Loan, 4.68%, 12/1/06 1,2             7,823,032               7,588,341
------------------------------------------------------------------------------------------------------------------------------
Northern Star General, Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.49%, 12/17/11 1,2                                                                         13,930,000              14,138,950
                                                                                                            ------------------
                                                                                                                    37,284,196

------------------------------------------------------------------------------------------------------------------------------
OIL & GAS--7.3%
Alon USA Energy, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
10%, 10/3/10 2                                                                               9,000,000               9,270,000

19 | OPPENHEIMER SENIOR FLOATING RATE FUND STATEMENT OF INVESTMENTS Continued --------------------------------------------------------------------------------


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

OIL & GAS Continued
ATP Oil & Gas Corp., Sr. Sec. Credit Facilities Term Loan:
Tranche B, 4/14/10 2,3                                                                 $     3,000,000      $        3,090,000
Tranche B, 8.76%-9.07%, 4/14/10 2                                                           22,942,501              23,630,774
------------------------------------------------------------------------------------------------------------------------------
Basic Energy Services, Inc., Sr. Sec. Credit Facilities Term Loan, 6.50%, 10/3/09 2         17,556,836              17,820,189
------------------------------------------------------------------------------------------------------------------------------
Celero Energy LP, Sr. Sec. Credit Facilities 2nd Lien Term Loan,
9.84%-9.976%, 9/30/11 1,2                                                                   10,945,000              11,150,218
------------------------------------------------------------------------------------------------------------------------------
Coleto Creek WLE LP, Sr. Sec. Credit Facilities 2nd Lien Term Loan,
ranche C, 6.516%, 7/1/12 1,2                                                                16,260,000              16,625,850
------------------------------------------------------------------------------------------------------------------------------
Dynegy, Inc., Sr. Sec. Credit Facilities Term Loan, 7.34%, 5/28/10 1,2                      10,904,962              10,994,699
------------------------------------------------------------------------------------------------------------------------------
El Paso Corp., Sr. Sec. Credit Facilities Term Loan, 6.24%, 11/23/09 2                      15,931,484              16,144,313
------------------------------------------------------------------------------------------------------------------------------
Ferrell Cos., Inc., Sr. Sec. Credit Facilities Term Loan, 6.909%-6.93%, 12/17/11 2          22,291,765              22,849,059
------------------------------------------------------------------------------------------------------------------------------
Hercules Offshore LLC, Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.82%, 6/29/10 1,2                                                                          12,500,000              12,710,938
------------------------------------------------------------------------------------------------------------------------------
Kerr-McGee Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.79%, 5/1/11 2                                                                             19,500,000              19,860,087
------------------------------------------------------------------------------------------------------------------------------
Power Well Services, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.61%, 7/30/09 2                                                                 16,000,000              16,030,000
------------------------------------------------------------------------------------------------------------------------------
Quest Cherokee LLC, Sr. Sec. Credit Facilities Term Loan, 8.02%-8.17%,
7/22/10 1,2                                                                                 18,596,270              18,619,514
                                                                                                            ------------------
                                                                                                                   198,795,641

------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--2.0%
------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.6%
Refco Group Ltd. LLC, Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.48%, 8/5/11 1,2                                                                           15,301,053              15,400,509
------------------------------------------------------------------------------------------------------------------------------
INSURANCE--1.2%
American Wholesale Insurance Group, Sr. Sec. Credit Facilities 1st Lien
Term Loan, Tranche B, 6.856%, 3/23/11 1,2                                                   10,473,750              10,473,750
------------------------------------------------------------------------------------------------------------------------------
American Wholesale Insurance Group, Sr. Sec. Credit Facilities 2nd Lien
Term Loan, 11.856%, 9/23/11 1,2                                                              3,000,000               3,000,000
------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.99%, 6/22/10 2            13,424,609              13,556,063
------------------------------------------------------------------------------------------------------------------------------
Vertafore, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, 6.04%-6.26%,
11/30/10 2                                                                                   5,762,307               5,798,322
                                                                                                            ------------------
                                                                                                                    32,828,135

------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--0.2%
Kyle Acquisition Group LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche A, 8.137%, 7/19/08 1,2                                                               3,635,015               3,689,540
------------------------------------------------------------------------------------------------------------------------------
LNR Property Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.21%, 2/3/08 1,2                                                                            2,000,000               2,020,892
                                                                                                            ------------------
                                                                                                                     5,710,432

20 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

HEALTH CARE--7.4%
------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.1%
Aircast, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 10.36%, 6/7/11 1,2       $     1,000,000      $        1,020,000
------------------------------------------------------------------------------------------------------------------------------
Aircast, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.11%, 10/28/10 1,2          3,052,045               3,082,566
                                                                                                            ------------------
                                                                                                                     4,102,566

------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--7.0%
3M Health Care Ltd., Sr. Sec. Credit Facilities Term Loan, 10.32%, 12/3/09 1,2               3,980,000               4,099,400
------------------------------------------------------------------------------------------------------------------------------
American Medical Response/EmCare Holdings, Inc., Sr. Sec. Credit
Facilities Term Loan, Tranche B, 5.50%-5.91%, 2/10/12 2                                     12,962,500              13,177,198
------------------------------------------------------------------------------------------------------------------------------
CompBenefits Corp., Sr. Sec. Credit Facilities Term Loan:
Tranche B, 7.07%-7.24%, 8/27/09 1,2                                                          4,905,471               4,905,471
Tranche C, 10.24%-10.43%, 2/27/10 1,2                                                        1,975,000               1,970,063
------------------------------------------------------------------------------------------------------------------------------
Concentra Operating Corp., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.80%-6.02%, 6/30/09 1,2                                                          7,664,343               7,774,518
------------------------------------------------------------------------------------------------------------------------------
DaVita, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 5/16/12 1,2,3                13,000,000              13,218,478
------------------------------------------------------------------------------------------------------------------------------
FHC Health Systems, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
9.33%, 11/15/09 1,2                                                                          5,380,367               5,434,170
------------------------------------------------------------------------------------------------------------------------------
FHC Health Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
Delayed Draw, Tranche B, 11.33%, 11/15/09 1,2                                                2,080,196               2,100,998
------------------------------------------------------------------------------------------------------------------------------
HealthSouth Corp., Sr. Sec. Credit Facilities Letter of Credit Term Loan,
8.75%, 3/31/10 1,2                                                                             362,620                 367,550
------------------------------------------------------------------------------------------------------------------------------
HealthSouth Corp., Sr. Sec. Credit Facilities Term Loan, 5.98%, 6/14/07 1,2                 10,072,052              10,208,971
------------------------------------------------------------------------------------------------------------------------------
HealthSouth Corp., Sr. Sec. Sub. Credit Facilities Term Loan, 10.375%, 1/16/11 1            10,500,000              10,998,750
------------------------------------------------------------------------------------------------------------------------------
HealthSouth Corp., Sr. Unsec. Credit Facilities Term Loan, 8.39%, 6/10/10 1,2               16,000,000              16,220,000
------------------------------------------------------------------------------------------------------------------------------
InSight Health Services Corp., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 7.24%, 10/17/08 1,2                                                               5,309,318               5,332,546
------------------------------------------------------------------------------------------------------------------------------
MultiPlan, Inc., Sr. Sec. Credit Facilities Term Loan, 6.24%, 3/4/09 1,2                     2,083,333               2,097,656
------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp., Sr. Sec. Credit Facilities Letter of Credit Term Loan,
5.84%, 2/18/12 1,2                                                                           2,604,709               2,643,780
------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.838%-6.038%, 2/18/12 1,2                                                                   9,525,793               9,668,680
------------------------------------------------------------------------------------------------------------------------------
Sheridan Healthcare, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.64%-6.82%, 11/12/10 1,2                                                         3,875,316               3,940,712
------------------------------------------------------------------------------------------------------------------------------
Sheridan Healthcare, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
Tranche C, 10.768%, 5/12/11 1,2                                                              1,500,000               1,520,625
------------------------------------------------------------------------------------------------------------------------------
SHPS, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 7%, 11/1/11 1,2                10,726,125              10,860,202
------------------------------------------------------------------------------------------------------------------------------
SouthernCare, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.60%-6.766%, 12/10/10 1,2                                                                   9,452,500               9,541,118
------------------------------------------------------------------------------------------------------------------------------
Triumph HealthCare LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 7.51%, 10/29/10 1,2                                                               5,935,329               5,965,006
------------------------------------------------------------------------------------------------------------------------------
Vanguard Health Systems, Inc., Sr. Sec. Credit Facilities Acquisition
Term Loan, 6.29%-6.74%, 9/23/11 1,2                                                          9,950,000              10,124,126

21 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

HEALTH CARE PROVIDERS & SERVICES Continued
Vanguard Health Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.74%, 9/23/11 1,2                                                          $     6,947,500      $        7,069,081
------------------------------------------------------------------------------------------------------------------------------
Warner Chilcott plc, Sr. Sec. Credit Facilities Term Loan:
Tranche B, 5.96%-6.18%, 1/4/12 1,2                                                          20,700,561              20,946,380
Tranche C, 6.18%, 1/4/12 1,2                                                                 6,224,272               6,298,186
Tranche D, 6.18%, 1/4/12 1,2                                                                 3,935,520               3,982,254
                                                                                                            ------------------
                                                                                                                   190,465,919

------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--0.3%
Alpharma Operating Corp., Sr. Sec. Credit Facilities Term Loan:
Tranche A, 5.21%, 10/5/07 1,2                                                                1,321,931               1,320,279
Tranche B, 6.659%-6.71%, 10/5/08 1,2                                                         5,273,231               5,286,414
------------------------------------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.40%, 6/16/10 1,2                                                                2,000,000               2,027,500
                                                                                                            ------------------
                                                                                                                     8,634,193

------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--20.0%
------------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--5.5%
AM General LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 7.91%-9.616%, 8/10/11 1,2                                                        10,450,000              10,900,656
------------------------------------------------------------------------------------------------------------------------------
American Airlines, Inc., Sr. Sec. Credit Facilities Revolving Credit Loan,
8.25%-8.56%, 6/17/09 1,2                                                                     8,550,000               8,468,776
------------------------------------------------------------------------------------------------------------------------------
Apptis, Inc., Sr. Sec. Credit Facilities Term Loan, 6.68%, 1/5/11 1,2                        9,600,000               9,666,000
------------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., Sr. Sec. Credit Facilities
Term Loan, 5.25%-5.50%, 7/23/10 1,2                                                          4,088,888               4,157,888
------------------------------------------------------------------------------------------------------------------------------
DeCrane Aircraft Holdings, Inc., Sr. Sec. Credit Facilities 2nd Lien Term
Loan, 15%, 6/30/08 1                                                                         8,492,167               8,534,627
------------------------------------------------------------------------------------------------------------------------------
DeCrane Aircraft Holdings, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche A, 8.766%, 3/31/06 1,2                                                               1,500,000               1,507,500
Tranche B, 9.016%, 3/31/07 1,2                                                               2,525,477               2,538,104
Tranche D, 9.516%, 12/31/07 1,2                                                              1,816,247               1,825,328
------------------------------------------------------------------------------------------------------------------------------
DynCorp International LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.063%, 2/1/11 1,2                                                               14,962,500              15,152,643
------------------------------------------------------------------------------------------------------------------------------
Federal Information Technology Systems, Inc., Sr. Sec. Credit Facilities
Term Loan, 4/1/11 1,2,3                                                                        992,500               1,003,356
------------------------------------------------------------------------------------------------------------------------------
Federal Information Technology Systems, Inc., Sr. Sec. Credit Facilities
Term Loan, 6.18%-6.63%, 4/1/11 1,2                                                           3,990,000               4,033,642
------------------------------------------------------------------------------------------------------------------------------
Gencorp, Inc., Sr. Sec. Credit Facilities Prefunded Letter of Credit
Term Loan, 6.49%, 12/6/09 1,2                                                                7,501,880               7,548,766
------------------------------------------------------------------------------------------------------------------------------
Gencorp, Inc., Sr. Sec. Credit Facilities Term Loan, 6.32%, 12/6/09 1,2                      2,450,614               2,475,120
------------------------------------------------------------------------------------------------------------------------------
IAP Worldwide Services, Inc., Sr. Sec. Credit Facilities 1st Lien Term
Loan, Tranche B, 6.313%, 3/31/11 2                                                          20,000,000              20,325,000
------------------------------------------------------------------------------------------------------------------------------
IAP Worldwide Services, Inc., Sr. Sec. Credit Facilities 2nd Lien Term
Loan, 9.313%, 3/30/12 1,2                                                                   10,000,000              10,158,330

22 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

AEROSPACE & DEFENSE Continued
Mid-Western Aircraft Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.584%, 12/31/11 1,2                                                        $     5,000,000      $        5,090,625
------------------------------------------------------------------------------------------------------------------------------
Northwest Airlines, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche A, 8.33%, 11/23/09 1,2                                                               7,500,000               7,223,438
Tranche C, 9.47%, 11/23/10 1,2                                                               2,000,000               1,945,000
------------------------------------------------------------------------------------------------------------------------------
Standard Aero Holdings, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.72%-5.73%, 8/1/12 1,2                                                           4,153,846               4,210,962
------------------------------------------------------------------------------------------------------------------------------
United Airlines, Inc., Sr. Sec. Credit Facilities Term Loan, Debtor in
Possession, 7.96%, 12/30/05 1,2                                                             17,600,000              17,809,000
------------------------------------------------------------------------------------------------------------------------------
Wyle Laboratories, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.96%, 1/28/11 1,2                                                                           4,488,750               4,563,097
------------------------------------------------------------------------------------------------------------------------------
Wyle Laboratories, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
9.71%, 7/6/11 1,2                                                                            2,000,000               2,038,750
                                                                                                            ------------------
                                                                                                                   151,176,608

------------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS--3.1%
Acoustical Material Services, Inc., Sr. Sec. Credit Facilities Term Loan,
6.24%, 4/13/12 1,2                                                                          14,975,000              15,106,031
------------------------------------------------------------------------------------------------------------------------------
CHI Overhead Doors, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.70%-8.63%, 4/19/10 1,2                                                          4,869,737               4,930,608
------------------------------------------------------------------------------------------------------------------------------
Custom Building Products, Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.74%, 10/20/11 1,2                                                                          7,980,000               8,034,863
------------------------------------------------------------------------------------------------------------------------------
Custom Building Products, Sr. Sec. Credit Facilities 2nd Lien Term Loan,
8.58%, 4/20/12 1,2                                                                           7,000,000               6,973,750
------------------------------------------------------------------------------------------------------------------------------
Formica Corp. (Canada), Sr. Sec. Credit Facilities Term Loan,
8.33%-8.433%, 6/15/10 1,2                                                                    1,786,128               1,795,059
------------------------------------------------------------------------------------------------------------------------------
Formica Corp. (Spain), Sr. Sec. Credit Facilities Term Loan,
8.33%-8.433%, 6/15/10 1,2                                                                    4,328,295               4,349,937
------------------------------------------------------------------------------------------------------------------------------
Formica Corp. (UK), Sr. Sec. Credit Facilities Term Loan, 8.33%-8.433%,
6/15/10 1,2                                                                                  2,213,510               2,224,577
------------------------------------------------------------------------------------------------------------------------------
Formica Corp., Sr. Sec. Credit Facilities Term Loan, 8.433%-9.616%, 6/15/10 1,2              6,301,565               6,333,073
------------------------------------------------------------------------------------------------------------------------------
Juno Lighting, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.71%-7.644%, 11/24/10 1,2                                                                   6,000,000               6,030,000
------------------------------------------------------------------------------------------------------------------------------
MAAX, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.979%-6.254%, 6/4/11 1,2                                                                    9,008,999               9,031,522
------------------------------------------------------------------------------------------------------------------------------
Nortek Holdings, Inc., Sr. Sec. Credit Facilities Term Loan,
5.91%-7.397%, 8/27/11 1,2                                                                    6,947,500               7,016,975
------------------------------------------------------------------------------------------------------------------------------
PGT Industries, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.49%-6.68%, 1/14/10 1,2                                                                     3,172,227               3,219,810
------------------------------------------------------------------------------------------------------------------------------
PGT Industries, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
9.93%, 6/14/10 1,2                                                                           5,000,000               5,025,000
------------------------------------------------------------------------------------------------------------------------------
Professional Paint, Inc., Sr. Sec. Credit Facilities Term Loan,
6.75%-6.938%, 9/30/11 1,2                                                                    3,850,000               3,907,750
                                                                                                            ------------------
                                                                                                                    83,978,955

23 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

COMMERCIAL SERVICES & SUPPLIES--4.7%
Allied Security, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
7.24%, 6/30/10 1,2                                                                     $     5,735,714      $        5,836,089
------------------------------------------------------------------------------------------------------------------------------
Knowledge Learning Corp., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.99%, 1/7/12 1,2                                                                 5,971,678               6,016,466
------------------------------------------------------------------------------------------------------------------------------
National Waterworks, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche C, 5.99%, 11/22/09 1,2                                                               5,440,999               5,515,812
------------------------------------------------------------------------------------------------------------------------------
NES Rentals Holdings, Inc., Sr. Sec. Credit Facilities 2nd Lien Term
Loan, 8.969%, 8/13/10 1,2                                                                    8,902,556               9,130,684
------------------------------------------------------------------------------------------------------------------------------
Norwood Promotional Products, Inc., Sr. Sec. Credit Facilities Term
Loan, Tranche A, 9.75%, 8/16/09 1,2                                                         19,258,211              19,065,629
------------------------------------------------------------------------------------------------------------------------------
Outsourcing Solutions, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 7.921%, 5/19/12 1,2                                                              12,000,000              12,090,000
------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.29%-6.46%, 3/21/10 1,2                                                                     6,580,000               6,670,475
------------------------------------------------------------------------------------------------------------------------------
Relizon Co. (The), Sr. Sec. Credit Facilities Term Loan:
Tranche B, 6.28%, 2/23/11 1,2                                                                6,502,663               6,531,113
Tranche B1, 6.28%, 2/20/11 1,2                                                                 354,918                 356,471
------------------------------------------------------------------------------------------------------------------------------
Safety-Kleen Systems, Inc., Sr. Sec. Credit Facilities Prefunded Letter
of Credit Term Loan, 10.34%, 4/6/11 1,2                                                      4,000,000               4,070,000
------------------------------------------------------------------------------------------------------------------------------
Safety-Kleen Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
10.25%-10.49%, 4/6/11 1,2                                                                    5,985,000               6,089,738
------------------------------------------------------------------------------------------------------------------------------
Synagro Technologies, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.683%, 3/31/12 1,2                                                              12,000,000              12,097,500
------------------------------------------------------------------------------------------------------------------------------
Synagro Technologies, Inc., Sr. Sec. Credit Facilities Term Loan,
Delayed Draw, 0.75%, 3/31/12 1,2                                                             2,000,001               2,007,500
------------------------------------------------------------------------------------------------------------------------------
Transaction Network Services, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.41%, 5/4/12 1,2                                                                 6,975,000               7,009,875
------------------------------------------------------------------------------------------------------------------------------
TransFirst Holdings, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche A, 7%, 6/16/10 1,2                                                                   5,880,000               5,931,450
------------------------------------------------------------------------------------------------------------------------------
TRM Corp., Sr. Sec. Credit Facilities Term Loan, 7.40%-7.561%, 11/24/10 1,2                  8,625,000               8,711,250
------------------------------------------------------------------------------------------------------------------------------
U.S. Investigation Services, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche C, 6.93%, 1/10/09 2                                                                 10,842,175              11,004,807
                                                                                                            ------------------
                                                                                                                   128,134,859

------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--5.0%
Amsted Industries, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.81%-6.15%, 8/19/10 1,2                                                                     9,575,399               9,703,068
------------------------------------------------------------------------------------------------------------------------------
Blount International, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.84%-7%, 8/9/10 2                                                                           9,660,952               9,805,866
------------------------------------------------------------------------------------------------------------------------------
Cellnet Technology, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.58%-6.68%, 4/26/12 2                                                           15,000,000              15,000,000
------------------------------------------------------------------------------------------------------------------------------
Hillman Group, Inc. (The), Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.688%-6.75%, 3/31/11 1,2                                                        16,407,295              16,617,522

24 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

INDUSTRIAL CONGLOMERATES Continued
Invensys plc, Sr. Sec. Credit Facilities 1st Lien Term Loan, Tranche B,
6.881%, 9/5/09 1,2                                                                     $     7,935,969      $        8,055,009
------------------------------------------------------------------------------------------------------------------------------
Joan Fabrics Corp., Sr. Sec. Credit Facilities Term Loan, Tranche C,
7.75%, 8/28/06 1,2                                                                             556,297                 492,323
------------------------------------------------------------------------------------------------------------------------------
Magnequench, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
10.88%, 9/30/09 1,2                                                                         12,485,574              12,485,574
------------------------------------------------------------------------------------------------------------------------------
Mueller Group (The), Sr. Sec. Credit Facilities Term Loan, Tranche E,
6.07%-6.24%, 4/22/11 2                                                                      12,966,341              13,079,796
------------------------------------------------------------------------------------------------------------------------------
PP Acquisition Corp., Sr. Sec. Credit Facilities Term Loan, 5.74%, 11/12/11 1,2             11,419,687              11,500,572
------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., Sr. Sec. Credit Facilities Term Loan,
7%-8.75%, 12/29/10 1,2                                                                      14,900,001              15,049,000
------------------------------------------------------------------------------------------------------------------------------
Sensus Metering System, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche B1, 5.58%-6.35%, 12/17/10 1,2                                                       11,086,294              11,220,251
Tranche B2, 5.58%-6.35%, 12/17/10 1,2                                                        1,662,944               1,683,038
------------------------------------------------------------------------------------------------------------------------------
Tinnerman Palnut Engineered Products LLC, Sr. Sec. Credit Facilities
1st Lien Term Loan, 6.44%-8.384%, 11/5/09 1,2                                               13,674,684              13,640,496
                                                                                                            ------------------
                                                                                                                   138,332,515

------------------------------------------------------------------------------------------------------------------------------
MACHINERY--0.5%
Gleason Corp., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.15%-6.43%, 7/31/11 1,2                                                                    12,486,948              12,622,218
------------------------------------------------------------------------------------------------------------------------------
Gleason Corp., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 8.99%, 1/31/12 1,2               995,000               1,012,413
                                                                                                            ------------------
                                                                                                                    13,634,631

------------------------------------------------------------------------------------------------------------------------------
MARINE--0.6%
Great Lakes Dredge & Dock Co., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.60%-7.40%, 12/22/10 1,2                                                        15,898,839              15,859,093
------------------------------------------------------------------------------------------------------------------------------
ROAD & RAIL--0.6%
Performance Transportation Services, Inc., Sr. Sec. Credit Facilities
1st Lien Term Loan, Tranche B, 7.74%, 12/6/11 1,2                                            9,553,529               9,314,691
------------------------------------------------------------------------------------------------------------------------------
Performance Transportation Services, Inc., Sr. Sec. Credit Facilities
Letter of Credit-Linked Certificate of Deposit, 7.74%, 12/6/09 1,2                           6,649,788               6,483,544
                                                                                                            ------------------
                                                                                                                    15,798,235

------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--4.7%
------------------------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.3%
Deltek Systems, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.99%, 4/22/11 1,2                                                                           7,076,923               7,130,000
------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.7%
Amkor Technology, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
Tranche B, 7.79%, 10/27/10 1,2                                                              10,000,000              10,300,000

25 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

ELECTRONIC EQUIPMENT & INSTRUMENTS Continued
Viasystems, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche C,
7.64%, 9/30/09 1,2                                                                     $     9,945,013      $       10,019,600
                                                                                                            ------------------
                                                                                                                    20,319,600

------------------------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.4%
DoubleClick, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
11.13%, 6/14/13 1,2                                                                         10,000,000              10,400,000
------------------------------------------------------------------------------------------------------------------------------
DoubleClick, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
7.38%, 6/14/12 1,2                                                                          21,000,000              21,315,000
------------------------------------------------------------------------------------------------------------------------------
Infor Global Solutions (Luxembourg), Sr. Sec. Credit Facilities 2nd Lien
Term Loan, 10.63%-10.82%, 3/23/12 1,2                                                          750,000                 752,812
------------------------------------------------------------------------------------------------------------------------------
Infor Global Solutions (Luxembourg), Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.63%-6.82%, 3/31/11 1,2                                                          2,700,000               2,715,188
------------------------------------------------------------------------------------------------------------------------------
Infor Global Solutions, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.63%-6.82%, 4/16/11 1,2                                                          3,300,000               3,318,562
------------------------------------------------------------------------------------------------------------------------------
Infor Global Solutions, Sr. Sec. Credit Facilities 2nd Lien Term Loan,
10.63%-10.82%, 4/16/12 1,2                                                                   1,250,000               1,254,688
                                                                                                            ------------------
                                                                                                                    39,756,250

------------------------------------------------------------------------------------------------------------------------------
IT SERVICES--1.9%
Fidelity National Financial, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.10%, 3/4/13 2                                                                   4,240,000               4,253,627
------------------------------------------------------------------------------------------------------------------------------
Sungard Data Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.28%, 1/5/13 1,2                                                                46,000,000              46,646,898
                                                                                                            ------------------
                                                                                                                    50,900,525

------------------------------------------------------------------------------------------------------------------------------
SOFTWARE--0.4%
Corel Corp., Sr. Sec. Credit Facilities 1st Lien Term Loan, Tranche B,
 7.68%, 1/27/10 1,2                                                                         11,356,250              11,356,250
------------------------------------------------------------------------------------------------------------------------------
MATERIALS--8.6%
------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--4.9%
Brenntag AG, Sr. Sec. Credit Facilities Term Loan, Tranche B, 5.88%, 2/27/12 1,2             5,000,000               5,063,500
------------------------------------------------------------------------------------------------------------------------------
Celanese Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B Add-On,
5.74%, 4/6/11 2                                                                             18,096,407              18,430,068
------------------------------------------------------------------------------------------------------------------------------
Cognis Deutschland GmbH & Co. KG, Sr. Sec. Credit Facilities 2nd Lien
Term Loan, Tranche C, 8.24%, 11/13/13 1,2                                                    6,260,000               6,398,897
------------------------------------------------------------------------------------------------------------------------------
Cognis Deutschland GmbH & Co. KG, Sr. Sec. Credit Facilities Term Loan:
Tranche B1, 6.371%, 5/12/12 1,2                                                              3,778,582               3,809,215
Tranche B4, 6.371%, 4/21/12 1,2                                                              1,361,808               1,372,848
Tranche C1, 6.871%, 5/12/13 1,2                                                              8,807,397               8,895,788
------------------------------------------------------------------------------------------------------------------------------
Huntsman International LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.75%, 12/31/10 2                                                                17,302,459              17,356,529
------------------------------------------------------------------------------------------------------------------------------
Huntsman LLC, Sr. Sec. Credit Facilities Term Loan, 6.40%, 3/31/10 2                        23,251,748              23,338,942

26 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

CHEMICALS Continued
Invista, Inc., Sr. Sec. Credit Facilities Term Loan:
Tranche B, 5.75%, 4/27/11 1,2                                                          $     5,383,059      $        5,473,898
Tranche B2, 5.75%, 4/30/11 1,2                                                               2,335,529               2,374,941
------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.73%, 4/27/10 1,2                                                                2,800,000               2,854,832
------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
Tranche C, 9.73%, 4/27/11 1,2                                                                3,000,000               3,069,999
------------------------------------------------------------------------------------------------------------------------------
Solutia, Inc., Sr. Sec. Credit Facilities Term Loan, Debtor in Possession,
Tranche B, 7.60%, 12/19/05 1,2                                                              15,000,000              15,262,500
------------------------------------------------------------------------------------------------------------------------------
Supresta, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B, 6.49%, 7/20/11 1,2          5,647,143               5,717,733
------------------------------------------------------------------------------------------------------------------------------
Wellman, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, 7.21%, 2/10/09 1,2            10,000,000              10,200,000
------------------------------------------------------------------------------------------------------------------------------
Wellman, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 9.96%, 2/10/10 1,2             5,000,000               5,100,000
------------------------------------------------------------------------------------------------------------------------------
Westlake Chemical Corp., Sr. Sec. Credit Facilities Term Loan,
5.74%-7.397%, 7/31/10 1,2                                                                       80,000                  80,800
                                                                                                            ------------------
                                                                                                                   134,800,490

------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.2%
Builders FirstSource, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.823%-6.19%, 8/11/11 1,2                                                                    4,400,000               4,447,666
------------------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING--1.1%
Berry Plastics Corp., Sr. Sec. Credit Facilities Term Loan,
Tranche C Add-On, 5.60%-5.766%, 7/22/10 1,2                                                  5,000,000               5,083,750
------------------------------------------------------------------------------------------------------------------------------
Consolidated Container Co., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.688%, 12/15/08 1,2                                                              4,970,000               5,035,231
------------------------------------------------------------------------------------------------------------------------------
Graham Packaging Co. LP, Sr. Sec. Credit Facilities Term Loan:
Tranche B, 5.938%-6.063%, 9/15/11 1,2                                                        8,467,500               8,609,509
Tranche C, 7.75%, 4/7/12 1,2                                                                 5,500,000               5,673,019
------------------------------------------------------------------------------------------------------------------------------
Precise Technology, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.50%, 3/22/11 2                                                                             6,757,875               6,802,227
                                                                                                            ------------------
                                                                                                                    31,203,736

------------------------------------------------------------------------------------------------------------------------------
METALS & MINING--1.4%
International Mill Service, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche C, 5.99%, 12/21/10 1,2                                                               7,960,000               8,079,400
------------------------------------------------------------------------------------------------------------------------------
Murray Energy Corp., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.49%, 1/31/10 2                                                                            15,461,250              15,567,546
------------------------------------------------------------------------------------------------------------------------------
Trout Coal Holdings LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
5.84%-6%, 3/14/11 1,2                                                                       12,468,750              12,501,867
------------------------------------------------------------------------------------------------------------------------------
Trout Coal Holdings LLC, Sr. Sec. Credit Facilities 2nd Lien Term Loan,
8.50%, 3/14/12 1,2                                                                           2,000,000               2,010,626
                                                                                                            ------------------
                                                                                                                    38,159,439

27 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

PAPER & FOREST PRODUCTS--1.0%
Escanaba Timber LLC, Sr. Sec. Credit Facilities Term Loan, 6%, 4/7/08 1,2              $     3,000,000      $        3,056,250
------------------------------------------------------------------------------------------------------------------------------
Newpage Corp., Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.25%-6.493%, 4/7/11 2                                                                      18,000,000              18,360,000
------------------------------------------------------------------------------------------------------------------------------
SP Newsprint Co., Sr. Sec. Credit Facilities Letter of Credit Term Loan,
Tranche B2, 5.68%, 1/9/11 1,2                                                                3,866,667               3,898,083
------------------------------------------------------------------------------------------------------------------------------
SP Newsprint Co., Sr. Sec. Credit Facilities Term Loan, Tranche B1,
5.74%, 1/9/11 1,2                                                                            1,643,333               1,669,010
                                                                                                            ------------------
                                                                                                                    26,983,343

------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--8.1%
------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--6.1%
Alaska Communications Systems Group, Inc., Sr. Sec. Credit Facilities
Term Loan, Tranche B, 5.49%-5.59%, 2/1/12 1,2                                                8,840,000               8,973,519
------------------------------------------------------------------------------------------------------------------------------
Conversent Communications LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 7.34%-7.49%, 5/1/11 2                                                            15,700,000              15,660,750
------------------------------------------------------------------------------------------------------------------------------
FairPoint Communications, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.438%-5.563%, 2/11/12 2                                                          9,500,001               9,636,562
------------------------------------------------------------------------------------------------------------------------------
Hughes Network Systems, Inc., Sr. Sec. Credit Facilities Term Loan,
7.25%, 4/22/12 1,2                                                                          12,500,000              12,382,813
------------------------------------------------------------------------------------------------------------------------------
IPC Acquisition Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6.84%, 8/29/08 1,2                                                                           1,726,566               1,735,198
------------------------------------------------------------------------------------------------------------------------------
Knology, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan,
9.08%-9.18%, 5/12/10 1,2                                                                    10,000,000              10,050,000
------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc., Sr. Sec. Credit Facilities Term Loan,
10.199%, 11/30/11 2                                                                         34,000,000              35,572,500
------------------------------------------------------------------------------------------------------------------------------
Madison River Communications, Sr. Sec. Credit Facilities Term Loan,
Tranche B, 6.04%, 8/1/12 1,2                                                                 2,000,000               2,035,416
------------------------------------------------------------------------------------------------------------------------------
Ntelos, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, Tranche B,
5.99%, 8/24/11 1,2                                                                          15,020,031              15,070,724
------------------------------------------------------------------------------------------------------------------------------
Qwest Corp., Sr. Sec. Credit Facilities Term Loan, Tranche A,
8.10%, 6/30/07 1,2                                                                          10,100,000              10,446,400
------------------------------------------------------------------------------------------------------------------------------
WestCom Corp., Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.43%, 12/17/10 1,2                                                              10,277,066              10,354,144
------------------------------------------------------------------------------------------------------------------------------
WestCom Corp., Sr. Sec. Credit Facilities 2nd Lien Term Loan,
10.68%, 6/17/11 1,2                                                                         12,000,000              12,270,000
------------------------------------------------------------------------------------------------------------------------------
WilTel Communications Group, Inc., Sr. Sec. Credit Facilities 1st Lien
Term Loan, Tranche B, 6.99%, 7/20/10 2                                                      12,899,986              13,077,361
------------------------------------------------------------------------------------------------------------------------------
XO Communications, Inc., Sr. Sec. Credit Facilities Term Loan,
9.669%, 7/15/09 1,2                                                                          8,861,075               8,861,075
                                                                                                            ------------------
                                                                                                                   166,126,462

28 | OPPENHEIMER SENIOR FLOATING RATE FUND


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

WIRELESS TELECOMMUNICATION SERVICES--2.0%
AAT Communications, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.24%, 7/11/12 1,2                                                          $    12,000,000      $       12,165,000
------------------------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc., Sr. Sec. Credit Facilities Term Loan,
Tranche B, 5.99%, 12/1/10 1,2                                                               14,450,000              14,562,898
------------------------------------------------------------------------------------------------------------------------------
MetroPCS, Inc., Sr. Sec. Credit Facilities 1st Lien Term Loan, Tranche B,
8.25%, 5/31/12 2                                                                            15,000,000              15,506,250
------------------------------------------------------------------------------------------------------------------------------
PanAmSat Corp., Sr. Sec. Credit Facilities Term Loan, Tranche B,
5.65%, 8/20/11 1,2                                                                           2,500,000               2,541,980
------------------------------------------------------------------------------------------------------------------------------
SBA Senior Finance, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche D,
5.48%-5.74%, 10/31/08 2                                                                      9,923,739              10,062,255
                                                                                                            ------------------
                                                                                                                    54,838,383

------------------------------------------------------------------------------------------------------------------------------
UTILITIES--6.1%
------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--4.9%
Allegheny Energy Supply Co. LLC, Sr. Sec. Credit Facilities Term Loan,
Tranche C, 7/29/11 1,2,3                                                                    23,783,100              24,124,983
------------------------------------------------------------------------------------------------------------------------------
Allegheny Energy, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche B,
6/16/10 1,2,3                                                                                7,000,000               7,021,252
------------------------------------------------------------------------------------------------------------------------------
Calpine Construction Finance Co. LP, Sr. Sec. Credit Facilities 1st Lien
Term Loan, 9.34%, 8/26/09 1,2                                                               18,849,849              19,745,217
------------------------------------------------------------------------------------------------------------------------------
KGen Partners LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
6.115%, 9/1/11 2                                                                            21,446,250              21,339,019
------------------------------------------------------------------------------------------------------------------------------
Mirant Corp., Sr. Sec. Credit Facilities Revolving Credit Loan, 12/31/06 1,4,5              13,000,000              11,043,227
------------------------------------------------------------------------------------------------------------------------------
Quachita Power LLC, Sr. Sec. Credit Facilities Term Loan, 6.24%, 8/30/07 1,2                 9,081,529               8,973,685
------------------------------------------------------------------------------------------------------------------------------
Quanta Services, Inc., Sr. Sec. Credit Facilities Term Loan,
6.43%-6.47%, 6/19/08 2                                                                      15,790,001              16,016,981
------------------------------------------------------------------------------------------------------------------------------
Riverside Energy Center LLC/Rocky Mountain Energy Center LLC,
Sr. Sec. Credit Facilities Term Loan, 7.44%, 6/24/11 1,2                                    26,281,790              26,938,834
                                                                                                            ------------------
                                                                                                                   135,203,198

------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.6%
Regency Gas Services LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 6.24%-6.33%, 5/13/10 1,2                                                         15,910,024              16,069,125
------------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.6%
Calpine Generating Co. LLC, Sr. Sec. Credit Facilities 1st Lien Term Loan,
Tranche B, 7.09%, 4/1/09 2                                                                  15,500,000              15,746,342
                                                                                                            ------------------

Total Corporate Loans (Cost $2,911,436,126)                                                                      2,919,873,125

29 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF INVESTMENTS Continued


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

CORPORATE BONDS AND NOTES--4.1%
-------------------------------------------------------------------------------------------------------------------------------
Builders FirstSource, Inc., 7.518% Sr. Sec. Nts., 2/15/12 2,6                          $    13,000,000      $       13,195,000
-------------------------------------------------------------------------------------------------------------------------------
Calpine Generating Co., 7.09% Sec. Nts., Series 1, 4/1/09 2                                  3,337,000               3,420,429
-------------------------------------------------------------------------------------------------------------------------------
Crompton Corp., 9.164% Sr. Unsec. Nts., 8/1/10 1,2                                           5,000,000               5,600,000
-------------------------------------------------------------------------------------------------------------------------------
FelCor Lodging LP, 7.78% Sr. Nts., 6/1/11 1,2                                               12,000,000              12,570,000
-------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
4.87% Nts., 10/20/05 2                                                                      10,000,000              10,014,990
6.125% Nts., 9/15/06                                                                        10,000,000              10,068,590
-------------------------------------------------------------------------------------------------------------------------------
SMART Modular Technologies, Inc., 9.004% Sr. Sec. Bonds, 4/1/12 2,6                         10,000,000              10,150,000
-------------------------------------------------------------------------------------------------------------------------------
SunGard Data Systems, Inc., 8.52% Sr. Unsec. Nts., 8/15/13 1,2                              17,000,000              17,701,250
-------------------------------------------------------------------------------------------------------------------------------
Unova, Inc., 7% Unsec. Nts., 3/15/08 1                                                      15,250,000              15,326,250
-------------------------------------------------------------------------------------------------------------------------------
XM Satellite Radio, Inc., 8.71% Sr. Sec. Nts., 5/1/09 2                                     14,915,000              15,120,081
                                                                                                            -------------------
Total Corporate Bonds and Notes (Cost $111,452,884)                                                                113,166,590

                                                                                                SHARES
-------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--0.0%
-------------------------------------------------------------------------------------------------------------------------------
Superior TeleCom, Inc., 9.50% Cv., Series A, Non-Vtg. 1 (Cost $60,318)                          60,317                  49,158

-------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--0.4%
-------------------------------------------------------------------------------------------------------------------------------
Acterna LLC 1,5                                                                                164,221               9,483,763
-------------------------------------------------------------------------------------------------------------------------------
Eningen Realty, Inc. 1,5                                                                         1,642                      --
-------------------------------------------------------------------------------------------------------------------------------
Outsourcing Solutions, Inc. 1,5                                                                  1,082                  49,231
                                                                                                            -------------------

Total Common Stocks (Cost $7,610,001)                                                                                9,532,994

                                                                                                 UNITS
-------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
-------------------------------------------------------------------------------------------------------------------------------
Aladdin/OpBiz Gaming LLC Wts., Exp. 12/31/49 5                                                  32,265                      --
                                                                                                            -------------------
Total Rights, Warrants and Certificates (Cost $0)                                                                           --

                                                                                             PRINCIPAL
                                                                                                AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--4.0%
-------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement (Principal Amount/Value $108,846,000, with a maturity
value of $108,875,388) with DB Alex Brown LLC, 3.24%, dated 7/29/05, to be
repurchased at $108,875,388 on 8/1/05, collateralized by U.S. Treasury Nts.,
3.50%, 11/15/06 with a value of $111,049,036 (Cost $108,846,000)                       $   108,846,000             108,846,000

-------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $3,139,405,329)                                                115.3%          3,151,467,867
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS                                                            (15.3)           (417,728,462)
                                                                                       ----------------------------------------

NET ASSETS                                                                                       100.0%     $    2,733,739,405
                                                                                       ========================================

30 | OPPENHEIMER SENIOR FLOATING RATE FUND

FOOTNOTES TO STATEMENT OF INVESTMENTS

1.     Illiquid security. The aggregate value of illiquid securities as of July 31, 2005 was $2,191,507,670, which represents 80.17% of the Funds net assets. See Note 5 of Notes to Financial Statements.

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

3.     This Senior Loan will settle after August 31, 2005, at which time the interest rate will be determined.

4.     Issue is in default. See Note 1 of Notes to Financial Statements.

5.     Non-income producing security.

6.     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 $23,345,000 or 0.85% of the Funds net assets as of July 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

31 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF ASSETS AND LIABILITIES July 31, 2005


----------------------------------------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------------------------------------

Investments, at value (cost $3,139,405,329)--see accompanying statement of investments  $   3,151,467,867
----------------------------------------------------------------------------------------------------------
Cash                                                                                            3,854,233
----------------------------------------------------------------------------------------------------------
Unrealized appreciation on unfunded loan commitments                                               20,478
----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold                                                                              130,955,632
Interest, dividends and principal paydowns                                                     18,241,451
Other                                                                                               6,515
                                                                                        ------------------
Total assets                                                                                3,304,546,176

----------------------------------------------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased                                                                         340,845,482
Shares of beneficial interest redeemed                                                        227,368,900
Dividends                                                                                       1,333,823
Distribution and service plan fees                                                                613,564
Shareholder communications                                                                        224,270
Transfer and shareholder servicing agent fees                                                     192,938
Trustees' compensation                                                                              4,050
Other                                                                                             223,744
                                                                                        ------------------
Total liabilities                                                                             570,806,771

----------------------------------------------------------------------------------------------------------
NET ASSETS                                                                              $   2,733,739,405
                                                                                        ==================

----------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
----------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest                                              $         286,435
----------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                  2,770,542,019
----------------------------------------------------------------------------------------------------------
Accumulated net investment loss                                                                   (44,205)
----------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                  (49,127,860)
----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                                     12,083,016
                                                                                        ------------------
NET ASSETS                                                                              $   2,733,739,405
                                                                                        ==================

32 | OPPENHEIMER SENIOR FLOATING RATE FUND


----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
----------------------------------------------------------------------------------------------------------

Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,038,746,570 and 108,906,507 shares of beneficial interest outstanding)                         $  9.54
Maximum offering price per share (net asset value plus sales charge of 3.50% of
offering price)                                                                                   $  9.89
----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable early withdrawal charge)
and offering price per share (based on net assets of $344,337,229 and
36,085,446 shares of beneficial interest outstanding)                                             $  9.54
----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable early withdrawal charge)
and offering price per share (based on net assets of $1,350,655,606 and
141,442,906 shares of beneficial interest outstanding)                                            $  9.55

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

33 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF OPERATIONS For the Year Ended July 31, 2005

INVESTMENT INCOME

Interest $ 139,501,211

Other income 1,650,456

Dividends 264,791

_________________

Total investment income 141,416,458

EXPENSES

Management fees 13,819,083

Distribution and service plan fees:

Class A 1,900,846 Class B 2,454,032 Class C 7,967,124

Transfer and shareholder servicing agent fees:

Class A 506,787 Class B 384,173 Class C 752,990

Shareholder communications:

Class A 152,021 Class B 115,634 Class C 220,386

Legal, auditing and other professional fees 933,904

Interest expense 569,479

Custodian fees and expenses 500,058

Trustees' compensation 37,053

Other 664,758

_________________

Total expenses 30,978,328 Less waivers and reimbursements of expenses (4,326,710)

_________________

Net expenses 26,651,618

NET INVESTMENT INCOME 114,764,840

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized loss on investments (10,412,104)

Net change in unrealized appreciation:

Investments 423,052 Unfunded loan commitments 20,478

_________________

Net change in unrealized appreciation 443,530

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 104,796,266

_________________

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

34 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENTS OF CHANGES IN NET ASSETS


YEAR ENDED JULY 31,                                                     2005               2004
------------------------------------------------------------------------------------------------

OPERATIONS
------------------------------------------------------------------------------------------------
Net investment income                                        $   114,764,840    $    35,772,485
------------------------------------------------------------------------------------------------
Net realized gain (loss)                                         (10,412,104)         6,317,694
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                443,530         11,715,595
                                                             -----------------------------------
Net increase in net assets resulting from operations             104,796,266         53,805,774

------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                          (43,089,683)        (7,286,019)
Class B                                                          (16,346,208)        (8,982,134)
Class C                                                          (53,708,395)       (15,514,260)

------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial
interest transactions:
Class A                                                          666,081,728        327,604,102
Class B                                                           68,117,677        113,330,151
Class C                                                          739,099,855        397,312,953

------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------
Total increase                                                 1,464,951,240        860,270,567
------------------------------------------------------------------------------------------------
Beginning of period                                            1,268,788,165        408,517,598
                                                             -----------------------------------
End of period (including accumulated net investment loss
of $44,205 and $41,687, respectively)                        $ 2,733,739,405    $ 1,268,788,165
                                                             ===================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

35 | OPPENHEIMER SENIOR FLOATING RATE FUND

STATEMENT OF CASH FLOWS For the Year Ended July 31, 2005


---------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
---------------------------------------------------------------------------------------------

Net increase in net assets from operations                                   $   104,796,266
---------------------------------------------------------------------------------------------
Adjustments to reconcile net increase in net assets from operations
to net cash used in operating activities:
Purchase of investment securities                                             (4,188,301,596)
Proceeds from disposition of investment securities                             2,544,834,370
Short-term investment securities, net                                           (103,935,772)
Premium amortization                                                               3,432,498
Discount accretion                                                                (2,343,787)
Net realized loss on investments                                                  10,412,104
Net change in unrealized appreciation on investments                                (423,052)
Net change in unrealized appreciation on unfunded loan commitments                   (20,478)
Increase in interest receivable                                                  (10,950,390)
Increase in receivable for securities sold                                       (98,296,110)
Increase in other assets                                                              (3,238)
Increase in payable for securities purchased                                     162,330,315
Increase in payable for accrued expenses                                             362,249
                                                                             ----------------
Net cash used in operating activities                                         (1,578,106,621)

---------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
---------------------------------------------------------------------------------------------
Proceeds from bank borrowing                                                     711,200,000
Payments on bank borrowing                                                      (724,000,000)
Proceeds from shares sold                                                      1,869,324,973
Payment on shares redeemed                                                      (250,583,814)
Cash distributions paid                                                          (36,494,660)
                                                                             ----------------
Net cash provided by financing activities                                      1,569,446,499
---------------------------------------------------------------------------------------------
Net decrease in cash                                                              (8,660,122)
---------------------------------------------------------------------------------------------
Cash, beginning balance                                                           12,514,355
                                                                             ----------------
Cash, ending balance                                                         $     3,854,233
                                                                             ================

Supplemental disclosure of cash flow information:

Noncash financing activities not included herein consist of reinvestment of dividends and distributions of $75,643,830. Cash paid for interest on bank borrowings  $570,987.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

36 | OPPENHEIMER SENIOR FLOATING RATE FUND

FINANCIAL HIGHLIGHTS


CLASS A     YEAR ENDED JULY 31,                         2005          2004       2003       2002         2001
--------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period              $     9.56     $    9.24    $  9.03     $  9.51    $   9.96
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .53 1         .49        .55         .54         .80
Net realized and unrealized gain (loss)                 (.02)          .30        .14        (.50)       (.46)
                                                  ------------------------------------------------------------
Total from investment operations                         .51           .79        .69         .04         .34
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.53)         (.47)      (.48)       (.52)       (.79)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $     9.54     $    9.56    $  9.24     $  9.03    $   9.51
                                                  ============================================================

--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      5.45%         8.78%      7.91%       0.44%       3.52%
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $1,038,746     $ 376,001    $44,028     $33,905    $ 44,985
--------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $  776,029     $ 146,224    $35,298     $41,195    $ 41,457
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.63%         5.56%      6.23%       5.84%       8.11%
Total expenses                                          1.09%         1.19%      1.39%       1.42%       1.20%
Expenses after payments and waivers and
reduction to custodian expenses                         0.89%         0.99%      1.19%       1.22%       1.00%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%         9%         92%         47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

37 | OPPENHEIMER SENIOR FLOATING RATE FUND

FINANCIAL HIGHLIGHTS Continued


CLASS B  YEAR ENDED JULY 31,                            2005          2004        2003        2002       2001
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $     9.56     $    9.24    $   9.04    $   9.51   $   9.97
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .48 1         .46         .52         .49        .76
Net realized and unrealized gain (loss)                 (.02)          .28         .11        (.49)      (.47)
                                                  ------------------------------------------------------------
Total from investment operations                         .46           .74         .63          --        .29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.48)         (.42)       (.43)       (.47)      (.75)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $     9.54     $    9.56    $   9.24    $   9.04   $   9.51
                                                  ============================================================

--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      4.86%         8.18%       7.21%       0.05%      2.96%
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $  344,337     $ 277,043    $157,057    $176,760   $220,328
--------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $  327,996     $ 201,260    $163,238    $206,869   $177,025
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.06%         5.04%       5.70%       5.33%      7.56%
Total expenses                                          1.66%         1.76%       1.93%       1.92%      1.64%
Expenses after payments and waivers and
reduction to custodian expenses                         1.46%         1.56%       1.73%       1.72%      1.44%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%          9%         92%        47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

38 | OPPENHEIMER SENIOR FLOATING RATE FUND


CLASS C      YEAR ENDED JULY 31,                        2005          2004        2003        2002       2001
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $     9.57     $    9.25    $   9.04    $   9.51   $   9.97
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .48 1         .45         .52         .50        .76
Net realized and unrealized gain (loss)                 (.02)          .29         .12        (.50)      (.47)
                                                  ------------------------------------------------------------
Total from investment operations                         .46           .74         .64          --        .29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.48)         (.42)       (.43)       (.47)      (.75)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $     9.55     $    9.57    $   9.25    $   9.04   $   9.51
                                                  ============================================================

--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      4.92%         8.21%       7.35%       0.05%      2.96%
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $1,350,656     $ 615,744    $207,433    $236,111   $350,126
--------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $1,065,783     $ 346,347    $210,987    $303,123   $323,725
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.11%         5.05%       5.73%       5.37%      7.60%
Total expenses                                          1.60%         1.71%       1.91%       1.92%      1.65%
Expenses after payments and waivers and
reduction to custodian expenses                         1.40%         1.51%       1.71%       1.72%      1.45%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  114%          155%          9%         92%        47%

1.     Per share amounts calculated based on the average shares outstanding during the period.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

39 | OPPENHEIMER SENIOR FLOATING RATE FUND

NOTES TO FINANCIAL STATEMENTS

1.     SIGNIFICANT ACCOUNTING POLICIES

Oppenheimer Senior Floating Rate Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company. The Fund seeks as high a level of current income and preservation of capital as is consistent with investing primarily in senior floating rate loans and other debt obligations. The Funds investment advisor is OppenheimerFunds, Inc. (the Manager).

The Fund offers Class A, Class B and Class C shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B and Class C shares are sold without an initial sales charge but may be subject to an early withdrawal charge (EWC). All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B and C shares have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares 72 months after the end of the month in which you purchase them.

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

SECURITIES VALUATION. The Fund calculates the net asset value of its shares as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities listed or traded on National Stock Exchanges or other domestic exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Funds assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Funds 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 traded on foreign exchanges are valued based on the last sale price on the principal exchange on which the security is traded, in the country that is identified by the portfolio pricing service, prior to the time when the Funds assets are valued. In the absence of a sale, the security is valued at the official closing price on the principal exchange. Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities will be valued at the mean between the bid and asked prices. Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Funds assets are valued. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager

40 | OPPENHEIMER SENIOR FLOATING RATE FUND

identifies as a significant event occurring before the Funds assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term money market type debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value).

WHEN-ISSUED AND DELAYED DELIVERY SECURITY TRANSACTIONS. The Fund purchases and sells interests in Senior Loans and other portfolio securities on a when issued and delayed delivery basis. No income accrues to the Fund on such interests or securities in connection with such purchase transactions prior to the date the Fund actually takes delivery of such interest or securities. These transactions are subject to market fluctuation; the value of the interests in Senior Loans and other portfolio debt securities at delivery may be more or less than their purchase prices, and yields generally available on such interests or securities when delivery occurs may be higher or lower than yields on the interest or securities obtained pursuant to such transactions. Because the Fund relies on the buyer or seller to consummate the transaction, failure by the other party to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous. When the Fund is the buyer in such a transaction, it will maintain, in a segregated account with its custodian, cash or liquid securities having an aggregate value equal to the amount of such purchase commitments until payment is made. To the extent the Fund engages in when issued and delayed delivery purchases, it will do so for the purpose of acquiring interest or securities for the Funds portfolio consistent with the Funds investment objective and policies and not for the purpose of investment leverage.

SENIOR LOANS. Under normal market conditions, the Fund will invest at least 80% of its net assets (plus borrowings for investment purposes) in floating rate Senior Loans made to U.S. and foreign borrowers that are corporations, partnerships or other business entities. The Fund will do so either as an original lender or as a purchaser of a loan assignment or a participation interest in a loan.While most of these loans will be collateralized, the Fund can also under normal market conditions invest up to 10% of its net assets (plus borrowings for investment purposes) in uncollateralized floating rate Senior Loans. Senior Loans generally are not listed on any national securities exchange or automated quotation system and no active trading market exists for many Senior Loans. As a result, many Senior Loans are illiquid, meaning the Fund may not be able to value them accurately or to sell them quickly at a fair price. To the extent that a secondary market does exist for certain Senior Loans, the market may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

As of July 31, 2005, securities with an aggregate market value of $2,919,873,125, representing 106.81% of the Funds net assets were comprised of Senior Loans, of which $2,130,728,018 representing 77.94% of net assets, were illiquid.

In addition, the Fund enters into certain loan commitments that are subject to funding at the time of a discretionary request by the borrower. The Fund generally will

41 | OPPENHEIMER SENIOR FLOATING RATE FUND

NOTES TO FINANCIAL STATEMENTS Continued

1.     SIGNIFICANT ACCOUNTING POLICIES Continued

maintain with its custodian, liquid investments having an aggregate value at least equal to the amount of such unfunded loan commitments. The Fund has entered into $10,484,340 of such commitments at July 31, 2005. These commitments have been excluded from the Statement of Investments. The unrealized appreciation on these commitments is recorded as an asset on the Statement of Assets and Liabilities.

SECURITY CREDIT RISK. Senior Loans are subject to credit risk. Credit risk relates to the ability of the borrower under a Senior Loan to make interest and principal payments as they become due. The Funds investments in Senior Loans are subject to risk of default. As of July 31, 2005, securities with an aggregate market value of $14,352,858, representing 0.53% of the Funds net assets, were in default.

REPURCHASE AGREEMENTS. The Fund requires its custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodians vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited.

ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated 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.

42 | OPPENHEIMER SENIOR FLOATING RATE FUND


                                                                           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 1,2,3,4           TAX PURPOSES
        ---------------------------------------------------------------------------------

        $1,275,845                    $--              $47,779,860            $10,735,017

1. As of July 31, 2005, the Fund had $36,768,670 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of July 31, 2005, details of the capital loss carryforwards were as follows: EXPIRING ---------------------- 2010 $ 10,765,372 2011 26,003,298 ------------- Total $ 36,768,670 ============= 2. As of July 31, 2005, the Fund had $11,011,190 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2014. 3. During the fiscal year ended July 31, 2005, the Fund utilized $3,066,072 of capital loss carryforward to offset capital gains realized in that fiscal year. 4. During the fiscal year ended July 31, 2004, the Fund utilized $1,064,614 of capital loss carryforward to offset capital gains realized in that fiscal year. 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 July 31, 2005. Net assets of the Fund were unaffected by the reclassifications. REDUCTION TO REDUCTION TO ACCUMULATED ACCUMULATED NET NET INVESTMENT REALIZED LOSS INCOME ON INVESTMENTS --------------------------------- $1,623,072 $1,623,072 The tax character of distributions paid during the years ended July 31, 2005 and July 31, 2004 was as follows: YEAR ENDED YEAR ENDED JULY 31, 2005 JULY 31, 2004 ------------------------------------------------------ Distributions paid from: Ordinary income $113,144,286 $31,782,413 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 July 31, 2005 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is 43 | OPPENHEIMER SENIOR FLOATING RATE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. Federal tax cost of securities $ 3,140,753,328 Federal tax cost of other investments 10,463,862 ---------------- Total federal tax cost $ 3,151,217,190 ================ Gross unrealized appreciation $ 25,212,481 Gross unrealized depreciation (14,477,464) ---------------- Net unrealized appreciation $ 10,735,017 ================ -------------------------------------------------------------------------------- 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. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. 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. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. 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. Other income is comprised primarily of amendment fees which are recorded when received. Amendment fees are earned as compensation for agreeing to changes in loan agreements. -------------------------------------------------------------------------------- CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the 44 | OPPENHEIMER SENIOR FLOATING RATE FUND Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. -------------------------------------------------------------------------------- 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 U.S. generally accepted accounting principles 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 adopted the following fundamental policies concerning periodic repurchase offers: o The Fund will make periodic Repurchase Offers, pursuant to Rule 23c-3 under the Investment Company Act of 1940 (as that rule may be amended from time to time). o Repurchase offers shall be made at periodic intervals of three months between Repurchase Request Deadlines. The Deadlines will be at the time on a regular business day (normally the last regular business day) in the months of January, April, July and October to be determined by the Fund's Board of Trustees. o The Repurchase Pricing Date for a particular Repurchase Offer shall be not more than 14 days after the Repurchase Request Deadline for the Repurchase Offer. If that day is not a normal business day, then the Repurchase Pricing Date will be the following regular business day. Each quarter, the Fund's Board will determine the number of shares that the Fund will offer to repurchase in a particular Repurchase Offer. The Repurchase Offer Amount will be at least 5% but not more than 25% of the total number of shares of all classes of the Fund (in the aggregate) outstanding on the Repurchase Request Deadline. If shareholders tender more than the Repurchase Offer Amount for a particular Repurchase Offer, the Fund may repurchase up to an additional 2% of the shares outstanding on the Repurchase Request Deadline. For the year ended July 31, 2005, the Fund extended four Repurchase Offers: PERCENTAGE OF AMOUNT OF REPURCHASE OUTSTANDING SHARES SHARES THE NUMBER OF REQUEST THE FUND OFFERED FUND OFFERED SHARES TENDERED DEADLINES TO REPURCHASE TO REPURCHASE (ALL CLASSES) ------------------------------------------------------------------------------- October 31, 2004 20% 35,129,386 4,658,458 January 31, 2005 20 44,231,045 8,526,718 April 30, 2005 20 55,276,078 12,627,782 July 31, 2005 20 57,286,972 25,109,161 45 | OPPENHEIMER SENIOR FLOATING RATE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued The Fund is authorized to issue an unlimited number of shares of each class and at the date of this report has registered 600 million shares, par value $0.001 each. Transactions in shares of beneficial interest were as follows:


                                   YEAR ENDED JULY 31, 2005          YEAR ENDED JULY 31, 2004
                                   SHARES            AMOUNT           SHARES           AMOUNT
----------------------------------------------------------------------------------------------

CLASS A
Sold                          88,829,120      $ 850,199,762       36,589,676    $ 346,722,635
Dividends and/or
distributions reinvested       3,041,815         29,063,026          559,316        5,301,678
Repurchased                  (22,302,293)      (213,181,060)      (2,575,947)     (24,420,211)
                             -----------------------------------------------------------------
Net increase                  69,568,642      $ 666,081,728       34,573,045    $ 327,604,102
                             =================================================================

----------------------------------------------------------------------------------------------
CLASS B
Sold                          12,098,323      $ 115,828,765       14,652,433    $ 138,541,892
Dividends and/or
distributions reinvested       1,132,369         10,829,378          597,692        5,649,211
Repurchased                   (6,120,311)       (58,540,466)      (3,264,998)     (30,860,952)
                             -----------------------------------------------------------------
Net increase                   7,110,381      $  68,117,677       11,985,127    $ 113,330,151
                             =================================================================

----------------------------------------------------------------------------------------------
CLASS C
Sold                          92,843,309      $ 889,756,237       45,179,360    $ 428,020,260
Dividends and/or
distributions reinvested       3,736,525         35,751,426        1,084,497       10,272,335
Repurchased                  (19,487,048)      (186,407,808)      (4,337,385)     (40,979,642)
                             -----------------------------------------------------------------
Net increase                  77,092,786      $ 739,099,855       41,926,472    $ 397,312,953
                             =================================================================

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 July 31, 2005, were as follows:

PURCHASES SALES

Investment securities $4,188,301,596 $2,544,834,370

4.     FEES AND OTHER TRANSACTIONS WITH AFFILIATES

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at 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, and 0.60% of average annual net assets in excess of $800 million.

ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund's tax returns.

46 | OPPENHEIMER SENIOR FLOATING RATE FUND

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 July 31, 2005, the Fund paid $1,528,366 to OFS for services to the Fund.

DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributors Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Funds principal underwriter in the continuous public offering of the Funds classes of shares.

SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions quarterly for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has adopted Distribution and Service Plans for Class B and Class C shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Fund pays the Distributor a distribution fee (which is deemed to be an asset-based sales charge) of up to 0.75% of average annual net assets on Class B shares and on Class C shares. The Board of Trustees has currently set that fee rate at 0.50% of average annual net assets of the respective class per year under each plan but may increase it up to 0.75% in the future. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B or Class C plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributors aggregate uncompensated expenses under the plan at July 31, 2005 for Class B and Class C shares were $7,572,614 and $22,195,213, respectively. Fees incurred by the Fund under the plans are detailed in the Statement of Operations.

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

47 | OPPENHEIMER SENIOR FLOATING RATE FUND

NOTES TO FINANCIAL STATEMENTS Continued

4.     FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

CLASS A CLASS B CLASS C CLASS A EARLY EARLY EARLY FRONT-END WITHDRAWAL WITHDRAWAL WITHDRAWAL SALES CHARGES CHARGES CHARGES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR

July 31, 2005 $1,285,735 $18,971 $332,290 $461,976

WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to reduce its management fee by 0.20% of average annual net assets. As a result of this agreement, the Fund was reimbursed $4,326,710 for the year ended July 31, 2005. It can amend or terminate that voluntary waiver at any time.

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

5.     ILLIQUID SECURITIES

As of July 31, 2005, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Most Senior Loans and many of the Funds other investments are illiquid.

6.     RESCISSION OFFER

Due to an administrative oversight, the Funds Class A shares sold during the periods January 10, 2005 through January 30, 2005 and February 9, 2005 through March 2, 2005 and Class C shares sold during the periods September 28, 2004 through October 28, 2004, November 5, 2004 through January 31, 2005 and February 8, 2005 through March 2, 2005 were not registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended.

Therefore, the Fund is offering to repurchase the unregistered Class A and Class C shares sold during these periods (Covered Shares) in a rescission offer. During the period September 1, 2005 through October 28, 2005 (pending receipt of certain approvals), shareholders may elect to sell any or all of their Covered Shares back to the Fund on the terms described, in detail, in materials that were distributed to owners of such shares. Registration of shares will occur automatically for those shareholders that do not respond to the rescission offer.

The Funds registration as an investment company under the Investment Company Act of 1940 was not affected by this administrative oversight. No loss to the Fund has occurred or will occur as a result of this oversight or the rescission offer and the Manager is assuming all of the costs associated with this oversight.

48 | OPPENHEIMER SENIOR FLOATING RATE FUND

7.     BORROWINGS

The Fund can borrow money in an amount up to 33 1/3% of its total assets (after counting the assets purchased with the amount borrowed). The Fund may borrow if necessary to obtain short-term credit to allow it to repurchase shares during Repurchase Offers, to manage cash flows, and to fund additional purchase commitments under Senior Loans.

The Fund may also borrow to acquire additional investments (a technique known as leverage). Until terminated on January 21, 2005, the Fund had entered into an agreement which enabled it to participate with certain other Oppenheimer funds in a committed, unsecured line of credit with a bank, which permitted borrowings up to $540 million, collectively, of which commitment $80 million was allocated to the Fund. Interest was charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.75%. The Fund also paid a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.09% per annum.

Effective January 21, 2005, the Fund entered into a Revolving Credit and Security Agreement (the Agreement) with a conduit lender and a bank which enables it to participate with certain other Oppenheimer funds in a committed, secured borrowing facility that permits borrowings of up to $800 million, collectively. To secure the loan, the Fund pledges investment securities in accordance with the terms of the Agreement. Interest is charged to the Fund, based on its borrowings, at current commercial paper issuance rates. The Fund pays additional fees of 0.30% per annum on its outstanding borrowings to manage and administer the facility and is allocated its pro-rata share of a 0.13% per annum commitment fee for a liquidity backstop facility with respect to the $800 million facility size.

For the year ended July 31, 2005, the average daily loan balance was $20,189,041 at an average daily interest rate of 2.637%. The Fund had no borrowings outstanding at July 31, 2005. The Fund had gross borrowings and gross loan repayments of $711,200,000 and $724,000,000 respectively, during the year ended July 31, 2005. The maximum amount of borrowings outstanding at any month-end during the year ended July 31, 2005 was $28,300,000. The Fund paid $215,186 in fees and $570,987 in interest during the year ended July 31, 2005.

8.     LITIGATION

A consolidated amended complaint has been filed as putative derivative and class actions against the Manager, OFS and the Distributor, as well as 51 of the Oppenheimer funds (as Nominal Defendants) including the Fund, 30 present and former Directors or Trustees and 8 present and former officers of the funds. This complaint, initially filed in the U.S. District Court for the Southern District of New York on January 10, 2005, and amended on March 4, 2005, consolidates into a single action and amends six individual previously filed putative derivative and class action complaints. Like those prior complaints, the complaint alleges that the Manager charged excessive fees for distribution and other costs, improperly used assets of the funds in the form of directed brokerage commissions

49 | OPPENHEIMER SENIOR FLOATING RATE FUND

NOTES TO FINANCIAL STATEMENTS Continued

8.     LITIGATION Continued

and 12b-1 fees to pay brokers to promote sales of the funds, and failed to properly disclose the use of assets of the funds to make those payments in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. Also, like those prior complaints, the complaint further alleges that by permitting and/or participating in those actions, the Directors/Trustees and the Officers breached their fiduciary duties to shareholders of the funds under the Investment Company Act of 1940 and at common law. The complaint seeks unspecified compensatory and punitive damages, rescission of the funds investment advisory agreements, an accounting of all fees paid, and an award of attorneys fees and litigation expenses.

The defendants believe that the allegations contained in the Complaints are without merit and that they have meritorious defenses against the claims asserted. The defendants intend to defend these lawsuits vigorously and to contest any claimed liability. The defendants believe that it is premature to render any opinion as to the likelihood of an outcome unfavorable to them and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss.

50 | OPPENHEIMER SENIOR FLOATING RATE FUND


                                     A-1
                                  Appendix A


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

o





                                     B-15
                                  Appendix B
        OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class
A shares(1) 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 created or qualified under Sections 401(a) or 401(k) of the
            Internal Revenue Code,

         2) non-qualified deferred compensation plans,
         3) employee benefit plans(3)
         4) Group Retirement Plans(4)
         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 $5 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. Effective
         October 1, 2005, taxable accounts established with proceeds of
         Required Minimum Distributions from Retirement Plans that have
         purchased Class N shares.

|_|   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 the Class A Initial and Contingent Deferred Sales Charges in
Certain Transactions.

   1. 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 by the reinvestment of loan repayments by a
         participant in a Retirement Plan for which the Manager or an
         affiliate acts as sponsor.

|_|   Shares purchased in amounts of less than $5.

2. Class A shares issued and purchased in the following transactions are not
subject to sales charges (a dealer concession at the annual rate of 0.25% is
paid by the Distributor on purchases made within the first 6 months of plan
establishment):
|_|   Retirement Plans that have $5 million or more in plan assets or that
         are part of a retirement plan or platform offered by banks,
         broker-dealers, financial advisors or insurance companies, or
         serviced by recordkeepers.
|_|   Retirement Plans with a single plan sponsor that have $5 million or
         more in aggregate assets invested in Oppenheimer funds.



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 (as defined in the
         Internal Revenue Code).

|_|   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 of Class C shares of an Oppenheimer fund in amounts of $1
         million or more requested in writing by a Retirement Plan sponsor
         and submitted more than 12 months after the Retirement Plan's first
         purchase of Class C shares, if the redemption proceeds are invested
         to purchase Class N shares of one or more Oppenheimer funds.
|_|   Distributions(8) 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 Fund              Oppenheimer Quest
   International Value Fund, Inc.
   Oppenheimer Quest Opportunity Value Fund

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

|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.

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

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



Sales Charge Waivers Brochure -070604
                                     B-13









Oppenheimer Senior Floating Rate Fund

Internet Website:
      www.oppenheimerfunds.com

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

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

Transfer Agent
      OppenheimerFunds Services
      P.O. Box 5270
      Denver, Colorado 80217
      1.800.CALL OPP (225.5677)

Custodian Bank
      The Deutsche Bank Trust Company of Americas
      60 Wall Street, 17th floor
      NYC60-1701
      New York, NY  10005-2848

Independent Registered Public Accounting Firm
      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

      Bell, Boyd & Lloyd, LLC
      Three First National Plaza
      70 West Madison Street, Suite 3300
      Chicago, Illinois 60602-42079
1234
PX291.001.1105


--------
(1). 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 only applies to qualified retirement plans and 403(b)(7)
custodial plans after your separation from service in or after the year you
reached age 55.
(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.

                                    PART C

                              OTHER INFORMATION


ITEM 24.  FINANCIAL STATEMENTS AND EXHIBITS

      1.    Financial Statements: Not Applicable.

      2.    Exhibits

(a)   (1)         Amended and Restated  Declaration  of Trust dated August 13,
                  1999 of     Registrant.*
(2)   Amendment  Number 1 dated  August 27, 2002 to the  Amended and  Restated
                        Declaration   of  Trust   dated   August   13,   1999.
                        Previously  filed  with  Registrant's  Post  Effective
                        Amendment No. 9, 09/24/02 and  incorporated  herein by
                        reference.

(3)   Amendment  Number 2 dated September 22, 2005 to the Amended and Restated
                        Declaration  of Trust  dated  August 13,  1999:  Filed
                        herewith.


(b)   By-Laws of Registrant as amended and restated  through October 23, 2001:
                  Previously filed with Registrant's Post Effective  Amendment
                  No. 10, 09/17/03 and incorporated herein by reference.

            (c)   Not Applicable.

            (d)   Articles Fourth,  Fifth and Seventh of Registrant's  Amended
                  and  Restated  Declaration  of Trust  define  the  rights of
                  holders of the securities being registered hereby.

            (e)   Not Applicable.

            (f)   Not Applicable.

            (g)   Form of Investment  Advisory Agreement dated 8/24/99 between
                  Registrant and OppenheimerFunds, Inc.*

            (h)   (1)   Form of General Distributor's  Agreement dated 8/24/99
                        between Registrant and OppenheimerFunds  Distributors,
                        Inc.*
                  (2)   Form   of   Dealer   Agreement   of   OppenheimerFunds
                        Distributor,     Inc.:     Previously    filed    with
                        Post-Effective  Amendment  No. 45 to the  Registration
                        Statement  of  Oppenheimer  High Yield Fund (Reg.  No.
                        2-62076),   10/26/01,   and  incorporated   herein  by
                        reference.
                  (3)   Form   of   Broker   Agreement   of   OppenheimerFunds
                        Distributor,     Inc.:     Previously    filed    with
                        Post-Effective  Amendment  No. 45 to the  Registration
                        Statement  of  Oppenheimer  High Yield Fund (Reg.  No.
                        2-62076),   10/26/01,   and  incorporated   herein  by
                        reference.
(4)   Form  of  Agency  Agreement  of  OppenheimerFunds   Distributor,   Inc.:
                        Previously filed with Post-Effective  Amendment No. 45
                        to the  Registration  Statement  of  Oppenheimer  High
                        Yield  Fund  (Reg.   No.   2-62076),   10/26/01,   and
                        incorporated herein by reference.
(5)   Form of Trust Company Fund/SERV Purchase  Agreement of  OppenheimerFunds
                        Distributor,     Inc.:     Previously    filed    with
                        Post-Effective  Amendment  No. 45 to the  Registration
                        Statement  of  Oppenheimer  High Yield Fund (Reg.  No.
                        2-62076),   10/26/01,   and  incorporated   herein  by
                        reference.
(6)   Form of Trust Company Agency Agreement of OppenheimerFunds  Distributor,
                        Inc.:  Previously filed with Post-Effective  Amendment
                        No. 45 to the  Registration  Statement of  Oppenheimer
                        High Yield  Fund (Reg.  No.  2-62076),  10/26/01,  and
                        incorporated herein by reference.

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

            (j)   (1)   Custodian  Agreement dated 5/13/02.  Previously  filed
                  with  Registrant's Post Effective  Amendment No. 9, 09/24/02
                  and   incorporated herein by reference.
(2)   Amended and Restated  Foreign  Custody  Manager  Agreement dated 4/3/01:
                        Previously filed with Post-Effective  Amendment No. 34
                        to the  Registration  Statement of Oppenheimer  Gold &
                        Special  Minerals Fund (Reg. No.  2-82590),  10/25/01,
                        and incorporated herein by reference.

            (k)   (1)   Amended and Restated  Service Plan and Agreement dated
                        4/26/04 for Class A Shares:  Previously filed with the
                        Registrant's  Post-Effective Amendment No. 12, 9/27/04
                        and incorporated herein by reference.
                  (2)   Form of  Distribution  and Service Plan dated  8/24/99
                        for Class B shares.*
                  (3)   Amended and  Restated  Distribution  and Service  Plan
                        for Class C Shares  dated  2/23/04:  Previously  filed
                        with the  Registrant's  Post-Effective  Amendment  No.
                        12, 9/27/04 and incorporated herein by reference.

                              (4)   Oppenheimer   Funds  Multiple  Class  Plan
                        under Rule 18f-3 updated through 08/11/05:  Previously
                        filed  with  Post-Effective  Amendment  No.  5 to  the
                        Registration  Statement  of  Oppenheimer  Main  Street
                        Opportunity Fund (Reg. No. 333-40186),  09/27/05,  and
                        incorporated herein by reference.


                        (l)   (1)   Opinion  of Myer,  Swanson,  Adams & Wolf,
                        P.C.,  counsel to  Registrant,  as to the  legality of
                        the Fund's shares: Filed herewith.
                  (2)   Opinion   of   Goodwin,   Procter   &  Hoar,   special
                        Massachusetts   counsel  to  Registrant,   as  to  the
                        legality of the Fund's shares dated 8/26/99.*

            (m)   Not Applicable.


            (n)   Independent  Registered  Public  Accounting  Firm's Consent:
                        Filed herewith.


            (o)   Not Applicable.

            (p)   Subscription Agreement for Initial Capital dated 8/24/99.*

            (q)   Not Applicable.


(r)   Amended  and  Restated  Code of Ethics of the  Oppenheimer  Funds  dated
                  February 1, 2005 under Rule 17j-1 of the Investment  Company
                  Act of 1940:  Previously filed with the Initial Registration
                  Statement  of  Oppenheimer  Dividend  Growth Fund (Reg.  No.
                  333-122902), 2/18/05, and incorporated herein by reference.


            --    Powers of  Attorneys  for John V.  Murphy,  Brian Wixted and
                  all Trustees/Directors Officers.


            --    Power of Attorney  dated  August 22, 2005 for John V. Murphy
                  for  Form  N-PX:   Previously   filed  with   Post-Effective
                  Amendment  No.  2 of  Oppenheimer  Limited  Term  California
                  Municipal  Fund  (Reg.  No.   333-111230),   09/29/05,   and
                  incorporated herein by reference.


ITEM 25. MARKETING ARRANGEMENTS

      See Form of  General  Distributor's  Agreement  filed  by  pre-effective
amendment Number 1 as Exhibit (h) to this Registration Statement.

* Filed with  pre-effective  amendment  Number 1 to Registrant's  registration
statement on Form N-2, 8/31/99 (Reg. No. 333-82579),  and incorporated  herein
by reference.






ITEM  26.   OTHER   EXPENSES  OF  ISSUANCE  AND   DISTRIBUTION:   All  of  the
Registrant's  initial organization and offering expenses have been absorbed by
OppenheimerFunds,  Inc. The additional  registration fees for the Registrant's
securities are detailed in Part A, Prospectus cover page.

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

            Not applicable.
------------------------------------------------------------------------------

ITEM 28. NUMBER OF HOLDERS OF SECURITIES
------------------------------------------------------------------------------

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

Title of Class                    Number of  Record  Holders  as of  September

26, 2005
------------------------------------------------------------------------------

Class A Shares of Beneficial Interest     29,020
Class B Shares of Beneficial Interest           18,527
Class C Shares of Beneficial Interest           37,885


ITEM 29. INDEMNIFICATION

      Reference is made to the  provisions  of Article  Seven of  Registrant's
Amended  and  Restated  Declaration  of Trust  filed as  Exhibit  2(a) to this
Registration Statement, and incorporated herein by reference.

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

ITEM 30.  BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

      (a) The  description  of the business of  OppenheimerFunds,  Inc. is set
forth under the caption  "How the Fund is Managed" in the  Prospectus  and the
Statement  of  Additional   Information  forming  part  of  this  Registration
Statement.

      (b)   The   information   as  to   the   Directors   and   Officers   of
OppenheimerFunds,  Inc. set forth in  OppenheimerFunds,  Inc.'s Form ADV filed
with the Securities and Exchange  Commission  (File No.  801-825),  as amended
through the date hereof, is incorporated herein by reference.

ITEM 31.  LOCATION OF ACCOUNTS AND RECORDS

1.    Accounts  and  records  of the Fund  are  maintained  at (i) the  Fund's
   office at 6803 South Tucson Way,  Centennial,  Colorado  80112 and (ii) the
   offices  of  OppenheimerFunds,  Inc.  at Two World  Financial  Center,  225
   Liberty Street- 11th Floor, New York, New York  10281-1008.

2.    OppenheimerFunds   Services,  P.O.  Box  5270  Denver,  Colorado  80217,
   maintains  all the required  records in its capacity as transfer,  dividend
   paying and shareholder service agent of the Registrant.

ITEM 32.  MANAGEMENT SERVICES

      Not Applicable.

ITEM 33. UNDERTAKINGS

      1.    Not Applicable.

      2.    Not Applicable.

      3.    Not Applicable.

      4.    a.    To file  during  any  period  in which  offers  or sales are
being made, a post-effective  amendment to this registration statement: (i) to
include any prospectus  required by Section  10(a)(3) of the Securities Act of
1933;  (ii) to reflect in the Prospectus any facts or events arising after the
effective   date  of  the   registration   statement   (or  the  most   recent
post-effective  amendment  thereof)  which,  individually or in the aggregate,
represent  a  fundamental   change  in  the   information  set  forth  in  the
registration  statement;  and (iii) to include any material  information  with
respect  to  the  plan  of  distribution  not  previously   disclosed  in  the
registration  statement  or any  material  change to such  information  in the
registration statement.

            b.    That,  for the purpose of  determining  any liability  under
the  Securities  Act of 1933,  each  such  post-effective  amendment  shall be
deemed to be a new registration  statement  relating to the securities offered
therein,  and the offering of such  securities at that time shall be deemed to
be the initial bona fide offering thereof.

            c.    To  remove  from  registration  by means  of  post-effective
amendment any of the securities  being  registered  which remain unsold at the
termination of the offering.

            5.    Not Applicable.

            6.    The  Registrant  undertakes  to send by first  class mail or
other means designed to ensure equally  prompt  delivery,  within two business
days of receipt of a written or oral  request,  any  Statement  of  Additional
Information.






                                  SIGNATURES



Pursuant to the  requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant  duly caused this  Registration  Statement
to be signed on its behalf by the undersigned,  thereunto duly authorized,  in
the City of New York and State of New York, on this 5th day of October, 2005.


                              OPPENHEIMER SENIOR FLOATING RATE FUND

                                                By:   By:  /s/ John V. Murphy*
                                 ---------------------------------------------
                                                    John V. Murphy, President,
                                         Principal Executive Officer & Trustee

Pursuant to the requirements of the Securities Act of 1933, this  Registration
Statement  has been signed below by the  following  persons in the  capacities
and on the date indicated:

Signatures                          Title                      Date



/s/ William L. Armstrong*    Chairman of the             October 5, 2005
---------------------------  Board of Trustees
William L. Armstrong

/s/ John V. Murphy*          President, Principal        October 5, 2005
------------------------     Executive Officer & Trustee
John V. Murphy

/s/ Brian W. Wixted*         Treasurer, Principal        October 5, 2005
-------------------------    Financial &
Brian W. Wixted              Accounting Officer

/s/ Robert G. Avis*          Trustee                     October 5, 2005

---------------------
Robert G. Avis


/s/ George Bowen*            Trustee                     October 5, 2005

----------------------
George Bowen


/s/ Edward Cameron*          Trustee                     October 5, 2005

------------------------
Edward Cameron


/s/ Jon S. Fossel*           Trustee                     October 5, 2005

--------------------
Jon S. Fossel


/s/ Sam Freedman*            Trustee                     October 5, 2005

---------------------
Sam Freedman



/s/ Beverly Hamilton            Trustee                     October 5, 2005

---------------------
Beverly Hamilton


/s/ Robert Malone            Trustee                     October 5, 2005

---------------------
Robert Malone



/s/ F. William Marshall, Jr.*                            Trustee  October 5,

2005
----------------------------
F. William Marshall, Jr.

*By: /s/ Mitchell J. Lindauer
        -----------------------------------------
        Mitchell J. Lindauer, Attorney-in-Fact








                    OPPENHEIMER SENIOR FLOATING RATE FUND

                     Registration Statement No. 333-82579

                                EXHIBITS FILED



Exhibit No.       Exhibit


2(a)(3)                 Amendment   Number  2  to  the  Amended  and  Restated
                  Declaration of Trust


2 (l)(1)                Opinion of Myer, Swanson, Adams & Wolf, P.C.


(n)               Independent Registered Public Accounting Firm's consent