Preliminary Copy
Registration No. 33-28598
File No. 811-5724
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /
OPPENHEIMER STRATEGIC FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective on June 2, 1995,
pursuant to Rule 488.
No filing fee is due because the Registrant has previously registered an
indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice for the
year ended September 30, 1994 was filed on November 29, 1994.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Oppenheimer Strategic Diversified Income Fund
and
Prospectus for Oppenheimer Strategic Income Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
<PAGE>
FORM N-14
OPPENHEIMER STRATEGIC FUNDS TRUST
Cross Reference Sheet
Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title
of Document
- -------- ----------------------------------------------------
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Comparative Fee Table
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison between the
Fund and Strategic Income Fund; Method of Carrying Out the
Reorganization; Miscellaneous Information
(b) Approval of the Reorganization - Capitalization Table
(Unaudited)
5 (a) Registrant's Prospectus; Additional Information
(b) *
(c) *
(d) *
(e) Comparison between the Fund and Strategic Income Fund
(f) Comparison between the Fund and Strategic Income Fund
6 (a) Prospectus of Oppenheimer Strategic Diversified Income Fund;
Front Cover Page
(b) Comparison between the Fund and Strategic Income Fund
(c) *
(d) *
7 (a) Introduction; Synopsis
(b) *
(c) Introduction; Approval of the Reorganization
8 (a) Proxy Statement
(b) *
9 *
Part B of
Form N-14
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a) Oppenheimer Strategic Income Fund's Statement of Additional
Information
(b) *
13 (a) Statement of Additional Information about Oppenheimer Global
Environment Fund
(b) *
14 Registrant's Statement of Additional Information; Statement of
Additional Information about Oppenheimer Strategic Diversified
Income Fund; Annual Report of Oppenheimer Strategic Diversified
Income Fund at 9/30/94; Financial Statements (unaudited) of
Oppenheimer Strategic Diversified Income Fund at 3/31/95;
Oppenheimer Strategic Income Fund Annual Report at 9/30/94 and
Financial Statements (unaudited) at 3/31/95
Part C of
Form N-14
Item No. Other Information Heading
- --------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings
_______________
* Not Applicable or negative answer
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / x /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oppenheimer Strategic Funds Trust
- ------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Oppenheimer Strategic Diversified Income Fund
- ------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- ------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
- ------------------------------------------------------------------
(1) Amount previously paid:
- ------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------
(4) Date Filed:
- -----------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
Preliminary Copy - For the Information of the Securities and Exchange
Commission Only
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 12, 1995
To the Shareholders of Oppenheimer Strategic Diversified Income Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Oppenheimer Strategic Diversified Income Fund (the "Fund"), a registered
management investment company, will be held at 3410 South Galena Street,
Denver, Colorado 80231, at 10:00 A.M., Denver time, on July 12, 1995, or
any adjournments thereof (the "Meeting"), for the following purposes:
1. To approve an Agreement and Plan of Reorganization between the Fund
and Oppenheimer Strategic Income Fund ("Strategic Income Fund"), and the
transactions contemplated thereby, including the transfer of substantially
all the assets of the Fund, which is a series of Oppenheimer Strategic
Funds Trust (the "Trust"), having one class of shares, designated as Class
C, in exchange for Class C shares of Strategic Income Fund, which is also
a series of the Trust and the distribution of Class C shares to the
shareholders of the Fund in complete liquidation of the Fund, the
cancellation of the outstanding shares of the Fund and its termination as
a series of the Trust.
2. To act upon such other matters as may properly come before the
Meeting.
Shareholders of record at the close of business on May 12, 1995 are
entitled to notice of, and to vote at, the Meeting. The Proposal is more
fully discussed in the Proxy Statement and Prospectus. Please read it
carefully before telling us, through your proxy or in person, how you wish
your shares to be voted. The Fund's Board of Trustees recommends a vote
in favor of the Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED
PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
June 2, 1995
_______________________________________________________________________
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy
no matter how large or small your holdings may be.
230
<PAGE>
Preliminary Copy - For the Information of the Securities and Exchange
Commission Only
OPPENHEIMER STRATEGIC INCOME FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Oppenheimer Strategic Funds Trust (the "Trust") has filed with the
Securities and Exchange Commission (the "SEC") a Registration Statement
on Form N-14 relating to the registration of Class C shares of its series
named Oppenheimer Strategic Income Fund ("Strategic Income Fund") to be
offered to the shareholders of the second series of the Trust named
Oppenheimer Strategic Diversified Income Fund (the "Fund"), located at
3410 South Galena Street, Denver, Colorado 80231 (telephone 1-800-525-
7048), pursuant to an Agreement and Plan of Reorganization (the
"Reorganization Agreement") between Strategic Income Fund and the Fund.
This Proxy Statement of the Fund relating to the Reorganization Agreement
and the transactions contemplated thereby (the "Reorganization") also
constitutes a Prospectus of Strategic Income Fund filed as part of such
Registration Statement. Strategic Income Fund is a mutual fund with the
investment objective of seeking a high level of current income by
investing mainly in debt securities and by writing covered call options
on them.
This Proxy Statement and Prospectus sets forth concisely information about
Strategic Income Fund that shareholders of the Fund should know before
voting on the Reorganization. A copy of the Prospectus for Strategic
Income Fund, dated May 26, 1995, is enclosed, and is incorporated herein
by reference. The following documents have been filed with the SEC and
are available without charge upon written request to Oppenheimer
Shareholder Services ("OSS"), the transfer and shareholder servicing agent
for Strategic Income Fund and the Fund, at P.O. Box 5270, Denver, Colorado
80217, or by calling the toll-free number shown above: (i) a Prospectus
for the Fund, dated May 26, 1995; (ii) a Statement of Additional
Information about the Fund, dated May 26, 1995, supplemented February 1,
1995; and (iii) a Statement of Additional Information about Strategic
Income Fund, dated May 26, 1995 (the "Strategic Income Fund Additional
Statement"). The Strategic Income Fund Additional Statement, which is
incorporated herein by reference, contains more detailed information about
Strategic Income Fund and its management. A Statement of Additional
Information relating to the Reorganization, dated May __, 1995, has been
filed with the SEC as part of the Strategic Income Fund Registration
Statement on Form N-14 and is incorporated by reference herein, and is
available by written request to OSS at the same address immediately above
or by calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated June 2, 1995.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
Page
Introduction
General
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
Comparative Fee Table
Synopsis
Parties to the Reorganization
The Reorganization
Reasons for the Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Distribution and Service Plan Fees
Purchases, Exchanges and Redemptions
Principal Risk Factors
Approval of the Reorganization (The Proposal)
Reasons for the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)
Comparison Between the Fund and Strategic Income Fund
Investment Objectives and Policies
Special Investment Methods
Investment Restrictions
Portfolio Turnover
Description of Brokerage Practices
Expense Ratios and Performance
Shareholder Services
Rights of Shareholders
Management and Distribution Arrangements
Purchase of Additional Shares
Method of Carrying Out the Reorganization
Miscellaneous
Additional Information
Financial Information
Public Information
Other Business
Annex A - Agreement and Plan of Reorganization, dated
__________________, by and between Oppenheimer Strategic
Diversified Income Fund and Oppenheimer Strategic
Income Fund A-1
<PAGE>
Preliminary Copy - For the Information of the Securities and Exchange
Commission Only
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Special Meeting of Shareholders
to be held July 12, 1995
INTRODUCTION
General
This Proxy Statement and Prospectus is being furnished to the shareholders
of Oppenheimer Strategic Diversified Income Fund (the "Fund"), a
registered management investment company, in connection with the
solicitation by the Board of Trustees (the "Board") of Oppenheimer
Strategic Fund Trust (the "Trust") proxies to be used at the Special
Meeting of Shareholders of the Fund to be held at 3410 South Galena
Street, Denver, Colorado 80231, at 10:00 A.M., Denver time, on July 12,
1995, or any adjournments thereof (the "Meeting"). It is expected that
the mailing of this Proxy Statement and Prospectus will commence on or
about June __, 1995.
At the Meeting, shareholders of the Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Reorganization Agreement")
between the Fund and Oppenheimer Strategic Income Fund ("Strategic Income
Fund"), and the transactions contemplated thereby (the "Reorganization"),
including the transfer of substantially all the assets of the Fund, which
is a series of Oppenheimer Strategic Funds Trust (the "Trust"), having one
class of shares, designated as Class C, in exchange for Class C shares of
Strategic Income Fund, the distribution of Class C shares to the
shareholders of the Fund in complete liquidation of the Fund, and the
cancellation of the outstanding shares of the Fund and its termination as
a series of the Trust. The Class C shares to be issued by Strategic
Income Fund pursuant to the Reorganization will be issued at net asset
value without a sales charge and without the imposition of the contingent
deferred sales load. Additional information with respect to these changes
to Strategic Income Fund is set forth herein, in the Prospectus of
Strategic Income Fund accompanying this Proxy Statement and Prospectus and
in the Strategic Income Fund Additional Statement which is incorporated
herein by reference.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on May 12, 1995 as the record
date (the "Record Date") for the determination of shareholders entitled
to notice of, and to vote at, the Meeting. An affirmative vote of the
holders of a majority of the outstanding shares of the Fund is defined in
the Investment Company Act of 1940 as the vote of the holders of the
lesser of: (i) 67% or more of the voting securities present or represented
by proxy at the shareholders meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or
(ii) more than 50% of the outstanding voting securities. Each shareholder
will be entitled to one vote for each share and a fractional vote for each
fractional share held of record at the close of business on the Record
Date. Only shareholders of the Fund will vote on the Reorganization. The
vote of shareholders of Strategic Income Fund is not being solicited.
At the close of business on the Record Date, there were approximately
_____________ shares of the Fund issued and outstanding and ______________
outstanding Class A shares of _____________ outstanding Class B shares of
Strategic Income Fund. The presence in person or by proxy of the holders
of a majority of such shares constitutes a quorum for the transaction of
business at the Meeting. To the knowledge of the Fund, as of the Record
Date, no person owned of record or beneficially 5% or more of its
outstanding shares except for _____________________________________, which
owned of record ___________ shares of the Fund (___% of the outstanding
shares of the Fund as of such date). As of the Record Date, to the
knowledge of Strategic Income Fund, no person owned of record or
beneficially 5% or more of its outstanding shares except for
__________________, which owned of record ___________ shares of Strategic
Income Fund (___% of the outstanding shares of Strategic Income Fund as
of such date). (In addition, as of the record date, the Trustees and
officers of the Trust owned less than 1% of the outstanding shares of
either the Fund or Strategic Income.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in accordance
with the choices specified thereon, and will be included in determining
whether there is quorum to conduct the Meeting. The proxy will be voted
in favor of the Proposal unless a choice is indicated to vote against or
to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions are
received, the broker-dealer may (if permitted under applicable stock
exchange rules), as record holder, vote such shares on the Proposal in the
same proportion as that broker-dealer votes street account shares for
which voting instructions were received in time to be voted. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the Proposal.
The proxy may be revoked at any time prior to the voting thereof by: (i)
writing to the Secretary of the Fund at Two World Trade Center, 34th
Floor, New York, New York 10048-0203; (ii) attending the Meeting and
voting in person; or (iii) signing and returning a new proxy (if returned
and received in time to be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be borne by the Fund.
Any documents such as existing prospectuses or annual reports that are
included in that mailing will be a cost of the fund issuing the document.
In addition to the solicitation of proxies by mail, proxies may be
solicited by officers of the Fund or officers and employees of OSS,
personally or by telephone or telegraph. Any expenses so incurred will
be borne by OSS. Brokerage houses, banks and other fiduciaries may be
requested to forward soliciting material to the beneficial owners of
shares of the Fund and to obtain authorization for the execution of
proxies. For those services, if any, they will be reimbursed by the Fund
for their reasonable out-of-pocket expenses.
With respect to the Reorganization, the Fund and Strategic Income Fund
will bear the cost of their respective tax opinions. Any other out-of-
pocket expenses of the Fund and Strategic Income Fund associated with the
Reorganization, including legal, accounting and transfer agent expenses,
will be borne by the Fund and Strategic Income Fund, respectively, in the
amounts so incurred by each.
COMPARATIVE FEE TABLE
The Fund and Strategic Income Fund each pay a variety of expenses directly
for management of their assets, administration, distribution of their
shares and other services, and those expenses are reflected in each fund's
net asset value per share. Shareholders pay other expenses directly, such
as sales charges.
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer
Strategic DiversifiedStrategic Income
Income Fund Class C Fund Class A Class B Class C
<S> <C> <C> <C> <C>
Maximum Sales Charge on
Purchases (as a % of
offering price) None 4.75% None None
Sales Charge on Reinvested
Dividends None None None None
Deferred Sales Charge (as
a % of the lower of the
original purchase price
or redemption proceeds) 1%(1) None(2) 5% in the first year1%(1)
declining to 1%
in the sixth year
and eliminated
thereafter(2)
<FN>
(1) If you redeem shares within 12 months of buying them, you may have to
pay a 1% contingent deferred sales charge ("CDSC"). The CDSC will not be
imposed on Fund shares exchanged in this Reorganization but will continue
to apply to Strategic Income shares received, based on the date your Fund
shares were purchased.
(2) For further information on deferred sales charges for Strategic Income
Fund, please review the enclosed prospectus.
</TABLE>
The following numbers are projections of the Fund's business expenses with
respect to the six month period (annualized) ended March 31, 1995
(unaudited). No shares Class C shares of Strategic Income were offered
during the period___________. The pro forma information with respect to
Class C shares is based on estimates of the business expenses for
Strategic Income Class B shares as if the Reorganization occurred on March
31, 1995. These amounts are shown as a percentage of the average net
asset of the Fund, Strategic Income and the combined fund. The 12b-1
Distribution and Service Plan fees are the 12b-1 service plan fees (0.25%
of average annual net assets) and the annual asset-based sales charges of
0.75%.
<TABLE>
<CAPTION> Strategic Pro Forma
Diversified Strategic Strategic
Income Fund Income Fund Income
Class C Class C Class C
<S> <C> <C> <C>
Management Fees .75% .54%
12b-1 Distribution and Service
Plan Fees 1.00% 1.00%
Other Expenses .44% .15%
Total Fund Operating Expenses 2.19% 1.69%
</TABLE>
To try and show the effect of the expenses in an investment over time, the
hypotheticals shown below have been created. Assume that you make a
$1,000 investment in either the Class C shares of the Fund, Class C shares
of Strategic Income or the pro forma combined fund and that the annual
return is 5% and that the operating expenses for each fund are the ones
shown in the chart above. If you were to redeem your shares at the end
of each period shown below, your investment would incur the following
expenses by the end of each period shown.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
Oppenheimer Strategic
Diversified Income Fund
Class C Shares $32 $69 $117 $252
Oppenheimer Strategic
Income Fund
Class C Shares $ $ $ $
Pro Forma Combined Fund
Class C Shares $27 $53 $92 $200
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Oppenheimer Strategic
Diversified Income Fund
Class C Shares $22 $69 $117 $252
Oppenheimer Strategic
Income Fund
Class C Shares $ $ $ $
Pro Forma Combined Fund
Class C Shares $17 $53 $92 $200
<FN>
- ------------------------
* Because of the asset-based sales charge imposed on shares of the Fund,
long term shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable regulatory
requirements.
</TABLE>
For information purposes, the following numbers are projections of
Strategic Income Class A and Class B shares business expenses with respect
to the six months (annualized) ended March 31, 1995 (unaudited). The pro
forma information with respect to Class A and Class B shares is based on
the business expenses for Strategic Income Class A and Class B shares
after the Reorganization as if it occurred on March 31, 1995. The 12b-1
Plan fees for the Class A shares are Service Plan Fees (maximum of 0.25%
of average annual net assets of the class) and for Class B shares, the
12b-1 fees are the Service Plan fee (0.25% of average annual net assets
of the class) and the annual asset-based sales charges of 0.75%.
<TABLE>
<CAPTION>
Pro Forma
Strategic Income Strategic Income
Class A Class B Class A Class B
<S> <C> <C> <C>
Management Fees .54% .54% .54% .54%
12b-1 Distribution and
Service Plan Fees .24% 1.00% .24% 1.00%
Other Expenses .16% .25% .16% .25%
Total Fund Operating
Expenses 94% 1.69% .94% 1.69%
</TABLE>
Assume that you make a $1,000 investment in either Class A or Class B
shares of Strategic Income or in Class A or Class B shares of the combined
fund and that the annual return is 5% and that the operating expenses for
each class of shares are the one shown above. If you were to redeem your
shares at the end of each period shown below, your investment would incur
the following expenses by the end of each period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162
Pro Forma Combined Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $97 $157
Class B Shares $17 $54 $92 $162
Pro Forma Combined Fund
Class A Shares $57 $76 $97 $163
Class B Shares $17 $54 $93 $202
</TABLE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and by the Reorganization Agreement, a copy of
which is attached as an Annex hereto. Shareholders should carefully
review this Proxy Statement and Prospectus and the Reorganization
Agreement in their entirety and, in particular, the current Prospectus of
Strategic Income Fund which accompanies this Proxy Statement and
Prospectus and is incorporated by reference herein.
Parties to the Reorganization
The Fund is one of two investment portfolios or "series" of Oppenheimer
Strategic Funds Trust (the "Trust"). The Trust was organized in 1989 as
a Massachusetts business trust with one series, but in December 1993, the
Trust was reorganized to become a multi-series business trust and the Fund
became a series of it. The Trust is an open-end, diversified management
investment company, with an unlimited number of authorized shares of
beneficial interest. Each of the two series of the Trust is a fund that
issues its own shares, has its own investment portfolio, and its own
assets and liabilities. The Fund and Strategic Income Fund are each
located at 3410 South Galena Street, Denver, Colorado 80231. There is
one Board of Trustees of the Trust. Oppenheimer Management Corporation
(the "Manager") acts as investment adviser to the Fund and Strategic
Income Fund (collectively referred to herein as the "funds"). Additional
information about the parties is set forth below.
Shares to be Issued. Shareholders of the Fund will receive Class C shares
of Strategic Income Fund in exchange for their shares of the Fund. The
Board of Trustees of the Trust have established three classes of shares
of Strategic Income which are Classes A, B and C. All classes of shares
vote together in the aggregate as to certain matters, however shares of
a particular class vote together on matters that affect that class alone.
With respect to the Fund, there is only one class of shares, and Fund
shareholders vote exclusively on all matters submitted to a vote of Fund
shareholders. In most other respects, the shares of the Fund, and Class
C shares of Strategic Income to be issued in the reorganization are
substantially similar.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to Strategic Income Fund in exchange for Class
C shares of Strategic Income Fund. Presently the Fund has only one class
of shares (Class C shares). The net asset value of Strategic Income Fund
Class C shares issued in the exchange will equal the value of the assets
of the Fund received by Strategic Income Fund. Following the Closing of
the Reorganization presently scheduled for August 4, 1995, the Fund will
distribute the Class C shares of Strategic Income Fund received by the
Fund on the Closing Date to holders of Fund shares issued and outstanding
as of the Valuation Date (as hereinafter defined). As a result of the
Reorganization, each Fund shareholder will receive that number of full and
fractional Strategic Income Fund Class C shares equal in value to such
shareholder's pro rata interest in the assets transferred to Strategic
Income Fund as of the Valuation Date. The Board has determined that the
interests of existing Fund shareholders will not be diluted as a result
of the Reorganization. For the reasons set forth below under "The
Reorganization - Reasons for the Reorganization," the Board, including the
trustees who are not "interested persons" of the Trust (the "Independent
Trustees'), as that term is defined in the Investment Company Act, has
concluded that the Reorganization is in the best interests of the Fund and
its shareholders and recommends approval of the Reorganization by Fund
shareholders. If the Reorganization is not approved, the Fund will
continue in existence as a series of the Trust and the Board will
determine whether to pursue alternative actions.
Reasons for the Reorganization
At a meeting of the Board of Trustees (the "Board") held February 28,
1995, the Trustees reviewed and discussed materials relevant to the
Reorganization. The Board, including the Independent Trustees,
unanimously approved and recommended to shareholders of the Fund that they
approve the Reorganization. The Fund and Strategic Income Fund are each
series of the same Trust. The Fund presently offers one class of shares
designated as Class C. Strategic Income Fund has three designated classes
of shares; Class A, Class B and Class C. Each series has its own
investment portfolio and its own assets and liabilities. The Board, in
its review of the proposed reorganization, noted that both the Fund and
Strategic Income Fund share the identical investment objective of seeking
a high level of current income by investing primarily in debt securities
and by writing covered call options on them. The investment policies and
restrictions of each fund are substantially the same. While sharing
identical investment objectives and policies, the Fund is a new fund which
commenced the sales of its shares on February 1, 1994. The Fund has not
grown and it is significantly smaller in size compared to Strategic Income
Fund. The Board considered that Strategic Income Fund would provide a
greater diversification of investments to Fund shareholders, and at the
same time Fund shareholders would have the benefit of a reduction in
management fee rates and business expenses based on the large asset size
and the large number of shareholders of Strategic Income Fund. As of
March 31, 1995, the Fund has ______ net assets and Strategic Income Fund
had approximately net assets of ___________. The Board concluded that as
a result of such Reorganization, shareholders of the Fund would become
shareholders of a larger fund and should benefit from the economics of
scale.
The Board, in reviewing financial information, considered that Fund
shareholders would expect a reduction in overall expenses as a result of
becoming shareholders in the larger Strategic Income Fund. Although the
Manager had been voluntarily reimbursing the Fund to the level needed to
maintain the dividend, the voluntary reimbursement is no longer necessary,
and it was terminated in September of 1994. The ratio of expenses to
average net assets for the Fund for the fiscal year ended September 30,
1994 was 1.71% (after reimbursement). For the six months ended March 31,
1995, the ratio of expenses to average net assets was 2.19%. Before
voluntary reimbursement by the Manager these expenses for the period ended
September 30, 1994 were 2.13%.
For the fiscal year ended September 30, 1994, and the six month period
ended March 31, 1995 (unaudited) on a pro forma basis giving effect to the
Reorganization, the expense ratio of Strategic Income Fund, as a
percentage of average annual net assets would have been 1.71% and 1.69%,
respectively, for Class C shares.
In addition to the above, the Board also considered information with
respect to the investment performance of the Fund. The Board considered
information concerning Class B shares of Strategic Income Fund, which has
comparable business expenses to the expected expenses of the Class C
shares of the Fund, and determined that both standardized yield and
average annual return were better for Class B shares of Strategic Income
Fund than Class C shares of the Fund. Although past performance is not
predictive of future results, shareholders of the Fund would have an
opportunity to become shareholders of the Fund with better past
performance.
The Board also considered that the Reorganization would be a tax-free
reorganization, and there would be no sales charge imposed in effecting
the Reorganization. The Board concluded that the combining of the Fund
with Class C shares of Strategic Income Fund would not result in dilution
to the shareholders of the Fund and it would not result in dilution to
shareholders of Strategic Income Fund.
Tax Consequences of the Reorganization
In the opinion of Deloitte & Touche LLP, tax adviser to the Fund, the
Reorganization will qualify as a tax-free reorganization for Federal
income tax purposes. As a result, no gain or loss will be recognized by
the Trust, Strategic Income Fund, or the shareholders of the Fund for
Federal income tax purposes as a result of the Reorganization. For
further information about the tax consequences of the Reorganization, see
"Approval of the Reorganization - Tax Aspects" below.
Investment Objectives and Policies
The Fund and Strategic Income Fund have virtually identical investment
objectives and policies. Each fund seeks a high level of current income
mainly from interest on debt securities and also seeks to enhance its
income by writing covered call options on debt securities. The funds do
not invest with the objective of seeking capital appreciation.
Each fund seeks its investment objective by investing principally in three
market sectors: (1) debt securities of foreign governments and companies,
(2) U.S. Government securities, and (3) lower-rated, high-yield debt
securities of U.S. companies. Under normal market conditions the funds
will invest in each of these three sectors, but from time to time the
Manager will adjust the amounts the funds invest in each sector.
Investment Advisory and Distribution and Service Plan Fees
The terms and conditions of each investment advisory agreement are the
same. The funds obtain investment management services from the Manager.
The management fee is payable monthly and computed on the net asset value
of each fund as of the close of business each day. Both the Fund and
Strategic Income Fund pay the same management fee at the rate of 0.75% of
the first $200 million of net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of
the next $200 million and 0.50% of the net assets in excess of $1 billion.
Each fund has a Distribution and Service Plan (the "Plan" for its Class
C shares pursuant to which payments are made to Oppenheimer Funds
Distributor, Inc. (the "Distributor") in connection with distributing each
fund's Class C shares and servicing accounts. Under each Plan, the fund
pays the Distributor an annual "asset-based sales charge" of 0.75 per
year. The Distributor also receives a service fee of 0.25% per year.
Both fees are computed on the average annual net assets of the fund,
determined as of the close of each regular business day. The Plan for the
Fund makes payments to reimburse the Distributor for its distribution
expenses. The Plan for Strategic Income is a compensation plan under
which Strategic Income pays the Distributor for certain distribution
services but Strategic Income payments are not tied to reimbursing the
Distributor for its expenses.
Purchases, Exchanges and Redemptions
The Fund and Strategic Income Fund are each series of Oppenheimer
Strategic Funds Trust. The funds are part of the OppenheimerFunds complex
of mutual funds. The procedures for purchases, exchanges and redemptions
of shares of the funds are substantially the same. Shares of either fund
may be exchanged only for Class C shares of Oppenheimer Funds and the
number of Oppenheimer Funds offering Class C shares is limited.
There is no initial sales charge on purchases of either Fund shares,
however, if shares of either Fund are sold within 12 months, there will
be a contingent deferred sales charge of 1%. Class C shares of Strategic
Income Fund received in the Reorganization will be issued at net asset
value, without a sales charge and no CDSC will be imposed as a result of
the Reorganization. Services available to shareholders of both funds
include purchase and redemption of shares through OppenheimerFunds
AccountLink and PhoneLink (an automated telephone system), telephone
redemptions, and exchanges by telephone to other OppenheimerFunds which
offer Class C shares, and reinvestment privileges. Please see
"Shareholder Services," and you should refer to the Fund's prospectus and
Strategic Income Fund's prospectus included with this document for further
information.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in
Strategic Income Fund, shareholders should carefully consider the
following risk factors, the information set forth in this Proxy Statement
and Prospectus and the more complete description of risk factors set forth
in the documents incorporated by reference herein, including the
Prospectuses of the funds and their respective Statements of Additional
Information. As stated in their respective Prospectuses, as a general
matter, both the Fund and Strategic Income Fund are designed for investors
willing to assume additional risk in return for seeking high current
income. The funds do not invest with the objective of seeking capital
appreciation.
Both the Fund and Strategic Income Fund seek high current income mainly
from interest on debt securities. They also seek to enhance income by
writing covered call options on debt securities. In seeking their
investment objectives, both funds invest in higher-yielding, lower-rated
debt securities, commonly known as "junk bonds." The types of securities
each Fund invests in are substantially similar, including foreign
securities and certain derivative investments. These securities and risks
of investing in them are described below under "Investment Objectives and
Policies" on page 15. The Board of Trustees has concluded that
shareholders of the Fund should not be subject to any material increase
in investment risks as shareholders of Strategic Income.
APPROVAL OF THE REORGANIZATION
(The Proposal)
Reasons for the Reorganization
At a meeting of the Board of Trustees (the "Board") held February 28,
1995, the Trustees reviewed and discussed materials relevant to the
proposed Reorganization. The Board, including the Independent Trustees,
unanimously approved and recommended to shareholders of the Fund that they
approve the Reorganization. The Fund and Strategic Income Fund are each
series of the same Trust. The Fund presently offers one class of shares
designated as Class C. Strategic Income Fund has three designated classes
of shares; Class A, Class B and Class C. Each series has its own
investment portfolio and its own assets and liabilities. The Board, in
its review of the proposed reorganization, noted that both the Fund and
Strategic Income Fund share the identical investment objective of seeking
a high level of current income by investing primarily in debt securities
and by writing covered call options on them. The investment policies and
restrictions of each fund are substantially the same. While sharing
identical investment objectives, the Fund is a new fund which commenced
the sales of its shares on February 1, 1994. The Fund has not grown and
it is significantly smaller in size than Strategic Income Fund. The Board
considered that Strategic Income Fund would provide a greater
diversification of investments to Fund shareholders, and at the same time
Fund shareholders would have the benefit of a reduction in management fee
rates and business expenses based on the large asset size and the large
number of shareholders of Strategic Income Fund. As of March 31, 1995,
the Fund had _____ net assets of __________________ and Strategic Income
Fund had approximately net assets of ___________. The Board concluded
that as a result of such Reorganization, shareholders of the Fund would
become shareholders of a larger fund and should benefit from the economics
of scale.
The Board, in reviewing financial information, considered that Fund
shareholders would expect a reduction in overall expenses as a result of
becoming shareholders in the larger Strategic Income Fund. Although the
Manager had been voluntarily reimbursing the Fund to the level needed to
maintain the dividend, the voluntary reimbursement was terminated in
September, 1994 because it was no longer necessary to maintain the
dividend. The ratio of expenses to average net assets for the Fund for
the fiscal year ended September 30, 1994 was 1.71% (after reimbursement).
For the six months ended March 31, 1995, the ratio of expenses to average
net assets was 2.19%. Before voluntary reimbursement by the Manager these
expenses for the period ended September 30, 1994 were 2.13%.
In addition to the above, the Board also considered information with
respect to the performance of the Fund. All shares of all classes of
Strategic Income Fund represent interests in the same portfolio of
investment securities, and the investment performance of Strategic Income
Fund's investments affects each share equally. The investment return on
the shares of the different classes is affected by the expenses borne by
each class. The Board reviewed information concerning Class B shares of
Strategic Income Fund, and considered that the business expenses which
will be incurred by Class C shares of Strategic Income Fund are similar
to the business expenses of Strategic Income Fund's Class B shares.
Through the economies of scale mentioned above, it is anticipated that the
expenses to be borne by Strategic Income Fund's Class C shares should be
less than the expenses borne by the Fund's shareholders. Based on this
analysis, the Board anticipates that the investment performance of
Strategic Income Fund's Class C shares should be better than the
investment performance of shares of the Fund if there were no
Reorganization. Based on a similar analysis, the Board also considered
that both standardized yield and average annual return were better for
Class B shares of Strategic Income Fund than Class C shares of the Fund.
Although past performance is not predictive of future results,
shareholders of the Fund would have an opportunity to become shareholders
of a fund with lower expenses.
The Board also considered that the Reorganization would be a tax-free
reorganization, and there would be no sales charge imposed in effecting
the Reorganization. The Board concluded that the Reorganization would not
result in dilution to the shareholders of the Fund and it would not result
in dilution to shareholders of Strategic Income Fund.
The Reorganization
The Reorganization Agreement (a copy of which is set forth in full as
Annex A to this Proxy Statement and Prospectus) contemplates a
reorganization under which (i) all of the assets of the Fund (other than
the cash reserve described below (the "Cash Reserve")) as a series of
Oppenheimer Strategic Funds Trust will be transferred to Strategic Income
Fund in exchange for Class C shares of Strategic Income Fund, (ii) these
shares will be distributed among the shareholders of the Fund in complete
liquidation of the Fund, (iii) the Fund will be terminated as a series of
the Trust and (iv) the outstanding shares of the Fund will be cancelled.
Strategic Income Fund will not assume any of the Fund's liabilities except
for portfolio securities purchased which have not settled and outstanding
shareholder redemption and dividend checks.
The result of effectuating the Reorganization would be that: (i) Strategic
Income Fund will add to its gross assets all of the assets (net of any
liability for portfolio securities purchased but not settled and
outstanding shareholder redemption and dividend checks) of the Fund other
than its Cash Reserve; and (ii) the shareholders of the Fund as of the
close of business on the Closing Date will become shareholders of Class
C shares of Strategic Income Fund.
The effect of the Reorganization will be that shareholders of the Fund who
vote their shares in favor of the Reorganization will be electing to
redeem their shares of the Fund (at net asset value on the Valuation Date
referred to below under "Method of Carrying Out the Reorganization Plan,"
calculated after subtracting the Cash Reserve) and reinvest the proceeds
in Class C shares of Strategic Income Fund at net asset value without
sales charge and without recognition of taxable gain or loss for Federal
income tax purposes (see "Tax Aspects of the Reorganization" below). The
Cash Reserve is that amount retained by the Fund which is sufficient in
the discretion of the Board for the payment of: (a) the Fund's expenses
of liquidation, and (b) its liabilities, other than those assumed by
Strategic Income Fund. The Fund and Strategic Income Fund, each as a
series of Oppenheimer Strategic Funds Trust will bear all of their
respective expenses associated with the Reorganization, as set forth under
"Costs of the Solicitation and the Reorganization" above. Management
estimates that such expenses associated with the Reorganization to be
borne by the Fund will not exceed $_____. Liabilities as of the date of
the transfer of assets will consist primarily of accrued but unpaid normal
operating expenses of the Fund, excluding the cost of any portfolio
securities purchased but not yet settled and outstanding shareholder
redemption and dividend checks. See "Method of Carrying Out the
Reorganization Plan" below.
The Reorganization Agreement provides for coordination between the funds
as to their respective portfolios so that, after the closing, Strategic
Income Fund will be in compliance with all of its investment policies and
restrictions. The Fund will recognize capital gain or loss on any sales
made pursuant to this paragraph. As noted in "Tax Aspects of the
Reorganization" below, if the Fund realizes net gain from the sale of
securities in 1995, such gain, to the extent not offset by capital loss
carry forward, will be distributed to shareholders prior to the Closing
Date and will be taxable to shareholders as capital gain.
Tax Aspects of the Reorganization
Immediately prior to the Valuation Date referred to in the Reorganization
Agreement, the Fund will pay a dividend or dividends which, together with
all previous such dividends, will have the effect of distributing to the
Fund's shareholders all of the Fund's investment company taxable income
for taxable years ending on or prior to the Closing Date (computed without
regard to any deduction for dividends paid) and all of its net capital
gain, if any, realized in taxable years ending on or prior to the Closing
Date (after reduction for any available capital loss carry-forward). Such
dividends will be included in the taxable income of the Fund's
shareholders as ordinary income and capital gain, respectively.
The exchange of the assets of the Fund for Class C shares of Strategic
Income Fund and the assumption by Strategic Income Fund of certain
liabilities of the Fund is intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Fund has
represented to Deloitte & Touche, tax adviser to the Fund, that there is
no plan or intention by any Fund shareholder who owns 5% or more of the
Fund's outstanding shares, and, to the Fund's best knowledge, there is no
plan or intention on the part of the remaining Fund shareholders, to
redeem, sell, exchange or otherwise dispose of a number of Strategic
Income Fund Class C shares received in the transaction that would reduce
the Fund shareholders' ownership of Strategic Income Fund shares to a
number of shares having a value, as of the Closing Date, of less than 50%
of the value of all the formerly outstanding Fund shares as of the same
date. Oppenheimer Strategic Funds Trust has represented to Deloitte &
Touche that, as of the Closing Date, it will qualify as a regulated
investment company or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Strategic Income Fund
and the Fund will receive the opinion of Deloitte to the effect that,
based on the Reorganization Agreement, the above representations, existing
provisions of the Code, Treasury Regulations issued thereunder, current
Revenue Rulings, Revenue Procedures and court decisions, for Federal
income tax purposes:
1. The transactions contemplated by the Reorganization Agreement will
qualify as a tax-free "reorganization" within the meaning of Section
368(a)(1) of the Code.
2. The Fund and Strategic Income Fund will each qualify as "a party to
a reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of the Fund
upon the distribution of Class C shares of beneficial interest in
Strategic Income Fund to the shareholders of the Fund pursuant to
Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized
by the Fund by reason of the transfer of its assets solely in exchange
for Class C shares of Strategic Income Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized by
Strategic Income Fund by reason of the transfer of the Fund's assets
solely in exchange for Class C shares of Strategic Income Fund.
6. The shareholders of the Fund will have the same tax basis and holding
period for the shares of beneficial interest in Strategic Income Fund
that they receive as they had for the Fund stock that they previously
held, pursuant to Sections 358(a) and 1223(1) of the Code,
respectively.
7. The securities transferred by the Fund to Strategic Income Fund will
have the same tax basis and holding period in the hands of Strategic
Income Fund as they had for the Fund, pursuant to Sections 362(b) and
1223(1) of the Code, respectively.
Shareholders of the Fund should consult their tax advisors regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the Federal
income tax consequences of the Reorganization, shareholders of the Fund
should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of the Fund and Strategic
Income Fund and indicates the pro forma combined capitalization as of
September 30, 1994 and March 31, 1995 as if the Reorganization had
occurred on such dates.
<TABLE>
<CAPTION>
September 30, 1994
Net Asset
Shares Value
Net Assets Outstanding Per Share
<S> <C>
Oppenheimer Strategic
Income Funds
Class A $ 3,143,103,010 661,897,244 $4.75
Class B $ 1,586,091,400 333.489,354 $4.76
Class C $ $4.75
Oppenheimer Strategic
Diversified Income Fund
Class C $42,887,741 8,943,700 $4.80
Oppenheimer Strategic
Income Fund (Pro Forma
Combined Fund)
Class A $ 3,143,103,010 661,897,244 $4.75
Class B $ 1,586,091,400 333,489,354 $4.76
Class C $ 42,887,741 9,028,996 $4.75
Reflects issuance of 9,028,996 of Class C shares of Strategic Income Fund
in a tax-free exchange for the net assets of the Fund aggregating
42,887,741.
March 31, 1995
Net Asset
Shares Value
Net Assets Outstanding Per Share
Oppenheimer Strategic
Income Fund
Class A $2,990,586,689 663,783,585 $4.51
Class B $1,652,677,216 366,177,811 $4.51
Class C $ -0- -0- $4.51
Oppenheimer Strategic
Diversified Income Fund
Class C $ 49,094,881 10,832,351 $4.53
Oppenheimer Strategic
Income Fund (Pro Forma
Combined Fund)
Class A $2,990,586,689 663,783,585 $4.51
Class B $1,652,672,216 336,177,811 $4.51
Class C $ 49,094,881 10,885,787 $4.51
</TABLE>
Reflects issuance of 10,885,787 shares of Strategic Income Fund in a tax-
free exchange for the net assets of the Fund, aggregating $49,094,881.
The pro forma ratio of expenses to average annual net assets of the Class
C shares at September 30, 1994 and at March 31, 1995 would have been 1.71%
and 1.69%, respectively, for Class C shares. The pro forma ratio of
expenses to average net assets of Class A of September 30, 1994 and March
31, 1995 would have been .93% and .94%, respectively. The pro forma ratio
of expenses to average net assets of Class B at September 30, 1994 and
March 31, 1995 would have been 1.71% and 1.69%, respectively.
COMPARISON BETWEEN THE FUND AND STRATEGIC INCOME FUND
Information about the Fund and Strategic Income Fund is presented below.
Additional information about Strategic Income Fund is set forth in its
Prospectus, accompanying this Proxy Statement and Prospectus, and
additional information about both funds is set forth in documents that may
be obtained upon request of the transfer agent and upon review at the
offices of the SEC. See "Miscellaneous - Public Information."
Investment Objectives and Policies
As their investment objective, both Strategic Diversified and Strategic
Income Fund seek a high level of current income by investing mainly in
debt securities and by writing covered calls on them. The funds do not
invest with the objective of capital appreciation. In seeking their
investment objectives, the funds employ virtually identical investment
policies as described in detail below. The Manager is the investment
adviser to both the Fund and Strategic Income Fund.
Each of the funds seek their investment objective by investing principally
in three market sectors: (1) debt securities of foreign governments and
companies, (2) U.S. Government securities, and (3) lower-rated, high-yield
debt securities of U.S. companies. Under normal market conditions the
funds will invest in each of these three sectors, but from time to time
the Manager will adjust the amounts the Fund invests in each sector.
By investing in all three sectors, the funds seek to reduce the volatility
of fluctuations in its net asset value per share, because the overall
securities price and interest rate movements in each of the different
sectors are not necessarily correlated with each other. Changes in one
sector may be offset by changes in another sector that moves in a
different direction. Therefore, this strategy may help reduce some of the
risks from negative market movements and interest rate changes in any one
sector. However, the Fund may invest up to 100% of their respective
assets in any one sector if the Manager believes that in doing so the
funds can achieve their objective without undue risk to a fund's assets.
When investing the fund's respective assets, the Manager considers many
factors, including general economic conditions in the U.S. and abroad,
prevailing interest rates, and the relative yields of U.S. and foreign
securities. While each fund may seek to earn income by writing covered
call options, market price movements may make it disadvantageous to do so.
The funds may also try to hedge against losses by using hedging strategies
described below. When market conditions are unstable, the funds may
invest substantial amounts of their assets in money market instruments for
defensive purposes. These instruments include U.S. Government Securities,
bank obligations, commercial paper, corporate obligations and other
instruments approved by the Board of Trustees.
Lower Rated Securities
In seeking high current income, each fund may invest in higher-yielding,
lower-rated debt securities, commonly known as "junk bonds." There is no
restriction on the amount of each fund's assets that could be invested in
these types of securities. Lower-rated debt securities are those rated
below "investment grade," which means they have a rating of "Baa" or lower
by Moody's Investors Service, Inc. ("Moody's") or "BBB" or lower by
Standard & Poor's Corporation ("S&P"). These securities may be rated as
low as "C" or "D" or may be in default at time of purchase.
The Manager does not rely solely on ratings of securities by rating
agencies when selecting investments for the fund, but evaluates other
economic and business factors as well. Each fund may invest in unrated
securities that the Manager believes offer yields and risks comparable to
rated securities. High yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics. Lower-grade securities
have special risks that make them riskier investments than investment
grade securities. They may be subject to greater market fluctuations and
risk of loss of income and principal than lower yielding, investment grade
securities. There may be less of a market for them and therefore they may
be harder to sell at an acceptable price. They are also subject to
greater credit risk. For example, there is a relatively greater
possibility that the issuer's earnings may be insufficient to make the
payments of interest due on the bonds. The issuer's low creditworthiness
may increase the potential for its insolvency. All corporate debt
securities (whether foreign or domestic) are subject to some degree of
credit risk.
These risks mean that either fund may not achieve the expected income from
lower-grade securities, and that either fund's net asset value per share
may be affected by declines in value of these securities. The Fund is not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. These risks are discussed in more
detail in each fund's Statement of Additional Information.
Interest Rate Risks
In addition to credit risks, referred to above, debt securities are
subject to changes in value due to changes in prevailing interest rates.
When prevailing interest rates fall, the values of outstanding debt
securities generally rise. Conversely, when interest rates rise, the
values of outstanding debt securities generally decline. The magnitude of
these fluctuations will be greater when the average maturity of the
portfolio securities is longer. Changes in the value of securities held
by each fund mean that each fund's share prices can go up or down when
interest rates change because of the effect of the change on the value of
each fund's portfolio of debt securities.
Risk of Foreign Securities
Both the Fund and Strategic Income Fund may invest in debt securities
issued or guaranteed by foreign companies, "supranational" entities such
as the World Bank, and foreign governments or their agencies. These
foreign securities may include debt obligations such as government bonds,
debentures issued by companies, as well as notes. Some of these debt
securities may have variable interest rates or "floating" interest rates
that change in different market conditions. Those changes will affect the
income each fund receives. Each fund can also invest in preferred stocks
and "zero coupon" securities, which have similar features to the ones
described below in "Debt Securities of U.S. Companies." However, if the
assets of either fund are held abroad, the countries in which they are
held and the sub-custodians holding them must be approved by the Board of
Trustees. Each of the funds may buy or sell foreign currencies and
foreign currency forward contracts (agreements to exchange one currency
for another at a future date) to hedge currency risks and to facilitate
transactions in foreign investments. Although currency forward contracts
can be used to protect a fund from adverse exchange rate changes, there
is a risk of loss if the Manager fails to predict currency exchange
movements correctly. For example, foreign issuers are not required to use
accounting methods that correspond to generally-accepted accounting
principles. If foreign securities are not registered under the Securities
Act of 1933, as amended (the "Securities Act"), the issuer may not have
to comply with the disclosure requirements of the Securities Exchange Act
of 1934, as amended. The values of foreign securities investments will
be affected by a variety of factors, including, among others, incomplete
or inaccurate information available as to foreign issuers, changes in
currency rates, exchange control regulations or currency blockage,
expropriation or nationalization of assets, application of foreign tax
laws (including withholding taxes), changes in governmental administration
or economic or monetary policy in the U.S. or abroad, or changed
circumstances in dealings between nations. In addition, it is generally
more difficult to obtain court judgments outside the U.S. Additional
costs may be incurred in connection with investments in foreign securities
because of generally higher foreign commissions and the additional
custodial costs associated with monitoring foreign securities. Foreign
securities markets may be less liquid, more volatile and less subject to
governmental regulation than in the U.S.
Debt Securities of Foreign Governments and Companies. The funds may
invest in debt securities issued or guaranteed by foreign companies,
"supranational" entities such as the World Bank, and foreign governments
or their agencies. These foreign securities may include debt obligations
such as government bonds, debentures issued by companies, as well as
notes. The funds will not invest more than 25% of their respective total
assets in government securities of any one foreign country or more than
25% of its assets in companies in one foreign country. Otherwise, the
funds are not restricted in the amount of assets they may invest in
foreign countries or in which countries. Both funds may buy or sell
foreign currencies and foreign currency forward contracts (agreements to
exchange one currency for another at a future date) to hedge currency
risks and to facilitate transactions in foreign investments. Although
currency forward contracts can be used to protect the funds from adverse
exchange rate changes, there is a risk of loss if the Manager fails to
predict currency exchange movements correctly.
U.S. Government Securities. The funds may invest in debt securities
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities ("U.S. Government Securities"). Certain U.S. Government
Securities, including U.S. Treasury bills, notes and bonds, and mortgage
participation certificates guaranteed by the Government National Mortgage
Association ("Ginnie Mae") are supported by the full faith and credit of
the U.S. Government. Ginnie Mae certificates are one type of mortgage-
related U.S. Government Security the funds invest in. Other mortgage-
related U.S. Government Securities the Fund invests in that are issued or
guaranteed by federal agencies or government-sponsored entities are not
supported by the full faith and credit of the U.S. Government. Those
securities include obligations supported by the right of the issuer to
borrow from the U.S. Treasury, such as obligations of Federal Home Loan
Mortgage Corporation ("Freddie Mac") and obligations supported only by the
credit of the instrumentality, such as Federal National Mortgage
Association ("Fannie Mae"). Other U.S. Government Securities the Fund
invests in may be zero coupon Treasury securities and collateralized
mortgage obligations ("CMOs").
Although U.S. Government Securities involve little credit risk, their
values will fluctuate depending on prevailing interest rates. Because the
yields on U.S. Government Securities are generally lower than on corporate
debt securities, when one of the funds holds U.S. Government Securities
it may attempt to increase the income it can earn from them by writing
covered call options against them when market conditions are appropriate.
Zero Coupon Treasury Securities. Zero coupon Treasury securities
generally are U.S. Treasury notes or bonds that have been "stripped" of
their interest coupons, U.S. Treasury bills issued without interest
coupons, or certificates representing an interest in the stripped
securities. A zero coupon Treasury security pays no current interest and
trades at a deep discount from its face value and will be subject to
greater market fluctuations from changes in interest rates than interest-
paying securities. Each of the funds accrues interest into holdings
without receiving the accrual costs. As a result, the funds may be forced
to seek portfolio securities to pay cash dividends of net redemptions.
The funds may invest up to 50% of their respective total assets in zero
coupon securities issued by either the U.S. Government or U.S. companies.
Mortgage-Backed U.S. Government Securities and CMOs. Certain mortgage-
backed U.S. Government securities "pass-through" to investors the interest
and principal payments generated by a pool of mortgages assembled for sale
by government agencies. Pass-through mortgage-backed securities entail the
risk that principal may be repaid at any time because of prepayments on
the underlying mortgages. That may result in greater price and yield
volatility than traditional fixed-income securities that have a fixed
maturity and interest rate.
The funds may also invest in CMOs, which generally are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payment of the interest and principal generated by the pool of mortgages
is passed through to the holders as the payments are received. CMOs are
issued with a variety of classes or series which have different
maturities. Certain CMOs may be more volatile and less liquid than other
types of mortgage-related securities, because of the possibility of the
prepayment of principal due to prepayments on the underlying mortgage
loans.
The funds may also enter into "forward roll" transactions with banks and
dealers with respect to the mortgage-related securities in which it can
invest. These require a fund to secure its obligation in the transaction
by segregating assets with its custodian bank equal in amount to its
obligation under the roll.
The funds may also invest in CMOs that are "stripped." That means that
the security is divided into two parts, one of which receives some or all
of the principal payments (and is known as a "P/O") and the other which
receives some or all of the interest (and is known as an "I/O"). P/Os and
I/Os are generally referred to as "derivative investments," discussed
further below.
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the funds
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the funds might receive back
less than their investment.
The value of "principal only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities
is typically more volatile than that of coupon-bearing bonds of the same
maturity.
Debt Securities of U.S. Companies. Each of the funds may invest in debt
securities and dividend-paying common stocks issued by U.S. companies,
including bonds, debentures, notes, preferred stocks, zero coupon
securities, participation interests, asset-backed securities and sinking
fund and callable bonds. The funds may purchase these securities in
public offerings or through private placements. The funds have no
limitations on the maturity, capitalization of the issuer or credit rating
of the domestic debt securities in which it invests, although it is
expected that most issuers will have total assets in excess of $100
million.
Zero Coupon Corporate Securities. Zero coupon corporate securities are
similar to U.S. Government zero coupon treasury securities but are issued
by companies. They have an additional risk that the issuing company may
fail to pay interest or repay the principal on the obligation.
Corporate Asset-Backed Securities. Asset-backed securities are fractional
interests in pools of consumer loans and other trade receivables, similar
to mortgage-backed securities. They are issued by trusts and special
purpose corporations. They are backed by a pool of assets, such as credit
card or auto loan receivables, which are the obligations of a number of
different parties. The income from the underlying pool is passed through
to holders, such as the funds. These securities are frequently supported
by a credit enhancement, such as a letter of credit, a guarantee or a
preference right. However, the extent of the credit enhancement may be
different for different securities and generally applies to only a
fraction of the security's value. These securities present special risks.
For example, in the case of credit card receivables, the issuer of the
security may have no security interest in the related collateral.
Participation Interests. Each of the funds may acquire participation
interests in loans that are made to U.S. or foreign companies (the
"borrower"). They may be interests in, or assignments of, the loan and
are acquired from banks or brokers that have made the loan or are members
of the lending syndicate. No more than 5% of each fund's net assets can
be invested in participation interests of the same borrower. The Manager
has set certain creditworthiness standards for issuers of loan
participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers may
have difficulty making payments. If a borrower fails to make scheduled
interest or principal payments, each fund could experience a decline in
the net asset value of its shares. Some borrowers may have senior
securities rated as low as "C" by Moody's or "D" by Standard & Poor's, but
may be deemed acceptable credit risks. Participation interests are
subject to each fund's limitations on investments in illiquid securities.
See "Illiquid and Restricted Securities" below.
Special Investment Methods
The Fund and Strategic Income Fund use the special investment methods
summarized below.
Borrowing For Leverage. From time to time, the Fund and Strategic Income
Fund may increase their ownership of securities by borrowing up to 50% of
the value of their respective assets from banks on an unsecured basis and
investing the borrowed funds (on which the fund will pay interest),
subject to the 300% asset coverage requirement of the Investment Company
Act. Purchasing securities with borrowed funds is a speculative
investment method known as leveraging. There are risks associated with
leveraging purchases of portfolio securities by borrowing, including a
possible reduction of income and increased fluctuation of net asset value
per share.
Short Sales Against-the-Box. The funds may not sell securities short
except in transactions referred to as "short sales against-the-box." No
more than 15% of each fund's net assets will be held as collateral for
such short sales at any one time.
Hedging. Each of the funds may purchase and sell certain kinds of futures
contracts, put and call options, forward contracts, and options on futures
and broadly-based securities indices, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments." The Fund
does not use hedging instruments for speculative purposes, and has limits
on the use of them, described below.
The funds may buy and sell options, futures and forward contracts for a
number of purposes. They may do so to try to manage its exposure to the
possibility that the prices of their portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. They may do so to try to manage
their exposure to changing interest rates. Some of these strategies, such
as selling futures, buying puts and writing covered calls, hedge each
fund's portfolio against price fluctuations. Other hedging strategies,
such as buying futures and call options, tend to increase the funds'
exposure to the securities market. Forward contracts are used to try to
manage foreign currency risks on each fund's foreign investments. Foreign
currency options are used to try to protect against declines in the dollar
value of foreign securities each fund owns, or to protect against an
increase in the dollar cost of buying foreign securities. Writing covered
call options may also provide income to each fund for liquidity purposes
or defensive reasons or to raise cash to distribute to shareholders.
Futures. The funds may buy and sell futures contracts that relate to (1)
broadly-based securities indices (these are referred to as Stock Index
Futures and Bond Index Futures), and (2) interest rates (these are
referred to as Interest Rate Futures). Each of the funds may buy and sell
certain kinds of put options (puts) and call options (calls). The funds
may purchase calls on (1) debt securities, (2) Futures, (3) broadly-based
securities indices and (4) foreign currencies, or to terminate its
obligation on a call the Fund previously wrote. The funds may write (that
is, sell) covered call options on debt securities to raise cash for income
to distribute to shareholders or for defensive reasons. When the fund
writes a call, it receives cash (called a premium). The call gives the
buyer the ability to buy the investment on which the call was written from
the fund at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call
price, it is likely that the call will lapse without being exercised,
while the fund keeps the cash premium (and the investment).
Each of the funds may purchase put options. Buying a put on an investment
gives a fund the right to sell the investment at a set price to a seller
of a put on that investment. Each fund can purchase those puts that
relate to (1) debt securities (whether or not it holds such securities in
its portfolio), (2) Interest Rate Futures, (3) Stock or Bond Index Futures
or (4) foreign currencies. Each fund may purchase puts on investments it
does not own. Writing puts requires the segregation of liquid assets to
cover the put. Neither fund will write a put if it will require more than
50% of that fund's respective net assets to be segregated to cover the put
obligation.
Each of the funds may buy or sell foreign currency puts and calls only if
they are traded on a securities or commodities exchange or on the over-
the-counter market, or are quoted by recognized dealers in those options.
Foreign currency options are used to try to protect against declines in
the dollar value of foreign securities the fund owns, or to protect
against increases in the dollar cost of buying foreign securities.
Each fund may buy and sell calls if certain conditions are met: (1) the
calls must be listed on a domestic or foreign securities or commodities
exchange or quoted on the Automated Quotation System of the National
Association of Securities Dealers, Inc. or on the over-the-counter market;
and (2) each call must be "covered" while it is outstanding; that means
the fund must own the securities on which the call is written or it must
own other securities that are acceptable for the escrow arrangements
required for calls. There is no limit on the amount of each fund's total
assets that may be subject to covered calls. Each fund can also write
calls on foreign currencies (discussed below). Each fund may also write
covered calls on Futures Contracts it owns, but these calls must be
covered by securities or other liquid assets the Fund owns and segregates
to enable it to satisfy its obligations if the call is exercised. A call
or put option may not be purchased if the value of all of a fund's put and
call options would exceed 5% of a fund's total assets.
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 funds use them to "lock-in" the U.S.
dollar price of a security denominated in a foreign currency that each
fund, respectively has bought or sold, or to protect against losses from
changes in the relative values of the U.S. dollar and a foreign currency.
Each 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.
Interest Rate Swaps. In an interest rate swap, a fund and another party
exchange their right to receive or their obligation to pay interest on a
security. For example, they may swap a right to receive floating rate
payments for fixed rate payments. The funds enter into swaps only on
securities they own. The funds may not enter into swaps with respect to
more than 25% of their total assets. Also, each fund will segregate
liquid assets (such as cash or U.S. Government securities) to cover any
amounts it could owe under swaps that exceed the amounts it is entitled
to receive, and it will adjust that amount daily, as needed.
Hedging instruments can be volatile investments and may involve special
risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce a fund's return. Each of the funds could
also experience losses if the prices of its futures and options positions
were not correlated with its other investments or if it could not close
out a position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on each fund. There are also special risks in particular hedging
strategies. If a covered call written by one of the funds is exercised
on a security that has increased in value, that fund will be required to
sell the security at the call price and will not be able to realize any
profit if the security has increased in value above the call price. The
use of forward contracts may reduce the gain that would otherwise result
from a change in the relationship between the U.S. dollar and a foreign
currency. To limit their exposure in foreign currency exchange contracts,
each fund limits its exposure to the amount of its assets denominated in
the foreign currency. Interest rate swaps are subject to credit risks (if
the other party fails to meet its obligations) and also to interest rate
risks. Each of the funds could be obligated to pay more under their
respective swap agreements than it receives under them, as a result of
interest rate changes. The funds will not enter into swaps with respect
to more than 25% of their respective total assets.
Derivative Investments. The Fund and Strategic Income Fund can invest in
a number of different kinds of "derivative investments." Each of the
funds may use some types of derivatives for hedging purposes, and may
invest in others because they offer the potential for increased income and
principal value. In general, a "derivative investment" is a specially-
designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index or
currency. In the broadest sense, derivative investments include exchange-
traded options and futures contracts.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the Manager expected it to perform.
The performance of derivative investments may also be influenced by
interest rate changes in the U.S. and abroad. All of these risks can mean
that a fund will realize less income than expected from its investments,
or that it can lose part of the value of its investments, which will
affect a fund's share price. Certain derivative investments held by each
of the funds may trade in the over-the-counter markets and may be
illiquid. If that is the case, the fund's investment in them will be
limited.
Illiquid and Restricted Securities. The Fund will not purchase or
otherwise acquire any securities that may be illiquid by virtue of the
absence of a readily-available market or because their disposition would
be subject to legal restrictions ("restricted securities") if, as a
result, more than 10% of the Fund's net assets would be invested in
securities that are illiquid (including repurchase agreements maturing in
more than seven days). This limit may increase to 15% if certain state
laws are changed or the Fund's shares are no longer sold in those states.
This policy does not limit the acquisition of restricted securities
eligible for resale to qualified institutional buyers pursuant to Rule
144A under the Securities Act that are determined to be liquid by the
Fund's Board of Trustees or by the Manager under Board-approved
guidelines. Such guidelines take into account, among other factors,
trading activity for such securities and the availability of reliable
pricing information. If there is a lack of trading interest in particular
Rule 144A securities, the Fund's holdings of those securities may be
illiquid. There may be undesirable delays in selling such securities at
prices representing their fair value. Strategic Income Fund has an
identical policy with respect to investment in restricted and illiquid
securities.
Loans of Portfolio Securities. To attempt to increase income for
liquidity purposes, each fund may lend its portfolio securities (other
than in repurchase transactions) to brokers, dealers and other financial
institutions meeting specified credit conditions if the loan is
collateralized in accordance with applicable regulatory requirements and
if, after any loan, the value of the securities loaned does not exceed 25%
of the value of that fund's total assets. Each fund presently does not
intend that the value of securities loaned in the current fiscal year will
exceed 5% of the value of its respective total assets.
Repurchase Agreements. Each fund may acquire securities subject to
repurchase agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from sales
of fund shares or settlement of purchases of portfolio investments. If
the vendor fails to pay the agreed-upon resale price on the delivery date,
the fund's risks may include any costs of disposing of such collateral,
and any loss from any delay in foreclosing on the collateral. Each fund's
repurchase agreements will be fully collateralized. There is no limit on
the amount of the fund's net assets that may be subject to repurchase
agreements having a maturity of seven days or less.
Warrants and Rights. Warrants basically are options to purchase stock at
set prices that are valid for a limited period of time. Rights are
options to purchase securities, normally granted to current holders by the
issuer. The Fund may invest up to 5% of its total assets in warrants or
rights. That 5% does not apply to warrants and rights the Fund acquired
as part of units with other securities or that were attached to other
securities. No more than 2% of the Fund's assets may be invested in
warrants that are not listed on the New York or American Stock Exchanges.
Strategic Income Fund has the same policy with respect to warrants and
rights.
"When-Issued" and Delayed Delivery Transactions. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities
on a "delayed delivery" basis. These terms refer to securities that have
been created and for which a market exists, but which are not available
for immediate delivery. There may be a risk of loss to the Fund if the
value of the security declines prior to the settlement date. Strategic
Income Fund has the same policy with respect to when issued and delayed
delivery transactions.
Investment Restrictions
The Fund and Strategic Income Fund have certain investment restrictions
that, together with their investment objectives, are fundamental policies,
changeable only by shareholder approval. Set forth below is a summary of
these investment restrictions which is qualified in its entirety by the
investment policies and restrictions of the funds contained in their
respective Prospectus and Statement of Additional Information.
The Fund and Strategic Income Fund each have other investment restrictions
which are fundamental policies. Under these fundamental policies, the
funds cannot do any of the following: (1) as to 75% of total assets, the
funds may not buy securities issued or guaranteed by a single issuer if,
as a result, the funds would have invested more than 5% of their assets
in the securities of that issuer or would own more than 10% of the voting
securities of that issuer (purchases of U.S. Government Securities are not
restricted by this policy); (2) the funds may not borrow money in excess
of 50% of the value of total assets, and it may borrow only subject to the
restrictions described under "Borrowing for Leverage;" (3) the funds may
not invest more than 25% of total assets in any one industry (this limit
does not apply to U.S. Government Securities but each foreign government
is treated as an "industry," and utilities are divided according to the
services they provide); (4) the funds may not invest more than 5% of total
assets in securities of issuers (including their predecessors) that have
been in operation less than three years; (5) buy or sell real estate, or
commodities or commodity contracts; however, the funds may invest in debt
securities secured by real estate or interests therein or issued by
companies, including real estate investment trusts, which invest in real
estate or interests therein, and the funds may buy and sell Hedging
Instruments; (6) buy securities on margin, except that the funds may make
margin deposits in connection with any of the Hedging Instruments which
it may use; (7) underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter for purposes of the
Securities Act of 1933; (8) buy and retain securities of any issuer if
those officers, Trustees or Directors of the Fund or the Manager who
beneficially own more than .5% of the securities of such issuer together
own more than 5% of the securities of such issuer; (9) invest in oil, gas,
or other mineral exploration or development programs; (10) buy the
securities of any company for the purpose of exercising management
control; (11) make loans, except by purchasing debt obligations in
accordance with its investment objectives and policies, or by entering
into repurchase agreements, or as described in "Loans of Portfolio
Securities"; (12) make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an
equal amount of such securities or by virtue of ownership of other
securities has the right, without payment of any further consideration,
to obtain an equal amount of securities sold short ("short sales against-
the-box"); short sales against-the-box may be made to defer realization
of gain or loss for Federal income tax purposes.
Portfolio Turnover
Holding a portfolio security for any particular length of time is not
generally a consideration in investment decisions. As a result of each
fund's investment policies and market factors, their portfolio securities
are actively traded to try to benefit from short-term yield differences
among debt securities. As a result, portfolio turnover of each of the
funds may be higher than other mutual funds. This strategy may involve
greater transaction costs from brokerage commissions and dealer mark-ups.
Additionally, high portfolio turnover may result in increased short-term
capital gains and affect the ability of each of the funds to qualify for
tax deductions for payments made to shareholders as a "regulated
investment company" under the Internal Revenue Code. The Fund and
Oppenheimer Strategic Income Fund each qualified in their last fiscal year
and intend to do so in the coming year, although they reserve the right
not to qualify.
For the fiscal year ended September 30, 1994, the portfolio turnover rate
for the Fund and Strategic Income Fund was ____% and ____%, respectively.
For the six months ended March 31, 1995 (unaudited), the portfolio
turnover rate for the Fund and Strategic Income Fund was ____% and ____%,
respectively.
Description of Brokerage Practices
Subject to the provisions of the advisory agreement, when brokers are used
for each fund's portfolio transactions, allocations of brokerage are
generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
circumstances, portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of the advisory agreement and
other procedures and rules. Brokerage is allocated under the supervision
of the Manager's executive officers. Transactions in securities other than
those for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid primarily for
effecting transactions in listed securities and otherwise only if it
appears likely that a better price or execution can be obtained. When
either of the funds engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any
transactions in the securities to which the option relates. When
possible, concurrent orders to purchase or sell the same security by more
than one of the accounts managed by the Manager or its affiliates are
combined. Transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase or sale
orders actually placed for each account. Option commissions may be
relatively higher than those which would apply to direct purchases and
sales of portfolio securities.
As most purchases made by each fund are principal transactions at net
prices, each fund incurs little or no brokerage costs. Each of the funds
usually deals directly with the selling or purchasing principal or market
maker without incurring charges for the services of a broker on its behalf
unless it is determined that a better price or execution can be obtained
by utilizing the services of a broker. Purchases of portfolio securities
from underwriters include a commission or concession paid by the issuer
to the underwriter, and purchases from dealers include a spread between
the bid and asked prices. The funds seek to obtain prompt execution of
such orders at the most favorable net price.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates,
and investment research received for the commissions of those other
accounts may be useful both to the funds and one or more of such other
accounts. Such research, which may be supplied by a third party at the
instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of 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 for in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research in the same
manner as is permitted for agency transactions.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager by making available additional
views for consideration and comparisons, and enabling the Manager to
obtain market information for the valuation of securities held in the
portfolio of the funds or being considered for purchase. The Board of
Trustees, including the "Independent Trustees" (those Trustees of the
Trust who are not "interested persons," as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the Agreement, the Plans of Distribution described below or
in any agreements relating to those Plans), annually reviews information
furnished by the Manager as to the commissions paid to brokers furnishing
such services so that the Board may ascertain whether the amount of such
commissions was reasonably related to the value or the benefit of such
services.
Expense Ratios and Performance
The ratio of expenses to average net assets for the Fund for the fiscal
year ended September 30, 1994 was 2.13% (before expense reimbursement).
For the six months ended March 31, 1995 (unaudited) the ratio of expenses
to average net assets for the Fund was 2.19% (annualized). Further
details are set forth under "Fund Expenses" and "Financial Highlights" in
Strategic Income Fund's Prospectus dated May 26, 1995, which accompanies
this Proxy Statement and Prospectus, and in the Fund's Annual Report as
of September 30, 1994 and (unaudited) financial statement as of March 31,
1995, and Strategic Income Fund's Annual Report as of September 30, 1994
and (unaudited) financial statement as of March 31, 1995, which are
included in the Additional Statement. The standardized yield for the Fund
for the 30 day period ended March 31, 1995 was 8.15% and the average
annual return for the one year period ended March 31, 1995 and since
inception of the Fund (February 1, 1994) was <.11%> and <1.06%>,
respectively. For the 30 day period ended March 31, 1995, the
standardized yield for the Strategic Income's Class B shares was 8.40%.
For the one year period ended March 31, 1995, and since inception
(November 30, 1992) the average annual return on an investment in Class
B shares of Strategic Income Fund were <.39%> and 5.06%, respectively.
For the one year period ended March 31, 1995, and since inception of the
Fund (February, 1994), the average annual return at net asset value was
<.117%> and <1.06%>. For the one year period ended March 31, 1995 and
since inception of Strategic Income Fund (November 30, 1992), the average
annual return at net asset value was <.30%> and 6.16%.
Shareholder Services
The policies of the Fund and Strategic Income Fund with respect to minimum
initial investments and subsequent investments by its shareholders are
substantially the same. Both the Fund and Strategic Income Fund offer the
following privileges: (i) Rights of Accumulation, (ii) Letters of Intent,
(iii) reinvestment of dividends and distributions at net asset value, (iv)
net asset value purchases by certain individuals and entities, (v) Asset
Builder (automatic investment) Plans, (vi) Automatic Withdrawal and
Exchange Plans for shareholders who own shares of the fund valued at
$5,000 or more, (vii) reinvestment of net redemption proceeds at net asset
value within six months of a redemption, (viii) AccountLink and PhoneLink
arrangements, (ix) exchanges of shares for shares of certain other funds
at net asset value, and (x) telephone redemption and exchange privileges.
Shareholders may purchase shares through OppenheimerFunds AccountLink,
which links a shareholder account to an account at a bank or financial
institution and enables shareholders to send money electronically between
those accounts to perform a number of types of account transactions. This
includes the purchase of shares through the automated telephone system
(PhoneLink). Exchanges can also be made by telephone, automatically
through PhoneLink. After AccountLink privileges have been established
with a bank account, shares may be purchased by telephone up to $100,000.
Shares of either Fund may be exchanged only for Class C shares of other
OppenheimerFunds although the number of Funds offering Class C shares is
limited. Shareholders of the funds may redeem their shares by written
request or by telephone request in an amount up to $50,000 in any seven-
day period. Shareholders may arrange to have share redemption proceeds
wired to a pre-designated account at a U.S. bank or other financial
institution that is an ACH member ("AccountLink redemption"). There is
no dollar limit on telephone redemption proceeds sent to a bank account
when an AccountLink has been established. Shareholders may also redeem
shares automatically by telephone by using PhoneLink. Shareholders may
also have the Transfer Agent send redemption proceeds of $2,500 or more
by Federal Funds wire to a designated commercial bank, which is a member
of the Federal Reserve wire system. Shareholders of the funds may
reinvest redemption proceeds within six months of a redemption at net
asset value in Class A shares of the funds or any of numerous "Eligible
Funds" within the OppenheimerFunds complex. The Fund and Strategic Income
Fund may redeem accounts valued at less than $200 if the account has
fallen below such stated amount for reasons other than market value
fluctuations. Both funds offer Automatic Withdrawal and Automatic
Exchange Plans under certain conditions.
Rights of Shareholders
Shares of both the Fund and Strategic Income are sold without sales
charge, but if the shares are sold within 12 months of their purchase, a
contingent deferred sales charge will be imposed. Thereafter, shares of
the Fund and Strategic Income Fund are redeemable at their net asset
value. The shares of each such fund, including shareholders of each
class, entitle the holder to one vote per share on the election of
trustees and all other matters submitted to shareholders of the fund.
Shares of the Fund and the Class C shares of Strategic Income Fund which
Fund shareholders will receive in the Reorganization participate equally
in the fund's dividends and distributions and in the fund's net assets
upon liquidation. All shares of the Fund, and Class A, Class B, and Class
C shares, when issued, are fully paid and non-assessable. It is not
contemplated that the Trust, the Fund or Strategic Income Fund will hold
regular annual meetings of shareholders. Under the Investment Company
Act, shareholders of the Fund do not have rights of appraisal as a result
of the transactions contemplated by the Reorganization Agreement.
However, they have the right at any time prior to the consummation of such
transaction to redeem their shares at net asset value subject to the
contingent deferred sales charge. Shareholders of the Trust have the
right, under certain circumstances, to remove a Trustee and will be
assisted in communicating with other shareholders for such purpose.
Oppenheimer Strategic Funds Trust is organized as a Massachusetts Business
Trust and is governed principally by its Declaration of Trust and by-laws.
Although the Trust was originally organized with one series, in December
1993, the Trust was reorganized to become a multi-series business trust.
The Trust is an open-end, diversified management investment company, with
an unlimited number of authorized shares of beneficial interest. Each of
the two series of the Trust (the Fund and Strategic Income Fund) has its
own shares. The Board of Trustees has the power, without shareholder
approval, to establish and designate one or more series and to divide
unissued shares of the Fund or Strategic Income Fund into two or more
classes. The Board has done so with respect to its Oppenheimer Strategic
Income Fund series, which has three classes of shares, Class A, Class B
and Class C. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionately. Shares of a particular class vote together on matters
that affect that class. Shares are free transferable. Most Amendments
to the Declaration of Trust require the approval of a "majority" (as
defined in the Investment Company Act) of a fund's shareholders. Under
certain circumstances, shareholders of the funds may be held personally
liable as partners for the fund's obligations, and under the Declaration
of Trust such a shareholder is entitled to indemnification rights by the
funds; the risk of a shareholder incurring any such loss is limited to the
remote circumstances in which the fund is unable to meet its obligations.
As of May 12, 1995 there were _______________ shares of Strategic Fund
Class A and ______________ shares of Strategic Income Class B.
Management and Distribution Arrangements
The Manager, located at Two World Trade Center, New York, New York 10048-
0203, acts as the investment adviser for the Fund pursuant to an
investment advisory agreement with the Fund dated February 1, 1994 (the
"Fund Advisory Agreement") and acts as the investment adviser to Strategic
Income Fund pursuant to an investment advisory agreement with Strategic
Income Fund dated October 22, 1990 (the "Strategic Income Fund Advisory
Agreement"). The Fund Advisory Agreement has not been submitted to or
approved by the shareholders of the Fund. The Strategic Income Fund
Advisory Agreement was submitted to and approved by the shareholders of
Strategic Income Fund at a meeting held on October 1, 1990. The monthly
management fee payable to the Manager by each fund is set forth under
"Synopsis - Investment Advisory and Service Plan Fees." The 12b-1
Distribution and Service Plan fees paid by the Fund to the Distributor
(including the asset-based sales charge) and the 12b-1 Distribution and
Service Plan fees with respect to Class C shares (including the asset-
based sales charge) of Strategic Income Fund are set forth under "Synopsis
- - Investment Advisory and Service Plan Fees," and are more fully explained
below.
The terms and conditions of the investment advisory agreement for each
fund are the same.
Pursuant to the Fund Advisory Agreement and the Strategic Income Fund
Advisory Agreement, the Manager supervises the investment operations of
the funds and the composition of their portfolios and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities. The Investment Advisory Agreements
require the Manager to provide the Fund and Strategic Income Fund with
adequate office space, facilities and equipment and to provide and
supervise the activities of, all administrative and clerical personnel
required to provide effective administration for the funds, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of each fund.
For the fiscal year ended September 30, 1994 and the six months ended
March 31, 1995 (unaudited), the management fees paid by the Fund were
$__________ and $___________, respectively. Neither fund's advisory
agreement contains any expense limitation. However, independently of the
advisory agreement, the Manager has undertaken that the total expenses of
the Fund and Strategic Income Fund in any fiscal year (including the
management fee but exclusive of taxes, interest, brokerage commissions,
distribution plan payments and any extraordinary non-recurring expenses,
including litigation) shall not exceed the most stringent state
regulatory limitation on fund expenses applicable to the funds. At
present, that limitation is imposed by California and limits expenses
(with specified exclusions) to 2.5% of the first $30 million of average
annual net assets, 2% of the next $70 million and 1.5% of average annual
net assets in excess of $100 million. As a result of these expense
assumptions, the yield and total return of the Fund may have been higher
during that period than they otherwise would have been.
In addition, independently of the advisory agreement, during the fiscal
year ended September 30, 1994, the Manager previously had voluntarily
agreed to assume any expense of the Fund in a fiscal year to the extent
required to enable the Fund to accrue income, net of expenses, to allow
the Fund to pay dividends at the annualized rate of $.3525 per share.
After September 30, 1994, there has been no reimbursement by the Manager.
With respect to Strategic Income Fund, the Manager has undertaken to
assume the Fund's expenses (other than extraordinary non-recurring
expenses) to enable the Fund to pay a dividend of $0.438 per share per
annum. The Manager reserves the right to change or eliminate the expense
limitations at any time and there can be no assurance as to the duration
of the expense limitation by either fund. It is not expected that
Strategic Income Fund will maintain a fixed dividend rate for its Class
C shares and there can be no assurance as to the payment of any dividends
or the realization of any capital gains by either fund.
The Manager is controlled by OAC, a holding company owned in part by
senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company that also advises pension plans and investment companies. The
Manager has operated as an investment company adviser since 1959. The
Manager and its affiliates currently advise investment companies with
combined net assets aggregating over $____ billion as of March 31, 1995,
with more than ___ million shareholder accounts. Oppenheimer Shareholder
Services, a division of the Manager, acts as transfer and shareholder
servicing agent on an at-cost basis for the Fund and Strategic Income Fund
and for certain other open-end funds managed by the Manager and its
affiliates.
The Distributor, a wholly-owned subsidiary of the Manager, acts as the
general distributor of each fund's shares under a General Distributor's
Agreement for each fund dated February 1, 1994. For the fiscal year ended
September 30, 1994, the contingent deferred sales charge collected on Fund
shares totalled $18,270, all of which the Distributor retained.
Under the Distribution and Service Plans adopted by both the Fund and
Strategic Income Fund for its Class C shares, the Distributor is paid an
annual asset-based sales charge of 0.75% per year in addition to the 0.25%
annual service fee. The asset-based sales charge allows an investor to
buy shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell shares of the funds. The Distributor uses
the service fee to compensate dealers for providing personal services for
accounts that hold shares of the funds. The asset-based sales charge and
service fees increase expenses by up to 1% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class C shares have been sold by the dealer. After the
shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge during the first year
shares are outstanding to recoup the sales commissions it pays, the
advancing of service fee payments it makes, and its financing costs. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on shares of the Fund, or Class C shares of
Strategic Income, respectively, which have been outstanding for a year or
more.
Purchase of Additional Shares
Shares of the Fund and Class C shares of Strategic Income Fund are sold
without a sales charge. If shares of the Fund or Strategic Income are
redeemed within 12 months of buying them, a contingent deferred sales
charge of 1% may be imposed.
The contingent deferred sales charge on Class C shares of Strategic Income
Fund will only affect shareholders of the Fund to the extent that they
desire to make additional purchases of shares of Strategic Income Fund in
addition to the shares which they will receive as a result of the
Reorganization. The Class C shares to be issued under the Reorganization
Agreement will be issued by Strategic Income Fund at net asset value
without a sales charge. Future dividends and capital gain distributions
of Strategic Income Fund, if any, may be reinvested without sales charge.
Any Fund shareholder who is entitled to a reduced sales charge on
additional purchases by reason of a Letter of Intent or Rights of
Accumulation based upon holdings of shares of the Fund will continue to
be entitled to a reduced sales charge on any future purchase of shares of
Strategic Income Fund.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the approval of the Reorganization by the
shareholders of the Fund and the receipt of the other opinions and
certificates set forth in Sections 10 and 11 of the Reorganization
Agreement and the occurrence of the events described in those Sections.
Under the Reorganization Agreement, all the assets of the Fund, excluding
the Cash Reserve, will be delivered to Strategic Income Fund in exchange
for Class C shares of Strategic Income Fund. The Cash Reserve to be
retained by the Fund will be sufficient in the discretion of the Board for
the payment of the Fund's liabilities, and the Fund's expenses of
liquidation.
Assuming the shareholders of the Fund approve the Reorganization, the
actual exchange of assets is expected to take place on August 4, 1995 or
as soon thereafter as is practicable (the "Closing Date") on the basis of
net asset values as of the close of business on the business day preceding
the Closing Date (the "Valuation Date"). Under the Reorganization
Agreement, all redemptions of shares of the Fund shall be permanently
suspended on the Valuation Date; only redemption requests received in
proper form on or prior to the close of business on that date shall be
fulfilled by it; redemption requests received by the Fund after that date
will be treated as requests for redemptions of Class C shares of Strategic
Income Fund to be distributed to the shareholders requesting redemption.
The exchange of assets for shares will be done on the basis of the per
share net asset value of the Class C shares of Strategic Income Fund, and
the value of the assets of the Fund to be transferred as of the close of
business on the Valuation Date, in the manner used by Strategic Income
Fund in the valuation of assets. Strategic Income Fund is not assuming
any of the liabilities of the Fund, except for portfolio securities
purchased which have not settled and outstanding shareholder redemption
and dividend checks.
The net asset value of the shares transferred by Strategic Income Fund to
the Fund will be the same as the value of the assets of the portfolio
received by Strategic Income Fund. For example, if, on the Valuation
Date, the Fund were to have securities with a market value of $95,000 and
cash in the amount of $10,000 (of which $5,000 was to be retained by it
as the Cash Reserve), the value of the assets which would be transferred
to Strategic Income Fund would be $100,000. If the net asset value per
share of Strategic Income Fund were $10 per share at the close of business
on the Valuation Date, the number of shares to be issued would be 10,000
($100,000 divided by $10). These 10,000 shares of Strategic Income Fund
would be distributed to the former shareholders of the Fund. This example
is given for illustration purposes only and does not bear any relationship
to the dollar amounts or shares expected to be involved in the Reorganization.
After the Closing Date, the Fund will distribute on a pro rata basis to
its shareholders of record on the Valuation Date the Class C shares of
Strategic Income Fund received by the Fund at the closing, in liquidation
of the outstanding shares of the Fund, and the outstanding shares of the
Fund will be cancelled. To assist the Fund in this distribution,
Strategic Income Fund will, in accordance with a shareholder list supplied
by the Fund, cause its transfer agent to credit and confirm an appropriate
number of shares of Strategic Income Fund to each shareholder of the Fund.
Certificates for Class C shares of Strategic Income Fund will be issued
upon written request of a former shareholder of the Fund but only for
whole shares with fractional shares credited to the name of the
shareholder on the books of Strategic Income Fund. Former shareholders
of the Fund who wish certificates representing their shares of Strategic
Income Fund must, after receipt of their confirmations, make a written
request to OSS, P.O. Box 5270, Denver, Colorado 80217. Shareholders of
the Fund holding certificates representing their shares will not be
required to surrender their certificates to anyone in connection with the
Reorganization. After the Reorganization, however, it will be necessary
for such shareholders to surrender such certificates in order to redeem,
transfer or exchange any shares of Strategic Income Fund.
Under the Reorganization Agreement, within one year after the Closing
Date, the Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of the
Cash Reserve to Strategic Income Fund, if such remaining amount is not
material (as defined below) or (ii) distribute such remaining amount to
the shareholders of the Fund who were such on the Valuation Date. Such
remaining amount shall be deemed to be material if the amount to be
distributed, after deducting the estimated expenses of the distribution,
equals or exceeds one cent per share of the number of Fund shares
outstanding on the Valuation Date. Within one year after the Closing
Date, the Fund will complete its liquidation.
Under the Reorganization Agreement, either the Fund or Strategic Income
Fund may abandon and terminate the Reorganization Agreement without
liability if the other party breaches any material provision of the
Reorganization Agreement or, if prior to the closing, any legal,
administrative or other proceeding shall be instituted or threatened (i)
seeking to restrain or otherwise prohibit the transactions contemplated
by the Reorganization Agreement and/or (ii) asserting a material liability
of either party, which proceeding or liability has not been terminated or
the threat thereto removed prior to the Closing Date.
In the event that the Reorganization Agreement is not consummated for any
reason, the Board will consider and may submit to the shareholders other
alternatives.
MISCELLANEOUS
Additional Information
Financial Information
The Reorganization will be accounted for by the surviving fund in its
financial statements similar to a pooling. Further financial information
as to the Fund is contained in its current Prospectus, which is available
without charge from Oppenheimer Shareholder Services, the Transfer Agent,
P.O. Box 5270, Denver, Colorado 80217, and is incorporated herein, and in
its audited financial statements as of September 30, 1994, and unaudited
financial statements as of March 31, 1995, which are included in the
Additional Statement. Financial information for Strategic Income Fund is
contained in its current Prospectus accompanying this Proxy Statement and
Prospectus and incorporated herein, and in its audited financial
statements as of September 30, 1994 and unaudited financial statements as
of March 31, 1995, which are included in the Additional Statement.
Public Information
Additional information about the Fund and Strategic Income Fund is
available, as applicable, in the following documents which are
incorporated herein by reference: (i) Strategic Income Fund's Prospectus
dated May 26, 1995, accompanying this Proxy Statement and Prospectus and
incorporated herein; (ii) the Fund's Prospectus dated May 26, 1995, which
may be obtained without charge by writing to OSS, P.O. Box 5270, Denver,
Colorado 80217; (iii) Strategic Income Fund's Annual Report as of
September 30, 1994 and unaudited financial statements as of March 31,
1995, which may be obtained without charge by writing to OSS at the
address indicated above; and (iv) the Fund's Annual Report as of September
30, 1994 and unaudited financial statements as of March 31, 1995, which
may be obtained without charge by writing to OSS at the address indicated
above. All of the foregoing documents may be obtained by calling the
toll-free number on the cover of this Proxy Statement and Prospectus.
Additional information about the following matters is contained in the
Additional Statement, which incorporates by reference the Strategic Income
Fund Statement of Additional Information, and the Fund's Prospectus dated
May 26, 1995, and Statement of Additional Information dated May 26, 1995:
the organization and operation of Strategic Income Fund and the Fund; more
information on investment policies, practices and risks; information about
the Fund's and Strategic Income Fund's Boards of Trustees and their
responsibilities; a further description of the services provided by
Strategic Income Fund's and the Fund's investment adviser, distributor,
and transfer and shareholder servicing agent; dividend policies; tax
matters; an explanation of the method of determining the offering price
of the shares and/or contingent deferred sales charges, as applicable of
Class A, B and C shares of Strategic Income Fund and Class C shares of the
Fund; purchase, redemption and exchange programs; and distribution
arrangements.
The Fund and Strategic Income Fund are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, file reports and other information with the SEC.
Proxy material, reports and other information about the Fund and Strategic
Income Fund which are of public record can be inspected and copied at
public reference facilities maintained by the SEC in Washington, D.C. and
certain of its regional offices, and copies of such materials can be
obtained at prescribed rates from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not
known at the time of the solicitation may come before the Meeting, the
proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote this proxy in accordance with their
judgment on such matters.
By Order of the Board of Directors
George C. Bowen, Secretary
June 1, 1995 230
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
June 1, 1995 by and between Oppenheimer Strategic Diversified Income Fund
(the "Fund"), a Massachusetts business trust, and Oppenheimer Strategic
Income Fund ("Strategic Income Fund"), a Massachusetts business trust.
W I T N E S S E T H:
WHEREAS, the parties are each open-end investment companies of the
management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), of the Fund through the acquisition by Strategic
Income Fund of substantially all of the assets of the Fund in exchange for
the voting shares of beneficial interest ("shares") of Strategic Income
Fund and the assumption by Strategic Income Fund of certain liabilities
of the Fund, which shares of Strategic Income Fund are thereafter to be
distributed by the Fund pro rata to its shareholders in complete
liquidation of the Fund and complete cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt a Plan of Reorganization pursuant
to Section 368(a)(1) of the Code as follows: The reorganization will be
comprised of the acquisition by Strategic Income Fund of substantially all
of the properties and assets of the Fund in exchange for shares of
Strategic Income Fund and the assumption by Strategic Income Fund of
certain liabilities of the Fund, followed by the distribution of such
Strategic Income Fund shares to the shareholders of the Fund in exchange
for their shares of the Fund, all upon and subject to the terms of the
Agreement hereinafter set forth.
The share transfer books of the Fund will be permanently closed at
the close of business on the Valuation Date (as hereinafter defined) and
only redemption requests received in proper form on or prior to the close
of business on the Valuation Date shall be fulfilled by the Fund;
redemption requests received by the Fund after that date shall be treated
as requests for the redemption of the shares of Strategic Income Fund to
be distributed to the shareholder in question as provided in Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets
of the Fund on that date, excluding a cash reserve (the "Cash Reserve")
to be retained by the Fund sufficient in its discretion for the payment
of the expenses of the Fund's dissolution and its liabilities, but not in
excess of the amount contemplated by Section 10E, shall be delivered as
provided in Section 8 to Strategic Income Fund, in exchange for and
against delivery to the Fund on the Closing Date of a number of shares of
Strategic Income Fund having an aggregate net asset value equal to the
value of the assets of the Fund so transferred and delivered.
3. The net asset value of shares of Strategic Income Fund and the
value of the assets of the Fund to be transferred shall in each case be
determined as of the close of business of the New York Stock Exchange on
the Valuation Date. The computation of the net asset value of the shares
of Strategic Income Fund and the Fund shall be done in the manner used by
Strategic Income Fund and the Fund, respectively, in the computation of
such net asset value per share as set forth in their respective
prospectuses. The methods used by Strategic Income Fund in such
computation shall be applied to the valuation of the assets of the Fund
to be transferred to Strategic Income Fund.
The Fund shall declare and pay, immediately prior to the Valuation
Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the Fund's
shareholders all of the Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without
regard to any dividends paid) and all of its net capital gain, if any,
realized in taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry-forward).
4. The closing (the "Closing") shall be at the office of Oppenheimer
Management Corporation (the "Agent"), Two World Trade Center, Suite 3400,
New York, New York 10048, at 4:00 P.M. New York time on
__________________, 1995, or at such other time or place as the parties
may designate or as provided below (the "Closing Date"). The business day
preceding the Closing Date is herein referred to as the "Valuation Date."
In the event that on the Valuation Date either party has, pursuant
to the Investment Company Act of 1940, as amended (the "Act"), or any
rule, regulation or order thereunder, suspended the redemption of its
shares or postponed payment therefor, the Closing Date shall be postponed
until the first business day after the date when both parties have ceased
such suspension or postponement; provided, however, that if such
suspension shall continue for a period of 60 days beyond the Valuation
Date, then the other party to the Agreement shall be permitted to
terminate the Agreement without liability to either party for such
termination.
5. As soon as practicable after the closing, the Fund shall
distribute on a pro rata basis to the shareholders of the Fund on the
Valuation Date the shares of Strategic Income Fund received by the Fund
on the Closing Date in exchange for the assets of the Fund in complete
liquidation of the Fund; for the purpose of the distribution by the Fund
of such shares of Strategic Income Fund to its shareholders, Strategic
Income Fund will promptly cause its transfer agent to: (a) credit an
appropriate number of shares of Strategic Income Fund on the books of
Strategic Income Fund to each shareholder of the Fund in accordance with
a list (the "Shareholder List") of its shareholders received from the
Fund; and (b) confirm an appropriate number of shares of Strategic Income
Fund to each shareholder of the Fund; certificates for shares of Strategic
Income Fund will be issued upon written request of a former shareholder
of the Fund but only for whole shares with fractional shares credited to
the name of the shareholder on the books of Strategic Income Fund.
The Shareholder List shall indicate, as of the close of business on
the Valuation Date, the name and address of each shareholder of the Fund,
indicating his or her share balance. The Fund agrees to supply the
Shareholder List to Strategic Income Fund not later than the Closing Date.
Shareholders of the Fund holding certificates representing their shares
shall not be required to surrender their certificates to anyone in
connection with the reorganization. After the Closing Date, however, it
will be necessary for such shareholders to surrender their certificates
in order to redeem, transfer or pledge the shares of Strategic Income Fund
which they received.
6. Within one year after the Closing Date, the Fund shall (a) either
pay or make provision for payment of all of its liabilities and taxes,
and (b) either (i) transfer any remaining amount of the Cash Reserve to
Strategic Income Fund, if such remaining amount (as reduced by the
estimated cost of distributing it to shareholders) is not material (as
defined below) or (ii) distribute such remaining amount to the
shareholders of the Fund on the Valuation Date. Such remaining amount
shall be deemed to be material if the amount to be distributed, after
deduction of the estimated expenses of the distribution, equals or exceeds
one cent per share of the Fund outstanding on the Valuation Date.
7. Prior to the Closing Date, there shall be coordination between
the parties as to their respective portfolios so that, after the closing,
Strategic Income Fund will be in compliance with all of its investment
policies and restrictions. At the Closing, the Fund shall deliver to
Strategic Income Fund two copies of a list setting forth the securities
then owned by the Fund. Promptly after the Closing, the Fund shall
provide Strategic Income Fund a list setting forth the respective federal
income tax bases thereof.
8. Portfolio securities or written evidence acceptable to Strategic
Income Fund of record ownership thereof by The Depository Trust Company
or through the Federal Reserve Book Entry System or any other depository
approved by the Fund pursuant to Rule 17f-4 under the Act shall be
endorsed and delivered, or transferred by appropriate transfer or
assignment documents, by the Fund on the Closing Date to Strategic Income
Fund, or at its direction, to its custodian bank, in proper form for
transfer in such condition as to constitute good delivery thereof in
accordance with the custom of brokers and shall be accompanied by all
necessary state transfer stamps, if any. The cash delivered shall be in
the form of certified or bank cashiers' checks or by bank wire or intra-
bank transfer payable to the order of Strategic Income Fund for the
account of Strategic Income Fund. Shares of Strategic Income Fund
representing the number of shares of Strategic Income Fund being delivered
against the assets of the Fund, registered in the name of the Fund, shall
be transferred to the Fund on the Closing Date. Such shares shall
thereupon be assigned by the Fund to its shareholders so that the shares
of Strategic Income Fund may be distributed as provided in Section 5.
If, at the Closing Date, the Fund is unable to make delivery under
this Section 8 to Strategic Income Fund of any of its portfolio securities
or cash for the reason that any of such securities purchased by the Fund,
or the cash proceeds of a sale of portfolio securities, prior to the
Closing Date have not yet been delivered to it or the Fund's custodian,
then the delivery requirements of this Section 8 with respect to said
undelivered securities or cash will be waived and the Fund will deliver
to Strategic Income Fund by or on the Closing Date and with respect to
said undelivered securities or cash executed copies of an agreement or
agreements of assignment in a form reasonably satisfactory to Strategic
Income Fund, together with such other documents, including a due bill or
due bills and brokers' confirmation slips as may reasonably be required
by Strategic Income Fund.
9. Strategic Income Fund shall not assume the liabilities (except
for portfolio securities purchased which have not settled and for
shareholder redemption and dividend checks outstanding) of the Fund, but
the Fund will, nevertheless, use its best efforts to discharge all known
liabilities, so far as may be possible, prior to the Closing Date. The
cost of printing and mailing the proxies and proxy statements will be
borne by the Fund. The Fund and Strategic Income Fund will bear the cost
of their respective tax opinion. Any documents such as existing
prospectuses or annual reports that are included in that mailing will be
a cost of the fund issuing the document. Any other out-of-pocket expenses
of Strategic Income Fund and the Fund associated with this reorganization,
including legal, accounting and transfer agent expenses, will be borne by
the Fund and Strategic Income Fund, respectively, in the amounts so
incurred by each.
10. The obligations of Strategic Income Fund hereunder shall be
subject to the following conditions:
A. The Board of Trustees of the Trust shall have authorized the
execution of the Agreement, and the shareholders of the Fund shall have
approved the Agreement and the transactions contemplated thereby, and the
Fund shall have furnished to Strategic Income Fund copies of resolutions
to that effect certified by the Secretary or an Assistant Secretary of the
Fund; such shareholder approval shall have been by the affirmative vote
of "a majority of the outstanding voting securities" (as defined in the
Act) of the Fund at a meeting for which proxies have been solicited by the
Proxy Statement and Prospectus (as hereinafter defined).
B. Strategic Income Fund shall have received an opinion dated the
Closing Date of counsel to the Fund, to the effect that (i) the Fund is
a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with full powers to
carry on its business as then being conducted and to enter into and
perform the Agreement; and (ii) that all action necessary to make the
Agreement, according to its terms, valid, binding and enforceable on the
Fund and to authorize effectively the transactions contemplated by the
Agreement have been taken by the Fund.
C. The representations and warranties of the Fund contained herein
shall be true and correct at and as of the Closing Date, and Strategic
Income Fund shall have been furnished with a certificate of the President,
or a Vice President, or the Secretary or the Assistant Secretary or the
Treasurer of the Fund, dated the Closing Date, to that effect.
D. On the Closing Date, the Fund shall have furnished to Strategic
Income Fund a certificate of the Treasurer or Assistant Treasurer of the
Fund as to the amount of the capital loss carry-over and net unrealized
appreciation or depreciation, if any, with respect to the Fund as of the
Closing Date.
E. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close of
business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by Strategic Funds
Trust under the Securities Act of 1933, as amended (the "1933 Act"),
containing a preliminary form of the Proxy Statement and Prospectus, shall
have become effective under the 1933 Act not later than May 26, 1995.
G. On the Closing Date, Strategic Income Fund shall have received
a letter of Andrew J. Donohue or other senior executive officer of
Oppenheimer Management Corporation acceptable to Strategic Income Fund,
stating that nothing has come to his or her attention which in his or her
judgment would indicate that as of the Closing Date there were any
material actual or contingent liabilities of the Fund arising out of
litigation brought against the Fund or claims asserted against it, or
pending or to the best of his or her knowledge threatened claims or
litigation not reflected in or apparent from the most recent audited
financial statements and footnotes thereto of the Fund delivered to
Strategic Income Fund. Such letter may also include such additional
statements relating to the scope of the review conducted by such person
and his or her responsibilities and liabilities as are not unreasonable
under the circumstances.
H. Strategic Income Fund shall have received an opinion, dated the
Closing Date, of Deloitte & Touche LLP, to the same effect as the opinion
contemplated by Section 11.E. of the Agreement.
I. Strategic Income Fund shall have received at the closing all of
the assets of the Fund to be conveyed hereunder, which assets shall be
free and clear of all liens, encumbrances, security interests,
restrictions and limitations whatsoever.
11. The obligations of the Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of Strategic Income Fund shall have
authorized the execution of the Agreement, and the transactions
contemplated thereby, and Strategic Income Fund shall have furnished to
the Fund copies of resolutions to that effect certified by the Secretary
or an Assistant Secretary of Strategic Income Fund.
B. The Fund's shareholders shall have approved the Agreement and the
transactions contemplated hereby, by an affirmative vote of "a majority
of the outstanding voting securities" (as defined in the Act) of the Fund,
and the Fund shall have furnished Strategic Income Fund copies of
resolutions to that effect certified by the Secretary or an Assistant
Secretary of the Fund.
C. The Fund shall have received an opinion dated the Closing Date
of counsel to Strategic Income Fund, to the effect that (i) Strategic
Income Fund is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts with
full powers to carry on its business as then being conducted and to enter
into and perform the Agreement; (ii) all action necessary to make the
Agreement, according to its terms, valid, binding and enforceable upon
Strategic Income Fund and to authorize effectively the transactions
contemplated by the Agreement have been taken by Strategic Income Fund,
and (iii) the shares of Strategic Income Fund to be issued hereunder are
duly authorized and when issued will be validly issued, fully-paid and
non-assessable, except as set forth in Strategic Income Fund's then
current Prospectus and Statement of Additional Information.
D. The representations and warranties of Strategic Income Fund
contained herein shall be true and correct at and as of the Closing Date,
and the Fund shall have been furnished with a certificate of the
President, a Vice President or the Secretary or an Assistant Secretary or
the Treasurer of Strategic Income Fund to that effect dated the Closing
Date.
E. The Fund shall have received an opinion of Deloitte & Touche LLP
to the effect that the Federal tax consequences of the transaction, if
carried out in the manner outlined in this Plan of Reorganization and in
accordance with (i) the Fund's representation that there is no plan or
intention by any Fund shareholder who owns 5% or more of the Fund's
outstanding shares, and, to the Fund's best knowledge, there is no plan
or intention on the part of the remaining Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Strategic Income Fund
shares received in the transaction that would reduce the Fund
shareholders' ownership of Strategic Income Fund shares to a number of
shares having a value, as of the Closing Date, of less than 50% of the
value of all of the formerly outstanding Fund shares as of the same date,
and (ii) the representation by each of the Fund and Strategic Income Fund
that, as of the Closing Date, the Fund and Strategic Income Fund will
qualify as regulated investment companies or will meet the diversification
test of Section 368(a)(2)(F)(ii) of the Code, will be as follows:
1. The transactions contemplated by the Agreement will qualify
as a tax-free "reorganization" within the meaning of Section 368(a)(1) of
the Code, and under the regulations promulgated thereunder.
2. The Fund and Strategic Income Fund will each qualify as a
"party to a reorganization" within the meaning of Section 368(b)(2) of the
Code.
3. No gain or loss will be recognized by the shareholders of
the Fund upon the distribution of Class C shares of beneficial interest
in Strategic Income Fund to the shareholders of the Fund pursuant to
Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by the Fund by reason of the transfer of substantially all its
assets in exchange for shares of Strategic Income Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Strategic Income Fund by reason of the transfer of
substantially all the Fund's assets in exchange for Class C shares of
Strategic Income Fund and Strategic Income Fund's assumption of certain
liabilities of the Fund.
6. The shareholders of the Fund will have the same tax basis
and holding period for the Class C shares of beneficial interest in
Strategic Income Fund that they receive as they had for the Fund shares
that they previously held, pursuant to Section 358(a) and 1223(1),
respectively, of the Code.
7. The securities transferred by the Fund to Strategic Income
Fund will have the same tax basis and holding period in the hands of
Strategic Income Fund as they had for the Fund, pursuant to Section 362(b)
and 1223(1), respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close of
business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by Oppenheimer
Strategic Funds Trust under the 1933 Act, containing a preliminary form
of the Proxy Statement and Prospectus, shall have become effective under
the 1933 Act not later than May 26, 1995.
H. On the Closing Date, the Fund shall have received a letter of
Andrew J. Donohue or other senior executive officer of Oppenheimer
Management Corporation acceptable to the Fund, stating that nothing has
come to his or her attention which in his or her judgment would indicate
that as of the Closing Date there were any material actual or contingent
liabilities of Strategic Income Fund arising out of litigation brought
against Strategic Income Fund or claims asserted against it, or pending
or, to the best of his or her knowledge, threatened claims or litigation
not reflected in or apparent by the most recent audited financial
statements and footnotes thereto of Strategic Income Fund delivered to the
Fund. Such letter may also include such additional statements relating
to the scope of the review conducted by such person and his or her
responsibilities and liabilities as are not unreasonable under the
circumstances.
I. The Fund shall acknowledge receipt of the shares of Strategic
Income Fund.
12. The Fund hereby represents and warrants that:
A. The financial statements of the Fund as at September 30, 1994
(audited) and March 31, 1995 (unaudited) heretofore furnished to Strategic
Income Fund, present fairly the financial position, results of operations,
and changes in net assets of the Fund as of that date, in conformity with
generally accepted accounting principles applied on a basis consistent
with the preceding year; and that from September 30, 1994 through the date
hereof there have not been, and through the Closing Date there will not
be, any material adverse change in the business or financial condition of
the Fund, it being agreed that a decrease in the size of the Fund due to
a diminution in the value of its portfolio and/or redemption of its shares
shall not be considered a material adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated thereby by the Fund's shareholders, the Fund has authority
to transfer all of the assets of the Fund to be conveyed hereunder free
and clear of all liens, encumbrances, security interests, restrictions and
limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in the
Fund's Registration Statement under the 1933 Act, as amended, is true,
correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement, as
amended, was, as of the date of the filing of the last Post-Effective
Amendment, true, correct and complete, conformed to the requirements of
the 1933 Act and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
D. There is no material contingent liability of the Fund and no
material claim and no material legal, administrative or other proceedings
pending or, to the knowledge of the Fund, threatened against the Fund, not
reflected in such Prospectus;
E. There are no material contracts outstanding to which the Fund is
a party other than those ordinary in the conduct of its business;
F. The Fund is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts; and
has all necessary and material Federal and state authorizations to own all
of its assets and to carry on its business as now being conducted; and the
Fund is duly registered under the Act and such registration has not been
rescinded or revoked and is in full force and effect;
G. All Federal and other tax returns and reports of the Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of the Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of the Fund ended
September 30, 1994 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due; and
H. The Fund has elected to be treated as a regulated investment
company and, for each fiscal year of its operations, the Fund has met the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and the Fund intends to meet such
requirements with respect to its current taxable year.
13. Strategic Income Fund hereby represents and warrants that:
A. The financial statements of Strategic Income Fund as at September
30, 1994 (audited) and March 31, 1995 (unaudited) heretofore furnished to
the Fund, present fairly the financial position, results of operations,
and changes in net assets of Strategic Income Fund, as of that date, in
conformity with generally accepted accounting principles applied on a
basis consistent with the preceding year; and that from September 30, 1993
through the date hereof there have not been, and through the Closing Date
there will not be, any material adverse changes in the business or
financial condition of Strategic Income Fund, it being understood that a
decrease in the size of Strategic Income Fund due to a diminution in the
value of its portfolio and/or redemption of its shares shall not be
considered a material or adverse change;
B. The Prospectus, as amended and supplemented, contained in
Oppenheimer Strategic Funds Trust's Registration Statement under the 1933
Act, is true, correct and complete, conforms to the requirements of the
1933 Act and does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Registration
Statement, as amended, was, as of the date of the filing of the last Post-
Effective Amendment, true, correct and complete, conformed to the
requirements of the 1933 Act and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
C. There is no material contingent liability of Strategic Income
Fund and no material claim and no material legal, administrative or other
proceedings pending or, to the knowledge of Strategic Income Fund,
threatened against Strategic Income Fund, not reflected in such
Prospectus;
D. There are no material contracts outstanding to which Strategic
Income Fund is a party other than those ordinary in the conduct of its
business;
E. Strategic Income Fund is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts; has all necessary and material Federal and state
authorizations to own all its properties and assets and to carry on its
business as now being conducted; the shares of Strategic Income Fund which
it issues to the Fund pursuant to the Agreement will be duly authorized,
validly issued, fully-paid and non-assessable, except as otherwise set
forth in Strategic Income Fund's Registration Statement; and will conform
to the description thereof contained in Strategic Income Fund's
Registration Statement, will be duly registered under the 1933 Act and in
the states where registration is required; and Strategic Income Fund is
duly registered under the Act and such registration has not been revoked
or rescinded and is in full force and effect;
F. All Federal and other tax returns and reports of Strategic Income
Fund required by law to be filed have been filed, and all Federal and
other taxes shown due on said returns and reports have been paid or
provision shall have been made for the payment thereof and to the best of
the knowledge of Strategic Income Fund no such return is currently under
audit and no assessment has been asserted with respect to such returns and
to the extent such tax returns with respect to the taxable year of
Strategic Income Fund ended September 30, 1993 have not been filed, such
returns will be filed when required and the amount of tax shown as due
thereon shall be paid when due;
G. Strategic Income Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, Strategic
Income Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and
Strategic Income Fund intends to meet such requirements with respect to
its current taxable year;
H. Strategic Income Fund has no plan or intention (i) to dispose of
any of the assets transferred by the Fund, other than in the ordinary
course of business, or (ii) to redeem or reacquire any of the shares
issued by it in the reorganization other than pursuant to valid requests
of shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, Strategic Income Fund intends to operate its business in a
substantially unchanged manner.
14. Each party hereby represents to the other that no broker or
finder has been employed by it with respect to the Agreement or the
transactions contemplated hereby. Each party also represents and warrants
to the other that the information concerning it in the Proxy Statement and
Prospectus will not as of its date contain any untrue statement of a
material fact or omit to state a fact necessary to make the statements
concerning it therein not misleading and that the financial statements
concerning it will present the information shown fairly in accordance with
generally accepted accounting principles applied on a basis consistent
with the preceding year. Each party also represents and warrants to the
other that the Agreement is valid, binding and enforceable in accordance
with its terms and that the execution, delivery and performance of the
Agreement will not result in any violation of, or be in conflict with, any
provision of any charter, by-laws, contract, agreement, judgment, decree
or order to which it is subject or to which it is a party. Strategic
Income Fund hereby represents to and covenants with the Fund that, if the
reorganization becomes effective, Strategic Income Fund will treat each
shareholder of the Fund who received any of Strategic Income Fund's shares
as a result of the reorganization as having made the minimum initial
purchase of shares of Strategic Income Fund received by such shareholder
for the purpose of making additional investments in shares of Strategic
Income Fund, regardless of the value of the shares of Strategic Income
Fund received.
15. Strategic Income Fund agrees that it will prepare and file a
Registration Statement on Form N-14 under the 1933 Act which shall contain
a preliminary form of proxy statement and prospectus contemplated by Rule
145 under the 1933 Act. The final form of such proxy statement and
prospectus is referred to in the Agreement as the "Proxy Statement and
Prospectus." Each party agrees that it will use its best efforts to have
such Registration Statement declared effective and to supply such
information concerning itself for inclusion in the Proxy Statement and
Prospectus as may be necessary or desirable in this connection. Strategic
Income Fund covenants and agrees to deregister as an investment company
under the Investment Company Act of 1940, as amended, as soon as
practicable and, thereafter, to cause the cancellation of its outstanding
shares.
16. The obligations of the parties under the Agreement shall be
subject to the right of either party to abandon and terminate the
Agreement without liability if the other party breaches any material
provision of the Agreement or if any material legal, administrative or
other proceeding shall be instituted or threatened between the date of the
Agreement and the Closing Date (i) seeking to restrain or otherwise
prohibit the transactions contemplated hereby and/or (ii) asserting a
material liability of either party, which proceeding has not been
terminated or the threat thereof removed prior to the Closing Date.
17. The Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all taken together shall constitute
one Agreement. The rights and obligations of each party pursuant to the
Agreement shall not be assignable.
18. All prior or contemporaneous agreements and representations are
merged into the Agreement, which constitutes the entire contract between
the parties hereto. No amendment or modification hereof shall be of any
force and effect unless in writing and signed by the parties and no party
shall be deemed to have waived any provision herein for its benefit unless
it executes a written acknowledgement of such waiver.
19. The Fund understands that the obligations of Strategic Income
Fund under the Agreement are not binding upon any Trustee or shareholder
of Strategic Income Fund personally, but bind only Strategic Income Fund
and Strategic Income Fund's property. The Fund represents that it has
notice of the provisions of the Declaration of Trust of Strategic Income
Fund disclaiming shareholder and Trustee liability for acts or obligations
of Strategic Income Fund.
20. Strategic Income Fund understands that the obligations of the
Fund under the Agreement are not binding upon any Trustee or shareholder
of the Fund personally, but bind only the Fund and the Fund's property.
Strategic Income Fund represents that it has notice of the provisions of
the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to
be executed and attested by its officers thereunto duly authorized on the
date first set forth above.
Attest: OPPENHEIMER STRATEGIC FUNDS TRUST
on behalf of Oppenheimer Strategic
Diversified Income Fund
__________________________ By:__________________________________
Robert G. Zack George C. Bowen
Assistant Secretary Treasurer
Attest: OPPENHEIMER STRATEGIC FUNDS TRUST
on behalf of Oppenheimer Strategic
Income Fund
__________________________ By:_________________________________
Robert G. Zack Andrew J. Donohue
Assistant Secretary Vice President
<PAGE>
Preliminary Copy - For the Information of the Securities and Exchange
Commission Only
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD JULY 12, 1995
The undersigned shareholder of Oppenheimer Strategic Diversified Income
Fund (the "Fund"), does hereby appoint George C. Bowen, Andrew J. Donohue,
Robert Bishop and Scott Farrar, and each of them, as attorneys-in-fact and
proxies of the undersigned, with full power of substitution, to attend the
Special Meeting of Shareholders of the Fund to be held on July 12, 1995,
at 3410 South Galena Street, Denver, Colorado at 10:00 A.M., Denver time,
and at all adjournments thereof, and to vote the shares held in the name
of the undersigned on the record date for said meeting on the Proposal
specified on the reverse side. Said attorneys-in-fact shall vote in
accordance with their best judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A VOTE
FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL
BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS
INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization between the Fund
and Oppenheimer Strategic Income Fund, and the transactions
contemplated thereby, including the transfer of substantially all the
assets of the Fund, which is a series of Oppenheimer Strategic Funds
Trust (the "Trust"), having one class of shares, designated as Class
C, in exchange for Class C shares of Strategic Income Fund, which is
also a series of the Trust and the distribution of Class C shares to
the shareholders of the Fund in complete liquidation of the Fund, the
cancellation of the outstanding shares of the Fund and its
termination as a series of the Trust.
FOR____ AGAINST____ ABSTAIN____
Dated: ___________________________, 1995
(Month) (Day)
___________________________________
Signature(s)
___________________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.
230
<PAGE>
OPPENHEIMER STRATEGIC FUNDS TRUST
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
May __, 1995
___________________________________
This Statement of Additional Information of Oppenheimer Strategic
Funds Trust consists of this cover page and the following documents:
1. Prospectus of Oppenheimer Strategic Income Fund dated May 26, 1995,
which has been previously filed and is incorporated herein by reference.
2. Statement of Additional Information of Oppenheimer Strategic Income
Fund dated May 26, 1995, which has been previously filed and is
incorporated herein by reference.
3. Prospectus of Oppenheimer Strategic Diversified Income Fund dated May
26, 1995, which has been previously filed and is incorporated herein by
reference.
4. Statement of Additional Information of Oppenheimer Strategic
Diversified Income Fund dated May 26, 1995, which has been previously
filed and is incorporated herein by reference.
5. Strategic Income Fund's Annual Report as of September 30, 1994, which
has been previously filed and is incorporated herein by reference.
6. Strategic Income Fund's Financial Statements (unaudited) as of March
31, 1995, which has been previously filed and is incorporated herein by
reference.
7. Strategic Diversified Income Fund's Annual Report as of September 30,
1994, which has been previously filed and is incorporated herein by
reference.
8. Strategic Diversified Income Fund's Financial Statements (unaudited)
as of March 31, 1995, which has been previously filed and is incorporated
herein by reference.
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read in
conjunction with the Proxy Statement and Prospectus, which may be obtained
by written request to Oppenheimer Shareholder Services ("OSS"), P.O. Box
5270, Denver, Colorado 80217, or by calling OSS at the toll-free number
shown above.
<PAGE>
OPPENHEIMER STRATEGIC FUNDS TRUST
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article Ninth of Registrant's Agreement and
Declaration of Trust filed as Exhibit 24(b)(1) to Registrant's
Registration Statement and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 16. Exhibits
(1) Amended and Restated Declaration of Trust dated March 16, 1995:
Filed with Registrant's Post-Effective Amendment No. 10, 3/26/95, and
incorporated herein by reference.
(2) By-Laws as amended through 6/26/90: Filed with Post-Effective
Amendment No. 9, 1/31/95, and incorporated herein by reference.
(3) Not applicable.
(4) Agreement and Plan of Reorganization: See Exhibit A to Part A
of this Registration Statement.
(5) (i) OSIF Specimen Class A Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 8, 2/1/94,
and incorporated herein by reference.
(ii) OSIF Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 8, 2/1/94,
and incorporated herein by reference.
(iii) OSIF Specimen Class C Share Certificate: Previously filed
with Registrant's Post-Effective Amendment No. 10,
3/26/95, and incorporated herein by reference.
(iv) OSDIF Specimen Class C Share Certificate: Previously filed
with Registrant's Post-Effective Amendment No. 8,
2/1/94, and incorporated herein by reference.
(6) (i) Investment Advisory Agreement for OSIF dated 10/22/90:
Filed with Registrant's Post-Effective Amendment No.
9, 1/31/95, and incorporated herein by reference.
(ii) Investment Advisory Agreement for OSDIF dated 2/1/94: Filed
with Registrant's Post-Effective Amendment No. 8,
2/1/94, and incorporated herein by reference.
(7) (i) (a) General Distributor's Agreement for OSIF dated
10/13/92: Filed with Post-Effective Amendment No.
9, 1/31/95, and incorporated herein by reference.
(b) General Distributor's Agreement for OSDIF dated 2/1/94:
Filed with Registrant's Post-Effective Amendment
No. 8, 2/1/94, and incorporated herein by
reference.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No.
14 to the Registration Statement of Oppenheimer
Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No.
14 to the Registration Statement of Oppenheimer
Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement - Filed with Post-Effective Amendment
No. 14 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-
17850), 9/30/94, and incorporated herein by
reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities, Inc.
dated 10/1/86: Previously filed with Post-
Effective Amendment No. 25 to the Registration
Statement of Oppenheimer Special Fund (Reg. No.
2-45272), 11/1/86, refiled with Post- Effective
Amendment No. 45 of Oppenheimer Special Fund (Reg.
No. 2-45272), 8/22/94, pursuant to Item 102 of
Regulation S-T, and incorporated herein by
reference.
(8) (i) Form of prototype Standardized and Non-
Standardized Profit-Sharing Plans and Money
Purchase Pension Plans for self-employed persons
and corporations: Filed with Post-Effective
Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund (Reg. No. 33-
6614), 1/20/95, and incorporated herein by
reference.
(ii) Form of Individual Retirement Account Trust
Agreement: Filed with Post-Effective Amendment No.
21, of Oppenheimer U.S. Government Trust (Reg. No.
2-76645), 8/25/93, and incorporated herein by
reference.
(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-
exempt organizations: Previously filed with Post-
Effective Amendment No. 47 of Oppenheimer Growth
Fund (File No. 2-45272), 10/21/94, and
incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA:
Previously filed with Post-Effective Amendment No.
36 to the Registration Statement of Oppenheimer
Equity Income Fund (Reg. No. 2-33043), 10/23/91,
refiled with Post-Effective Amendment No. 42 to
the Registration Statement of Oppenheimer Equity
Income Fund (Reg. No. 2-33043), 10/28/94, pursuant
to Item 102 of Regulation S-T, and incorporated
herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA:
Filed with Post-Effective Amendment No. 15 to the
Registration Statement of Oppenheimer Mortgage
Income Fund (File No. 33-6614), 1/20/95, and
incorporated herein by reference.
(9) Custody Agreement dated 10/6/92: Filed with Post-
Effective Amendment No. 9, 1/31/95, and incorporate
herein by reference.
(10) (i) Service Plan and Agreement for Class A shares of
OSIF under Rule 12b-1 dated 6/22/93: Filed with
Registrant's Post-Effective Amendment No. 8,
2/1/94, and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for
Class B shares of OSIF under Rule 12b-1 dated
6/22/93: Filed with Registrant's Post-Effective
Amendment No. 8, 2/1/94, and incorporated herein
by reference.
(iii) Distribution and Service Plan and Agreement for
Class C shares of OSDIF under Rule 12b-1 dated
2/1/94: Filed with Registrant's Post-Effective
Amendment No. 8, 2/1/94, and incorporated herein
by reference.
(iv) Form of Class C Distribution and Service Plan for
Oppenheimer Strategic Income Fund dated 2/__/95:
Filed with Registrant's Post-Effective Amendment
No. 10, 3/26/95, and incorporated herein by
reference.
(11) (i) Opinion and Consent of Counsel for OSIF
dated 8/30/89: Previously filed with
Registrant's Pre-Effective Amendment No. 9,
1/31/95, and incorporated herein by
reference.
(ii) Opinion and Consent of Counsel for OSDIF
dated 1/31/94: Filed with Registrant's Post-
Effective Amendment No. 8, 2/1/94, and
incorporated herein by reference.
(12) Tax Opinion Relating to the Reorganization:
Draft Opinion filed herewith.
(13) Not applicable.
(14) Consent of Deloitte & Touche LLP: Filed herewith.
(15) Not applicable.
(16) Not applicable
(17) Declaration of Registrant under Rule 24f-2: Filed herewith.
(18) Powers of Attorney: Filed with Registrant's Post-Effective
Amendment No. 7, 2/1/94, and incorporated herein by
reference.
Item 17. Undertakings
(1) Not applicable.
(2) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver and State of Colorado on
the 2nd day of May, 1995.
OPPENHEIMER STRATEGIC FUNDS TRUST
By: /s/ James C. Swain*
----------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ James C. Swain* Chairman of the
- ------------------ Board of Trustees May 2, 1995
James C. Swain
/s/ Jon S. Fossel* Chief Executive
- -------------------- Officer and May 2, 1995
Jon S. Fossel Trustee
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting May 2, 1995
George C. Bowen Officer
/s/ Robert G. Avis* Trustee May 2, 1995
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee May 2, 1995
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee May 2, 1995
- -----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee May 2, 1995
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee May 2, 1995
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee May 2, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee May 2, 1995
- ----------------
Ned M. Steel
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER STRATEGIC FUNDS TRUST
EXHIBIT INDEX
Exhibit Description
- ------- -----------
16(12) Tax Opinion in Draft Form
16(14) Independent Auditors' Consent
16(17) Declaration of the Registrant under Rule 24f-2
<PAGE>
[Logo] OPPENHEIMER FUNDS
OPPENHEIMER STRATEGIC INCOME FUND
ANNUAL REPORT SEPTEMBER 30, 1994
"I NEED HIGH INCOME, BUT NOT A LOT OF RISK.
"MY FINANCIAL ADVISOR RECOMMENDED THIS FUND BECAUSE ITS UNIQUE INVESTMENT
STRATEGY IS SPECIFICALLY DESIGNED TO LOWER RISK."
WOMAN SITTING BY
WOMAN HUGGING
CHILD
<PAGE>
FUND FACTS
IN THIS REPORT:
ANSWERS TO TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
- - HOW DID THE FUND RESPOND TO RISING INTEREST RATES IN THE U.S. AND OVERSEAS?
- - WHAT'S THE OUTLOOK FOR THE CORPORATE BOND MARKET?
- - WHERE ARE YOU FINDING ATTRACTIVE INVESTMENT OPPORTUNITIES TODAY?
FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT OPPENHEIMER STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
1 The Fund seeks high current income by investing in foreign fixed income
securities, U.S. government issues and higher-yielding, lower-rated
corporate bonds.
- --------------------------------------------------------------------------------
2 Standardized yield for the 30 days ended September 30, 1994 for Class A
shares was 8.65% and 8.31% for Class B shares.(1)
- --------------------------------------------------------------------------------
3 Total return at net asset value for the 12 months ended September 30, 1994
was 1.85% for Class A shares and 1.07% for Class B shares.(2)
- --------------------------------------------------------------------------------
4 Average annual total returns for Class A shares for the 1-year period ended
September 30, 1994 and since inception of the Fund on October 16, 1989 were
--2.98% and 9.93%, respectively. For Class B shares, average annual total
returns for the 1-year period ended September 30, 1994 and since inception
of the Class on November 30, 1992 were --3.93% and 6.43%, respectively.(3)
- --------------------------------------------------------------------------------
5 The Fund's Class A shares received **** from Morningstar, Inc. as of
September 30, 1994. The Fund was ranked among 165 hybrid funds.(4)
- --------------------------------------------------------------------------------
6 "The Fund's flexibility to shift assets strategically among bond market
sectors is a major plus for shareholders in the current investment
environment. It has allowed us to capitalize on opportunities offered in
higher-yielding corporate bonds, the best performing bond market sector
over the last 12 months. And it has enabled us to limit the portfolio's
exposure to rising interest rates worldwide."
PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, SEPTEMBER 30, 1994
(1) Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/94, divided by the
maximum offering price at the end of the period, compounded semiannually and
then annualized. Falling net asset values will tend to artificially raise
yields.
(2) Based on the change in net asset value per share from 9/30/93 to 9/30/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
(3) Average annual total returns are based on a hypothetical investment held
until 9/30/94, after deducting the current maximum initial sales charge of 4.75%
for Class A shares and the contingent deferred sales charge of 5% (1-year) and
4% (since inception) for Class B shares.
(4) Source: Morningstar Mutual Funds, 9/30/94. Morningstar, Inc., an
independent mutual fund monitoring service, produces proprietary monthly
rankings of mutual funds in broad investment categories (equity, taxable bond,
tax-exempt bond, and "hybrid") based on risk-adjusted investment return, after
considering sales charges and expenses. Investment return measures a fund's (or
class's) 3-, 5-, and 10-year (depending on the inception of the class or fund)
average annual total returns in excess of 90-day U.S. Treasury bill returns.
Risk measures a fund's (or class's) performance below 90-day U.S. Treasury bill
returns. Risk and returns are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (22.5%) and 1 star is
lowest (bottom 1%). The Fund's current ranking is also the Fund's ranking for
the 1-year and 3-year periods ended 9/30/94. Rankings are subject to change. The
Fund's Class A and Class B shares have the same portfolio.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
2 Oppenheimer Strategic Income Fund
<PAGE>
REPORT TO SHAREHOLDERS
ABOVE-AVERAGE TOTAL RETURN
TOTAL RETURN FOR THE 1-YEAR PERIOD ENDED SEPTEMBER 30, 1994
OPPENHEIMER STRATEGIC 1.85%
INCOME FUND A
(AT NAV)(7)
OPPENHEIMER STRATEGIC 1.07%
INCOME FUND B
(AT NAV)(7)
LIPPER GENERAL BOND --2.69%
FUNDS AVERAGE(8)
Extending the record of performance that has earned the Fund's Class A Shares a
**** ranking from Morningstar, Inc., Oppenheimer Strategic Income Fund continued
to provide an attractive level of income for the 12 months ended September 30,
1994.(5) At that date, the Fund's standardized 30-day yield was 8.65% for Class
A shares and 8.31% for Class B shares.(6)
Once again, your managers' ability to shift assets strategically among
three sectors--U.S. government securities, high yield corporate bonds and
foreign fixed income securities--played an important role in the Fund's
performance over the past year. As the Federal Reserve and central banks
worldwide moved aggressively to raise short-term interest rates to fend off
inflation, your managers were able to capture rising yields while limiting the
portfolio's price volatility.
As U.S. interest rates began to rise, your managers reduced the Fund's
exposure to long-term U.S. government bonds, as well as to high yield corporate
bonds issued by consumer-durable and financial services companies, whose
earnings are sensitive to interest rate changes.
The proceeds were used to add to holdings in higher-yielding corporate
bonds issued by larger industrial companies, notably in chemicals, mining,
metals, and forest products sectors. These companies' earnings tend to rise in
the middle-to-late stages of an economic expansion.
The foreign portion of the portfolio continues to emphasize Latin
America and other emerging markets. As interest rates rose offshore and the
dollar weakened against major currencies, these positions were reduced somewhat,
while more investments were centered in Europe. In addition to increasing the
portfolio's holdings of foreign government bonds, your managers focused more
attention on large European industrial companies positioned to benefit from
economic growth.
Looking ahead, your managers don't anticipate major changes in the
portfolio's composition in the near term. The Fund's allocations will, of
course, be adjusted should the economic expansion appear to be ending, but signs
are currently pointing to continued gradual growth--and your Fund is
well-positioned to provide attractive returns.
We appreciate the confidence you have placed in Oppenheimer Strategic
Income Fund and we look forward to continuing to help you reach your investment
goals.
James C. Swain
Chairman
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Income Fund
Jon S. Fossel
President
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Income Fund
October 21, 1994
(5) See footnote 4, page 2.
(6) See footnote 1, page 2.
(7) See footnote 2, page 2.
(8) Source of data: Lipper Analytical Services. The Lipper total return average
for the 1-year period ended 9/30/94 was for 35 general bond funds. The average
is shown for comparative purposes only. Oppenheimer Strategic Income Fund is
characterized by Lipper as a general bond fund. Lipper performance does not
take sales charges into consideration.
3 Oppenheimer Strategic Income Fund
<PAGE>
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Statement of Investments September 30, 1994
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
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Repurchase Agreements--0.9%
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Repurchase agreement with First Chicago Capital Markets, 4.95%, dated
9/30/94, to be repurchased at $40,716,789 on 10/3/94, collateralized by U.S.
Treasury Nts., 4.25%--8.50%, 4/15/95--7/15/98, with a value of $23,014,481
and U.S. Treasury Bills, 0%, 3/16/95--3/23/95, with a value of $18,537,281
(Cost $40,700,000) $40,700,000 $40,700,000
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Short-Term Government Obligations--0.3%
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Bonos de la Tesoreria la Federacion:
0%, 8/3/95 7,623,450(1) 2,103,222
0%, 8/10/95 12,197,520(1) 3,360,261
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United Mexican States Treasury Bills, 0%, 11/10/94 35,238,970(1) 10,203,270
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Total Short-Term Government Obligations (Cost $15,646,044) 15,666,753
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Government Obligations--49.8%
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Argentina (Republic Of):
Bonos de Consolidacion de Deudas:
Bonds, 8.375%, 12/20/03 36,950,000 30,797,934
Bonds, Series I, 3.704%, 4/1/01(4)(6) 77,759,247(1) 45,377,982
Bonds, Series I, 4.375%, 4/1/01(4)(6) 27,007,821 20,469,552
Bonds, Series I, 4.8125%, 4/1/07(4)(6) 45,913,296 28,585,986
Bonds, Series I, 4.8125%, 9/1/02(4)(6) 15,634,644 10,528,088
Supplier Bocon (Pesos), 4.60%, 4/1/07 5,057,512(1) 2,118,317
Discount Bonds, 4.250%, 3/31/23 20,000,000 14,250,000
Par Bonds, 4.25%, 3/31/23(8) 30,000,000 14,925,000
Past Due Interest Bonds, 5%, 3/31/05(4)(6) 107,000,000 81,721,250
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Bariven SA Sr. Nts., Gtd. by Petroleos de Venezuela:
9.50%, 12/10/96 500,000 478,750
9%, 2/25/97(5) 1,000,000 930,000
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Brazil (Federal Republic of):
6% Debs., 9/15/13 32,000,000 17,220,000
Bonds, Banco do Brasil SA, 10.50%, 4/14/98 5,000,000 5,043,750
Bonds, Banco do Nordeste, Sr. Unsec. Debs, 9%, 11/12/96 8,200,000 7,779,750
Bonds, Nacional de Desenvolvimento Economico e Social:
10.375%, 4/27/98 3,850,000 3,854,813
Interest Due and Unpaid Bonds, 8.75%, 1/1/01(4) 19,061,000 15,844,456
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 14,870,000 14,349,550
7.875%, 2/10/99(5) 4,000,000 3,290,000
8.25%, 2/10/00 9,000,000 7,245,000
8.25%, 2/10/00(5) 2,000,000 1,630,000
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Colombia (Republic of):
8.75%, Nts., 10/6/99 5,000,000 4,984,084
1989--1990 Integrated Loan Facility Bonds:
4.188%, 7/1/01(4)(5) 16,131,048 15,485,807
4.44%, 10/26/03(4)(5) 8,122,423 7,594,466
Empresa Columbiana de Petroleos, Nts., 7.25%, 7/8/98(5) 15,650,000 14,926,188
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Denmark (Kingdom of) Bonds:
9%, 11/15/98 158,160,000(1) 26,215,716
6%, 12/10/99 47,450,000(1) 6,929,474
</TABLE>
4 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
------ ------------
<S> <C> <C>
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Long-Term Government Obligations (continued)
First Australia National Mortgage Acceptance Corp. Ltd Bonds,
Series 17, 15%, 7/15/02 $3,740,000(1) $ 3,015,869
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 4/24/95 56,500,000,000(1) 23,817,889
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Italy (Republic of) Treasury Bonds:
12%, 9/1/97 13,600,000,000(1) 8,843,486
12.50%, 1/1/98 13,500,000,000(1) 8,877,980
Buoni Pollennali del Tes:
12%, 1/1/96 13,720,000,000(1) 8,904,807
12%, 5/1/97 62,325,000,000(1) 40,491,269
12.50%, 6/16/97 12,300,000,000(1) 8,074,634
12.50%, 3/19/98 4,740,000,000(1) 3,135,692
12%, 1/17/99 10,000,000,000(1) 6,476,281
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Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 4.125%, 10/15/00(4)(5) 900,000 738,000
Tranche B, 4.125%, 11/15/04(4)(5) 5,000,000 3,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
Landeskredietbank Baden Sr. Unsec. Unsub. Nts., 11.625%, 6/24/99 5,000,000,000(1) 3,241,186
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of):
Loan Participation Agreement:
Tranche A, 5.938%, 1/1/09(4)(5) 55,950,000 40,843,500
Tranche B, 4.312%, 1/1/04(4)(5) 33,800,000 26,089,375
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New South Wales Treasury Corp., 7% Gtd. Bonds, 4/1/04 16,000,000(1) 9,375,719
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
9%, 11/15/96 65,570,000(1) 39,610,123
10%, 7/15/97 29,150,000(1) 18,009,173
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Oesterreich Kontrollbank Sr. Unsec. Unsub. Gtd. Nts., 10%, 8/10/99 3,700,000,000(1) 2,276,923
- ------------------------------------------------------------------------------------------------------------------------------------
Polish People's Republic Loan Participation Agreement, 5.0625%, 2/3/24(4)(5)(7) 20,750,000(1) 11,481,851
- ------------------------------------------------------------------------------------------------------------------------------------
Quebec, Canada (Province of), Sr. Nts., 9.50%, 10/2/02 20,000,000(1) 13,495,634
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South Africa (Republic of), Loan Participation Agreements:
Eskom 4.907%, 12/23/97(4)(5) 6,457,568 6,037,827
Eskom 4.651%, 1/15/98(4)(5) 8,750,000 8,137,500
Eskom 4.875%, 4/15/98(4)(5) 2,767,816 2,504,874
Eskom 4.75%, 9/15/99(4)(5) 8,578,951 7,763,951
Eskom 4.875%, 2/15/00(4)(5) 29,550,000 27,333,750
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South Australia Government Finance Authority Bonds, 10%, 1/15/03 34,200,000(1) 24,282,057
- ------------------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 10,236,000,000(1) 80,606,211
Bonds, 10.25%, 11/30/98 1,500,000,000(1) 11,351,344
Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 9,781,000,000(1) 78,905,977
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria:
Bonds, 12%, 10/22/98 19,000,000(1) 15,100,310
Gtd. Bonds, 8.25%, 10/15/03 80,290,000(1) 51,130,130
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United Kingdom Treasury Nts., 12%, 11/20/98 43,743,000(1) 76,484,630
- ------------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
1990 Combined Multi-Year Restructuring Agreement,
Restructured Sov. Loan, 4.28%, 12/23/06(4)(5) 26,277,514 21,876,031
Banco Nacional de Comercio Exterior SNC International Finance BV
Collateralized Fixed Rate Par Bonds:
Series A, 6.25%, 12/31/19 15,000,000 9,721,875
Series B, 6.25%, 12/31/19 15,000,000 9,721,875
</TABLE>
5 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
------- --------------
<S> <C> <C>
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Long-Term Government Obligations (continued)
Gtd. Matador Bonds:
13%, 1/29/97 $1,250,000,000(1) $9,819,166
12.65%, 6/21/98 2,900,000,000(1) 21,652,719
12.25%, 12/3/98 19,500,000(1) 32,000,800
7.25% Debs., 2/2/04 1,750,000 1,467,821
Bankpesca Restructured Sov. Loan, 6.0625%, 10/26/06(4)(5) 5,310,128 4,420,682
Banobras Myra Loan Participation Agreement, Tranche 2,
6.125%, 11/16/06(4)(5) 3,271,125 2,723,213
- ------------------------------------------------------------------------------------------------------------------------------------
Myra Old Money Loan Participation Agreements:
5.6875%, 3/20/05(4)(5) 4,039,820 3,363,150
6.1725%, 3/20/05(4)(5) 167,589 139,518
- ------------------------------------------------------------------------------------------------------------------------------------
New New Money Loan Participation Agreements, 5.1825%, 3/25/05(4)(5) 1,203,817 1,002,178
Tranche A, 6.0625%, 3/25/05(4)(5) 2,659,208 2,213,791
Nts., Nacional Financiera SNC, 13.60%, 4/2/98 1,395,000,000(1) 10,998,875
- ------------------------------------------------------------------------------------------------------------------------------------
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.:
8.125%, 12/15/03(5) 1,950,000 1,674,563
8.125%, 12/15/03 10,975,000 9,424,781
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Petroleos Mexicanos Gtd. Medium Term Nts.:
7.60%, 6/15/00(5) 14,310,000 13,033,834
8.625%, 12/1/23 13,500,000 11,189,070
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U.S. Treasury Bonds:
10.50%, 2/15/95(11) 190,000,000 193,443,750
10.375%, 5/15/95 25,000,000 25,703,125
8.125%, 8/15/19 100,100,000 101,726,250
7.875%, 2/15/21 197,500,000 195,031,250
6.25%, 8/15/23 48,000,000 38,984,971
7.125%, 2/15/23 100,000,000 90,906,189
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U.S. Treasury Nts.:
11.25%, 2/15/95 66,500,000 67,892,303
5.125%, 11/15/95 150,000 148,500
9.25%, 1/15/96 13,000,000 13,475,305
11.25%, 5/15/19 28,000,000 28,936,233
8.875%, 11/15/19(12) 128,719,000 135,637,646
9.50%, 11/15/19 85,000,000 88,107,761
8.50%, 11/15/20 44,000,000 46,392,500
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Venezuela (Republic of):
6.75% Debs., 9/20/95(5) 29,025,000 27,537,469
6.2364% Debs., 12/29/95(4) 8,048,318 7,364,211
8.2375% Unsub. Nts., 9/20/95(4) 2,500,000 2,360,738
9.125% Unsub., 3/11/96 7,500,000 7,106,250
9.00% Sr. Unsec. Unsub. Nts., 5/27/96(5) 23,025,000 21,557,156
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Bonds, Banco Venezuela TCI:
0% Debs, 12/13/94 456,558 442,862
0% Debs, 12/13/98(5) 9,885,056 6,326,436
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Western Australia Treasury Corp. Gtd. Bonds, 12.50%, 4/1/98 21,400,000(1) 17,192,205
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Total Long-Term Government Obligations (Cost $2,518,241,698) 2,355,130,917
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Mortgage/Asset-Backed Obligations--5.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Mortgage Finance Corp:
Nts., 6.75%, 4/25/24(5) 849,343 579,412
Nts., 6.75%, 2/25/25(5) 710,295 485,665
</TABLE>
6 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage/Asset-Backed
Obligations (continued)
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
0%, Cl. B-8, 3/25/25(5) $2,184,269 $1,639,568
0%, Cl. B-9, 3/25/25(5) 2,184,269 1,566,531
0%, Cl B-10, 3/25/25(5) 1,092,134 779,511
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Citicorp Mortgage Securities, Inc., 7% Sub. Bonds, Series 1993-5:
Cl. B3, 4/25/23 1,662,792 1,189,417
Cl. B4, 4/25/23 1,603,408 217,963
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CMC Security Corp. III, 0% Collateralized Mtg. Oblig., Series 1994-E,
Cl. E-B3, 3/25/24(5) 4,957,267 3,389,532
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CSFOB 11%, Cl.E, 2/15/14(5) 12,000,000 11,701,248
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-D, 8.70%, 9/25/25(5) 2,500,000 2,398,828
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-E, 8.70%, 9/25/25(5) 2,500,000 2,312,109
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Series 176, Class F, 8.95%, 3/15/20 16,988,000 17,368,530
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Interest-Only Stripped Mtg.-Backed
Security:
Trust 221, Class 2, 7.50%, 5/25/23(10) 63,848,072 23,923,063
Trust 240, Class 2, 7%, 9/25/23(10) 114,242,159 43,197,816
Trust 240, Class 2, 7%, 2/25/24(10) 170,646,483 65,485,589
Trust 252, Class 2, 7.50%, 11/30/23(10) 88,701,927 33,679,013
Trust 258, Class 2, 7%, 3/25/24(10) 35,135,718 12,714,738
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Principal-Only Stripped
Mtg.-Backed Security, Series 1993-253 Class G, 0%, 11/25/23(9) 7,802,220 3,513,437
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mtg. Services, Inc.:
Series 1994-7 Cl. B3, 6% Sub. Bonds., 2/25/09 1,586,524 1,149,239
Series 1994-10 Cl. B3, 6.5% Sub. Bonds., 3/25/24(5) 4,763,001 3,328,148
Series 1994-11 Cl. B3, 6.5% Sub. Bonds., 5/25/24(5) 3,167,515 2,134,114
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc. Farmer Mac Agricultural Real Estate
Trust Sr. Sub. Mtg. Pass-Through Certificates:
9.18%, Series 1992-2, Cl. B2, 1/15/03(4)(5) 5,681,627 4,320,255
9.47%, Series 1992-2, Cl. B3, 4/15/09(4)(5) 5,792,386 4,407,260
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. 7.785% Mtg. Pass-Through Certificates,
Series 1993-6, Cl. B5, 6/15/23(5) 4,087,900 3,021,214
- ------------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-Through Certificates:
8.25%, Series 1992-CHF, Cl.C, 12/25/20 1,776,220 1,726,265
10.638 %, Series 1992-16, Cl. B3, 5/24/24(4) 2,822,000 2,859,039
8.75%, Series 1993-C1, Cl.B, 5/25/24 7,572,000 7,496,280
8.50%, Series 1993-C2, Cl.E, 3/25/25 161,685 158,578
8%, Series 1994-C1, Cl.E, 6/25/26 5,000,000 3,781,250
- ------------------------------------------------------------------------------------------------------------------------------------
SKW Real Estate Limited Partnership, 9.05%, Secured
Note, Cl. E, 4/15/04(5) 9,500,000 9,048,750
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Total Mortgage/Asset-Backed Obligations (Cost $268,347,594) 269,572,362
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--35.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Materials--4.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.7%
Acme Metals, Inc., 12.50% Sr. Sec. Nts., 8/1/02 6,500,000 6,597,500
- ------------------------------------------------------------------------------------------------------------------------------------
Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04(5) 2,000,000 2,030,000
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 9,000,000 8,865,000
- ------------------------------------------------------------------------------------------------------------------------------------
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 15,500,000 15,848,750
</TABLE>
7 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals (continued)
Harris Chemical North America, Inc.:
0%/10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01(3) $12,500,000 $10,187,500
10.75% Gtd. Sr. Sub. Nts., 10/15/03 1,000,000 942,500
- ------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 3,750,000 3,881,250
- ------------------------------------------------------------------------------------------------------------------------------------
NL Industries Inc.:
11.75% Sr. Sec. Nts., 10/15/03 500,000 516,250
0%/13% Sr. Sec. Disc. Nts., 10/15/05(3) 1,250,000 795,313
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Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 3,500,000 3,883,799
- ------------------------------------------------------------------------------------------------------------------------------------
Rexene Corp.:
9% Fst. Priority Nts., 11/15/99(8) 2,535,000 2,522,325
10% 2nd Priority Nts., 11/15/02(6) 3,706,000 3,536,143
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Sherritt, Inc., 11.00% Debs., 3/31/04 10,000,000(1) 7,175,639
- ------------------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/01/02 12,275,000 12,397,750
USG Corp., 9.25%, 9/15/01 3,200,000 3,048,000
- ------------------------------------------------------------------------------------------------------------------------------------
82,227,719
- ------------------------------------------------------------------------------------------------------------------------------------
Metals--0.8%
Haynes International, Inc., 11.25% Sr. Sec. Nts., 6/15/98 3,000,000 2,565,000
- ------------------------------------------------------------------------------------------------------------------------------------
Horsehead Industries, Inc.:
13.50% Extd. Nts., 6/1/97(4) 4,566,000 4,702,980
14% Sub. Nts., 6/1/99 5,050,000 4,974,250
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Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 2,000,000 2,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.:
9.875% Sr. Nts., 2/15/02 4,175,000 3,715,750
12.75% Sr. Sub. Nts., 2/1/03 16,850,000 16,386,625
- ------------------------------------------------------------------------------------------------------------------------------------
Stelco, Inc., 10.25% Debs., 4/30/96 4,300,000(1) 3,173,683
- ------------------------------------------------------------------------------------------------------------------------------------
37,518,288
- ------------------------------------------------------------------------------------------------------------------------------------
Paper and Forest
Products--1.7%
Domtar, Inc., 10.85% Debs., 8/15/17 2,500,000(1) 1,703,049
- ------------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc., 12.375% Sr. Nts., 8/15/02(2) 1,830,000 1,070,550
- ------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 8,450,000 8,661,250
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 14,370,000 13,471,875
- ------------------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 17,500,000 15,312,500
- ------------------------------------------------------------------------------------------------------------------------------------
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 3,250,000 3,258,125
- ------------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.75% Sr. Nts., 6/15/00 5,000,000 5,225,000
11.25% Sr. Sub. Nts., 6/15/02 950,000 997,500
10.375% Sr. Sub. Nts., 6/30/04 3,600,000 3,681,000
- ------------------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,645,897 2,435,522
- ------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp.:
9.875% Sr. Nts., 2/1/01 18,300,000 17,224,875
10.75% Sr. Sub. Debs., 4/1/02 300,000 286,500
10.75% Fst. Mtg. Nts., 10/1/02 4,100,000 4,094,875
- ------------------------------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 5,125,000 5,060,938
- ------------------------------------------------------------------------------------------------------------------------------------
82,483,559
</TABLE>
8 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
------- ------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--9.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Automotive--0.6% Envirotest Systems Corp.:
9.125% Sr. Nts., 3/15/01 $3,000,000 $2,782,500
9.625% Sr. Sub. Nts., 4/1/03 8,940,000 8,224,800
- ------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 11.875% Sr. Sub. Debs., 10/1/04 2,600,000 2,626,000
- ------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units(5) 8,750,000 4,856,250
- ------------------------------------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000 2,525,000
- ------------------------------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 8,600,000 7,955,000
- ------------------------------------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 1,350,000 1,410,750
- ------------------------------------------------------------------------------------------------------------------------------------
30,380,300
- ------------------------------------------------------------------------------------------------------------------------------------
Construction Supplies and
Development--0.9%
Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 9,000,000 7,605,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dal-Tile International, Inc., 0% Sr. Sec. Nts., 7/15/98 21,500,000 13,491,250
- ------------------------------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000 6,555,000
- ------------------------------------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 3,490,000 3,193,350
- ------------------------------------------------------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 10,967,000 11,241,175
- ------------------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/99(2) 742,000 1,253,980
- ------------------------------------------------------------------------------------------------------------------------------------
43,339,755
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Goods
and Services--2.6%
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 10,886,000 10,777,140
- ------------------------------------------------------------------------------------------------------------------------------------
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 5/27/98 13,450,000 9,078,750
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Co. of Texas, 10.25% Sr. Nts., 2/15/00 3,000,000 3,030,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(3) 4,118,000 3,294,400
- ------------------------------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 23,000,000 24,610,000
- ------------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97 5,866,000 5,961,323
- ------------------------------------------------------------------------------------------------------------------------------------
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(5) 17,826,000 17,539,045
- ------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., Sub. Nts., 12.25%, 7/1/96 1,565,000 1,561,088
- ------------------------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 4,915,000 4,890,425
- ------------------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp.:
12.75% Gtd. Sr. Nts., Series B, 12/6/00(5) 1,000,000 1,045,000
10.25% Sr. Nts., 12/31/00(5) 9,875,000 9,677,500
- ------------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01 4,150,000 3,934,893
- ------------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts., Series B, 11/1/03 6,500,000 6,207,500
- ------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 5,200,000 4,563,041
- ------------------------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., 0% Sr. Sec. Disc. Nts., 3/15/98 15,450,000 7,184,250
- ------------------------------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 9,450,000 8,587,688
- ------------------------------------------------------------------------------------------------------------------------------------
121,942,043
- ------------------------------------------------------------------------------------------------------------------------------------
Entertainment--1.8%
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 5,775,000 5,053,125
- ------------------------------------------------------------------------------------------------------------------------------------
Aztar Corp., 11% Sr. Sub. Nts., 10/1/02 6,250,000 5,507,813
- ------------------------------------------------------------------------------------------------------------------------------------
Aztar Mortgage Funding, Inc., 13.50% Gtd. Fst. Mtg. Nts., 9/15/96 2,220,000 2,203,350
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Sr. Sec. Nts., 2/1/01 3,100,000 2,170,000
- ------------------------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(5) 4,200,000 3,255,000
- ------------------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 12,800,000 13,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 13.50% Fst. Mtg. Nts., 9/30/98 3,500,000 2,992,500
- ------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino, 14%, 4/1/98 3,000,000 3,105,000
- ------------------------------------------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 14,000,000 13,930,000
</TABLE>
9 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Entertainment
(continued)
Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., 3/1/01 $4,020,000 $1,809,000
- ------------------------------------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp, 11.75% Fst. Mtg. Nts., Series A, 5/1/99 5,000,000 5,337,500
- ------------------------------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(4)(5)(6) 2,939,466 2,330,262
- ------------------------------------------------------------------------------------------------------------------------------------
Marvel (Parent) Holdings, Inc., 0% Sr. Sec. Disc. Nts., 4/15/98 7,050,000 4,406,250
- ------------------------------------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 4/15/98 12,500,000 7,843,750
- ------------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 10,000,000 8,600,000
- ------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(5) 4,050,000 1,235,250
- ------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(5) 1,125,000 354,375
- ------------------------------------------------------------------------------------------------------------------------------------
Trump Plaza Funding, 10.875%, 6/15/01 1,000,000 712,500
- ------------------------------------------------------------------------------------------------------------------------------------
United Gaming, Inc., 7.50% Cv. Sub. Debs., 9/15/03 1,540,000 1,287,825
- ------------------------------------------------------------------------------------------------------------------------------------
85,733,500
- ------------------------------------------------------------------------------------------------------------------------------------
Hotels/Lodging--0.1%
Embassy Suites, Inc., 10.875% Gtd. Sr. Sub. Nts., 4/15/02 2,250,000 2,340,000
- ------------------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L, 5/1/07 4,353,000 4,380,206
- ------------------------------------------------------------------------------------------------------------------------------------
6,720,206
- ------------------------------------------------------------------------------------------------------------------------------------
Media--1.8%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 8,850,000 8,584,500
- ------------------------------------------------------------------------------------------------------------------------------------
Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 1,000,000 955,000
- ------------------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(5) 835,202 896,590
- ------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc., 10.625% Sr. Sec. Nts., 12/31/00 4,000,000 3,740,000
- ------------------------------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., 10.375% Sr. Sub. Nts., 3/15/02 4,000,000 4,160,000
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000 11,730,000
- ------------------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
12% Sr. Nts., 12/15/01 2,500,000 2,849,190
8.50% Sr. Nts., 2/15/02 6,000,000 5,815,097
8.625%, Sr. Nts., 2/1/03 10,400,000 10,298,006
10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,461,541
- ------------------------------------------------------------------------------------------------------------------------------------
SCI Television, Inc.:
7.50% Fst. Sec. Loan Nts., 6/30/98 4,380,331 4,281,774
11% Sr. Sec. Nts., 6/30/05 5,653,155 5,759,152
- ------------------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/08 3,000,000 3,127,500
- ------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 12,925,000 12,537,250
- ------------------------------------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000 5,836,875
- ------------------------------------------------------------------------------------------------------------------------------------
84,032,475
- ------------------------------------------------------------------------------------------------------------------------------------
Real Estate Development--0.5%
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 4,150,000 3,216,250
- ------------------------------------------------------------------------------------------------------------------------------------
Noranda Forest, Inc., 11% Debs., 7/15/98 2,000,000(1) 1,580,504
- ------------------------------------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3, 11/4/49(2) 5,150,000(1) 2,380,448
- ------------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 17,000,000 15,385,000
- ------------------------------------------------------------------------------------------------------------------------------------
22,562,202
- ------------------------------------------------------------------------------------------------------------------------------------
Retail--1.4%
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 17,950,000 17,680,750
- ------------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 7,000,000 5,915,000
- ------------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05(3) 750,000 435,000
- ------------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 8,370,000 7,951,500
- ------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 11,500,000 9,775,000
- ------------------------------------------------------------------------------------------------------------------------------------
R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98(2) 7,450,000 5,364,000
</TABLE>
10 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Retail (continued)
Sears Canada, Inc.:
11.75% Debs., 12/5/95 $2,400,000(1) $1,874,240
11.70% Debs., 7/10/00 3,150,000(1) 2,542,133
- ------------------------------------------------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 4,850,000 3,031,250
- ------------------------------------------------------------------------------------------------------------------------------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 8,000,000 7,920,000
- ------------------------------------------------------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd. 2nd Priority Sr. Sec. Nts., 7/30/00 2,000,000 2,005,000
- ------------------------------------------------------------------------------------------------------------------------------------
64,493,873
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--4.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Food--2.6%
Family Restaurant, Inc.:
9.75% Sr. Nts., 2/1/02 8,000,000 7,040,000
0%/10.875% Sr. Sub. Disc. Nts., 2/1/04(3) 14,850,000 8,984,250
- ------------------------------------------------------------------------------------------------------------------------------------
Farm Fresh, Inc., 12.25% Sr. Nts., 10/1/00 10,350,000 8,952,750
- ------------------------------------------------------------------------------------------------------------------------------------
Flagstar Corp., 10.75% Sr. Nts., 9/15/01 4,000,000 3,790,000
- ------------------------------------------------------------------------------------------------------------------------------------
Food 4 Less Supermarkets, Inc., 13.75% Sr. Sub Nts., 6/15/01 1,500,000 1,620,000
- ------------------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 15,000,000 15,768,750
- ------------------------------------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 8,050,000 6,862,625
- ------------------------------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01(2) 1,000,000 285,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional, S.A. de C.V.:
8%, Nts., 12/14/94(5) 30,000,000 30,000,000
9%, Nts., 9/19/95(5) 14,750,000 14,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 20,000,000 18,255,759
- ------------------------------------------------------------------------------------------------------------------------------------
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00 2,000,000 1,865,000
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Foods, 10.25% Sr. Nts., 8/15/01 6,100,000 5,490,000
- ------------------------------------------------------------------------------------------------------------------------------------
123,664,134
- ------------------------------------------------------------------------------------------------------------------------------------
Food and Drug Distribution--1.1%
Alco Health Distribution Corp., 11.25% Sr. Debs., 7/15/05(6) 13,540,068 13,248,117
- ------------------------------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 8,680,000 8,680,000
- ------------------------------------------------------------------------------------------------------------------------------------
Duane Reade, 12% Sr. Nts., Series B, 9/15/02 2,250,000 2,182,500
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Union Co.:
11.25% Sr. Nts., 7/15/00 8,350,000 7,577,625
12.25% Sr. Sub. Nts., 7/15/02 8,200,000 6,068,000
- ------------------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 7,350,000 6,504,750
- ------------------------------------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, 12.25% Sr. Sub. Nts., 4/15/04 2,000,000 2,065,000
- ------------------------------------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 5,000,000 4,987,500
- ------------------------------------------------------------------------------------------------------------------------------------
51,313,492
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare--0.6%
Abbey Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 11/1/02 2,000,000 1,835,000
- ------------------------------------------------------------------------------------------------------------------------------------
American Medical International, Inc.:
11.25% Nts., 2/6/95 1,060,000(1) 1,684,158
13.50% Sr. Sub. Nts., 8/15/01 1,200,000 1,342,500
- ------------------------------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(5) 3,000,000 3,105,000
- ------------------------------------------------------------------------------------------------------------------------------------
Mediq/PRN Life Support Services, Inc., 11.125% Sr. Sec. Nts., 7/1/99 3,000,000 2,835,000
- ------------------------------------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 6,290,000 7,327,850
- ------------------------------------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 3,750,000 4,003,125
- ------------------------------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 9,700,000 6,984,000
- ------------------------------------------------------------------------------------------------------------------------------------
29,116,633
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Energy--1.9%
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 $2,600,000 $2,827,500
- ------------------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 10,500,000 9,667,875
- ------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,750,000 3,543,750
- ------------------------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
9.875% Nts., 10/15/02 4,550,000 4,390,750
8.50% Debs., 4/1/08 5,000,000 4,306,250
11.50% Debs., 11/15/15 3,500,000 3,517,500
- ------------------------------------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(3) 21,047,000 18,679,213
- ------------------------------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 13,000,000 14,852,500
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 1,700,000 1,566,125
- ------------------------------------------------------------------------------------------------------------------------------------
Presidio Oil Co.:
11.50% Sr. Sec. Nts., Series B, 9/15/00 6,564,500 6,269,098
13.90% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02(4) 5,250,000 4,672,500
- ------------------------------------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,500,000 8,025,000
- ------------------------------------------------------------------------------------------------------------------------------------
TGX Corp., 12.675% Sr. Sub. Exch. Nts., 4/1/94(2) 6,920,000 2,802,600
- ------------------------------------------------------------------------------------------------------------------------------------
Triton Energy Corp., 0% Sr. Sub. Disc. Nts., 11/1/97 3,500,000 2,572,500
- ------------------------------------------------------------------------------------------------------------------------------------
87,693,161
- ------------------------------------------------------------------------------------------------------------------------------------
Financial--3.5%
Acadia Partners LP, 13% Sub.Nts., 10/1/97(5) 25,000,000 25,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, 9.75%, 8/26/99(5) 13,700,000 13,802,750
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99(4) 4,500,000 4,820,625
- ------------------------------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corp, 9.125%, Sr. Sub. Nts., 5/1/03 5,360,000 4,837,400
- ------------------------------------------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03 17,275,000 16,324,875
- ------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(5) 1,611,387 1,772,526
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo S.A., 8.25%, Gtd. Nts., 2/17/01(5) 14,700,000 12,090,750
- ------------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds, 12.50%, 7/25/97 60,320,000(1) 39,253,853
- ------------------------------------------------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000 2,718,750
- ------------------------------------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 6,500,000 5,801,250
- ------------------------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000 6,101,122
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Finance, 13.50% Fst Mtg. Bonds, 12/1/98 18,205,000 16,839,625
- ------------------------------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 3,200,000 2,896,016
- ------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 13,700,000 12,364,250
- ------------------------------------------------------------------------------------------------------------------------------------
165,373,792
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial--2.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Containers--0.8%
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 7,000,000 7,017,500
- ------------------------------------------------------------------------------------------------------------------------------------
Calmar Spraying Systems, Inc., 14% Sr. Sub. Disc. Nts., 2/15/99 3,850,000 3,869,250
- ------------------------------------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 2,100,000 2,110,500
- ------------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd.:
9.50% Sr. Nts., 7/1/03 4,750,000 4,405,625
12.50% Sr. Sub. Debs., Series A, 12/1/04 2,850,000 2,985,375
- ------------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(5) 4,065,000 3,780,450
- ------------------------------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 11,900,000 11,840,500
- ------------------------------------------------------------------------------------------------------------------------------------
36,009,200
</TABLE>
12 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
General Industrial--0.9%
EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 $15,785,000 $14,364,350
- ------------------------------------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 3,850,000 3,898,125
- ------------------------------------------------------------------------------------------------------------------------------------
Pace Industries, 10.625% Sr. Nts., 12/1/02 12,300,000 11,193,000
- ------------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(5) 3,900,000 3,900,000
- ------------------------------------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 3,450,000 3,907,125
- ------------------------------------------------------------------------------------------------------------------------------------
United States Banknote Corp., 11.625%, 8/1/02 4,220,000 3,776,900
- ------------------------------------------------------------------------------------------------------------------------------------
41,039,500
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8%
Chrysler Corp., 13% Debs., 3/1/97 500,000 513,706
- ------------------------------------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Sr. Nts., 10/15/99 4,500,000 5,485,211
- ------------------------------------------------------------------------------------------------------------------------------------
Tiphook Financial Corp.:
7.125% Gtd. Nts., 5/1/98 5,000,000 3,625,000
8% Gtd. Nts., 3/15/00 5,583,000 3,852,270
- ------------------------------------------------------------------------------------------------------------------------------------
Transportacion Maritima Mexicana S.A.:
8.50% Nts., 10/15/00 4,000,000 3,525,000
9.25% Nts., 5/15/03 11,000,000 9,693,750
- ------------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts.,
Series B, 12/15/03(3) 19,266,000 10,548,135
- ------------------------------------------------------------------------------------------------------------------------------------
Trism, Inc., 10.75% Sr. Sub. Nts., 12/15/00 1,250,000 1,226,563
- ------------------------------------------------------------------------------------------------------------------------------------
38,469,635
- ------------------------------------------------------------------------------------------------------------------------------------
Technology--7.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.0%
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 5,255,000 4,414,200
9.75%, 12/10/01 2,000,000 1,545,000
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Medium-Term Nts., 2/10/97(5) 10,500,000 9,318,750
8.625% Medium-Term Nts., Series C, 1/15/99(5) 4,750,000 3,752,500
8.94% Medium-Term Nts., Series C, 2/16/99 2,000,000 1,595,000
9.50% Medium-Term Nts., Series A, 12/15/01(5) 1,500,000 1,155,000
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,505,000
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Medium-Term Nts., 3/3/97(5) 6,500,000 5,752,500
- ------------------------------------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 1,800,000 1,845,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sequa Corp., 8.75% Sr. Nts., 12/15/01 9,000,000 8,325,000
- ------------------------------------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc. Debs., 10/15/05 17,296,000 9,080,400
- ------------------------------------------------------------------------------------------------------------------------------------
48,288,350
- ------------------------------------------------------------------------------------------------------------------------------------
Cable Television--2.7%
Adelphia Communications Corp.:
10.25% Sr. Nts., Series B, 7/15/00 2,000,000 1,840,000
12.50% Sr. Nts., 5/15/02 6,740,000 6,740,000
- ------------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 12.50%, Sr. Disc. Nts., 6/15/04 17,600,000 8,624,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Media Cable, 11.95%, 7/15/04 6,125,000 3,498,906
- ------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
14% Sr. Sub. Reset Debs., 11/15/03(4) 7,900,000 7,998,750
10.75% Sr. Sub. Debs., 4/1/04 2,525,000 2,575,500
9.875% Sr. Sub. Debs., 2/15/13 5,550,000 5,175,375
9.875% Sr. Sub. Debs., 2/15/13 2,000,000 1,840,000
- ------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(3)(5) 12,600,000 7,985,224
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., 0% Nts., Series B, 3/5/00 6,600,000 4,092,000
</TABLE>
13 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Cable Television
(continued)
Continental Broadcasting Ltd./Continental Broadcasting Capital Corp.,
10.625% Sr. Sub. Nts., 7/1/03 $7,150,000 $7,230,438
- ------------------------------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 8,200,000 7,462,000
- ------------------------------------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 23,250,000 11,160,000
- ------------------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B, 11/1/03(4) 17,500,000 15,837,500
- ------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03(3) 3,600,000 2,016,000
- ------------------------------------------------------------------------------------------------------------------------------------
Marcus Cable, 0%/13.5% Gtd. Sr. Sub. Disc. Nts., 8/1/04(3) 13,200,000 7,227,000
- ------------------------------------------------------------------------------------------------------------------------------------
New World Communications Holding Corp., 0%, 6/15/99(5) 17,000,000 9,201,250
- ------------------------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,010,000
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
7.45% Nts., 2/1/98 800,000 787,000
7.95% Nts., 2/1/00 3,020,000 2,955,825
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 10.15% Sr. Nts., 5/1/12 1,000,000 1,053,737
- ------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 8,000,000 8,690,000
- ------------------------------------------------------------------------------------------------------------------------------------
126,000,505
- ------------------------------------------------------------------------------------------------------------------------------------
Communications--2.4%
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(3) 26,626,000 17,573,160
- ------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 8.875% Sr. Nts., 11/1/01 15,250,000 13,801,250
- ------------------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(3) 21,402,000 15,409,440
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(3) 12,400,000 7,347,000
- ------------------------------------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375%, Sr. Sub. Nts., 11/1/03 17,975,000 18,199,688
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04(3) 4,675,000 2,314,125
- ------------------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
9.75% Sr. Sec. Nts., 8/1/00 3,600,000 3,591,000
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(3) 33,700,000 22,663,250
- ------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 10.875% Sr. Debs., 4/15/04 2,200,000 2,249,500
- ------------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communication, Inc. II, 9.50% Sr. Nts., 2/1/04 9,350,000 8,415,000
- ------------------------------------------------------------------------------------------------------------------------------------
111,563,413
- ------------------------------------------------------------------------------------------------------------------------------------
Technology--1.4%
Bell & Howell Holdings Co.:
10.75% Sr. Sub. Nts., Series B, 10/1/02 2,000,000 1,950,000
0%/10.75% Sr. Disc. Debs., Series B, 3/1/05(3) 28,450,000 14,936,250
- ------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 2,100,000 2,147,250
- ------------------------------------------------------------------------------------------------------------------------------------
Computervision Corp., 10.875% Sr. Nts., 8/15/97 4,650,000 4,336,125
- ------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts, 8/15/00 9,500,000 9,951,250
- ------------------------------------------------------------------------------------------------------------------------------------
Imax Corp., 7% Sr. Nts., 3/1/01(8) 13,200,000 11,550,000
- ------------------------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(3) 24,000,000 11,340,000
- ------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp.:
9.75% Sr. Nts., 9/15/96 2,000,000 2,026,100
13.50% Credit Sensitive Nts., 7/1/97 4,200,000 4,567,517
8.875% Nts., 7/15/97 1,000,000 977,135
9.75% Sr. Nts., 9/15/16 3,900,000 3,460,263
- ------------------------------------------------------------------------------------------------------------------------------------
67,241,890
</TABLE>
14 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities--2.0%
Beaver Valley Funding Corp., 9% Debs., 6/1/17 $20,400,000 $15,520,666
- ------------------------------------------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(3) 17,575,000 12,610,063
- ------------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,743,750
- ------------------------------------------------------------------------------------------------------------------------------------
Del Norte Funding Corp.:
9.95% Debs., 1/2/98(2) 5,000,000 2,601,765
11.25% Debs., 1/2/14(2) 3,350,000 1,744,459
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co.:
9.20% Debs., 7/2/97(2) 1,500,000 810,487
10.375% Lease Obligation Debs., 1/15/94(2) 12,750,000 6,895,735
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Funding Corp.:
9.375% Debs., 1/1/96(2) 6,000,000 3,241,415
10.75% Debs., 4/1/13(2) 11,900,000 6,485,500
- ------------------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., Lease Obligation Bonds:
10.30%, Series 1986A, 1/15/14 16,450,000 15,296,409
10.15%, Series 1986B, 1/15/16 20,100,000 18,484,870
- ------------------------------------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000 131,362
- ------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(5) 9,500,000 8,763,750
- ------------------------------------------------------------------------------------------------------------------------------------
95,330,231
- ------------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $1,779,466,288) 1,682,537,856
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stocks--0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(2)(5) 159,220 716,490
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming, Inc.(6) 82,676 547,729
- ------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5) 2,048,760 2,504,275
- ------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(5) 525 525,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ladish, Inc. 806,000 806,000
- ------------------------------------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A 44,672 636,576
- ------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 232,222 2,264,165
- ------------------------------------------------------------------------------------------------------------------------------------
Trizec, Ltd. 52,913(1) 414,201
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $7,871,447) 8,414,436
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Stocks--0.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Berg Electronic Holdings, Series E(6) 81,248 2,193,696
- ------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp., $7.00 Cv., Series A(5) 23,500 3,724,750
- ------------------------------------------------------------------------------------------------------------------------------------
First Madison Bank, FSB, 11.50% 95,000 9,975,000
- ------------------------------------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
Sr. Exch., Series A 80,000 2,060,000
$11.625 Exch., Series B(6)(13) 53,248 5,218,378
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 50,000 1,206,250
- ------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 118,800 4,336,200
- ------------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $27,762,014) 28,714,274
Units
- ------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Ctfs. 37,200 372
Litigation Trust Units 118,975 1,190
</TABLE>
15 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
Market Value
Units See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants and
Certificates (continued)
Becker Gaming, Inc. Wts., Exp. 11/00(5) 262,500 $525,000
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 69,024 224,328
- ------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 9,789 14,684
- ------------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03 7,000 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc. Wts., Exp. 12/00(5) 4,000 40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp. Wts., Exp. 4/98 13,333 1,439,999
- ------------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 182,000 584,220
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., Wts., Exp. 12/96 100 55,500
- ------------------------------------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96(5) 13,935 20,903
- ------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Wts., Exp. 1/98(5) 55,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Rights, Warrants, and Certificates (Cost $1,705,251) 2,976,196
<CAPTION>
Face
Date/Price Amount
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
OTC 96-20+ Put Tsy, 7.50%, 11/24 Oct. 12/.009531 $50,000,000 484,375
European OTC Deutsche Mark/U.S. Dollar Put Nov. 2/1.60DEM 338,733,106(1) 698,620
European OTC Deutsche Mark/U.S. Dollar Put Nov. 8/1.60DEM 169,366,553(1) 382,058
European OTC Deutsche Mark/U.S. Dollar Put Nov. 4/1.60DEM 169,366,553(1) 444,933
- ------------------------------------------------------------------------------------------------------------------------------------
Total Put Options Purchased (Cost $7,858,128) 2,009,986
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments--5.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02(5) 3,750,000 3,750,000
Series II, 11.30%, 4/1/00(5) 23,400,000 23,576,670
- ------------------------------------------------------------------------------------------------------------------------------------
Bancario San Paolo, 14.28% CD, 10/18/94 6,500,000,000(1) 2,419,583
- ------------------------------------------------------------------------------------------------------------------------------------
Bayerishe Landesbank, N.Y. Branch:
Italian Lira Linked Confidence Nt., Girozentrale Branch,
10%, 8/7/95(5) 12,500,000 11,818,750
Italian Lira/Deutsche Mark Linked Confidence Nt., Girozentrale Branch,
10%, 8/7/95 24,580,000 24,029,408
Mexican Peso Linked Confidence Nt., Girozentrale Branch,
35.50%, 12/30/94(5) 19,980,000 19,630,350
- ------------------------------------------------------------------------------------------------------------------------------------
Citibank, 10.50%-17% CD, 8/18/94--8/28/95 31,736,857,279(1) 84,366,061
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs International Limited, 5.10%, 2/28/95 9,690,000 9,424,494
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's 500 Indexed-Linked Nts.:
4.85%, 11/16/94(5) 3,250,000 4,195,100
4.85%, 11/25/94(5) 300,000 410,490
4.85%, 11/25/94(5) 2,212,500 3,165,645
5.038%, 12/22/94(5) 2,000,000 2,665,400
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York
(Singapore Branch) CD, 12.15%, 2/3/95 14,898,412,500(1) 6,846,539
- ------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
Japanese Yen Maximum Rate Nts., 10%, 6/2/95(5) 12,500,000 11,620,000
British Pound Sterling Maximum Rate Nts., 10%, 6/2/95(5) 25,000,000 22,797,500
Structured Product Asset Return Certificates, 9.40%,
Series 94-2, 9/1/97(5) 10,000,000 9,969,000
</TABLE>
16 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments
(continued)
Swiss Bank Corporation Investment Banking, Inc.,
10% CD Sterling Rate Linked Nts., 7/3/95 $23,530,000 $23,209,992
- ------------------------------------------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $270,746,085) 263,894,982
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,938,344,549) 98.7% 4,669,617,762
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.3 59,576,648
------- --------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $4,729,194,410
------- --------------
------- --------------
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Face amount is reported in foreign currency.
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at a
designated date in the future.
4. Represents the current interest rate for a variable rate security.
5. Restricted security-see Note 6 of Notes to Financial Statements.
6. Interest or dividend is paid in kind.
7. Partial interest payment was received.
8. Represents the current interest rate for an increasing rate security.
9. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment
rates rise. The price of these securities is typically more volatile than
that of coupon-bearing bonds of the same maturity.
10. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically
more sensitive to changes in prepayment rates than traditional mortgage
backed securities (for example, GNMA pass-throughs).
11. Securities with an aggregate market value of $936,675 are held in escrow to
cover initial margin requirements on open interest rate futures sales
contracts, as follows:
Type of Contract Number of Contracts Face Amount
----------------------------------------------------------------------------
U.S. Treasury Nts., 12/94 245 $24,921,094
U.S. Treasury Bonds, 12/94 89 8,808,219
The market value of the open contracts was $33,665,282 at September 30,
1994, with a net unrealized gain of $64,031.
12. Securities with an aggregate market value of $22,128,750 are held in escrow
to cover outstanding call options, as follows:
Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
------------------------------------------------------------------------------------------------------
OTC 96-20 Put Tsy 7.50 11/24 300,000 10/12/94 1.000156 $609,375 $937,500
European OTC Deutsche Mark/U.S. Dollar 73,914,099 11/04/94 1.50 DEM 355,784 218,277
European OTC Deutsche Mark/U.S. Dollar 33,207,784 11/04/94 1.60 DEM 872,628 1,096,836
European OTC Deutsche Mark/U.S. Dollar 147,828,199 11/02/94 1.50 DEM 686,696 389,856
European OTC Deutsche Mark/U.S. Dollar 66,415,567 11/02/94 1.60 DEM 1,732,112 2,213,366
European OTC Deutsche Mark/U.S. Dollar 73,914,100 11/08/94 1.54 DEM 881,869 908,660
European OTC Deutsche Mark/U.S. Dollar 33,207,784 11/08/94 1.60 DEM 903,055 1,136,225
Argentina (Republic of) OTC U.S. Dollar 25,000 11/16/94 .7533 500,000 540,000
---------
------------------------------------------------------------------------------------------------------
$6,541,519 $7,440,720
13. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the year ended September 30,
1994. The aggregate fair value of all securities of affiliated companies as
of September 30, 1994 amounted to $5,218,378. Transactions during the period
in which the issuer was an affiliate are as follows:
Balance Balance
September 30, 1993 Gross Additions Gross Reductions September 30, 1994
------------------------------ ---------------- ---------------- ------------------------------
Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
-------- ------ ---------- ------ ---------- ------ ------- ------ ---------- --------
K-III Communications Corp., $11.625 21,103 $2,095,713 32,281 $3,301,943 136 $13,677 53,248 $5,383,979
$564,467
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities September 30, 1994
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Investments, at value (cost $4,938,344,549)--see accompanying statement $4,669,617,762
- ------------------------------------------------------------------------------------------------------------------------------------
Cash 4,400,431
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on futures contracts--Note 7 64,031
- ------------------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 109,861,572
Investments sold 84,944,908
Shares of beneficial interest sold 16,958,955
- ------------------------------------------------------------------------------------------------------------------------------------
Other 141,704
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,885,989,363
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities Options written, at value (premiums received $6,541,519)--see accompanying statement--Note 4 7,440,720
- ------------------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 114,847,063
Shares of beneficial interest redeemed 19,984,405
Distribution and service plan fees--Note 5 2,939,585
Dividends and distributions 10,331,176
- ------------------------------------------------------------------------------------------------------------------------------------
Other 1,252,004
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 156,794,953
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $4,729,194,410
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Composition of
Net Assets
Paid-in capital $5,035,306,478
- ------------------------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (2,882,064)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option and foreign
currency transactions (34,233,637)
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options written and translation of assets
and liabilities denominated in foreign currencies (268,996,367)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $4,729,194,410
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $3,143,103,010
and 661,897,244 shares of beneficial interest outstanding) $4.75
Maximum offering price per share
(net asset value plus sales charge of 4.75% of offering price) $4.99
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,586,091,400 and 333,489,354 shares of beneficial interest outstanding) $4.76
See accompanying Notes to Financial Statements.
</TABLE>
18 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Operations For the Year Ended September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest:
Unaffiliated companies (net of withholding taxes of $1,101,145) $413,257,729
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 3,242,246
Affiliated companies 564,467
- ------------------------------------------------------------------------------------------------------------------------------------
Total income $417,064,442
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees--Note 5 23,416,082
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 5 7,673,295
Class B--Note 5 12,329,469
- ------------------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 4,218,280
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder reports 1,313,497
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 846,200
- ------------------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 156,391
Class B 324,858
- ------------------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 106,799
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 54,980
- ------------------------------------------------------------------------------------------------------------------------------------
Other 78,098
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 50,517,949
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 366,546,493
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments,
Options Written and
Foreign Currency
Transactions
Net realized gain (loss) from:
Investments and options written (including premiums on options exercised) (4,635,548)
Closing and expiration of option contracts written--Note 4 9,145,220
Foreign currency transactions (21,719,790)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized loss (17,210,118)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written (371,603,790)
Translation of assets and liabilities denominated in foreign currencies 54,421,484
- ------------------------------------------------------------------------------------------------------------------------------------
Net change (317,182,306)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments, options written and foreign
currency transactions (334,392,424)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $32,154,069
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended September 30,
1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $366,546,493 $225,207,116
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments, options written and foreign
currency transactions (17,210,118) 63,690,435
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies (317,182,306) 32,124,174
----------- -----------
Net increase in net assets resulting from operations 32,154,069 321,021,725
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and
Distributions to
Shareholders
Dividends from net investment income:
Class A ($.4329 and $.4960 per share, respectively) (236,741,649) (210,522,530)
Class B ($.3938 and $.3637 per share, respectively) (119,419,105) (18,595,592)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments, options written
and foreign currency transactions:
Class A ($.0124 per share) -- (7,998,180)
Class B ($.0124 per share) -- (36,330)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions in excess of gains on investments, options written
and foreign currency transactions:
Class A ($.1179 per share) (57,628,697) --
Class B ($.1179 per share) (29,069,526) --
- ------------------------------------------------------------------------------------------------------------------------------------
Tax return of capital:
Class A ($.0135 per share) (8,947,314) --
Class B ($.0135 per share) (4,513,275) --
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest
Transactions
Net increase in net assets resulting from Class A beneficial interest
transactions--Note 2 685,155,178 945,622,259
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial interest
transactions--Note 2 1,019,463,146 683,558,019
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 1,280,452,827 1,713,049,371
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning of year 3,448,741,583 1,735,692,212
-------------- --------------
End of year [including undistributed (overdistributed) net
investment income of ($2,882,064) and $2,865,362, respectively] $4,729,194,410 $3,448,741,583
-------------- --------------
-------------- --------------
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights September 30, 1993
Class A Class B
------- -------
Year Ended Year Ended
September 30, September 30,
1994 1993 1992 1991 1990(2) 1994 1993(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $5.21 $5.07 $5.01 $4.87 $5.00 $5.22 $4.89
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .48 .46 .56 .59 .42 .36
Net realized and unrealized gain (loss)
on investments, options written
and foreign currency transactions (.35) .17 .14 .21 (.10) (.36) .34
------ ------ ------ ------ ------ ------ ------
Total income from investment
operations .10 .65 .60 .77 .49 .06 .70
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.43) (.50) (.46) (.57) (.57) (.39) (.36)
Distributions from net realized gain
on investments, options written
and foreign currency transactions -- (.01) (.08) (.06) (.05) -- (.01)
Distributions in excess of net
realized gain on investments,
options written and foreign
currency transactions (.12) -- -- -- -- (.12) --
Tax return of capital (.01) -- -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.56) (.51) (.54) (.63) (.62) (.52) (.37)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.75 $5.21 $5.07 $5.01 $4.87 $4.76 $5.22
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 1.85% 13.30% 12.56% 16.97% 10.20% 1.07%
13.58%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $3,143 $2,754 $1,736 $560 $177 $1,586 $695
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,082 $2,107 $1,084 $311 $93 $1,236 $276
- ----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 661,897 528,587 342,034 111,739 36,418 333,489 133,235
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.72% 9.78% 9.39% 11.82% 12.79%(4) 7.90% 8.13%(4)
Expenses .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.71% 1.80%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 119.0% 148.6% 208.2% 194.7% 424.6% 119.0% 148.6%
<FN>
1. For the period from November 30, 1992 (inception of offering) to September
30, 1993.
2. For the period from October 16, 1989 (commencement of operations) to
September 30, 1990.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
4. Annualized.
5. Includes $.0002 and $.0020 per share of federal excise tax expense for 1992
and 1991, respectively. The expense ratio, exclusive of federal excise tax
expense, was 1.16% and 1.23%, respectively.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the year ended September 30, 1994 were $6,168,422,547 and
$4,642,399,344, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements
- -------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Strategic Income Fund (the Fund) is a separate series of
Oppenheimer Strategic Funds Trust, a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Fund's investment advisor is Oppenheimer Management Corporation (the Manager).
The fund offers both Class A and Class B shares. Class A shares are sold with a
front-end sales charge. Class B shares may be subject to a contingent deferred
sales charge. Both classes of shares have identical rights to earnings, assets
and voting privileges, except that each class has its own distribution and/or
service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- -------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York
time) on each trading day. Listed and unlisted securities for which such
information is regularly reported are valued at the last sale price of the day
or, in the absence of sales, at values based on the closing bid or asked price
or the last sale price on the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the Board of Trustees.
Long-term debt securities which cannot be valued by the approved portfolio
pricing service are valued by averaging the mean between the bid and asked
prices obtained from two active market makers in such securities. Short-term
debt securities having a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for amortization to maturity of
any premium or discount. Securities for which market quotes are not readily
available are valued under procedures established by the Board of Trustees to
determine fair value in good faith. An option is valued based upon the last
sales price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last sale on
the prior trading date if it is within the spread between the closing bid and
asked prices. If the last sale price is outside the spread, the closing bid or
asked price closest to the last reported sale price is used. Forward foreign
currency contracts are valued at the forward rate on a daily basis.
- -------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. At September 30, 1994, securities with an
aggregate market value of $46,417,790, representing .95% of the Fund's total
assets, were in default.
- -------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The Fund generally enters into forward foreign currency exchange contracts
as a hedge, upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Fund may enter into such contracts as a hedge against
changes in foreign currency exchange rates on portfolio positions. A forward
exchange contract is a commitment to purchase or sell a foreign currency at a
future date, at a negotiated rate. Risks may arise from the potential inability
of the counterparty to meet the terms of the contract and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's results of operations.
- -------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian 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. 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.
22 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
Options Written. The Fund may write covered call and put options. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
In writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written by the Fund could result in the Fund selling or purchasing a security at
a price different from the current market value. All securities covering call
options written are held in escrow by the custodian bank and the Fund maintains
liquid assets sufficient to cover written put options in the event of exercise
by the holder.
- -------------------------------------------------------------------------------
Allocation of Income, Expenses and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily 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 Income Taxes. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required.
- -------------------------------------------------------------------------------
Organization Costs. The Manager advanced $13,675 for organization and start-up
costs of the Fund. Such expenses are being amortized over a five-year period
from the date operations commenced. In the event that all or part of the
Manager's initial investment in shares of the Fund is withdrawn during the
amortization period, the redemption proceeds will be reduced to reimburse the
Fund for any unamortized expenses, in the same ratio as the number of shares
redeemed bears to the number of initial shares outstanding at the time of such
redemption.
- -------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A and Class B shares from net investment income each day the New York
Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- -------------------------------------------------------------------------------
Change in Accounting for Distributions to Shareholders. Effective October 1,
1993, the Fund adopted Statement of Position 93-2: Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. As a result, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. Accordingly, subsequent to September 30,
1993, amounts have been reclassified to reflect an increase in paid-in capital
of $223,939, an increase in undistributed net investment loss of $9,032,371, and
a decrease in undistributed capital loss on investments of $8,808,432. During
the year ended September 30, 1994, in accordance with Statement of Position
93-2, paid-in capital was decreased by $13,460,589, undistributed net investment
loss was decreased by $6,359,795 and undistributed capital loss was decreased by
$7,100,794.
- -------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends in kind are
recognized as income on the ex-dividend date, at the current market value of the
underlying security. Interest on payment-in-kind debt instruments is accrued as
income at the coupon rate and a market adjustment is made on the ex-date.
23 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1994 Period Ended September 30, 1993(1)
----------------------------- ----------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 236,638,548 $1,198,107,502 249,430,763 $1,264,793,607
Dividends and distributions reinvested 46,661,271 234,357,544 29,150,165 147,612,098
Redeemed (149,989,676) (747,309,868) (92,028,210) (466,783,446)
------------ -------------- ----------- --------------
Net increase 133,310,143 $685,155,178 186,552,718 $945,622,259
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
- --------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 211,514,941 $1,074,296,304 133,631,433 $685,673,857
Dividends and distributions reinvested 13,715,575 68,501,659 1,974,080 10,213,941
Redeemed (24,975,699) (123,334,817) (2,370,976) (12,329,779)
------------ -------------- ----------- --------------
Net increase 200,254,817 $1,019,463,146 133,234,537 $683,558,019
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
<FN>
1. For the year ended September 30, 1993 for Class A shares and for the period
from November 30, 1992 (inception of offering) to September 30, 1993 for
Class B shares.
- -------------------------------------------------------------------------------
3. Unrealized Gains And Losses on Investments and Options Written
At September 30, 1994, net unrealized depreciation on investments and
options written of $269,561,957 was composed of gross appreciation of
$34,252,245, and gross depreciation of $303,814,202.
- -------------------------------------------------------------------------------
4. Option Activity
Option activity for the year ended September 30, 1994 was as follows:
Call Options Put Options
------------ -----------
Number Amount Number Amount
of Options of Premiums of Options of Premiums
- --------------------------------------------------------------------------------------------------------------------------
Options outstanding at September 30, 1993 30,000 $3,914,062 -- $--
- --------------------------------------------------------------------------------------------------------------------------
Options written 428,562,283 14,188,394 525,152 1,670,220
- --------------------------------------------------------------------------------------------------------------------------
Options cancelled in closing purchase transactions (10,000) (1,734,375) -- --
- --------------------------------------------------------------------------------------------------------------------------
Options expired prior to exercise (39,750) (6,350,000) (225,152) (1,060,845)
- --------------------------------------------------------------------------------------------------------------------------
Options exercised (30,000) (4,085,937) -- --
----------- ---------- ------- --------
Options outstanding at September 30, 1994 428,512,533 $5,932,144 300,000 $609,375
----------- ---------- ------- --------
----------- ---------- ------- --------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Management Fees And Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of .75% on the
first $200 million of net assets with a reduction of .03% on each $200 million
thereafter to $800 million, .60% on the next $200 million and .50% on net assets
in excess of $1 billion. The Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses.
For the year ended September 30, 1994, commissions (sales charges paid by
investors) on sales of Class A shares totaled $31,059,937, of which $8,686,206
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. During the
year ended September 30, 1994, OFDI received contingent deferred sales charges
of $2,731,436 upon redemption of Class B shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing such services are allocated
ratably to these companies.
24 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
5. Management Fees And Other Transactions With Affiliates (continued)
Under separate approved plans, each class may expend up to .25% of its net
assets annually to reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other financial
institutions. In addition, Class B shares are subject to an asset-based sales
charge of .75% of net assets annually, to reimburse OFDI for sales commissions
paid from its own resources at the time of sale and associated financing costs.
In the event of termination or discontinuance of the Class B plan, the Board of
Trustees may allow the Fund to continue payment of the asset-based sales charge
to OFDI for distribution expenses incurred on Class B shares sold prior to
termination or discontinuance of the plan. During the year ended September 30,
1994, OFDI paid $468,405 and $17,712, respectively, to an affiliated
broker/dealer as reimbursement for Class A and Class B personal service and
maintenance expenses and retained $11,816,316 as reimbursement for Class B sales
commissions and service fee advances, as well as financing costs.
- -------------------------------------------------------------------------------
6. Restricted Securities
The Fund owns securities purchased in private placement transactions, without
registration under the Securities Act of 1933 (the Act). The securities are
valued under methods approved by the Board of Trustees as reflecting fair value.
The Fund intends to invest no more than 10% of its net assets (determined at the
time of purchase) in restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that are determined to be
liquid by the Board of Trustees or by the Manager under Board-approved
guidelines. Restricted and illiquid securities, excluding securities eligible
for resale pursuant to Rule 144A of the Act amount to $370,578,238, or 7.8% of
the Fund's net assets, at September 30, 1994. Illiquid and/or restricted
securities, including those restricted securities that are transferable under
Rule 144A of the Act are listed below.
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Acadia Partners LP, 13% Sub. Nts., 10/1/97(1) 3/12/93 $100.00 $103.00
- ------------------------------------------------------------------------------------------------------------------------------------
Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04(1) 7/21/94 $100.00 $101.50
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02(1) 9/19/94 $100.00 $100.76
Series II, 11.30%, 4/1/00(1) 8/24/94 $100.00 $100.76
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(1) 11/18/93--12/9/93 $100.00 $87.50
- ------------------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, 9.75%, 8/26/99(1) 8/10/94 $99.58 $100.75
- ------------------------------------------------------------------------------------------------------------------------------------
Bariven SA, Sr. Nts., Gtd. by Petroleos de Venezuela, 9%, 2/25/97(1) 7/20/94 $85.38 $93.00
- ------------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank N.Y. Branch:
Italian Lira Linked Confidence Nt.,
Girozentrale Branch, 10%, 8/7/95(1) 5/20/94 $100.00 $94.55
Mexican Peso Linked Confidence Nt.,
Girozentrale Branch, 35.50%, 12/30/94 9/23/94 $100.00 $98.25
- ------------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93--12/9/93 $2.10 $2.00
- ------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(1) 4/28/93--8/11/93 $1.27 $4.50
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
Nts., Banco Estado Minas Gerais:
7.875%, 2/10/99(1) 8/16/94--8/17/94 $79.66 $82.25
8.25%, 2/10/00(1) 8/15/94 $76.25 $81.50
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93--12/17/93 $87.70 $77.50
- ------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(1) 5/17/94 $1.19 $1.22
- ------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(1) 5/17/94 $60.78 $63.37
- ------------------------------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(1) 4/22/94 $100.00 $103.50
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Mortgage Finance Corp.:
Nts., 6.75%, 2/25/25(1) 3/21/94 $78.55 $68.38
Nts., 6.75%, 4/25/24(1) 3/21/94 $78.41 $68.22
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
0%, Cl. B-8, 3/25/25(1) 3/22/94 $81.12 $75.06
0%, Cl. B-9, 3/25/25(1) 3/22/94 $80.89 $71.72
0%, Cl. B-10, 3/25/25(1) 3/22/94 $80.41 $71.38
</TABLE>
25 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
6. Restricted Securities (continued)
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CMC Security Corp. III, 0% Collateralized Mtg. Oblig.,
Series 1994-E, Cl. E-B3, 3/25/24(1) 3/21/94 $75.88 $68.38
- ------------------------------------------------------------------------------------------------------------------------------------
CSFOB 11%, Cl. E, 2/15/14 5/16/94 $98.85 $97.51
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of):
1989-1990 Integrated Loan Facility Bonds:
4.188%, 7/1/01 6/17/93--11/12/93 $91.78 $96.00
4.44%, 10/26/03 10/25/93--12/17/93 $89.77 $93.50
- ------------------------------------------------------------------------------------------------------------------------------------
Empresa Columbiana de Petroleos, Nts., 7.25%, 7/8/98(1) 4/25/94 $93.25 $95.38
- ------------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp. $7.00 Cv., Series A(1) 1/27/94--2/2/94 $103.57 $158.50
- ------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 $1,000.00 $1,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 $100.00 $110.00
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-Cl Class 2-D, 8.70%, 9/25/25 8/10/94 $98.00 $95.95
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994-Cl Class 2-E, 8.70%, 9/25/25 8/10/94 $94.88 $92.48
- ------------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp., Units(1) 6/21/94 $51.39 $55.50
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc.:
Series 1994-11 Cl. B3, 6.50%, 5/25/24(1) 3/11/94 $76.00 $67.38
Series 1994-10 Cl. B3, 6.50%, 3/25/24(1) 3/8/94 $77.45 $69.88
- ------------------------------------------------------------------------------------------------------------------------------------
General Media, Inc. Wts., Exp. 12/00(1) 12/15/93 $.01 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Med.-Term Nts., 2/10/97(1) 6/30/93 $69.50 $88.75
8.625% Med.-Term Nts., Series C, 1/15/99 1/10/94 $78.13 $79.00
9.50% Med.-Term Nts., Series A, 12/15/01 1/27/94 $79.96 $77.00
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Med.-Term Nts., 3/3/97(1) 7/8/93--10/27/93 $76.63 $88.50
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA, 8.25% Gtd. Nts., 2/17/01(1) 2/8/94 $100.00 $82.25
- ------------------------------------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% First Mtg. Bonds, 6/24/10 1/29/93 $102.40 $107.35
- ------------------------------------------------------------------------------------------------------------------------------------
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(1) 10/14/92 $91.50 $98.50
- ------------------------------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 4.25%, 10/15/00 4/15/94 $78.50 $82.00
Tranche B, 4.125%, 11/15/04 9/23/93 $70.00 $68.00
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's
500 Indexed-Linked Nts.:
4.85%, 11/16/94 8/16/94 $139.20 $129.08
4.85%, 11/25/94 8/24/94 $132.00 $136.83
4.85%, 11/25/94 8/24/94 $139.00 $143.08
5.038%, 12/22/94 9/21/94 $146.40 $133.27
- ------------------------------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(1) 2/16/94--8/12/94 $99.60 $79.28
- ------------------------------------------------------------------------------------------------------------------------------------
Mary Kay Corp.:
12.75% Gtd. Sr. Nts., Series B, 12/6/00 12/11/92 $106.50 $104.50
10.25% Sr. Nts., 12/31/00 6/30/93--10/11/93 $101.03 $98.00
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of)
Loan Participation Agreement:
Tranche A, 5.938%, 1/1/09 2/23/94--9/15/94 $75.29 $73.00
Tranche B, 4.312%, 1/1/04 5/18/94--6/3/94 $80.02 $77.19
- ------------------------------------------------------------------------------------------------------------------------------------
New World Communications Holdings Corp., 0%, 6/15/99(1) 6/24/94 $52.32 $54.13
- ------------------------------------------------------------------------------------------------------------------------------------
Polish People's Republic Loan Participation Agreement,
5.0625%, 2/3/24 1/12/94--2/7/94 $63.71 $55.33
- ------------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(1) 6/17/94 $100.00 $100.00
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc. Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass Through Certificates:
9.18%, Series 1992-2, Cl. B2, 1/15/03 8/18/92 $70.74 $76.04
9.47%, Series 1992-2, Cl. B3, 4/15/09 8/18/92 $74.47 $76.09
26 Oppenheimer Strategic Income Fund
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
6. Restricted Securities (continued)
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pulsar Internacional, S.A. de C.V.:
8% Nts., 12/14/94 12/14/93 $100.00 $100.00
9% Nts., 9/19/95 9/16/94 $99.62 $100.00
- ------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
Japanese Yen Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $92.96
British Pound Sterling Maximum Rate Nts., 10%, 6/2/95 5/20/94 $100.00 $91.19
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp. 7.785% Mtg.
Pass Through Certificates, Series 1993-6, Cl. B5, 6/15/23(1) 6/10/93 $82.13 $73.91
- ------------------------------------------------------------------------------------------------------------------------------------
SKW Real Estate Limited Partnership, 9.05%,
Secured Note, Cl. E, 4/15/04(1) 4/14/94 $99.96 $95.25
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic Of) Loan Participation Agreements:
Eskom, 4.907%, 12/23/97 11/18/93 $94.75 $93.50
Eskom, 4.651%, 1/15/98 2/9/94 $95.25 $93.00
Eskom, 4.875%, 4/15/98 11/18/93 $94.75 $90.50
Eskom, 4.75%, 9/15/99 12/17/93 $89.75 $90.50
Eskom, 4.875%, 2/15/00 12/3/93 $90.50 $92.50
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Product Asset Return Certificates,
9.40%, Series 94-2, 9/1/97(1) 9/7/94 $100.00 $99.69
- ------------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(1) 12/20/93--12/22/93 $100.43 $92.25
- ------------------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
13% Sr. Nts., 8/1/96(1) 4/5/94--5/13/94 $93.33 $93.00
Rts., Exp. 7/96(1) 4/5/94--6/29/94 $1.53 $1.50
- ------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming & Resorts, Inc., Units(1) 11/10/93--9/12/94 $102.96 $30.50
- ------------------------------------------------------------------------------------------------------------------------------------
Treasure Bay Gaming, 12.25% Fst. Mtg. Nts., 11/15/00(1) 4/21/94--9/12/94 $92.19 $31.50
- ------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Wts., Exp. 1/98 1/13/92--1/23/92 $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(1) 11/8/93--11/18/93 $100.02 $90.25
- ------------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
1990 Combined Multi-Year Restructuring Agreement,
Restructured Sov. Loan, 4.28%, 12/23/06 1/11/94 $92.00 $83.25
Bankpesca Restructured Sov. Loan, 6.0625%, 10/26/06 1/13/94 $91.75 $83.25
Banobras Myra Loan Participation Agreement,
Tranche 2, 6.125%, 11/16/06 1/24/94 $91.75 $83.25
- ------------------------------------------------------------------------------------------------------------------------------------
Myra Old Money Loan Participation Agreements:
5.6875%, 3/20/05 1/24/94 $91.75 $83.25
6.1725%, 3/20/05 1/24/94 $91.75 $83.25
- ------------------------------------------------------------------------------------------------------------------------------------
New New Money Loan Participation Agreements:
5.1825%, 3/25/05 1/24/94 $91.75 $83.25
Tranche A, 6.0625%, 3/25/05 1/24/94 $91.75 $83.25
- ------------------------------------------------------------------------------------------------------------------------------------
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.,
8.125%, 12/15/03(1) 5/18/94--8/22/94 $87.92 $85.88
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Gtd. Med.-Term Nts.,
7.60%, 6/15/00(1) 8/3/94--8/5/94 $84.94 $82.88
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
6.75% Debs., 9/20/95(1) 4/6/94--5/19/94 $95.14 $94.88
9.00% Sr. Unsec. Unsub. Nts., 5/27/96(1) 5/3/94--7/15/94 $94.58 $93.63
- ------------------------------------------------------------------------------------------------------------------------------------
Bonds, Banco Venezuela TCI:
0% Debs., 12/13/98 7/13/93--7/15/93 $72.64 $64.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7. Futures Contracts
At September 30, 1994, the Fund had outstanding futures contracts to sell
debt securities as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Date Futures Contracts September 30, 1994 Appreciation
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 12/94 245 $24,859,844 $61,250
U.S. Treasury Bonds 12/94 89 8,805,438 2,781
--- ----------- -------
334 $33,665,282 $64,031
--- ----------- -------
--- ----------- -------
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
27 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
Independent Auditors' Report
- -------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Strategic Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Strategic Income Fund as of
September 30, 1994, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended September 30, 1994
and 1993, and the financial highlights for the period October 16, 1989
(commencement of operations) to September 30, 1994. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
at September 30, 1994 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
Strategic Income Fund at September 30, 1994, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1994
28 Oppenheimer Strategic Income Fund
<PAGE>
- -------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- -------------------------------------------------------------------------------
In early 1995, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1994. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
A distribution of $.104 per share was paid on November 24, 1993, of which
$.010 was designated as a ``capital gain distribution'' for federal income tax
purposes. Whether received in stock or cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of capital assets held
for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended September 30, 1994
which are not designated as capital gain distributions should be multiplied by
1.00% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
29 Oppenheimer Strategic Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund
A Series of Oppenheimer Strategic Funds Trust
- --------------------------------------------------------------------------------
Officers and Trustees
James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President, Secretary, and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
Investment Advisor Oppenheimer Management Corporation
- --------------------------------------------------------------------------------
Distributor Oppenheimer Funds Distributor, Inc.
- --------------------------------------------------------------------------------
Transfer and Shareholder
Servicing Agent Oppenheimer Shareholder Services
- --------------------------------------------------------------------------------
Custodian of Portfolio Securities The Bank of New York
- --------------------------------------------------------------------------------
Independent Auditors Deloitte & Touche LLP
- --------------------------------------------------------------------------------
Legal Counsel Myer, Swanson & Adams, P.C.
This is a copy of a report to shareholders of Oppenheimer Strategic Income Fund.
This report must be preceded or accompanied by a Prospectus of Oppenheimer
Strategic Income Fund. For material information concerning the Fund, see the
Prospectus.
30 Oppenheimer Strategic Income Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
OppenheimerFunds offers over 35 funds designed to fit virtually every investment
goal. Whether you're investing for retirement, your children's education or
tax-free income, we have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable knowing
that you are investing with a respected financial institution with over 30 years
of experience in helping people just like you reach their financial goals. And
you're investing with a leader in global, growth stock and flexible fixed-income
investments--with over 1.8 million shareholder accounts and more than $26
billion under Oppenheimer's management and that of our affiliates.
As an OppenheimerFunds shareholder, you can easily exchange shares of
eligible funds of the same class by mail or by telephone for a small
administrative fee.1 For more information on OppenheimerFunds, please contact
your financial advisor or call us at 1-800-525-7048 for a prospectus. You may
also write us at the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
- --------------------------------------------------------------------------------
Stock Funds Discovery Fund Global Fund
Global Emerging Growth Fund2 Oppenheimer Fund
Time Fund Value Stock Fund
Target Fund Gold & Special Minerals Fund
Growth Fund3
- --------------------------------------------------------------------------------
Stock & Bond Funds
Main Street Income & Growth Fund
Total Return Fund
Global Growth & Income Fund
Equity Income Fund
Asset Allocation Fund
- --------------------------------------------------------------------------------
Bond Funds
High Yield Fund
Champion High Yield Fund
Strategic Income & Growth Fund
Strategic Income Fund
Strategic Diversified Income Fund
Strategic Investment Grade Bond Fund
Strategic Short-Term Income Fund
Investment Grade Bond Fund
Mortgage Income Fund
U.S. Government Trust
Limited-Term Government
- --------------------------------------------------------------------------------
Tax-Exempt Funds
New York Tax-Exempt Fund4
California Tax-Exempt Fund4
Pennsylvania Tax-Exempt Fund4
Florida Tax-Exempt Fund4
New Jersey Tax-Exempt Fund4
Tax-Free Bond Fund
Insured Tax-Exempt Bond Fund
Intermediate Tax-Exempt Bond Fund
- --------------------------------------------------------------------------------
Money Market Funds Money Market Fund Cash Reserves
1. The fee is waived for PhoneLink exchanges between existing accounts. Exchange
privileges are subject to change or termination.
2. Formerly Oppenheimer Global Bio-Tech Fund and Oppenheimer Global Environment
Fund.
3. Formerly Special Fund.
4. Available only to residents of those states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1994 Oppenheimer Management Corporation. All rights reserved.
31 Oppenheimer Strategic Income Fund
<PAGE>
"HOW MAY I HELP YOU?"
GENERAL INFORMATION
1-800-525-7048
TALK TO A CUSTOMER SERVICE REPRESENTATIVE.
MONDAY THROUGH FRIDAY FROM
8:30 A.M. TO 8:00 P.M., AND SATURDAY FROM 10:00 A.M.
TO 2:00 P.M. ET.
TELEPHONE TRANSACTIONS
1-800-852-8457
MAKE ACCOUNT TRANSACTIONS WITH A CUSTOMER SERVICE REPRESENTATIVE.
MONDAY THROUGH FRIDAY FROM
8:30 A.M. TO 8:00 P.M. ET.
PHOTO OF
BARBARA H.
PHONELINK
1-800-533-3310 ICSA LOGO
GET AUTOMATED INFORMATION OR MAKE AUTOMATED TRANSACTIONS.
24 HOURS A DAY, 7 DAYS A WEEK.
TELECOMMUNICATION
DEVICE FOR THE DEAF
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INFORMATION HOTLINE
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HEAR TIMELY AND INSIGHTFUL MESSAGES ON THE ECONOMY AND ISSUES THAT AFFECT YOUR
FINANCES. 24 HOURS A DAY, 7 DAYS A WEEK.
"Just as OppenheimerFunds offers over 35 different mutual funds designed to help
meet virtually every investment need, Oppenheimer Shareholder Services offers a
variety of services to satisfy your individual needs. Whenever you require help,
we're only a toll-free phone call away.
"For personalized assistance and account information, call our General
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Representatives and get the help you need.
"When you want to make account transactions, it's easy for you to
redeem shares, exchange shares, or conduct AccountLink transactions, simply by
calling our Telephone Transactions number.
"And for added convenience, OppenheimerFunds' PhoneLink, an automated
voice response system is available 24 hours a day, 7 days a week. PhoneLink
gives you access to a variety of fund, account, and market information. You can
even make purchases, exchanges and redemptions using your touch-tone phone. Of
course, PhoneLink will always give you the option to speak with a Customer
Service Representative during the hours shown to the left.
"When you invest in OppenheimerFunds, you know you'll receive a high
level of customer service. The International Customer Service Association knows
it, too, as it awarded Oppenheimer Shareholder Services a 1993 Award of
Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
RA275.1194.N
[Logo] OPPENHEIMERFUNDS
Oppenheimer Funds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
<PAGE>
<PAGE>
[Logo] OPPENHEIMERFUNDS
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
ANNUAL REPORT SEPTEMBER 30, 1994
<PAGE>
FUND FACTS
IN THIS REPORT:
ANSWERS TO TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
- - HOW DID THE FUND RESPOND TO RISING INTEREST RATES IN THE U.S. AND OVERSEAS?
- - WHERE ARE YOU FINDING THE MOST ATTRACTIVE INVESTMENT OPPORTUNITIES TODAY?
FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
- --------------------------------------------------------------------------------
1 The Fund's objective is to seek high current income by investing in three
broad fixed income sectors: U.S. government issues, foreign fixed income
securities, and high-yield lower-rated corporate bonds.
- --------------------------------------------------------------------------------
2 The Fund's standardized yield for the 30 days ended September 30, 1994 was
7.11%.(1)
- --------------------------------------------------------------------------------
3 Total return for the period from inception of the Fund on February 1, 1994
to September 30, 1994 was -0.42%.(2)
- --------------------------------------------------------------------------------
4 "The Fund's flexibility to shift assets strategically among bond market
sectors is a major plus for shareholders in the current investment
environment. It has allowed us to capitalize on opportunities offered in
higher-yielding corporate bonds, the best performing bond market sector
over the last 12 months. And it has enabled us to limit the portfolio's
exposure to rising interest rates worldwide."
PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, SEPTEMBER 30, 1994
(1) Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/94, divided by the
maximum offering price at the end of the period, compounded semi-annually and
then annualized. Falling net asset values will tend to artificially raise
yields.
(2) Total return is based on a hypothetical investment in the Fund for the
period shown, after deducting the contingent deferred sales charge of 1%.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
2 Oppenheimer Strategic Diversified Income Fund
<PAGE>
REPORT TO SHAREHOLDERS
Oppenheimer Strategic Diversified Income Fund provided shareholders an
attractive level of income for the 8 months ended September 30, 1994. At that
date, the Fund's standardized 30-day yield was 7.11%.(3)
Your managers' ability to shift assets strategically among three
sectors--U.S. government securities, high-yield corporate bonds and foreign
fixed income securities--played an important role in the Fund's performance
over the past year. As the Federal Reserve and central banks worldwide moved
aggressively to raise short-term interest rates to fend off inflation, your
managers were able to capture rising yields while limiting the portfolio's price
erosion.
As U.S. interest rates began to rise, your managers reduced the Fund's
exposure to long-term U.S. government bonds, as well as to high-yield bonds
issued by consumer-durable and financial services companies, whose earnings are
sensitive to interest rate changes.
The proceeds from these sales were used to add to holdings in
higher-yielding corporate bonds issued by larger industrial companies, whose
earnings tend to rise in the middle-to-late stages of an economic expansion. In
addition, your managers increased positions in chemicals, mining, metals, and
forest products sectors.
As interest rates rose offshore and the dollar weakened against major
currencies, positions in Latin America and other emerging markets also were
reduced, while more investments were centered in Europe. In addition to
increasing the portfolio's holdings of foreign government bonds, which made up
14.8% of the portfolio on September 30, your managers focused attention on large
European industrial companies positioned to benefit from economic growth.
Looking ahead, your managers don't anticipate major changes in the
portfolio's composition in the near term. The Fund's allocations will, of
course, be adjusted should the economic expansion appear to be ending, but all
signs are currently pointing to continued gradual growth--and your Fund is
well-positioned to provide attractive returns.
We appreciate the confidence you have placed in Oppenheimer Strategic
Diversified Income Fund, and we look forward to continuing to help you reach
your investment goals.
James C. Swain
Chairman
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Diversified Income Fund
Jon S. Fossel
President
Oppenheimer Strategic Funds Trust for
Oppenheimer Strategic Diversified Income Fund
October 21, 1994
(3) See footnote 1, page 2.
3 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS September 30, 1994
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--7.0%
- -------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with First Chicago Capital Markets, 4.95%, dated
9/30/94, to be repurchased at $3,001,238 on 10/03/94, collateralized by
U.S. Treasury Nts., 4.25%-8.5%, 4/15/95-7/15/98, with a value of
$1,696,399 and U.S. Treasury Bills, 0%, 3/16/95-3/23/95, with a value of
$1,366,384 (Cost $3,000,000)
$3,000,000 $3,000,000 7.00%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS--45.7%
- -------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of):
Bonds, 8.375%, 12/20/03 800,000 666,802
Bonos de Consolidacion de Deudas, Series I, 4.8125%:
9/1/02 (4)(7) 267,900 180,399
4/1/07 (4)(7) 402,244 250,440
-----------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
Bonds, Banco Do Nordeste, 9% Sr. Unsec. Debs, 11/12/96 100,000 94,875
Bonds, Banco Nacional de Desenvolvimento Economico e Social,
10.375%, 4/27/98 100,000 100,125
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 50,000 48,250
8.25%, 2/10/00 500,000 402,500
-----------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Bonds:
6%, 12/10/99 2,600,000 (1) 379,697
9%, 11/15/98 1,500,000 (1) 248,632
-----------------------------------------------------------------------------------------------------
Empresa Columbiana de Petroleos, Nts., 7.25%,
7/8/98 (6) 150,000 143,063
-----------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds:
12.50% 1/1/98 150,000,000 (1) 98,644
Buoni Pollennali del Tes:
12%, 5/1/97 700,000,000 (1) 454,776
12.50%, 6/16/97 300,000,000 (1) 196,942
-----------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreements:
Tranche A, 4.50%, 1/1/09 (4)(6) 350,000 255,500
Tranche B, 4.312%, 1/1/04 (4)(6) 50,000 38,594
-----------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 635,000 (1) 392,310
-----------------------------------------------------------------------------------------------------
South Australia Government Finance Authority Bonds, 10%, 1/15/03 1,080,000 (1) 766,802
-----------------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 8,000,000 (1) 62,998
Bonds, 11.45%, 8/30/98 177,290,000 (1) 1,396,119
-----------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria:
12%, 10/22/98 250,000 (1) 198,688
Gtd. Bonds, 8.25%, 10/15/03 180,000 (1) 114,627
-----------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts.:
12%, 11/20/98 306,000 (1) 535,041
12.25%, 3/26/99 240,000 (1) 425,435
-----------------------------------------------------------------------------------------------------
United Mexican States:
Banco Nacional de Comercio Exterior SNC International Finance BV
Gtd. Matador Bonds, 7.25% Debs., 2/2/04 950,000 (1) 796,817
Petacalco Topolobampo Trust, Sr. Sec. Unsub. Nts.:
8.125%, 12/15/03 (6) 200,000 171,750
8.125%, 12/15/03 850,000 729,938
Petroleos Mexicanos Gtd. Medium term Nts., 7.60%, 6/15/00 50,000 45,541
-----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 11.75%, 11/15/14 3,600,000 4,799,250
-----------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
8.875%, 11/15/97 (9)(10) 3,656,000 3,852,510
9.25%, 1/15/96 900,000 932,906
-----------------------------------------------------------------------------------------------------
Venezuela (Republic of):
6.75% Debs., 9/20/95 (6) 325,000 308,344
9% Sr. Unsec. Unsub. Nts., 5/27/96 (6) 125,000 117,031
-----------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 12.5%, 4/1/98 475,000 (1) 381,603
-----------
Total Government Obligations (Cost $19,892,873) 19,586,949
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--3.9%
- -------------------------------------------------------------------------------------------------------------------------
Government Federal National Mortgage Assn. Interest-Only Stripped Mtg.-Backed
Agency--3.9% Security, Trust 240, Class 2:
7%, 9/25/23 (8) 320,217 121,082
7%, 2/25/24 (8) 3,900,491 1,496,813
-----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 8.95%, 3/15/20 78,000 79,747
-----------
Total Mortgage-Backed Obligations (Cost $1,627,755) 1,697,642
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--36.0%
- -------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--4.8%
- -------------------------------------------------------------------------------------------------------------------------
Chemicals--2.6% Harris Chemical North America, Inc., 0%/10.25% Gtd. Sr. Sec.
Disc. Nts., 7/15/01 (3) 400,000 326,000
-----------------------------------------------------------------------------------------------------
4 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chemicals NL Industries, Inc.:
(continued) 11.75% Sr. Sec. Nts., 10/15/03 $200,000 $206,500
0%/13% Sr. Sec. Disc. Nts., 10/15/05 (3) 400,000 254,500
-----------------------------------------------------------------------------------------------------
Rexene Corp.:
9% Fst. Priority Nts., 11/15/99 (5) 127,000 121,179
10% 2nd Priority Nts., 11/15/02 (7) 200,000 199,000
-----------
1,107,179
- -------------------------------------------------------------------------------------------------------------------------
Metals--0.8% Kaiser Aluminum & Chemical Corp.:
12.75% Sr. Sub. Nts., 2/15/02 250,000 222,500
9.875% Sr. Nts., 2/1/03 100,000 97,250
-----------
319,750
- -------------------------------------------------------------------------------------------------------------------------
Paper and Forest Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 50,000 50,125
Products--1.4% -----------------------------------------------------------------------------------------------------
Stone Consolidated, Corp., 10.25% Sr. Sec Nts., 12/15/00 250,000 246,875 *
-----------------------------------------------------------------------------------------------------
Stone Container Corp.:
9.875% Sr. Nts., 2/1/01 200,000 188,250
10.75% Fst. Mtg. Nts., 10/1/02 100,000 99,875
-----------
585,125
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS-11.5%
- -------------------------------------------------------------------------------------------------------------------------
Automotive--2.2% Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01 350,000 324,625
-----------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 11.875% Sr. Sub. Debs., 10/1/04 300,000 303,000
-----------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 300,000 277,500
-----------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 50,000 52,250 *
-----------
957,375
- -------------------------------------------------------------------------------------------------------------------------
Construction Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 250,000 246,250
Supplies and -----------------------------------------------------------------------------------------------------
Development--1.8% USG Corp., 9.25% Sr. Sec. Nts., 9/15/01 200,000 190,500
-----------------------------------------------------------------------------------------------------
Walter Industries, Inc., 14.625% Sr. Nts., Series B, 1/1/49 (2) 200,000 338,000
-----------
774,750
- -------------------------------------------------------------------------------------------------------------------------
Consumer Goods MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 300,000 298,500
and Services--3.3% -----------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01 250,000 237,042
-----------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 350,000 307,128
-----------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 300,000 303,000
-----------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 300,000 272,625
-----------
1,418,295
- -------------------------------------------------------------------------------------------------------------------------
Entertainment--1.6% Capital Gaming International, Inc., 11.50% Sr. Sec. Nts., 2/1/01 250,000 175,000
-----------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 200,000 199,000
-----------------------------------------------------------------------------------------------------
Marvel (Parent) Holdings, Inc., 0% Sr. Sec. Disc. Nts., 4/15/98 500,000 312,500
-----------
686,500
- -------------------------------------------------------------------------------------------------------------------------
Media--1.1% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 200,000 194,000
-----------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 300,000 291,000
-----------
485,000
- -------------------------------------------------------------------------------------------------------------------------
Real Estate
Development--0.6% Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 300,000 271,500
- -------------------------------------------------------------------------------------------------------------------------
Retail--0.9% Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 50,000 49,250
-----------------------------------------------------------------------------------------------------
R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98 (2) 450,000 324,000
-----------
373,250
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--6.2%
- -------------------------------------------------------------------------------------------------------------------------
Food--0.1% Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01 (2) 200,000 57,000
- -------------------------------------------------------------------------------------------------------------------------
Food and Drug Di Giorgio Corp., 12% Sr. Nts., 2/15/03 150,000 150,000
Distribution--1.1% -----------------------------------------------------------------------------------------------------
Grand Union Co., 12.25% Sr. Sub. Nts., 7/15/02 400,000 296,000
-----------
446,000
- -------------------------------------------------------------------------------------------------------------------------
Healthcare--0.8% Total Renal Care, Inc., Units 500,000 360,000
- -------------------------------------------------------------------------------------------------------------------------
Financial--4.2% Banco Ganadero S.A., 9.75%, 8/26/99 (6) 300,000 302,250
-----------------------------------------------------------------------------------------------------
Borg-Warner Security Corp, 9.125% Sr. Sub. Nts., 5/1/03 400,000 361,000
-----------------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03 300,000 283,500
-----------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 980,000 (1) 637,745
-----------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 250,000 223,125
-----------
1,807,620
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--3.2%
- -------------------------------------------------------------------------------------------------------------------------
Containers--.9% Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 400,000 398,000
- -------------------------------------------------------------------------------------------------------------------------
General EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 350,000 318,500
Industrial--1.4% -----------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02 (6) 300,000 300,000
-----------
618,500
- -------------------------------------------------------------------------------------------------------------------------
Transportation--0.9% Tiphook Financial Corp., 7.125% Gtd. Nts., 5/1/98 500,000 362,500
- -------------------------------------------------------------------------------------------------------------------------
5 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY--8.8%
- -------------------------------------------------------------------------------------------------------------------------
Aerospace/ GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 $200,000 $168,000
Defense--1.1% -----------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 300,000 307,500
-----------
475,500
- -------------------------------------------------------------------------------------------------------------------------
Cable American Telecasting, Inc., 12.5% Sr. Disc. Nts., 6/15/04 400,000 196,000
Television--3.9% -----------------------------------------------------------------------------------------------------
Bell Media Cable, 11.95% Sr. Disc. Nts., 7/15/04 (5) 400,000 228,500
-----------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 300,000 306,000
-----------------------------------------------------------------------------------------------------
Celcaribe S.A., 0%/13.50% Sr. Sec. Nts., 3/15/04 (3)(6) 100,000 63,375
-----------------------------------------------------------------------------------------------------
Comcast Cellular Corp., 0% Nts., Series B, 3/5/00 500,000 310,000
-----------------------------------------------------------------------------------------------------
Continental Broadcasting Ltd./Continental Broadcasting Capital Corp.,
10.625% Sr. Sub. Nts., 7/1/03 250,000 252,813
-----------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 320,000 153,600
-----------------------------------------------------------------------------------------------------
Marcus Cable, 0% Gtd. Sr. Sub. Disc. Nts., 8/01/04 (3) 300,000 164,250
-----------
1,674,538
- -------------------------------------------------------------------------------------------------------------------------
Communications--3.6% Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (3) 280,000 184,800
-----------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00 (3) 500,000 360,000
-----------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (3) 600,000 355,500
-----------------------------------------------------------------------------------------------------
NewCity Communications, Inc., 11.375%, Sr. Sub. Nts., 11/1/03 300,000 303,750
-----------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr.
Sub. Disc. Nts., 8/1/03 (3) 500,000 336,250
-----------
1,540,300
- -------------------------------------------------------------------------------------------------------------------------
Technology--0.2% Imax Corp., 7% Sr. Nts., 3/1/01 (5) 80,000 70,000
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
UTILITIES--1.5%
- -------------------------------------------------------------------------------------------------------------------------
Utility--1.5% Beaver Valley Funding Corp., 9.00% Debs., 6/1/17 300,000 228,245
-----------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04 (3) 165,000 118,387
-----------------------------------------------------------------------------------------------------
El Paso Electric Co., 10.375% Lease Oblig. Debs., 1/2/11 (2) 210,000 113,577
-----------------------------------------------------------------------------------------------------
First PV Funding Corp., Lease Obligation Bonds, 10.15%,
Series 1986B, 1/15/16 200,000 183,929
-----------
644,138
-----------
Total Corporate Bonds and Notes (Cost $15,585,965) 15,432,820
<CAPTION>
SHARES
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--0.2%
- -------------------------------------------------------------------------------------------------------------------------
Capital Gaming, Inc. (7) 6,667 44,169
-----------------------------------------------------------------------------------------------------
Celcaribe S.A. (6) 16,260 19,875
-----------
Total Common Stocks (Cost $70,007) 64,044
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PREFERRED First Madison Bank, FSB, 11.50% 3,000 315,000
STOCKS--1.2%
- -------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 C.V., Series B 8,000 193,000
-----------
Total Preferred Stocks (Cost $498,000) 508,000
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS, AND CERTIFICATES--0%
- -------------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 5,062 16,451
-----------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96 (6) 6 9
-----------
Total Rights, Warrants, and Certificates (Cost $22,524) 16,460
<CAPTION>
DATE/PRICE FACE AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED--0%
- -------------------------------------------------------------------------------------------------------------------------
European OTC Deutsche Mark/U.S. Dollar Put Nov. 2/1.60 DEM 1,522,819 (1) 3,141
European OTC Deutsche Mark/U.S. Dollar Put Nov. 8/1.60 DEM 761,409 (1) 2,000
European OTC Deutsche Mark/U.S. Dollar Put Nov. 4/1.60 DEM 761,409 (1) 1,718
-----------
Total Put Options Purchased (Cost $33,185) 6,859
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS--5.4%
- -------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02 (6) 250,000 250,000
Series II, 11.30%, 4/1/00 (6) 300,000 302,265
-----------------------------------------------------------------------------------------------------
Bayerische Landesbank, N.Y. Branch:
Mexican Peso Linked Confidence Nt., Girozentrale Branch,
35.50%, 12/30/94 (6) 200,000 196,500
Italian Lira Linked Confidence Nt., Girozentrale Branch,
10%, 8/7/95 140,000 136,864
-----------------------------------------------------------------------------------------------------
Citibank, 10.50%-16% CD, 12/12/94-8/17/95 274,189,082 (1) 814,731
-----------------------------------------------------------------------------------------------------
Goldman Sachs International Limited, 5.10%, 2/28/95 80,000 77,808
-----------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Standard & Poor's 500
Index-Linked Nts.:
4.85%, 11/25/94 (6) 25,000 35,770
4.9125%, 12/14/94 (6) 25,000 34,505
-----------------------------------------------------------------------------------------------------
6 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Structured Instruments (continued)
Pulsar Internacional, S.A. de C.V., 9%, 9/19/95 (6) $250,000 $250,000
-----------------------------------------------------------------------------------------------------
Swiss Bank Corporation Investment Banking, Inc.,
10% CD Sterling Rate Linked Nts., 7/3/95 230,000 226,872
-----------
Total Structured Instruments (Cost $2,315,444) 2,325,315
- -------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $43,045,753) 99.4% 42,638,089
- -------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.6% 249,652
----------- -----------
Net Assets 100.0% $42,887,741
----------- -----------
----------- -----------
<FN>
1. Face amount is reported in foreign currency.
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at a
designated future date.
4. Represents the current interest rate for a variable rate security.
5. Represents the current interest rate for an increasing rate security.
6. Restricted security-See Note 6 of Notes to Financial Statements.
7. Interest or dividend is paid in kind.
8. Interest-Only Strips represent the right to receive the monthly interest payments on
an underlying pool of mortgage loans. These securities typically decline in price as
interest rates decline. Most other fixed-income securities increase in price when
interest rates decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated. The price of these
securities is typically more sensitive to changes in prepayment rates than
traditional mortgage backed securities (for example, GNMA pass-throughs).
9. Securities with an aggregate market value of $93,784 are held in escrow to cover
outstanding call options, as follows:
FACE
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET
VALUE
TO CALL DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
European OTC Deutsche Mark/U.S. Dollar 332,290 11/4/94 1.50 DEM $1,599 $981
European OTC Deutsche Mark/U.S. Dollar 149,290 11/4/94 1.60 DEM 3,923 4,931
European OTC Deutsche Mark/U.S. Dollar 664,581 11/2/94 1.50 DEM 3,087 1,753
European OTC Deutsche Mark/U.S. Dollar 298,580 11/2/94 1.60 DEM 7,787 9,950
European OTC Deutsche Mark/U.S. Dollar 332,291 11/8/94 1.54 DEM 3,965 4,085
European OTC Deutsche Mark/U.S. Dollar 149,290 11/8/94 1.60 DEM 4,060 5,108
------- -------
$24,421 $26,808
10. Securities with an aggregate market value of $10,538 are held in escrow to cover
initial margin requirements on open interest rate futures sales contracts as
follows:
TYPE OF CONTRACT NUMBER OF CONTRACTS FACE
AMOUNT
----------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 12/94 1 $101,719
The market value of the open contracts was $101,469 at September 30, 1994 with a net unrealized gain of $249.
</TABLE>
7 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (cost $43,045,753) - see accompanying statement $42,638,089
------------------------------------------------------------------------------------------------
Cash 557,053
------------------------------------------------------------------------------------------------
Unrealized appreciation on futures contracts - Note 7 249
------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 945,838
Shares of beneficial interest sold 217,954
Investments sold 15,108
------------------------------------------------------------------------------------------------
Other 12,134
-----------
Total assets 44,386,425
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Options written, at value (premiums received $24,421) - see accompanying
statement - Note 4 26,808
------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,253,551
Shares of beneficial interest redeemed 78,804
Distribution and service plan fees - Note 5 21,780
Dividends 105,799
Other 11,942
-----------
Total liabilities 1,498,684
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $42,887,741
-----------
-----------
- ------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $43,752,822
NET ASSETS ------------------------------------------------------------------------------------------------
Undistributed net investment income 4,070
------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option
and foreign currency transactions (460,892)
------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options written and
translation of assets and liabilities denominated in foreign
currencies (408,259)
------------------------------------------------------------------------------------------------
Net assets $42,887,741
-----------
-----------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Net asset value, redemption price and offering
PER SHARE price per share (based on net assets of $42,887,741 and 8,943,700
shares of beneficial interest outstanding) $ 4.80
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Period from February 1, 1994 (commencement of operations)
to September 30, 1994
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $1,296,832
Dividends 4,250
----------
Total income 1,301,082
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES Service plan fees - Note 5 143,650
------------------------------------------------------------------------------------------------
Management fees - Note 5 109,624
------------------------------------------------------------------------------------------------
Registration and filing fees 13,505
------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 5 11,481
------------------------------------------------------------------------------------------------
Custodian fees and expenses 11,441
------------------------------------------------------------------------------------------------
Legal and auditing fees 10,501
------------------------------------------------------------------------------------------------
Shareholder reports 8,957
------------------------------------------------------------------------------------------------
Other 2,389
----------
Total expenses 311,548
------------------------------------------------------------------------------------------------
Less reimbursement from Oppenheimer Management Corporation - Note 5 (61,005)
----------
Net expenses 250,543
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,050,539
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND Net realized gain (loss) from:
UNREALIZED GAIN (LOSS) Investments and options written (443,166)
ON INVESTMENTS AND Closing and expiration of option contracts written - Note 4 5,502
FOREIGN CURRENCY Foreign currency transactions (23,228)
TRANSACTIONS ----------
Net realized loss (460,892)
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written (555,781)
Translation of assets and liabilities denominated in foreign currencies 147,522
----------
Net change (408,259)
----------
Net realized and unrealized loss on investments, options written and foreign
currency transactions (869,151)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $
181,388
----------
----------
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED
SEPTEMBER 30,
1994(1)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS Net investment income $ 1,050,539
------------------------------------------------------------------------------------------------
Net realized loss on investments, options written and foreign
currency transactions (460,892)
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets and
liabilities denominated in foreign currencies (408,259)
-----------
Net decrease in net assets resulting from operations 181,388
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO Dividends from net investment income
SHAREHOLDERS ($.228 per share) (1,046,469)
- ------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2 43,752,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 42,887,741
------------------------------------------------------------------------------------------------
Beginning of period --
End of period (including undistributed net investment income of $4,070) $42,887,741
<FN>
1. For the period from February 1, 1994 (commencement of operations) to September 30, 1994.
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Strategic Diversified Income Fund
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
PERIOD ENDED
SEPTEMBER 30,
1994(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 5.00
- ----------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23
Net realized and unrealized loss on
investments, options written and foreign currency
transactions (.20)
-------
Total income from investment operations .03
- ----------------------------------------------------------------------------
Dividends from net investment income (.23)
- ----------------------------------------------------------------------------
Net asset value, end of period $ 4.80
- ----------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) .58%
- ----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $42,888
- ----------------------------------------------------------------------------
Average net assets (in thousands) $22,046
- ----------------------------------------------------------------------------
Number of shares outstanding at end of period
(in thousands) 8,944
- ----------------------------------------------------------------------------
Ratios to average net assets(3):
Net investment income 7.187%
Expenses, before voluntary reimbursement by the Manager 2.131%
Expenses net of voluntary reimbursement by the Manager 1.714%
- ----------------------------------------------------------------------------
Portfolio turnover rate(4) 108.8%
<FN>
1. For the period from February 1, 1994 (commencement of operations) to
September 30, 1994.
2. Assumes a hypothetical initial investment on February 1, 1994, with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended September 30, 1994 were $63,604,122 and $21,616,005, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Strategic Diversified Income Fund
<PAGE>
----------------------------------------------------------
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Strategic Diversified Income Fund (the Fund)
ACCOUNTING POLICIES is a separate series of Oppenheimer Strategic Funds Trust,
a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as
amended. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers a
single class of shares, designated as Class C shares,
which may be subject to a contingent deferred sales
charge. The following is a summary of significant
accounting policies consistently followed by the Fund.
----------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at
4:00 p.m. (New York time) on each trading day. Listed and
unlisted securities for which such information is
regularly reported are valued at the last sale price of
the day or, in the absence of sales, at values based on
the closing bid or asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Long-term debt securities which cannot
be valued by the approved portfolio pricing service are
valued by averaging the mean between the bid and asked
prices obtained from two active market makers in such
securities. Short-term debt securities having a remaining
maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to
maturity of any premium or discount. Securities for which
market quotes are not readily available are valued under
procedures established by the Board of Trustees to
determine fair value in good faith. An option is valued
based upon the last sale price on the principal exchange
on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last
sale price on the prior trading date if it is within the
spread between the closing bid and asked prices. If the
last sale price is outside the spread, the closing bid or
asked price closest to the last reported sale price is
used. Forward foreign currency exchange contracts are
valued at the forward rate on a daily basis.
----------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high yield
securities, which may be subject to a greater degree of
credit risk, greater market fluctuations and risk of loss
of income and principal, and may be more sensitive to
economic conditions than lower yielding, higher rated
fixed income securities. The Fund may acquire securities
in default, and is not obligated to dispose of securities
whose issuers subsequently default. At September 30,
1994, securities with an aggregate market value of
$832,577, representing 1.88% of the Fund's total assets
were in default.
----------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of
the Fund are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rates of exchange prevailing on the respective dates of
such transactions.
The Fund generally enters into forward currency exchange
contracts as a hedge, upon the purchase or sale of a
security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against
changes in foreign currency exchange rates on portfolio
positions. A forward exchange contract is a commitment to
purchase or sell a foreign currency at a future date, at a
negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the
contract and from unanticipated movements in the value of
a foreign currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange rates
on investments is separately identified from the
fluctuations arising from changes in market values of
securities held and reported with all other foreign
currency gains and losses in the Fund's results of
operations.
12 Oppenheimer Strategic Diversified Income Fund
<PAGE>
----------------------------------------------------------
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian 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. 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.
----------------------------------------------------------
OPTIONS WRITTEN. The Fund may write covered call and put
options. When an option is written, the Fund receives a
premium and becomes obligated to sell the underlying
security at a fixed price, upon exercise of the option.
In writing an option, the Fund bears the market risk of an
unfavorable change in the price of the security underlying
the written option. Exercise of an option written by the
Fund could result in the Fund selling or purchasing a
security at a price different from the current market
value. All securities covering call options written are
held in escrow by the custodian bank and the Fund
maintains liquid assets sufficient to cover written put
options in the event of exercise by the holder.
----------------------------------------------------------
FEDERAL INCOME TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any net
realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income
tax provision is required.
----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends from net investment income each day the
New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains
on investments, if any, will be declared at least once
each year.
----------------------------------------------------------
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date)
and dividend income is recorded on the ex-dividend date.
Discount on securities purchased is amortized over the
life of the respective securities, in accordance with
federal income tax requirements. Realized gains and
losses on investments and options written and unrealized
appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for
federal income tax purposes. Dividends in kind are
recognized as income on the ex-dividend date, at the
current market value of the underlying security. Interest
on payment-in-kind debt instruments is accrued as income
at the coupon rate and a market adjustment is made on the
ex-date.
13 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no
BENEFICIAL INTEREST par value shares of beneficial interest.
Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30, 1994(1)
----------------------
SHARES AMOUNT
--------------------------------------------------
<S> <C> <C>
Sold 9,579,653 $46,855,355
Dividends Reinvested 132,003 640,038
Redeemed (767,956) (3,742,571)
---------- ------------
Net increase 8,943,700 $43,752,822
---------- ------------
---------- ------------
</TABLE>
1. For the period from February 1, 1994
(commencement of operations) to September 30,
1994.
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS At September 30, 1994, net unrealized
AND LOSSES ON depreciation on investments and options written
INVESTMENTS of $409,802 was composed of gross appreciation of
$382,008, and gross depreciation of $791,810.
- --------------------------------------------------------------------------------
4. OPTION ACTIVITY Option activity for the period from February 1,
1994 (commencement of operations) to
September 30, 1994 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
------------------------ --------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options written 1,926,322 $ 24,421 3,132 $ 5,502
Options expired prior
to exercise -- -- (3,132) (5,502)
----------- --------- ----------- --------
Options outstanding at
September 30, 1994 1,926,322 $ 24,421 -- $ --
----------- --------- ----------- --------
----------- --------- ----------- --------
</TABLE>
- --------------------------------------------------------------------------------
5. MANAGEMENT FEES Management fees paid to the Manager were in
OTHER accordance with the investment advisory agreement
TRANSACTIONS WITH and with the Fund which provides for an annual fee
AFFILIATES of .75% on the first $200 million of net assets
with a reduction of .03% on each $200 million
thereafter to $800 million, .60% on the next $200
million and .50% on net assets in excess of
$1 billion. The Manager has agreed to reimburse
the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses. In addition,
the Manager has voluntarily undertaken to
reimburse Fund expenses to the level needed to
maintain a stable dividend.
During the eight months ended September 30, 1994,
Oppenheimer Funds Distributor, Inc. (OFDI)
received contingent deferred sales charges of
$18,270 upon redemption of Fund shares, as
reimbursement for sales commissions advanced by
OFDI at the time of sale of such shares.
14 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
Oppenheimer Shareholder Services (OSS), a division
of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other
registered investment companies. OSS's total
costs of providing such services are allocated
ratably to these companies.
Under an approved distribution and service plan,
the Fund may expend up to .25% of its net assets
annually to reimburse OFDI for costs incurred in
connection with the personal service and
maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers,
banks and other financial institutions. In
addition, the Fund's shares are subject to an
asset-based sales charge of .75% of net assets
annually, to reimburse OFDI for sales commissions
paid from its own resources at the time of sale
and associated financing costs. In the event of
termination or discontinuance of the plan, the
Board of Trustees may allow the Fund to continue
payment of the asset-based sales charge to OFDI
for distribution expenses incurred on Fund shares
sold prior to termination or discontinuance of the
plan. During the period ended September 30, 1994,
OFDI retained $143,650 as reimbursement for Class
C sales commissions and service fee advances, as
well as financing costs.
- --------------------------------------------------------------------------------
6. RESTRICTED The Fund owns securities purchased in private
SECURITIES placement transactions, without registration under
the Securities Act of 1933 (the Act). The
securities are valued under methods approved by
the Board of Trustees as reflecting fair value.
The Fund intends to invest no more than 10% of its
net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding
securities eligible for resale pursuant to Rule
144A of the Act that are determined to be liquid
by the Board of Trustees or by the Manager under
Board-approved guidelines. Restricted and
illiquid securities, excluding securities eligible
for resale pursuant to Rule 144A of the Act amount
to $2,788,831, or 6.5% of the Fund's net assets,
at September 30, 1994. Illiquid and/or restricted
securities, including those restricted securities
that are transferable under Rule 144A of the Act
are listed below.
<TABLE>
<CAPTION>
VALUATION PER
ACQUISITION COST UNIT AS OF
SECURITY DATE PER UNIT SEPTEMBER 30, 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina Local Market Securities Trust:
Series I, 14.75%, 9/1/02(1) 9/19/94 $ 98.83 $100.00
Series II, 11.30%, 4/1/00(1) 8/24/94 $100.00 $100.76
Banco Ganadero S.A., 9.75%, 8/26/99(1) 8/10/94 $ 99.58 $100.75
Bayerische Landesbank, N.Y. Branch, Mexican Peso
Linked Confidence Nt., Girozentrale Branch,
35.50%, 12/30/94 9/23/94 $100.00 $ 98.25
Celcaribe S.A.(1) 5/17/94 $119.00 $122.23
Celcaribe S.A., 0%/13.50% Sr. Sec. Nts., 3/15/04(1) 5/17/94 $ 63.34 $ 63.37
Empresa Columbiana de Petroleos, Nts., 7.25%,
7/8/98(1) 4/25/94 $ 93.92 $ 95.38
Lehman Brothers Holdings, Inc., Standard &
Poor's 500 Index-Linked Nts:
4.85%, 11/25/94 8/24/94 $139.00 $143.08
4.9125%, 12/14/94 9/13/94 $137.00 $138.02
Morocco (Kingdom of) Loan Participation
Agreements:
Tranche A, 4.50%, 1/1/09 3/4/94-4/21/94 $ 70.29 $ 73.00
Tranche B, 4.312%, 1/1/04 5/25/94 $ 80.50 $ 77.19
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(1) 6/17/94 $100.00 $100.00
Pulsar International, S.A. de C.V., 9%, 9/19/95 9/16/94 $ 99.63 $100.00
Terex Corp. Rts., Exp. 7/96(1) 6/28/94 $ 1.49 $ 1.50
United Mexican States, Petacalco Topolobampo
Trust, Sr. Sec. Unsub. Nts., 8.125%, 12/15/03(1) 8/22/94 $ 88.96 $ 85.88
Venezuela (Republic of):
6.75% Debs., 9/20/95(1) 4/7/94-5/19/94 $ 96.44 $ 94.88
9% Sr. Unsec. Unsub. Nts., 5/27/96(1) 5/3/94-5/19/94 $ 96.98 $ 93.63
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
15 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
7. FUTURES At September 30, 1994, the Fund had outstanding
CONTRACTS futures contracts to sell debt securities as
follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
SECURITY DATE CONTRACTS SEPTEMBER 30, 1994
APPRECIATION
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts.,
12/94 12/20/94 1 $101,469 $249
</TABLE>
16 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Strategic Diversified Income Fund:
We have audited the accompanying statement of
assets and liabilities, including the statement of
investments, of Oppenheimer Strategic Diversified
Income Fund as of September 30, 1994, the related
statement of operations for the period from
February 1, 1994 (commencement of operations) to
September 30, 1994, the statement of changes in
net assets for the period from February 1, 1994
(commencement of operations) to September 30, 1994
and the financial highlights for the period
February 1, 1994 (commencement of operations) to
September 30, 1994. 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 audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements and financial highlights
are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
financial statements and financial highlights.
Our procedures included confirmation of securities
owned at September 30, 1994, by correspondence
with the custodian and brokers; where replies were
not received from brokers, we performed other
auditing procedures. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well
as evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, such financial statements and
financial highlights present fairly, in all
material respects, the financial position of
Oppenheimer Strategic Diversified Income Fund at
September 30, 1994, the results of its operations,
the changes in its net assets and the financial
highlights for the above stated period, in
conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1994
17 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
FEDERAL INCOME TAX INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
In early 1995, shareholders will receive
information regarding all dividends and
distributions paid to them by the Fund during
calendar year 1994. Regulations of the U.S.
Treasury Department require the Fund to report
this information to the Internal Revenue Service.
Dividends paid by the Fund during the fiscal year
ended September 30, 1994 which are not designated
as capital gain distributions should be multiplied
by .40% to arrive at the net amount eligible for
the corporate dividend-received deduction.
The foregoing information is presented to assist
shareholders in reporting distributions received
from the Fund to the Internal Revenue Service.
Because of the complexity of the federal
regulations which may affect your individual tax
return and the many variations in state and local
tax regulations, we recommend that you consult
your tax advisor for specific guidance.
18 Oppenheimer Strategic Diversified Income Fund
<PAGE>
--------------------------------------------------
OPPENHEIMER STRATEGIC DIVERSIFIED INCOME FUND
A Series of Oppenheimer Strategic Funds Trust
--------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman
and Chief Executive
Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr.,
Trustee
Jon S. Fossel, Trustee and
President
Raymond J. Kalinowski,
Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice
President
David P. Negri, Vice
President
Arthur P. Steinmetz, Vice
President
George C. Bowen, Vice
President, Secretary, and
Treasurer
Robert J. Bishop, Assistant
Treasurer
Scott Farrar, Assistant
Treasurer
Robert G. Zack, Assistant
Secretary
--------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management
Corporation
--------------------------------------------------
DISTRIBUTOR Oppenheimer Funds
Distributor, Inc.
--------------------------------------------------
TRANSFER AND Oppenheimer Shareholder
SHAREHOLDER SERVICING Services
AGENT
--------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
--------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche LLP
--------------------------------------------------
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
The financial statements included herein have been
taken from the records of the Fund without
examination by the independent auditors.
This is a copy of a report to shareholders of
Oppenheimer Strategic Diversified Income Fund.
This report must be preceded or accompanied by a
Prospectus of Oppenheimer Strategic Diversified
Income Fund. For material information concerning
the Fund, see the Prospectus.
19 Oppenheimer Strategic Diversified Income Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Assets Investments, at value (cost $4,901,533,334)$ 4,711,212,915
Receivables:
Interest and dividends 112,681,886
Investments sold81,300,604
Shares of beneficial interest sold 17,679,643
Other 117,830
-------------------
Total assets 4,922,992,878
Liabilities Bank overdraft 621,894
Unrealized depreciation on forward foreign currency
exchange contracts122,643
Options written, at value (premiums received $2,302,358)7,746,477
Payables and other liabilities:
Investments purchased 235,990,249
Shares of beneficial interest redeemed18,154,378
Dividends14,019,735
Distribution and service plan fees 2,804,791
Other 268,806
------------------
Total liabilities 279,728,973
Net Assets $ 4,643,263,905
========
Composition of Paid-in capital$ 5,194,278,050
Net Assets Overdistributed net investment income (32,622,783)
Accumulated net realized loss from investment, written option
and foreign currency transactions (323,248,765)
Net unrealized depreciation on investments, options written and
translation of assets and liabilities denominated in foreign currencies (195,142,597)
--------------------
Net assets$ 4,643,263,905
========
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $2,990,586,689 and 663,783,585 shares of beneficial interest outstanding)$4.51
===
Maximum offering price per share (net asset value plus sales charges of
4.75% of offering price)$4.73
===
Class B Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $1,652,677,216 and 366,177,811 shares of beneficial
interest outstanding)$4.51
===
</TABLE>
Oppenheimer Strategic Income Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $849,421) $249,135,073
Dividends:
Unaffiliated companies1,927,618
Affiliated companies302,089
-----------------
Total income 251,364,780
Expenses Management fees 12,485,016
Distribution and service plan fees:
Class A3,682,992
Class B7,986,106
Transfer and Shareholder servicing agent fees 2,125,389
Custodian fees and expenses948,370
Shareholder reports469,706
Registration and filing fees:
Class A1,414
Class B63,741
Trustees' fees and expenses37,831
Legal and auditing fees35,635
Other25,645
-----------------
Total expenses 27,861,845
Net Investment Income 223,502,935
Realized and Net realized loss from:
Unrealized Gain Investments and options written(294,935,347)
(Loss) on Closing and expiration of options written(14,875,135)
Investments, Foreign currency transactions(18,594,305)
Options Written and-----------------
Foreign Currency Net realized loss(328,404,787)
Transactions
Net change in unrealized appreciation or depreciation on:
Investments and options written 57,857,416
Translation of assets and liabilities denominated in foreign currencies15,996,354
-----------------
Net change73,853,770
-----------------
Net realized and unrealized loss on investments, options written and
foreign currency transactions (254,551,017)
Net Decrease in Net Assets Resulting From Operations$(31,048,082)
=======
</TABLE>
Oppenheimer Strategic Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1995 September 30,
(Unaudited) 1994
<S> <C> <C> <C>
Operations Net investment income $ 223,502,935 $366,546,493
Net realized loss on investments, options written and
foreign currency transactions (328,404,787) (17,210,118)
Net change in unrealized appreciation or depreciation on---------------------------------------
investments, options written and translation of assets
and liabilities denominated in foreign currencies 73,853,770 (317,182,306)
Net increase (decrease) in net assets resulting from---------------------------------------
operations (31,048,082) 32,154,069
Dividends and Dividends from net investment income:
Distributions Class A ($.2182 and $.4329 per share, respectively) (144,270,531) (236,741,649)
to Shareholders Class B ($.2008 and $.3938 per share, respectively) (69,583,464) (119,419,105)
Distributions in excess of net realized gain on investments,
options written and foreign currency transactions:
Class A ($.1179 per share) -- (57,628,697)
Class B ($.1179 per share) -- (29,069,526)
Tax return of capital distribution:
Class A ($.0135 per share) -- (8,947,314)
Class B ($.0135 per share) -- (4,513,275)
Beneficial Interest Net increase in net assets resulting from Class A beneficial
Transactions interest transactions 8,602,927 685,155,178
Net increase in net assets resulting from Class B beneficial
interest transactions 150,368,645 1,019,463,146
Net Assets Total increase (decrease) (85,930,505)1,280,452,827
Beginning of period 4,729,194,410 3,448,741,583
End of period (including overdistributed net ---------------------------------------
investment income of $32,622,783 and $2,882,064,
respectively) $4,643,263,905$4,729,194,410
======== ========
</TABLE>
Oppenheimer Strategic Income Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Assets Investments, at value (cost $51,350,383) $51,058,505
Receivables:
Interest 1,234,738
Investments sold 993,781
Shares of beneficial interest sold 363,670
Other 6,043
---------------
Total assets 53,656,737
Liabilities Bank overdraft 552,458
Options written, at value (premiums received $8,439) 20,442
Unrealized depreciation on forward foreign currency
exchange contracts 965
Payables and other liabilities:
Investments purchased 3,669,447
Shares of beneficial interest redeemed 147,446
Dividends 102,072
Service plan fees 28,578
Transfer and shareholder servicing agent fees 579
Trustees' fees 1,482
Other 38,387
---------------
Total liabilities 4,561,856
Net Assets $49,094,881
======
Composition of Paid-in capital $52,546,681
Net Assets
Undistributed net investment income 148,195
Accumulated net realized loss from investment transactions (3,299,235)
Net unrealized depreciation on investments and
translation of assets and liabilities denominated in foreign
currencies (300,760)
---------------
Net assets - applicable to 10,832,351 shares of beneficial interest
outstanding $49,094,881
======
Net Asset Value $4.53
Per Share and ===
Offering Price
Per Share
</TABLE>
Oppenheimer Strategic Diversified Income Fund
<PAGE>
Statement of Operations For the Six Months Ended
March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $4,777) $2,381,797
Dividends 55,370
---------------
Total income 2,437,167
Expenses Management fees 171,570
Service plan fees 228,602
Transfer and shareholder servicing agent fees 25,519
Shareholder reports 24,759
Custodian fees and expenses 21,982
Legal and auditing fees 15,339
Trustees' fees and expenses 2,388
Registration and filing fees 4,394
Other 6,771
---------------
Total expenses 501,324
Net Investment Income 1,935,843
Realized and Net realized loss from:
Unrealized Gain Investments (2,345,688)
(Loss) on Expiration and closing of option contracts written (63,983)
Investments and Foreign currency transactions (428,672)
Foreing Currency ---------------
Transactions Net realized loss (2,838,343)
======
Net change in unrealized appreciation or depreciation on:
Investments and options written 94,940
Translation of assets and liabilities denominated in foreign currencies 12,559
---------------
Net change 107,499
---------------
Net realized and unrealized loss on investments, options written
and foreign currency transactions (2,730,844)
Net Decrease in Net Assets Resulting From Operations $(795,001)
=====
</TABLE>
Oppenheimer Strategic Diversified Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Period Ended
March 31, September 30,
1995 (Unaudited) 1994(1)
<S> <C> <C> <C>
Operations Net investment income $ 1,935,843 $ 1,050,539
Net realized loss on investments, options written
and foreign currency transactions (2,838,343) (460,892)
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets
and liabilities denominated in foreign currencies 107,499 (408,259)
Net increase (decrease) in net assets resulting from ----------- -----------
operations (795,001) 181,388
Dividends to Dividends from net investment income ($.1743 and
Shareholders $.228 per share, respectively) (1,791,718) (1,046,469)
Beneficial Interest Net increase in net assets resulting
Transactions from beneficial interest transactions 8,793,859 43,752,822
----------- -----------
Net Assets Total increase 6,207,140 42,887,741
Beginning of period 42,887,741 --
End of period (including undistributed net ----------- -----------
investment income of $148,195 and $4,070,
respectively) $49,094,881 $42,887,741
====== ======
1. For the period from February 1, 1994 (commencement of operations)
to September 30, 1994.
</TABLE>
<PAGE>
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Assets Investments, at value (cost $51,350,383) $51,058,505
Receivables:
Interest 1,234,738
Investments sold 993,781
Shares of beneficial interest sold 363,670
Other 6,043
---------------
Total assets 53,656,737
Liabilities Bank overdraft 552,458
Options written, at value (premiums received $8,439) 20,442
Unrealized depreciation on forward foreign currency
exchange contracts 965
Payables and other liabilities:
Investments purchased 3,669,447
Shares of beneficial interest redeemed 147,446
Dividends 102,072
Service plan fees 28,578
Transfer and shareholder servicing agent fees 579
Trustees' fees 1,482
Other 38,387
---------------
Total liabilities 4,561,856
Net Assets $49,094,881
======
Composition of Paid-in capital $52,546,681
Net Assets
Undistributed net investment income 148,195
Accumulated net realized loss from investment transactions(3,299,235)
Net unrealized depreciation on investments and
translation of assets and liabilities denominated in foreign
currencies (300,760)
---------------
Net assets - applicable to 10,832,351 shares of beneficial interest
outstanding $49,094,881
======
Net Asset Value $4.53
Per Share and ===
Offering Price
Per Share
</TABLE>
Oppenheimer Strategic Diversified Income Fund
<PAGE>
Statement of Operations For the Six Months Ended
March 31, 1995 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $4,777) $2,381,797
Dividends 55,370
---------------
Total income 2,437,167
Expenses Management fees 171,570
Service plan fees 228,602
Transfer and shareholder servicing agent fees 25,519
Shareholder reports 24,759
Custodian fees and expenses 21,982
Legal and auditing fees 15,339
Trustees' fees and expenses 2,388
Registration and filing fees 4,394
Other 6,771
---------------
Total expenses 501,324
Net Investment Income 1,935,843
Realized and Net realized loss from:
Unrealized Gain Investments (2,345,688)
(Loss) on Expiration and closing of option contracts written (63,983)
Investments and Foreign currency transactions (428,672)
Foreing Currency ---------------
Transactions Net realized loss (2,838,343)
======
Net change in unrealized appreciation or depreciation on:
Investments and options written 94,940
Translation of assets and liabilities denominated in foreign currencies12,559
---------------
Net change 107,499
---------------
Net realized and unrealized loss on investments, options written
and foreign currency transactions (2,730,844)
Net Decrease in Net Assets Resulting From Operations $(795,001)
=====
</TABLE>
Oppenheimer Strategic Diversified Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Period Ended
March 31, September 30,
1995 (Unaudited) 1994(1)
<S> <C> <C> <C>
Operations Net investment income $ 1,935,843 $ 1,050,539
Net realized loss on investments, options written
and foreign currency transactions (2,838,343) (460,892)
Net change in unrealized appreciation or depreciation on
investments, options written and translation of assets
and liabilities denominated in foreign currencies 107,499 (408,259)
Net increase (decrease) in net assets resulting from ----------- -----------
operations (795,001) 181,388
Dividends to Dividends from net investment income ($.1743 and
Shareholders $.228 per share, respectively) (1,791,718) (1,046,469)
Beneficial Interest Net increase in net assets resulting
Transactions from beneficial interest transactions 8,793,859 43,752,822
----------- -----------
Net Assets Total increase 6,207,140 42,887,741
Beginning of period 42,887,741 --
End of period (including undistributed net ----------- -----------
investment income of $148,195 and $4,070,
respectively) $49,094,881 $42,887,741
====== ======
1. For the period from February 1, 1994 (commencement of operations)
to September 30, 1994.
</TABLE>
Independent Auditors' Consent
Oppenheimer Strategic Funds Trust:
We consent to the incorporation by reference in this Registration
Statement No. 33-28598 on Form N-14 of our report dated October 21, 1994,
appearing in the Annual Report of Oppenheimer Strategic Diversified Income
Fund for the year ended September 30, 1994 and our report dated October
21, 1994, appearing in the Annual Report of Oppenheimer Strategic Income
Fund for the year ended September 30, 1994 and to the references to us
under the headings "Tax Consequences of the Reorganization" and "Tax
Aspects of the Reorganization" appearing in the Prospectus, which is a
part of this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
April 27, 1995
MERGE/230CON
Rule 24f-2 Notice for Oppenheimer Strategic Funds Trust
3410 S. Galena Street, Denver, Colorado 80231
(Registration No. 33-28598, File No. 811-5724)
NOTICE IS HEREBY GIVEN that Oppenheimer Strategic Funds Trust having
previously filed in its registration statement a declaration that an
indefinite number of its shares of beneficial interest were being
registered pursuant to Rule 24f-2 of the Investment Company Act of 1940,
now elects to continue such indefinite registration.
(i) This Notice is being filed for the fiscal year ended September 30,
1994.
(ii) No shares which had been registered other than pursuant to this
Rule remained unsold at the beginning of the above fiscal year.
(iii) No shares were registered other than pursuant to this Rule during
the above fiscal year.
(iv) The number of shares sold during the above fiscal year was as
follows(1):
Oppenheimer Strategic Income Fund: Class A 236,638,548
Class B 211,514,941
Oppenheimer Strategic Diversified Income Fund*: Class C 9,579,653
(v) Shares sold during the above fiscal year in reliance upon
registration pursuant to this Rule were as follows:
Oppenheimer Strategic Income Fund: Class A 236,638,548
Class B 211,514,941
Oppenheimer Strategic Diversified Income Fund*: Class C 9,579,653
Pursuant to the requirements of the Investment Company Act of 1940,
the undersigned registrant has caused this Notice to be signed on its
behalf this 28th day of November, 1994.
Oppenheimer Strategic Funds Trust
By:__________________________________
Andrew J. Donohue, Vice President
_________________
(1)The calculation of the aggregate sales price is made pursuant to Rule
24f-2 of the Investment Company Act of 1940 as follows:
Value of
Value of Shares Filing
Shares Sold Redeemed Net Fee
Strategic Income Fund
Class A $1,229,167,439$(747,309,868)$481,857,571 $166,158
Class B $1,074,296,304$(123,334,817)$950,961,487 $327,918
Strategic Diversified Income Fund
Class C $ 46,855,355 $( 3,742,571)$ 43,112,784 $ 14,866
$508,942
*For the period from February 1, 1994 (inception of offering) to September
30, 1994.
SEC/230<PAGE>
<PAGE>
Myer, Swanson & Adams, P.C.
Attorneys At Law
The Colorado State Bank Building
Rendle Myer 1600 Broadway - Suite 1850 of counsel
Allan B. Adams Denver, Colorado 80202-4918 Robert Swanson
Robert K. Swanson Telephone (303) 866-9800 ----
Thomas J. Wolf* Facsimile (303) 866-9818 Fredd E. Neef
*Board Certified Civil (1910-1986)
Trial Advocate by the
National Board of Trial
Advocacy
November 28, 1994
Oppenheimer Strategic Funds Trust
3410 South Galena Street
Denver, Colorado 80231
Gentlemen:
In connection with the public offering of the no par value Class A and
Class B shares of beneficial interest in the Oppenheimer Strategic Income
Fund series and the Class C shares of the Oppenheimer Strategic
Diversified Income Fund series of Oppenheimer Strategic Funds Trust
(formerly known as Oppenheimer Strategic Income Fund), a business trust
organized under the laws of the Commonwealth of Massachusetts (the
"Trust"), we have examined such records and documents and have made such
further investigation and examination as we deem necessary for the
purposes of this opinion.
We are advised that during the fiscal period ended September 30, 1994,
the following shares of beneficial interest of the Trust were sold in
reliance on the registration of an indefinite number of shares pursuant
to Rule 24f-2 of the Investment Company Act of 1940:
Oppenheimer Strategic Income Fund:
Class A 236,638,548
Class B 211,514,941
Oppenheimer Strategic Diversified
Income Fund
Class C 9,579,653
It is our opinion that the said shares of beneficial interest of each
class of the Trust sold in reliance on Rule 24f-2 of the Investment
Company Act of 1940 are legally issued and, subject to the matters
mentioned in the next paragraph, fully paid and nonassessable by the
Trust.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. The Declaration of Trust does, however, contain an express
disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of
the Trust property of any shareholder held personally liable for the
obligations of the Trust. The Declaration of Trust also provides that the
Trust shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust and satisfy any
judgment thereon.
Sincerely,
MYER, SWANSON & ADAMS, P.C.
By /s/ Allan B. Adams
--------------------------
Allan B. Adams
DRAFT
[Letterhead of Deloitte & Touche LLP]
______________, 1995
Oppenheimer Strategic Diversified Income Fund
Two World Trade Center 34th floor
New York, New York 10048-0203
Oppenheimer Strategic Income Fund
Two World Trade Center 34th floor
New York, New York 10048-0203
Dear Sirs:
We have reviewed the Agreement and Plan of Reorganization between
Oppenheimer Strategic Diversified Income Fund (the "Fund") and Oppenheimer
Strategic Income Fund ("Strategic Income Fund") which is attached as
Exhibit A to the Proxy Statement and Prospectus of the Fund included as
part of Oppenheimer Strategic Funds Trust's Registration Statement on Form
N-14 filed under the Securities Act of 1933, as amended, with the
Securities and Exchange Commission on ______________, 1995 (the
"Agreement"), concerning the acquisition by Strategic Income Fund of
substantially all of the assets of the Fund solely for voting Class C
shares of beneficial interest in Strategic Income Fund, followed by the
distribution of Strategic Income Fund Class C shares to the shareholders
of the Fund in complete liquidation of the Fund.
In connection with the rendering of this opinion, we have reviewed the
Agreement, the most recent audited financial statements and related
documents and other materials as we deemed relevant to the rendering of
this opinion. Based upon all of the foregoing and the representations
made by the Fund and Strategic Income Fund, attached hereto, in our
opinion, the federal tax consequences of the transaction will be as
follows:
1. The transactions contemplated by the Agreement will qualify as a tax-
free "reorganization" within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
2. The Fund and Strategic Income Fund will each qualify as a "party to
a reorganization" within the meaning of Section 368(b)(2) of the
Code.
3. No gain or loss will be recognized by the shareholders of the Fund
upon the distribution of shares of beneficial interest in Strategic
Income Fund to the shareholders of the Fund, pursuant to Section 354
of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized
by the Fund by reason of the transfer of its assets solely in
exchange for shares of Strategic Income Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized by
Strategic Income Fund by reason of the transfer of the Fund's assets
solely in exchange for shares of Strategic Income Fund.
6. The stockholders of the Fund will have the same tax basis and holding
period for the shares of beneficial interest in Strategic Income Fund
that they receive as they had for the stock of the Fund that they
previously held, pursuant to Sections 358(a) and 1223(1),
respectively, of the Code.
7. The securities transferred by the Fund to Strategic Income Fund will
have the same tax basis and holding period in the hands of Strategic
Income Fund as they had for the Fund, pursuant to Sections 362(b) and
1223(1), respectively, of the Code.
Very truly yours
MERGE\230OPIN
