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Oppenheimer Senior Floating Rate Fund
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6803 South Tucson Way, Centennial, Colorado 80112
1.800.CALL OPP (225.5677)
Statement of Additional Information dated November 22, 2005, revised December
6, 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 22, 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..2
    More Information About Senior Loans................................2
            Main Risks of Debt Securities..............................8
            Other Debt Securities the Fund Can Buy.....................11
    Other Investment Techniques and Strategies.........................13
    Portfolio Turnover.................................................36
    Other Investment Restrictions......................................37
Disclosure of Portfolio Holdings                                       39
How the Fund is Managed................................................44
Organization and History...............................................44
    Board of Trustees and Oversight Committees.........................45
    Trustees and Officers of the Fund..................................46
    The Manager........................................................55
Brokerage Policies of the Fund.........................................59
Distribution and Service Plans.........................................61
Payments to Fund Intermediaries                                        67
Performance of the Fund................................................71
About Your Account
How To Buy Shares......................................................76
Periodic Offers to Repurchase Shares...................................86
How To Exchange Shares.................................................88
Dividends, Capital Gains and Taxes.....................................93
Additional Information About the Fund..................................98

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm................99
Financial Statements...................................................100
Appendix A:  Industry Classifications.................................. A-1
Appendix B:  Special Sales Charge Arrangements and Waivers............. B-1
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ABOUT THE FUND
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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 to  reclassify  unissued
shares into  additional  series or classes and to 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     will generally have a different net asset value,
o     will generally 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 a 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 committee is comprised solely of Trustees who are
not "interested persons" under the Investment Company Act (the "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) reviewing certain reports from and meet periodically
with the Fund's Chief Compliance Officer; (v) maintaining a separate line of
communication between the Fund's independent Auditors and the Independent
Trustees; (vi) reviewing the independence of the Fund's independent Auditors;
and (vii) pre-approving the provision of any audit or 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 .

      The Review Committee is comprised solely of Independent Trustees. 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 Governance Committee is comprised solely of Independent Trustees.
The members of the Governance Committee are, Robert J. Malone (Chairman),
William Armstrong, Beverly L. 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 below. 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. 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, hold the same offices with one or more of the other Board II Funds. As
of October 31, 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 Board II
Funds. In addition, none of the Independent Trustees (nor any of their
immediate family members) owns 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: 65             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: 59             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 is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a
Trustee for an indefinite term and as an officer for an indefinite term, or
until his resignation, retirement, death or removal. Mr. Murphy is an
"Interested Trustee" because he is affiliated with the Manager by virtue of
his positions as an officer and director of the Manager, and as a shareholder
of its parent company. Mr. Murphy was elected as a Trustee of the Fund with
the understanding that in the event he ceases to be the Chief Executive
Officer of the Manager, he will resign as a Trustee of the Fund and the other
Board II Funds (defined below) for which he is a director or trustee.

-------------------------------------------------------------------------------------
                           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
                   77 portfolios as an officer and director
                   or trustee and 10 additional portfolios
                   as an 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 Mss. Hui and Ives, 6803 S.
Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an indefinite
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: 46                 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: 40                 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 the Officers and Trustees. The officers and the
interested Trustee 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 $36,654 deferred by Ms. Hamilton under the deferred
   compensation plan for serving as a Trustee for MassMutual Institutional
   Funds and MML Series Investment Fund (until June 30, 2004).
5.    Includes $810 deferred by Mr. Malone under the "Deferred Compensation
   Plan" described below.
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 October 31, 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 6,238,346.310 Class A shares (5.38% of the Class A
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 16,854,769.427 Class C shares (11.52% 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.

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
Portfolio Proxy Voting Policies and Procedures include provisions to address
conflicts of interest that may arise between the Fund and the Manager or the
Manager's affiliates or business relationships.  Such a conflict of interest
may arise, for example, where the Manager or an affiliate of the Manager
manages or administers the assets of a pension plan or other investment
account of the portfolio company soliciting the proxy or seeks to serve in
that capacity.  The Manager and its affiliates generally seek to avoid such
conflicts by maintaining separate investment decision making processes to
prevent the sharing of business objectives with respect to proposed or actual
actions regarding portfolio proxy voting decisions.  Additionally, the
Manager employs the following two procedures:  (1) if the proposal that gives
rise to the conflict is specifically addressed in the Guidelines, the Manager
will vote the portfolio proxy in accordance with the Guidelines, provided
that they do not provide discretion to the Manager on how to vote on the
matter; and (2) if such proposal is not specifically addressed in the
Guidelines or the Guidelines provide discretion to the Manager on how to
vote, the Manager will vote in accordance with the third-party proxy voting
agent's general recommended guidelines on the proposal provided that the
Manager has reasonably determined that there is no conflict of interest on
the part of the proxy voting agent.  If neither of the previous two
procedures provides an appropriate voting recommendation, the Manager may
retain an independent fiduciary to advise the Manager on how to vote the
proposal or may abstain from voting.  The Guidelines' provisions with respect
to certain routine and non-routine proxy proposals are summarized below:

o     The Fund generally votes with the recommendation of the issuer's
      management on routine matters, including ratification of the
      independent registered public accounting firm, unless circumstances
      indicate otherwise.
o     The Fund evaluates nominees for director nominated by management on a
      case-by-case basis, examining the following factors, among others:
      Composition of the board and key board committees, attendance at board
      meetings, corporate governance provisions and takeover activity,
      long-term company performance and the nominee's investment in the
      company.
o     In general, the Fund opposes anti-takeover proposals and supports the
      elimination, or the ability of shareholders to vote on the preservation
      or elimination, of anti-takeover proposals, absent unusual
      circumstances.
o     The Fund supports shareholder proposals to reduce a super-majority vote
      requirement, and opposes management proposals to add a super-majority
      vote requirement.
o     The Fund opposes proposals to classify the board of directors.
o     The Fund supports proposals to eliminate cumulative voting.
o     The Fund opposes re-pricing of stock options without shareholder
       approval
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 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:     Management Fees Paid to OppenheimerFunds, Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
           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
     ----------------------------------------------------------------------------
     ----------------------------------------------------------------------------
                         1                  None                613,140.2
      Margaret Hui               $2,969.3                    $0
                                                                        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 period 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 periodically 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 periodic 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 periodically 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 periodically 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.

Payments to Fund Intermediaries

      Financial intermediaries may receive various forms of compensation or
reimbursement from the Fund in the form of 12b-1 plan payments as described
in the preceding section of this SAI. They may also receive reallowance of
commissions from the Distributor, derived from sales charges paid by the
clients of the financial intermediary, also as described in this SAI.
Additionally, the Manager and/or the Distributor (including their affiliates)
may make payments to financial intermediaries in connection with their
offering and selling shares of the Fund and other Oppenheimer funds,
providing marketing or promotional support, transaction processing and/or
administrative services. Among the financial intermediaries that may receive
these payments are brokers and dealers who sell and/or hold shares of the
Fund, banks (including bank trust departments), registered investment
advisers, insurance companies, retirement plan and qualified tuition program
administrators, third party administrators, and other institutions that have
selling, servicing or similar arrangements with the Manager or Distributor.
The payments to intermediaries vary by the types of product sold, the
features of the Fund share class and the role played by the intermediary.

      Possible types of payments to financial intermediaries include, without
limitation, those discussed below.

o     Payments made by the Fund, or by an investor buying or selling shares
            of the Fund may include:

o     depending on the share class that the investor selects, contingent
            deferred sales charges or initial front-end sales charges, all or
            a portion of which front-end sales charges are payable by the
            Distributor to financial intermediaries as sales commissions (see
            "About Your Account" in the Prospectus);
o     ongoing asset-based payments attributable to the share class selected,
            including fees payable under the Fund's distribution and/or
            service plans adopted under Rule 12b-1 under the Investment
            Company Act, which are paid from the Fund's assets and allocated
            to the class of shares to which the plan relates (see "About the
            Fund -- Distribution and Service Plans" above);
o     shareholder servicing payments for providing omnibus accounting,
            recordkeeping, networking, sub-transfer agency or other
            administrative or shareholder services, including retirement plan
            and 529 plan administrative services fees, which are paid from
            the assets of a Fund as reimbursement to the Manager or
            Distributor for expenses they incur on behalf of the Fund.
o     Payments made by the Manager or Distributor out of their respective
            resources and assets, which may include profits the Manager
            derives from investment advisory fees paid by the Fund. These
            payments are made at the discretion of the Manager and/or the
            Distributor. These payments, often referred to as "revenue
            sharing" payments, may be in addition to the payments by the Fund
            listed above.
o     These types of payments may reflect compensation for marketing support,
            support provided in offering the Fund or other Oppenheimer funds
            through certain trading platforms and programs, transaction
            processing or other services;
o     The Manager and Distributor each may also pay other compensation to the
            extent the payment is not prohibited by law or by any
            self-regulatory agency, such as the NASD. Payments are made based
            on the guidelines established by the Manager and Distributor,
            subject to applicable law.

      These payments may provide an incentive to financial intermediaries to
actively market or promote the sale of shares of the Fund or other
Oppenheimer funds, or to support the marketing or promotional efforts of the
Distributor in offering shares of the Fund or other Oppenheimer funds. In
addition, some types of payments may provide a financial intermediary with an
incentive to recommend the Fund or a particular share class. Financial
intermediaries may earn profits on these payments, since the amount of the
payment may exceed the cost of providing the service. Certain of these
payments are subject to limitations under applicable law. Financial
intermediaries may categorize and disclose these arrangements to their
clients and to members of the public in a manner different from the
disclosures in the Fund's prospectus and this SAI. You should ask your
financial intermediary for information about any payments it receives from
the Fund, the Manager or the Distributor and any services it provides, as
well as the fees and commissions it charges.

      Although brokers or dealers that sell Fund shares may also act as a
broker or dealer in connection with the execution of the purchase or sale of
portfolio securities by the Fund or other Oppenheimer funds, a financial
intermediary's sales of shares of the Fund or such other Oppenheimer funds is
not a consideration for the Manager when choosing brokers or dealers to
effect portfolio transactions for the Fund or such other Oppenheimer funds.

      Revenue sharing payments can pay for distribution-related or asset
retention items including, without limitation,

o     transactional support, one-time charges for setting up access for the
         Fund or other Oppenheimer funds on particular trading systems, and
         paying the intermediary's networking fees;
o     program support, such as expenses related to including the Oppenheimer
         funds in retirement plans, college savings plans, fee-based advisory
         or wrap fee programs, fund "supermarkets", bank or trust company
         products or insurance companies' variable annuity or variable life
         insurance products;
o     placement on the dealer's list of offered funds and providing
         representatives of the Distributor with access to a financial
         intermediary's sales meetings, sales representatives and management
         representatives.

      Additionally, the Manager or Distributor may make payments for firm
support, such as business planning assistance, advertising, and educating a
financial intermediary's sales personnel about the Oppenheimer funds and
shareholder financial planning needs.

      For the year ended December 31, 2004, the following financial
intermediaries that are broker-dealers offering shares of the Oppenheimer
funds, and/or their respective affiliates, received revenue sharing or
similar distribution-related payments from the Manager or Distributor for
marketing or program support:

  ===============================================================================
  ADVEST INC.                             AEGON
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  A.G. Edwards & Sons, Inc                AIG Network
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Allianz Life Insurance Company          Allstate Life Insurance Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Ameritas Life Insurance Corporation     American Centurian Life Insurance
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  American Enterprise Life Insurance      American Express Financial Advisors
                                          Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  American Portfolios                     Annuity Investors Life
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  AXA Advisors                            Banc One Securities Corporation
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Bank of New York                        Cadaret Grant & Co. Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Charter One Securities Inc.             Chase Investment Services
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Citigroup Financial Network             CitiStreet
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Citizens Bank of Rhode Island           CJM Planning Corp.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Columbus Life Insurance Company         Commonwealth Financial Network
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  CUNA Brokerage Services Inc.            CUSO Financial Services, L.P.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Federal Kemper                          First Allied Securities Inc
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  First Global Capital                    GE Financial Assurance
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  GlenBrook Life and Annuity Co.          Great West Life & Annuity Co., Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  HD Vest                                 Hewitt Associates
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  HSBC Brokerage (USA) Inc.               ING Network
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Jefferson Pilot Securities Corporation  John Hancock Variable Life Insurance
                                          Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Kemper Life Assurance Company           Legend Equities Corporation
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Legg Mason Wood Walker, Incorporated    Lincoln National Life Insurance
                                          Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Lincoln Financial Advisors Corporation  Lincoln Investment Planning
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Linsco/Private Ledger Corp.             MassMutual Financial Group and
                                          affiliates
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  McDonald Investments, Inc.              Merrill Lynch & Co., Inc. and
                                          affiliates
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Metlife and affiliates                  Minnesota Life Insurance Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Morgan Stanley DW Inc.                  NPH Network
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Nationwide and affiliates               New York Life Securities, LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  PacLife Network                         Park Avenue Securities LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Planmember Securities Corporation       Prime Capital Services, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Princor Financial Services Corporation  Protective Life Insurance Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Provident Mutual Insurance Company      Prudential Investment Management
                                          Services LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Raymond James Financial Services, Inc.  Raymond James & Associates, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  RBC Dain Rauscher Inc.                  Securities America, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Security Benefit Life Insurance Company Signator Investments
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Sun Life Insurance Company              Suntrust Investment Services, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Tower Square Securities, Inc            Travelers Life & Annuity Co., Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  UBS Financial Services Inc.             Union Central Life Insurance Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Wachovia Securities LLC                 Wells Fargo Investments, LLC
  ===============================================================================

      For the year ended December 31, 2004, the following firms, which in
some cases are broker-dealers, received payments from the Manager or
Distributor for administrative or other services provided (other than revenue
sharing arrangements), as described above:

  ===============================================================================
  ABN AMRO                                ADP
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Alliance Benefit Group                  AMVESCAP Retirement Plans
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  American Stock & Transfer               Baden Retirement
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  BCG                                     Benefit Administration Co., LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Benefit Administration, Inc.            Benefit Plans Administrative Services
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Benetech, Inc.                          BISYS Retirement Services
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Boston Financial Data Services          Ceridian
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Circle Trust Company                    Citigroup
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  CitiStreet                              CPI
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Daily Access.Com, Inc.                  Digital Retirement Solutions
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Dyatech                                 ERISA Administrative Services, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  ExpertPlan.com                          FAScore
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  FBD Consulting                          Federated Investors
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Fidelity Institutional                  First National Bank of Omaha
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  First Trust Corp.                       Franklin Templeton
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Geller Group                            Gold K
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Great West Financial Services           Hartford Life Insurance Co.
  Equities, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  ICMA - RC Services                      In West Pension Mgmt
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Independent Plan Coordinators           Ingham Group
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Interactive Retirement Systems, Ltd.    Invesmart, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Kaufman & Goble                         Leggette & Co., Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Manulife                                MassMutual Financial Group and
                                          affiliates
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Matrix Settlement & Clearance Services  Mellon HR Solutions
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Merrill Lynch & Co., Inc.               Metavante
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Metlife Securities Inc.                 MFS Investment Management
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Mid Atlantic Capital Corp.              Milliman USA
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Morgan Stanley DW Inc.                  National City Bank
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  National Financial Services Corp.       National Investors Services Corp.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Nationwide Investment Service Corp.     New York Life Investment Management,
                                          Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Northwest Plan Services                 Pension Administration and Consulting
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  PFPC, Inc.                              PSMI Group
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Putnam Fiduciary Trust Company          Quads Trust Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  RSM McGladrey                           SAFECO
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Charles Schwab & Co., Inc.              Security Trust Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Sentinel / National Life                Standard Insurance Co
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Stanley, Hunt, Dupree & Rhine           State Street Bank & Trust Company
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Suntrust Investment Services, Inc.      Swerdlin & Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  T. Rowe Price Brokerage Services, L.P.  Taylor, Perky & Parker, LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  The 401k Company                        The Investment Center, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Trusource                               Union Bank and Trust Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  USI Consulting Group                    Vanguard Group
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
  Web401K.com                             Wilmington Trust Company
  ===============================================================================


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 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 Portfolio Series:
                                            Active Allocation Fund
                                            Aggressive Investor Fund
                                            Conservative Investor Fund
Oppenheimer Limited-Term Government 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 more than $100,000
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
in 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 Limited Term Municipal Fund
      Oppenheimer AMT-Free Municipals        Oppenheimer New Jersey Municipal Fund
      Oppenheimer AMT-Free New York          Oppenheimer Pennsylvania Municipal Fund
      Municipals
      Oppenheimer Balanced Fund              Oppenheimer Principal Protected Main
                                             Street Fund
      Oppenheimer California Municipal Fund  Oppenheimer Principal Protected Main
                                             Street Fund II
      Oppenheimer Capital Income Fund        Oppenheimer Principal Protected Main
                                             Street Fund III
      Oppenheimer Cash Reserves              Oppenheimer Quest Capital Value Fund, Inc.
      Oppenheimer Champion Income Fund       Oppenheimer Quest International Value
                                             Fund, Inc.
      Oppenheimer Convertible Securities     Oppenheimer Rochester National Municipals
      Fund
      Oppenheimer Disciplined Allocation     Oppenheimer Total Return Bond Fund
      Fund
      Oppenheimer Gold & Special Minerals
      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 (12/16/2011).

      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 Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with 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 Fund’s 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 Fund’s 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 Fund’s 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.

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.

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.

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.

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.

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 Fund’s 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 Fund’s assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing “bid” and “asked” prices, and if not, at the closing bid price. Securities 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 Fund’s 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 Fund’s 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 Fund’s 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 Fund’s portfolio consistent with the Fund’s 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 Fund’s 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 Fund’s 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 Fund’s 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 custodian’s vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited.

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 Distributor’s Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund’s principal underwriter in the continuous public offering of the Fund’s 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 Distributor’s 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 Fund’s other investments are illiquid.

6.     RESCISSION OFFER

Due to an administrative oversight, the Fund’s 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 Fund’s 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-12
                                  Appendix B
        OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class
A shares(2) 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.(3)  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(4)
         4) Group Retirement Plans(5)
         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."(6) 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.
|_|   Effective October 1, 2005, taxable accounts established with the
         proceeds of Required Minimum Distributions from Retirement Plans.

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 certain Retirement Plans that are part of a
         retirement plan or platform offered by banks, broker-dealers,
         financial advisors or insurance companies, or serviced by
         recordkeepers.
|_|   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.
|_|   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.(7)
         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.(8)
         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(9) 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.(10)
         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.(11)
         9) On account of the participant's separation from service.(12)
         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- & Mid- 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 Core Bond Fund,
   Oppenheimer Value Fund and
   Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
   Connecticut Mutual Liquid Account         Connecticut Mutual Total Return
   Account
   Connecticut Mutual Government Securities Account   CMIA LifeSpan Capital
   Appreciation Account
   Connecticut Mutual Income Account         CMIA LifeSpan Balanced Account
   Connecticut Mutual Growth Account         CMIA Diversified Income Account

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

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

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

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

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

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

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

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

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

Shareholders of Oppenheimer 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.












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
PX291.001.1205



(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.
(2) Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) This provision does not apply to IRAs.
(8) 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.
(9) The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
(10) This provision does not apply to IRAs.
(11) This provision does not apply to loans from 403(b)(7) custodial plans
and loans from the OppenheimerFunds-sponsored Single K retirement plan.
(12) This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.