Oppenheimer Strategic Income Fund
Semiannual Report March 31, 1995
"We want our money to work hard, but we're concerned about risk."
Appendix photo: man and woman at flower show
[Oppenheimer Funds Logo]
<PAGE>
This Fund is for people who want high income
from an investment that's strategically designed to
lower risk.
News
"Over the trailing three-year period, the fund has been one of the
top-performing strategic-income offerings. This fund has a lot to offer one-stop
fixed-income shoppers."
Morningstar Mutual Funds
12/9/94
"The Fund's Class A shares are ranked HHHH among 189 hybrid funds as of
3/31/95.(1)
How Your Fund Is Managed
Oppenheimer Strategic Income Fund seeks high current income by
strategically allocating its assets among three sectors: U.S. government issues,
foreign fixed income securities and higher-yielding, lower-rated corporate
bonds. Strategic investing gives the Fund's managers the flexibility to shift
assets among three fixed income sectors to capitalize on worldwide investment
opportunities. At the same time, allocating the Fund's assets among three
distinct fixed income sectors can provide the diversification necessary to
lower risk.
Performance
Total returns at net asset value for the 6 months ended 3/31/95 for Class A
and B shares were -0.42% and -1.01%, respectively.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 3/31/95 and since inception
of the Class on 10/16/89 were -4.38%, 9.00% and 8.90%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 3/31/95 and
since inception of the Class on 11/30/92 were -4.96% and 5.06%, respectively.(3)
Outlook
"The outlook for the bond market is more positive today than it has been in
some time, both in terms of income and potential total returns. The Fund's
ability to shift assets strategically among market sectors worldwide remains a
major advantage for shareholders in the current environment. It allows us to
seek high yields, while keeping portfolio risks under careful control."
David Negri and Art Steinmetz, Portfolio Managers
March 31, 1995
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.
1. Source: Morningstar Mutual Funds, 3/31/95. Morningstar, Inc., an
independent mutual fund monitoring service, produces proprietary monthly
rankings of funds in broad investment categories (equity, taxable bond,
tax-exempt bond, or "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%), 4 stars is "above
average" and 1 star is the lowest (bottom 1%). The 4-star current ranking is
a weighted average of the 3- and 5-year rankings for the class, which were
both 4 stars, weighted 40%/60%. The Fund was ranked among 189 hybrid funds.
Rankings are subject to change. The Fund's Class A and Class B shares have
the same portfolio.
2. Based on the change in net asset value per share for the periods shown,
without deducting any sales charges. Such performance would have been lower
if sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 4/1/94, 4/1/90,
and 10/16/89 (inception of class), after deducting the current maximum initial
sales charge of 4.75%. Class B returns show results of hypothetical investments
on 4/1/94 and 11/30/92 (inception of class) and the deduction of the applicable
contingent deferred sales charge of 5% (1-year) and 4% (since inception). An
explanation of the different total returns is in the Fund's prospectus.
2 Oppenheimer Strategic Income Fund
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Dear OppenheimerFunds Shareholder,
1994 was marked by one of the greatest tests the bond markets faced in more
than six decades. As the U.S. Federal Reserve undertook the most aggressive
moves in its history to raise interest rates, bond prices and bond mutual funds
declined across the board. Changing interest rates are a fact of life and they
affect the short-term performance of all bond markets. That is why we believe
the best measure of any fixed income mutual fund is its performance over the
long term. And we believe the long-term outlook for the bond markets is very
positive.
To see how greatly the U.S. bond market has improved since last fall, we
need look no further than the market's reaction to the Fed's most recent
short-term rate increase in February. While the markets had already anticipated
this move, unlike previous rate increases, long-term interest rates continued to
decline and bonds rallied further. Although the Fed could raise rates again, we
believe that this positive environment will prove more than momentary as a
result of several factors.
First, concerns about the effects of inflation on bond prices are fading
fast. By most indicators, economic growth is slowing to a pace that can be
sustained without reigniting inflation or causing a recession. Second, at
current prices, intermediate and long-term bonds are producing some of the best
inflation-adjusted returns in years. With the actual inflation rate running just
over 3 percent today, many fixed income investors are clearly being rewarded.
Attracted by the strong, real returns intermediate and long-term bonds offer,
investors are returning to bonds in a significant way. This rising demand is
providing solid support for bond prices. Third, as the Fed concludes its
tightening efforts and recent reports suggest that point is near-long-term
interest rates will likely stay within their current range, and could decline
further. Of course, rates could rise later this year if future reports indicate
that the economy isn't slowing as quickly as it seems to be today; however, we
believe that over the longer term, the downward trend of rates will continue.
Two uncertainties affecting the fixed income markets are foreign investors'
attitudes toward U.S. debt and the weakness of the U.S. dollar abroad relative
to other major currencies. But investors' attitudes overseas and the dollar's
decline, in our view, should prove temporary. Both have been driven by the
government's moves to support the Mexican peso, a widening trade deficit, and
Congress's apparent inability to limit the Federal budget deficit.
We believe the trade deficit will narrow with increasing U.S. exports as
European economies come out of recession and emerging world markets stabilize.
Additionally, the need to support the peso has begun to decline as Mexico's
tough domestic economic policy has gained credibility. Finally, we are confident
that Congress will be able to get the budget deficit issue dealt with because
Americans are demanding it.
Of course, no one can predict the future with perfect clarity. The bond
markets are always subject to fluctuations and, as we saw in 1994, the shifts
can sometimes be sharp. Overall, however, we believe the outlook for the bond
markets today appears positive.
Your portfolio manager discusses the outlook for your Fund on the following
pages. We appreciate your trust, and we'll continue to do our best to help you
meet your long-term investment objectives.
James C. Swain Jon S. Fossel
April 24, 1995
James C. Swain
Chairman
Oppenheimer
Strategic Income Fund
Jon S. Fossel
President
Oppenheimer
Strategic Income Fund
3 Oppenheimer Strategic Income Fund
<PAGE>
Q + A
An interview with your Fund's managers.
Q What's your outlook for the Fund?
Investments in emerging markets historically have played an important role
in the Fund's portfolio. Did the devaluation of the peso affect your strategy?
It certainly did with regard to Mexico itself, where we have drastically reduced
our positions. And it had a short-term negative impact on performance.
In other emerging markets, however, we think the perception of risk has been
exaggerated. We've reduced our emerging-market holdings as a defensive measure,
but for the most part we've redirected our investments among emerging markets,
to countries like Morocco and Poland, with relatively stronger markets and
economies, and where attractive yields should compensate for perceived risks. We
also continue to maintain positions in several other markets that were not
significantly affected by the turmoil in Mexico. (1)
These markets don't, of course, develop in straight lines. Foreign
investments are always subject to adverse market changes as a result of currency
fluctuations, and sometimes the shifts can be sharp. But over time, we expect
that the long-term returns will more than compensate for temporary risks,
especially when these investments are part of a diversified portfolio.
Have changes in interest rates and the economy affected your allocations
among the U.S. government and high yield corporate sectors?
While where we allocate the Fund's assets among fixed income sectors is
critical to producing good returns, how we allocate assets within each sector is
just as important to meeting the Fund's objectives. For example, last year, when
interest rates were rising and the economy was gaining strength, our strategy
was to decrease the impact of interest-rate risk by shortening Treasury
maturities and investing in corporate bonds with stronger prospects than their
credit ratings suggested.
That strategy worked well for us, but today, as the economic expansion and
interest rates approach what we believe will be their peak, we're revers-
1. The Fund's portfolio is subject to change.
4 Oppenheimer Strategic Income Fund
<PAGE>
ing that strategy. With interest rates poised to fall and the economy
slowing, we're extending Treasury maturities and upgrading the quality of the
high yield portion of the portfolio.
Have you made any changes in the types of bonds you're buying in the high
yield sector of the portfolio?
While we think the expansion phase of the economic cycle is drawing to a
close, cyclical companies continue to do well, and we are still focusing on
industrial companies whose earnings benefit in the later stages of the economic
cycle.
At the same time, however, there's little doubt the Fed's efforts to
control inflation are slowing the economy. For high yield issuers, that means
earnings and cash flow may come under pressure, and we've been managing the
Fund's high yield sector more conservatively, focusing on issuers' financial
strength and orienting the portfolio toward relatively higher quality. Of
course, investments in high yield bonds are subject to greater risk that the
issuer will default in principal or interest payments. Our focus on quality,
however, helps reduce that risk.
Has the recent weakness of the dollar affected the Fund?
It has to some extent. The dollar's decline was driven largely by the U.S.
government's attempt to support Mexico by buying peso-denominated securities. As
our government pumped U.S. dollars into the system, and as the supply of dollars
rose, their value fell. But as investors sought stability, other markets and
currencies, notably Germany and the mark, benefitted. Currency declines
affecting one sector of the Fund were largely offset by currency gains in
Europe.
What's your outlook for the Fund?
The Fund's flexibility and diversification should continue to help us
manage risk and seek solid returns. And now that the prospects for the bond
markets in general are positive, we believe that the Fund is positioned for good
performance in 1995.
Facing page
Top left: Art Steinmetz,
Portfolio Manager
Top right: The trading desk
Bottom: Eva Zeff, Assistant VP
Fixed Income Investments
Portfolio Management Team
This page
Top: Ashwin Vasan, VP
Fixed Income Investments
Portfolio Management Team
Bottom: David Negri,
Portfolio Manager
A Flexibility and diversification should continue to help us manage risk
and seek solid returns.
5 Oppenheimer Strategic Income Fund
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Statement of Investments March 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
====================================================================================================================================
<S> <C> <C> <C>
Certificates of Deposit--1.6%
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Citibank CD:
10.50%, 7/14/95(2) ARA $ 7,400,000 $ 7,401,821
-----------------------------------------------------------------------------------------------------------
10.75%, 11/20/95--11/21/95(2) CLP 2,735,851,960 6,779,462
-----------------------------------------------------------------------------------------------------------
13%, 11/13/95(2) CLP 970,588,931 2,405,127
-----------------------------------------------------------------------------------------------------------
15%, 8/28/95(2) CLP 1,166,000,000 2,889,357
-----------------------------------------------------------------------------------------------------------
16%, 5/3/95--8/17/95(2) CLP 9,007,661,571 22,321,053
-----------------------------------------------------------------------------------------------------------
16.25%, 5/30/95(2) CLP 1,988,563,369 4,927,674
-----------------------------------------------------------------------------------------------------------
16.50%, 7/12/95(2) CLP 2,558,400,000 6,339,733
-----------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, Zero Coupon, 4/24/95 IDR 56,500,000,000 24,986,983
---------------
Total Certificates of Deposit (Cost $77,911,253) 78,051,210
====================================================================================================================================
Mortgage-Backed Obligations--11.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Government Agency--8.9%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/
Sponsored--6.2% Federal Home Loan Mortgage Corp., Series 176, Cl. F, 8.95%, 3/15/20 16,988,000 17,290,726
-----------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, 10.50%, 11/25/20 38,400,000 43,535,613
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1993-87, Cl. S, Inverse Floater, 4.875%, 6/25/23(3) 28,806,289 14,457,157
Interest-Only Stripped Mtg.-Backed Security:
Trust 221, Cl. 2, 7.50%, 5/25/23(4) 179,107,604 63,835,070
Trust 222, Cl. 2, 7%, 6/25/23(4) 97,830,154 34,821,420
Trust 240, Cl. 2, 7%, 9/25/23(4) 189,670,144 68,696,156
Trust 258, Cl. 2, 7%, 3/25/24(4) 34,471,293 12,097,270
Principal-Only Stripped Mtg.-Backed Security, Series 1993-253,
Cl. G, Zero Coupon, 11/25/23(5) 7,802,220 3,966,941
Series 1994-83, Cl. Z, 7.50%, 6/25/24 33,168,748 28,013,994
---------------
286,714,347
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GNMA/Guaranteed--2.7% Government National Mortgage Assn., 7.50%, 4/1/25--6/1/25(6) 123,500,000 126,085,781
- ------------------------------------------------------------------------------------------------------------------------------------
Private--2.9%
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Agricultural--0.2% Prudential Agricultural Credit, Inc., Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass-Through Certificates, Series 1992-2:
Cl. B2, 8.961%, 1/15/03(7)(8) 5,720,249 4,342,921
Cl. B3, 9.294%, 4/15/09(7)(8) 5,635,220 4,205,371
---------------
8,548,292
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Commercial--1.1% Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5:
Cl. B3, 7%, 4/25/23 1,653,341 1,142,356
Cl. B4, 7%, 4/25/23(8) 1,594,295 223,201
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CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Cl. 1E-1, 11%, 2/15/14(9) 12,000,000 11,637,588
-----------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(8) 2,500,000 2,452,344
Cl. 2-E, 8.70%, 9/25/25(8) 2,500,000 2,366,406
Cl. 2-G, 8.70%, 9/25/25 4,870,000 4,443,875
6 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
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Commercial (continued) Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. C, 8.25%, 12/25/20 $ 1,740,537 $ 1,713,191
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 9,890,259 9,609,005
Series 1993-C1, Cl. B, 8.75%, 5/25/24 7,572,000 7,564,901
Series 1993-C1, Cl. D, 9.45%, 5/25/24 6,370,007 6,332,185
Series 1993-C2, Cl. E, 8.50%, 3/25/25 137,688 131,880
Series 1994-C2, Cl. D, 8%, 4/25/25 1,988,211 1,871,090
Series 1994-C1, Cl. E, 8%, 6/25/26 4,875,808 3,728,470
---------------
53,216,492
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Multi-Family--1.0% Countrywide Funding Corp., Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,500,000 2,855,781
-----------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M6, Cl. B4, 6.45%, 6/25/21(7) 10,573,125 10,199,762
Series 1992-M4, Cl. B, 7.20%, 9/25/21 4,468,291 4,369,850
Series 1994-C1, Cl. C, 8%, 6/25/26 8,000,000 7,658,750
Series 1994-C2, Cl. E, 8%, 4/25/25 19,595,191 16,407,911
Series 1994-C2, Cl. G, 8%, 4/25/25 3,917,480 2,916,437
---------------
44,408,491
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Residential--0.6% Chase Mortgage Finance Corp.:
Nts., 6.75%, 2/25/25(9) 706,397 472,845
Nts., 6.75%, 3/25/25(9) 844,890 565,549
Sub. Mtg. Pass-Through Certificates, Series 1994-1:
Cl. B-10, 6.601%, 3/25/25(9) 1,075,853 739,986
Cl. B-8, 6.601%, 3/25/25(9) 2,151,707 1,500,816
Cl. B-9, 6.601%, 3/25/25(9) 2,151,707 1,492,747
-----------------------------------------------------------------------------------------------------------
CMC Security Corp. III, Collateralized Mtg. Obligation,
Series 1994-E, Cl. E-B3, 6.50%, 3/25/24(9) 4,932,128 3,160,030
-----------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Sub. Bonds:
Series 1994-10, Cl. B3, 6.50%, 3/25/24(9) 4,738,823 3,145,394
Series 1994-11, Cl. B3, 6.50%, 4/25/24(9) 3,151,273 2,101,006
Series 1994-7, Cl. B3, 6%, 2/25/09 1,552,394 1,120,636
-----------------------------------------------------------------------------------------------------------
Prudential Home Mortgage Securities Corp., Sub. Fixed Rate Mtg.
Securities, Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1995-A, Cl. B2, 8.684%, 3/28/25(9) 5,437,000 5,340,153
-----------------------------------------------------------------------------------------------------------
SKW Real Estate L.P., Sec. Nt.,
Cl. D, 9.05%, 4/15/04(7)(9) 9,500,000 9,378,281
---------------
29,017,443
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Total Mortgage-Backed Obligations (Cost $547,015,912) 547,990,846
====================================================================================================================================
U.S. Government Obligations--31.5%
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Treasury--31.5% U.S. Treasury Bonds:
7.125%, 2/15/23 100,000,000 95,656,189
7.50%, 11/15/24 21,000,000 21,072,175
7.875%, 2/15/21(10)(11) 222,500,000 229,939,708
8.125%, 8/15/19--8/15/21 134,157,000 142,654,573
8.75%, 8/15/00 143,500,000 153,948,506
10.375%, 5/15/95 122,500,000 123,112,500
11.50%, 11/15/95 51,150,000 52,748,438
11.625%, 11/15/02 138,279,000 173,885,843
13.375%, 8/15/01 72,000,000 94,612,456
7 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury (continued) U.S. Treasury Nts.:
8.875%, 11/15/97 $ 128,719,000 $ 134,752,703
9.375%, 4/15/96 67,100,000 68,966,249
10.50%, 8/15/95 101,695,000 103,283,984
11.25%, 5/15/95(10)(11) 68,000,000 68,403,708
---------------
Total U.S. Government Obligations (Cost $1,530,543,776) 1,463,037,032
====================================================================================================================================
Foreign Government Obligations--19.5%
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Argentina--0.9% Argentina (Republic of):
Bonos de Consolidacion de Deudas:
Bonds, Series I, 3.032%, 4/1/01(7)(12) ARA 298,090 100,450
Bonds, Series I, 6.062%, 4/1/01(7)(12) 8,265,641 4,350,745
Bonds, Series I, 6.062%, 4/1/07(7)(12) 873,796 328,586
Bonos del Tesoro:
Bonds, Series II, 6.188%, 9/1/97(7) 16,486,500 13,945,485
Bonds, Series I, 6.188%, 5/31/96(7) 4,578,000 4,237,108
Par Bonds, 4.25%, 3/31/23(13) 35,000,000 14,284,375
---------------
37,246,749
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Australia--2.7% First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 17, 15%, 7/15/02 AUD 2,370,000 1,907,099
-----------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd.:
Bonds, 12%, 12/1/01 AUD 22,803,000 18,359,013
Exch. Bonds, 12%, 12/1/01 AUD 38,250,000 30,802,061
-----------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 78,780,000 52,425,377
-----------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 12%, 8/1/01 AUD 30,010,000 24,079,143
---------------
127,572,693
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Brazil--0.7% Brazil (Federal Republic of):
Interest Due and Unpaid Bonds, 7.813%, 1/1/01(7) 1,309,500 960,641
Nts., Banco Estado Minas Gerais:
10%, 1/15/96 14,870,000 13,717,575
7.875%, 2/10/99(9) 4,000,000 2,540,000
8.25%, 2/10/00 9,000,000 5,535,000
8.25%, 2/10/00(9) 2,000,000 1,362,500
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Petroquimica do Nordeste Sr. Unsec. Unsub. Nts., 9.50%, 10/19/01 11,850,000 10,428,000
---------------
34,543,716
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Colombia--0.4% Colombia (Republic of) 1989--1990 Integrated Loan Facility Bonds:
6.75%, 7/1/01(7)(8) 16,131,048 13,953,358
7.937%, 10/26/03(7)(8) 8,089,264 6,835,428
---------------
20,788,786
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Denmark--0.9% Denmark (Kingdom of) Bonds, 9%, 11/15/00 DKK 215,000,000 40,265,801
- ------------------------------------------------------------------------------------------------------------------------------------
Ecuador--0.3% Ecuador (Republic of) Bonds, 7.25%, 2/28/25(7) 36,500,000 16,242,500
- ------------------------------------------------------------------------------------------------------------------------------------
Germany--0.9% Germany (Republic of) Gtd. Federal Government Debs., 9%, 10/20/00 DEM 52,000,000 41,892,828
- ------------------------------------------------------------------------------------------------------------------------------------
Great Britain--3.4% United Kingdom Treasury Nts.:
12%, 11/20/98 GBP 43,743,000 79,174,995
13%, 7/14/00 GBP 34,090,000 65,832,758
9%, 3/3/00 GBP 7,800,000 12,986,523
---------------
157,994,276
8 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico--1.6% Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds:
13%, 1/29/97 ESP 1,250,000,000 $ 9,461,801
12.65%, 6/21/98 ESP 3,028,000,000 19,886,260
-----------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
4/20/95 1,313,000 1,291,766
5/4/95 1,050,000 1,020,408
-----------------------------------------------------------------------------------------------------------
United Mexican States:
Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds, 12.25%, 12/3/98 GBP 8,500,000 12,858,357
Combined Facility 2, Loan Participation Agreement, Tranche A,
7.625%, 3/20/99(7)(8) 1,083,614 612,242
Gtd. Matador Bonds, Bankpesca Restructured Sov. Loan,
7.562%, 10/26/06(7)(8) 5,237,680 2,789,065
Nacional Financiera SNC Nts., 13.60%, 4/2/98 ESP 1,395,000,000 9,881,245
Petacalco Topolobampo Trust Sr. Sec. Unsub. Nts.:
8.125%, 12/15/03 10,975,000 5,432,625
8.125%, 12/15/03(9) 1,950,000 965,250
Petroleos Mexicanos Gtd. Medium-Term Nts., 7.60%, 6/15/00 14,310,000 8,729,100
---------------
72,928,119
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Morocco--1.6% Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 7.375%, 1/1/09(7) 88,450,000 51,522,125
Tranche B, 7.375%, 1/1/04(7) 33,800,000 21,336,250
---------------
72,858,375
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New Zealand--2.9% International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 65,320,000 46,402,331
-----------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
10%, 7/15/97 NZD 108,531,000 73,358,277
8%, 11/15/95 NZD 22,700,000 14,744,339
---------------
134,504,947
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Poland--0.5% Poland (Republic of):
Disc. Bonds, 6.812%, 10/27/24(7) 10,500,000 6,772,500
Past Due Interest Bonds, 3.25%, 10/27/14(13) 39,250,000 15,650,938
---------------
22,423,438
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South Africa--0.6% South Africa (Republic of) Loan Participation Agreements, Eskom:
7.375%, 4/15/98(7)(8) 2,421,839 2,246,256
7.875%, 2/9/00(7)(8) 9,590,909 9,087,387
7.875%, 9/15/99(7)(8) 7,721,056 7,180,582
8.625%, 1/5/98(7)(8) 7,500,000 7,087,500
---------------
25,601,725
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Spain--1.2% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
10.25%, 11/30/98 ESP 7,319,000,000 55,211,953
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Supranational--0.0% Corporacion Andina de Fomento Sr. Unsec. Debs.:
6.625%, 10/14/98 1,250,000 1,143,750
7.25%, 4/30/98 1,030,000 952,750
---------------
2,096,500
9 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela--0.9% Bariven SA Sr. Nts., Gtd. by Petroleos de Venezuela, 9.50%, 12/10/96 $ 500,000 $483,125
-----------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
Debs., 6.75%, 9/20/95 1,200,000 1,176,000
Debs., 8.313%, 12/29/95(7) 5,365,714 4,976,700
Debs., 9%, 5/27/96 23,025,000 21,758,623
Debs., 9.125%, 3/11/96 7,500,000 7,059,375
Debs., Banco Venezuela TCI, Zero Coupon, 12/13/98(8) 7,908,048 4,942,530
Unsub. Nts., 8.237%, 9/20/95(7) 2,500,000 2,418,750
---------------
42,815,103
---------------
Total Foreign Government Obligations (Cost $926,488,025) 904,987,509
====================================================================================================================================
Corporate Bonds and Notes--33.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Industry--4.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.0% Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 13,000,000 13,585,000
-----------------------------------------------------------------------------------------------------------
Georgia Gulf Corp., 15% Sr. Sub. Nts., 4/15/00 500,000 500,000
-----------------------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(14) 13,450,000 8,809,750
11.75% Sr. Sec. Nts., 10/15/03 3,500,000 3,596,250
-----------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02(9) 3,900,000 3,783,000
-----------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 3,500,000 3,868,805
-----------------------------------------------------------------------------------------------------------
Sherritt, Inc., 11% Debs., 3/31/04 CAD 10,000,000 6,879,344
-----------------------------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05(9) 4,000,000 4,215,000
---------------
45,237,149
- ------------------------------------------------------------------------------------------------------------------------------------
Containers--0.3% Calmar Spraying Systems, Inc., 14% Sr. Sub. Disc. Nts., 2/15/99 3,850,000 3,893,313
-----------------------------------------------------------------------------------------------------------
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97 7,000,000 7,105,000
-----------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc.:
10% Sr. Sub. Nts., 8/1/02 1,150,000 1,155,750
11% Sr. Debs., 12/1/03 750,000 804,375
---------------
12,958,438
- ------------------------------------------------------------------------------------------------------------------------------------
Metals/Mining--0.5% Horsehead Industries, Inc.:
14% Sub. Nts., 6/1/99 3,050,000 3,126,250
15.75% Sr. Sub. Nts., 6/1/97 4,566,000 4,725,810
-----------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.:
12.75% Sr. Sub. Nts., 2/1/03 2,800,000 2,898,000
9.875% Sr. Nts., 2/15/02 14,775,000 13,888,500
---------------
24,638,560
- ------------------------------------------------------------------------------------------------------------------------------------
Paper--1.9% Domtar, Inc.:
10.85% Debs., 8/15/17 CAD 1,700,000 1,146,765
11.25% Debs., 9/15/17 1,325,000 1,393,734
11.75% Sr. Nts., 3/15/99 500,000 537,500
12% Nts., 4/15/01 1,050,000 1,160,250
-----------------------------------------------------------------------------------------------------------
Gaylord Container Corp.:
0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(14) 9,250,000 8,810,625
11.50% Sr. Nts., 5/15/01 8,250,000 8,703,750
-----------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 3,350,000 3,500,750
10 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Paper (continued) Noranda Forest, Inc., 11% Debs., 7/15/98 CAD $ 2,000,000 $ 1,511,317
-----------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 12,040,000 10,173,800
-----------------------------------------------------------------------------------------------------------
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01 1,500,000 1,541,250
-----------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts., 2/1/02 1,000,000 945,000
-----------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.375% Sr. Sub. Nts., 6/30/04 3,600,000 3,699,000
10.75% Sr. Nts., 6/15/00 9,790,000 10,255,025
11.25% Sr. Sub. Nts., 6/15/02 3,904,000 4,128,480
-----------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,586,007 2,448,835
-----------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04(9) 2,000,000 2,130,000
-----------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 4,800,000 4,878,000
-----------------------------------------------------------------------------------------------------------
Stone Container Corp.:
10.75% Fst. Mtg. Nts., 10/1/02 4,100,000 4,253,750
10.75% Sr. Sub. Nts., 6/15/97 900,000 931,500
9.875% Sr. Nts., 2/1/01 14,900,000 14,527,500
---------------
86,676,831
- ------------------------------------------------------------------------------------------------------------------------------------
Steel--0.4% AK Steel Corp., 10.75% Gtd. Sr. Nts., 4/1/04 3,000,000 3,030,000
-----------------------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 5,975,000 5,736,000
-----------------------------------------------------------------------------------------------------------
Sheffield Steel Corp., 12% Sec. Fst. Mtg., 11/1/01 4,000,000 3,820,000
-----------------------------------------------------------------------------------------------------------
Wheel-Pittsburgh Corp., 9.375% Sr. Nts., 11/15/03 7,750,000 6,800,625
---------------
19,386,625
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Related--7.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Products--1.8% Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 10,886,000 10,886,000
-----------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 24,750,000 27,101,250
-----------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03(14) 19,560,000 8,704,200
-----------------------------------------------------------------------------------------------------------
Pace Industries, Inc., 10.625% Sr. Nts., Series B, 12/1/02 12,300,000 11,377,500
-----------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 3,490,000 3,289,325
-----------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 3/15/98 4,000,000 2,390,000
-----------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 13,925,000 13,576,875
-----------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 5,000,000 4,812,500
---------------
82,137,650
- ------------------------------------------------------------------------------------------------------------------------------------
Food/Beverages/
Tobacco--1.7% Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 4,400,000 4,180,000
-----------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 8,680,000 7,421,400
-----------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Co. of Texas, 10.25% Sr. Nts., 2/15/00 3,000,000 3,045,000
-----------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc. Nts., 2/15/03(14) 5,300,000 3,736,500
-----------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(14) 4,118,000 3,582,660
-----------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 8,050,000 5,554,500
-----------------------------------------------------------------------------------------------------------
Pulsar Internacional, SA de C.V., 9% Nts., 9/19/95(8) 14,750,000 14,012,500
-----------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 20,000,000 19,653,638
-----------------------------------------------------------------------------------------------------------
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00 13,650,000 12,831,000
-----------------------------------------------------------------------------------------------------------
Specialty Foods Acquisition Corp.:
10.25% Sr. Nts., 8/15/01 5,000,000 4,900,000
11.25% Sr. Sub. Nts., 8/15/03 1,500,000 1,462,500
---------------
80,379,698
11 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare--1.7% Abbey Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 11/1/02 $ 3,850,000 $ 3,984,750
-----------------------------------------------------------------------------------------------------------
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05(12) 14,301,696 14,896,117
-----------------------------------------------------------------------------------------------------------
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 1,000,000 1,007,500
-----------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 3,900,000 4,114,500
-----------------------------------------------------------------------------------------------------------
Healthsouth Rehabilitation Corp., 9.50% Sr. Sub. Nts., 4/1/01 3,200,000 3,208,000
-----------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., 7/15/02(9) 10,900,000 11,608,500
-----------------------------------------------------------------------------------------------------------
Mediq/PRN Life Support Services, Inc., 11.125% Sr. Sec. Nts., 7/1/99 3,000,000 2,767,500
-----------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 6,290,000 7,107,700
-----------------------------------------------------------------------------------------------------------
National Medical Enterprises, Inc., 10.125% Sr. Sub. Nts., 3/1/05 13,900,000 14,351,750
-----------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 3,750,000 4,087,500
-----------------------------------------------------------------------------------------------------------
Surgical Health Corp., 11.50% Sr. Sub. Nts., 7/15/04 3,350,000 3,618,000
-----------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units 9,700,000 8,487,500
---------------
79,239,317
- ------------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming--1.4% Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(8) 5,775,000 4,706,625
-----------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 5,575,000 6,034,938
-----------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 31,000 --
-----------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00(8) 2,100,000 1,921,500
-----------------------------------------------------------------------------------------------------------
Casino Magic Finance Corp., 11.50% Fst. Mtg. Nts., 10/15/01 4,150,000 3,174,750
-----------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% Fst. Mtg. Nts., 1/15/04 4,400,000 3,773,000
-----------------------------------------------------------------------------------------------------------
Hollywood Casino Corp.:
13.50% Fst. Mtg. Nts., 9/30/98 3,500,000 3,447,500
14% Sr. Sec. Nts., 4/1/98 3,900,000 4,173,000
-----------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 11% Sr. Nts., Series L, 5/1/07 3,880,000 3,938,200
-----------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units(9)(15) 3,042,347 1,916,679
-----------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp.:
11.75% Fst. Mtg. Nts., Series A, 5/1/99 5,000,000 5,362,500
12% Fst. Mtg. Nts., 5/1/02 625,000 690,625
-----------------------------------------------------------------------------------------------------------
Pioneer Finance Corp., 13.50% Gtd. Fst. Mtg. Bonds, 12/1/98 18,205,000 14,290,924
-----------------------------------------------------------------------------------------------------------
Showboat, Inc., 13% Sr. Sub. Nts., 8/1/09 1,750,000 1,820,000
-----------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 3,750,000 3,318,750
-----------------------------------------------------------------------------------------------------------
Stratosphere Corp., 14.25% Gtd. Fst. Mtg. Nts., 5/15/02 1,000,000 1,025,000
-----------------------------------------------------------------------------------------------------------
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01 1,450,000 1,210,750
-----------------------------------------------------------------------------------------------------------
Trump Taj Mahal Funding, Inc., 11.35% Debs., Series A, 11/15/99 2,250,000 1,624,775
---------------
62,429,516
- ------------------------------------------------------------------------------------------------------------------------------------
Leisure--0.4% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 5/27/98 17,450,000 12,345,875
-----------------------------------------------------------------------------------------------------------
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03 4,250,000 3,336,250
---------------
15,682,125
- ------------------------------------------------------------------------------------------------------------------------------------
Restaurants--0.6% Family Restaurants, Inc.:
0%/10.875% Sr. Sub. Disc. Nts., 2/1/04(14) 4,850,000 1,818,750
9.75% Sr. Nts., 2/1/02 2,900,000 2,008,250
-----------------------------------------------------------------------------------------------------------
Flagstar Corp., 10.75% Sr. Nts., 9/15/01 9,800,000 9,432,500
-----------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 15,000,000 15,487,500
---------------
28,747,000
12 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel--0.2% PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts., 10/23/96 IDR 20,000,000,000 $ 6,188,560
-----------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 5,600,000 5,159,000
---------------
11,347,560
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Related--2.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Building Materials--1.2% Dal-Tile International, Inc., Zero Coupon Sr. Sec. Nts., 7/15/98 17,750,000 11,759,375
-----------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.875% Sr. Sub. Nts., 3/1/04 8,300,000 7,594,500
-----------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 14,370,000 13,507,800
-----------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 3,450,000 3,812,250
-----------------------------------------------------------------------------------------------------------
USG Corp.:
10.25% Sr. Sec. Nts., 12/15/02 10,967,000 11,117,796
9.25% Sr. Nts., Series B, 9/15/01 3,200,000 3,156,000
-----------------------------------------------------------------------------------------------------------
Walter Industries, Inc.:
14.625% Sr. Nts., Series B, 1/1/49(15) 742,000 1,398,670
17% Sub. Nts., 1/1/96(15) 4,250,000 2,698,750
---------------
55,045,141
- ------------------------------------------------------------------------------------------------------------------------------------
Homebuilders/
Real Estate--0.9% Baldwin Co., 10.375% Sr. Nts., Series B, 8/1/03 7,200,000 4,572,000
-----------------------------------------------------------------------------------------------------------
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99 4,500,000 4,680,000
-----------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000 6,089,250
-----------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3,
11/4/49(16) CAD 5,150,000 2,276,243
-----------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 17,000,000 15,810,000
-----------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(9) 13,700,000 8,254,250
---------------
41,681,743
- ------------------------------------------------------------------------------------------------------------------------------------
Energy--1.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Argo Petroleum Corp., 16.50% Sub. Debs., 1/1/02(15) 3,000,000 --
-----------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,702,855
-----------------------------------------------------------------------------------------------------------
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 6,785,000 7,310,838
-----------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 10,500,000 9,871,154
-----------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,750,000 3,600,000
-----------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 3,500,000 2,992,500
8.50% Debs., 4/1/08 1,000,000 835,000
9.375% Nts., 11/1/03 1,250,000 1,037,500
-----------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(14) 8,908,000 8,596,220
-----------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 13,000,000 14,365,000
-----------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05 3,625,000 3,788,125
9.375% Sub. Debs., 2/1/06 3,250,000 2,843,750
-----------------------------------------------------------------------------------------------------------
Presidio Oil Co., 13.30% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02(7) 750,000 348,750
-----------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 4,500,000 4,668,750
-----------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000 134,777
-----------------------------------------------------------------------------------------------------------
Triton Energy Corp.:
0%/9.75% Sr. Sub. Disc. Nts., 12/15/00(14) 800,000 652,000
Zero Coupon Sr. Sub. Disc. Nts., 11/1/97 9,250,000 7,307,500
---------------
71,054,719
13 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Services--1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Diversified
Financial--1.1% Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03 $ 17,275,000 $ 19,196,844
-----------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(8) 1,293,590 1,422,950
-----------------------------------------------------------------------------------------------------------
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 5,955,000 4,704,450
9.75%, 12/10/01 2,000,000 1,320,000
-----------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Medium-Term Nts., 2/10/97(9) 10,500,000 9,187,500
8.625% Medium-Term Nts., Series C, 1/15/99(8) 4,750,000 3,544,687
8.94% Medium-Term Nts., Series C, 2/16/99 2,000,000 1,502,500
9.50% Medium-Term Nts., Series A, 12/15/01(8) 1,500,000 975,000
-----------------------------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,375,000
-----------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Medium-Term Nts., 3/3/97(9) 6,500,000 5,703,750
---------------
48,932,681
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance--0.1% Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000 2,737,500
-----------------------------------------------------------------------------------------------------------
Nacolah Holding Corp., 9.50% Sr. Nts., 12/1/03 2,100,000 1,932,000
---------------
4,669,500
- ------------------------------------------------------------------------------------------------------------------------------------
Media--6.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Broadcasting--1.5% Act III Broadcasting, Inc., 9.625% Sr. Sub. Nts., 12/15/03 4,930,000 4,794,425
-----------------------------------------------------------------------------------------------------------
Chancellor Broadcasting Co., 12.50% Sr. Sub. Nts., 10/1/04 7,000,000 7,070,000
-----------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 12,800,000 13,504,000
-----------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03 17,975,000 16,447,125
-----------------------------------------------------------------------------------------------------------
New World Communications Group Holding Corp., Zero Coupon
Sr. Disc. Nts., Series B, 6/15/99 12,000,000 6,990,000
-----------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,010,000
-----------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Nts., Series 1, 6/30/05 2,153,155 2,217,750
-----------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/00 3,000,000 3,060,000
-----------------------------------------------------------------------------------------------------------
Sinclair Broadcasting Group, Inc., 10% Sr. Sub. Nts., 12/15/03 8,975,000 8,660,875
-----------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000 5,857,500
---------------
70,611,675
- ------------------------------------------------------------------------------------------------------------------------------------
Cable Television--2.6% Adelphia Communications Corp., 12.50% Sr. Nts., 5/15/02 7,740,000 7,430,400
-----------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/12.50% Sr. Disc. Nts., 6/15/04(14) 20,150,000 10,175,750
-----------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04(14) 22,500,000 13,640,625
-----------------------------------------------------------------------------------------------------------
Cablevision Industries Corp.:
10.75% Sr. Nts., 1/30/02 900,000 951,750
9.25% Sr. Debs., Series B, 4/1/08 2,400,000 2,370,000
-----------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 6,025,000 6,281,063
9.875% Sr. Sub. Debs., 2/15/13 4,550,000 4,390,750
9.875% Sr. Sub. Debs., 4/1/23 1,100,000 1,040,875
-----------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc.:
11% Sr. Sub. Debs., 6/1/07 2,700,000 2,889,135
9.50% Sr. Debs., 8/1/13 12,255,000 11,826,075
-----------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B,
11/1/03(7) 18,500,000 16,326,250
14 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Cable Television
(continued) Marcus Cable Operating Co. LP/Marcus Capital Corp., 0%/13.50%
Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(14) $ 13,200,000 $ 7,606,500
-----------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
9.125% Debs., 1/15/13 12,550,000 12,054,538
9.15% Debs., 2/1/23 4,500,000 4,284,516
-----------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP:
10.15% Sr. Nts., 5/1/12 1,000,000 1,068,014
8.375% Sr. Debs., 3/15/23 12,804,000 11,520,552
-----------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 6,000,000 6,390,000
---------------
120,246,793
- ------------------------------------------------------------------------------------------------------------------------------------
Diversified Media--1.2% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 8,850,000 8,938,500
-----------------------------------------------------------------------------------------------------------
Echostar Communications Corp., Units 19,220,000 8,745,100
-----------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% Fst. Mtg. Bonds, 6/24/10(9) 829,369 916,454
-----------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000 11,730,000
-----------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,572,257
12% Sr. Nts., 12/15/01 2,500,000 2,817,307
8.50% Sr. Nts., 2/15/05 6,000,000 6,041,147
8.625% Sr. Nts., 2/1/03 10,400,000 10,540,150
-----------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 10.875% Sr. Debs., 4/15/04 2,200,000 2,222,000
---------------
55,522,915
- ------------------------------------------------------------------------------------------------------------------------------------
Entertainment/Film--0.4% Imax Corp., 7% Sr. Nts., 3/1/01(13) 13,200,000 11,484,000
-----------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 4/15/98 11,000,000 7,095,000
---------------
18,579,000
- ------------------------------------------------------------------------------------------------------------------------------------
Publishing/
Printing--0.4% Bell & Howell Co., 10.75% Sr. Sub. Nts., Series B, 10/1/02 2,000,000 2,060,000
-----------------------------------------------------------------------------------------------------------
Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(14) 13,500,000 7,323,750
-----------------------------------------------------------------------------------------------------------
General Media, Inc., 10.625% Sr. Sec. Nts., 12/31/00 4,000,000 3,340,000
-----------------------------------------------------------------------------------------------------------
United States Banknote Corp., 11.625% Sr. Nts., Series B, 8/1/02 4,220,000 3,291,600
---------------
16,015,350
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Air Transportation--0.1% Northwest Airlines, Inc., 12.0916% Sr. Gtd. Nts., 12/31/00 4,969,886 5,075,491
- ------------------------------------------------------------------------------------------------------------------------------------
Railroads--0.2% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(14) 19,266,000 10,114,650
- ------------------------------------------------------------------------------------------------------------------------------------
Shipping--0.4% Sea Containers Ltd.:
12.50% Sr. Sub. Debs., Series A, 12/1/04 2,850,000 3,021,000
9.50% Sr. Sub. Debs., 7/1/03 4,750,000 4,465,000
-----------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 11,900,000 11,483,500
---------------
18,969,500
- ------------------------------------------------------------------------------------------------------------------------------------
Trucking--0.1% Trism, Inc., 10.75% Sr. Sub. Nts., 12/15/00 1,250,000 1,212,500
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities--4.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--2.4% Beaver Valley II Funding Corp., 9% 2nd Lease Obligation Bonds, 6/1/17 24,189,000 18,667,618
-----------------------------------------------------------------------------------------------------------
C.A. La Electricidad de Caracas, 7.188% Exchange Eurobonds, 9/30/03(7) 3,691,162 1,421,098
15 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities
(continued) California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(14) $ 17,390,000 $ 13,129,450
-----------------------------------------------------------------------------------------------------------
Del Norte Funding Corp.:
11.25% Debs., 1/2/14(15) 3,350,000 2,012,931
9.95% Debs., 1/2/98(15) 5,000,000 3,001,060
-----------------------------------------------------------------------------------------------------------
El Paso Electric Co.:
10.375% Lease Obligation Bonds, Series 1986A, 1/2/11(15) 12,750,000 7,774,706
10.75% Lease Obligation Bonds, 4/1/13(15) 11,900,000 7,268,793
9.20% Lease Obligation Bonds, Series 1986A, 7/2/97(15) 1,500,000 915,355
9.375% Lease Obligation Bonds, 10/1/96(15) 6,000,000 3,662,813
-----------------------------------------------------------------------------------------------------------
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 24,800,000 24,145,478
10.30% Lease Obligation Bonds, Series 1986A, 1/15/14 16,700,000 16,708,417
-----------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sinking Fund Debs., 12/28/08 7,434,350 6,040,409
9.50% Sinking Fund Debs., 12/28/08(9) 5,793,103 5,011,034
---------------
109,759,162
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommunications--2.4% Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(14) 8,400,000 4,641,000
-----------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(9)(14) 12,600,000 8,461,646
-----------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(14) 26,626,000 18,505,070
-----------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., Zero Coupon Nts., Series B, 3/5/00 10,250,000 7,277,500
-----------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375%
Sr. Sub. Disc. Nts., 10/1/00(14) 21,402,000 16,265,520
-----------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(14) 13,400,000 8,609,500
-----------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(14) 33,700,000 22,157,750
9.75% Sr. Sec. Nts., 8/1/00 5,700,000 5,628,750
-----------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01(14) 16,667,000 12,333,580
-----------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 7,750,000 8,331,250
9.50% Sr. Nts., 2/1/04 1,850,000 1,600,250
---------------
113,811,816
- ------------------------------------------------------------------------------------------------------------------------------------
Other--1.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Conglomerates--0.9% Acadia Partners LP, 13% Sub. Nts., 10/1/97(9) 25,000,000 25,750,000
-----------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., 12.25% Sub. Nts., 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
-----------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc. Debs., 10/15/05(14) 16,946,000 9,616,855
---------------
41,818,368
- ------------------------------------------------------------------------------------------------------------------------------------
Environmental--0.4% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 13,135,000 11,493,125
-----------------------------------------------------------------------------------------------------------
Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01 10,250,000 7,738,750
---------------
19,231,875
16 Oppenheimer Strategic Income Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Services--0.4% Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 $ 11,760,000 $ 9,702,000
-----------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA:
8.25% Gtd. Nts., 2/17/01(9) 11,700,000 2,866,500
8.25% Gtd. Nts., 2/17/01 3,000,000 735,000
-----------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 12% Sr. Sub. Nts.,
Series B, 11/1/03 6,500,000 6,077,500
---------------
19,381,000
- ------------------------------------------------------------------------------------------------------------------------------------
Retail--1.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Department Stores--0.1% Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 4,000,000 2,800,000
-----------------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.75% Debs., 12/5/95 CAD 2,400,000 1,749,421
---------------
4,549,421
- ------------------------------------------------------------------------------------------------------------------------------------
Drug Stores--0.1% Duane Reade, 12% Sr. Nts., Series B, 9/15/02 2,250,000 1,676,250
-----------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 5,000,000 5,262,500
---------------
6,938,750
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty
Retailing--0.7% Caldor Corp., 15% Sr. Sub. Nts., 6/1/00 2,000,000 2,150,000
-----------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 13,300,000 12,768,000
-----------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 7,000,000 5,460,000
-----------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 6,870,000 6,423,450
-----------------------------------------------------------------------------------------------------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 2,950,000 3,001,625
-----------------------------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd. 2nd Priority Sr. Sec. Nts., 7/30/00 2,000,000 2,005,000
---------------
31,808,075
- ------------------------------------------------------------------------------------------------------------------------------------
Supermarkets--0.5% Food 4 Less Supermarkets, Inc., 13.75% Sr. Sub. Nts., 6/15/01 1,500,000 1,605,000
-----------------------------------------------------------------------------------------------------------
Grand Union Co.:
11.25% Sr. Nts., 7/15/00(15) 2,700,000 2,824,875
11.75% Sr. Nts., 2/15/99(15) 4,650,000 4,719,750
12.25% Sr. Sub. Nts., 7/15/02(15) 5,070,000 1,698,450
-----------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 9,000,000 7,740,000
-----------------------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 4,850,000 3,140,375
---------------
21,728,450
- ------------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace/Electronics/
Computers--0.6% Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 4,450,000 4,594,625
-----------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts., 8/15/00 9,500,000 10,212,500
-----------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 1,800,000 1,836,000
-----------------------------------------------------------------------------------------------------------
Unisys Corp.:
13.50% Credit Sensitive Nts., 7/1/97(7) 9,200,000 10,142,356
8.875% Nts., 7/15/97 1,000,000 993,230
9.75% Sr. Nts., 9/15/16 3,900,000 3,687,157
---------------
31,465,868
- ------------------------------------------------------------------------------------------------------------------------------------
Automotive--1.1% Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04 4,650,000 4,905,750
-----------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Sr. Nts., 10/15/99 4,500,000 5,434,434
-----------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.:
11.25% Sr. Nts., 10/1/02 4,800,000 4,728,000
9.50% Sr. Sec. Nts., 6/1/00 3,622,000 3,531,450
17 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Automotive (continued) Foamex LP/JPS Automotive Corp., 0%/14% Sr. Disc. Nts.,
Series B, 7/1/04(14) $ 7,250,000 $ 3,987,500
-----------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000 2,450,000
-----------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000 6,133,623
-----------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 11,500,000 10,378,750
-----------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 1,000,000 1,045,000
-----------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(9) 8,759,000 8,496,230
---------------
51,090,737
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Goods--0.3% Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 9,000,000 8,955,000
-----------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 2,860,000 2,888,600
---------------
11,843,600
---------------
Total Corporate Bonds and Notes (Cost $1,627,067,998) 1,550,019,249
Shares
====================================================================================================================================
Common Stocks--0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp.(9)(17) 159,220 716,490
-----------------------------------------------------------------------------------------------------------
Celcaribe SA(9)(17) 2,048,760 1,870,354
-----------------------------------------------------------------------------------------------------------
Dell Computer Corp.(17) 61,052 2,671,025
-----------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(8) 525 525,000
-----------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(17) 68,985 206,955
-----------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.(17) 25,095 483,079
-----------------------------------------------------------------------------------------------------------
Ladish, Inc.(17) 806,000 201,500
-----------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A(17) 44,672 770,592
-----------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, Inc.(17) 38,000 152,000
-----------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(8)(17) 232,222 928,888
---------------
Total Common Stocks (Cost $8,919,466) 8,525,883
====================================================================================================================================
Preferred Stocks--1.0%
- ------------------------------------------------------------------------------------------------------------------------------------
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income
Linked Securities 107,000 3,076,250
-----------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Notes for Common Stock
of Lyondell Petrochemical Co., 9/15/97 48,500 1,212,500
-----------------------------------------------------------------------------------------------------------
Berg Electronics Holdings Corp., $3.3438, Series E 86,772 2,386,230
-----------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 63,475 6,474,450
-----------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 132,000 13,299,000
-----------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exch., Series B(12)(18) 56,388 5,469,652
Sr. Exch., Series A 80,000 2,130,000
-----------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp.:
$.65 Cv., Series A 42,000 346,500
8.255% Provisionally Redeemable Income Debt Exchangeable for Stock 289,400 3,038,700
-----------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 200,000 3,475,000
-----------------------------------------------------------------------------------------------------------
TGX Corp., Series A 692,000 1,211,000
-----------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 118,800 4,618,350
---------------
Total Preferred Stocks (Cost $48,094,903) 46,737,632
18 Oppenheimer Strategic Income Fund
<PAGE>
Market Value
Units See Note 1
====================================================================================================================================
Rights, Warrants and Certificates--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 100,750 $201,500
-----------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A 37,200 372
Litigation Trust 118,975 1,190
-----------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(8) 262,500 525,000
-----------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 69,024 172,560
-----------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 9,789 2,447
-----------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03 7,000 35,000
-----------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99 7,250 108,750
-----------------------------------------------------------------------------------------------------------
General Media, Inc. Wts., Exp. 12/00(9) 4,000 45,000
-----------------------------------------------------------------------------------------------------------
Mexican Value Rights MXP 21,153,000 --
-----------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 182,000 819,000
-----------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc. Wts., Exp. 12/96 100 69,000
-----------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96(9) 13,935 10,451
---------------
Total Rights, Warrants and Certificates (Cost $1,588,702) 1,990,270
Date/Price Shares
====================================================================================================================================
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50% Put Opt. Apr. 11/ 91,000 42,656
(Cost $234,609) 0.258
Face
Amount
====================================================================================================================================
Structured Instruments--2.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina Local Market Securities Trust, Series 1994-II, 11.30%,
4/1/00(2)(9) $ 21,365,217 16,718,283
-----------------------------------------------------------------------------------------------------------
Bayerische Landesbank, N.Y. Branch, 10% Italian Lira/Deutsche Mark
Linked Confidence Nts., Girozentrale Branch, 8/7/95(2) 14,600,000 2,708,300
-----------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit:
British Pound Sterling Maximum Rate Linked Nts., 10%, 6/2/95(2)(8) 25,000,000 24,095,000
Japanese Yen Minimum Rate Linked Nts., 10%, 6/2/95(2)(8) 12,500,000 12,562,500
-----------------------------------------------------------------------------------------------------------
Repackaged Argentina Domestic Securities Trust I, 14.75%, 9/1/02(9) 11,500,000 6,583,750
-----------------------------------------------------------------------------------------------------------
Structured Product Asset Return Certificates, 9.40%, Series 94-2, 9/1/97(9) 8,285,714 7,109,275
-----------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc.:
10% CD Japanese Yen Rate Linked Nts., 6/5/95(2)(8) 12,500,000 12,500,000
10% CD Sterling Rate Linked Nts., 7/3/95(2) 23,530,000 23,153,520
---------------
Total Structured Instruments (Cost $129,268,690) 105,430,628
====================================================================================================================================
Repurchase
Agreements--0.1% Repurchase agreement with First Chicago Capital Markets,
6.25%, dated 3/31/95, to be repurchased at $4,402,292 on 4/3/95,
collateralized by U.S. Treasury Nts., 4.75%--8.875%, 5/15/96--10/31/99,
with a value of $653,436 (Cost $4,400,000) 4,400,000 4,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,901,533,334) 101.5% 4,711,212,915
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.5) (67,949,010)
--------------- ---------------
Net Assets 100.0% $ 4,643,263,905
=============== ===============
</TABLE>
19 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- ------------------------------------------------------------------------------
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
ARA--Argentine Austral
DEM--German Deutsche Mark
IDR--Indonesian Rupiah
AUD--Australian Dollar
DKK--Danish Krone
MXP--Mexican Peso
CAD--Canadian Dollar
ESP--Spanish Peseta
NZD--New Zealand Dollar
CLP--Chilean Peso
GBP--British Pound Sterling
USD--U.S. Dollar
2. Indexed instrument for which the principal amount and/or interest due at
maturity is affected by the relative value of a foreign currency.
3. Represents the current interest rate for a variable rate bond. Variable
rate bonds known as "inverse floaters" pay interest at a rate that varies
inversely with short-term interest rates. As interest rates rise, inverse
floaters produce less current income. Their price may be more volatile than the
price of a comparable fixed-rate security. Inverse floaters amount to
$14,457,157 or .31% of the Fund's net assets, at March 31, 1995.
4. 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's pass-throughs).
5. 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.
6. When-issued security to be delivered and settled after March 31, 1995.
7. Represents the current interest rate for a variable rate security.
8. Identifies issues considered to be illiquid--See Note 7 of Notes to
Financial Statements.
9. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $175,756,290 or 3.79% of the Fund's net
assets at March 31, 1995.
10. A sufficient amount of securities is segregated to collateralize
outstanding forward foreign currency exchange contracts. See Note 5 of Notes to
Financial Statements.
11. A sufficient amount of liquid assets has been designated to cover
outstanding call and put options, as follows:
<TABLE>
<CAPTION>
Face Subject Expiration Exercise Premium Market Value
To Call/Put Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian Dollar 44,750,000 AUD 4/20/95 0.74 USD/AUD $ 77,418 $ 132,460
- -----------------------------------------------------------------------------------------------------------
Call Option on New South Wales Treasury
Corp. Gtd. Exch. Bonds, 12%, 12/1/01 24,300,000 AUD 4/28/95 109.056 AUD 164,844 213,887
- -----------------------------------------------------------------------------------------------------------
Call Option on Poland (Republic of) Disc.
Bonds, 6.812%, 7/15/97 10,500,000 4/21/95 64.875 105,000 93,492
- -----------------------------------------------------------------------------------------------------------
Call Option on Pound Sterling 45,025,000 GBP 5/8/95 1.60 USD/GBP 444,847 1,743,369
- -----------------------------------------------------------------------------------------------------------
Call Option on Spanish Peseta/Deutsche
Mark 2,800,000,000 ESP 5/4/95 89.00 ESP/DEM 156,180 91,957
- -----------------------------------------------------------------------------------------------------------
Put Option on Argentina (Republic of) Past
Due Interest Bonds, 6.50%, 3/31/05 30,000,000 11/2/95 62.00 405,000 4,128,000
- -----------------------------------------------------------------------------------------------------------
Put Option on Brazil (Republic of) Interest
Due and Unpaid Bonds, 7.813%, 1/1/01 19,000,000 11/2/95 95.00 313,500 942,400
- -----------------------------------------------------------------------------------------------------------
Put Option on Deutsche Mark 50,000,000 DEM 6/2/95 1.48 DEM/USD 297,500 162,162
Put Option on Deutsche Mark 47,750,000 DEM 6/6/95 1.46 DEM/USD 338,070 238,750
---------- ----------
$2,302,359 $7,746,477
</TABLE>
12. Interest or dividend is paid in kind.
13. Represents the current interest rate for an increasing rate security.
14. Represents a zero coupon bond that converts to a fixed rate of interest
at a designated future date.
15. Non-income producing--issuer is in default of interest payment.
16. Partial interest payment received.
17. Non-income producing security.
18. 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 period ended March 31, 1995.
The aggregate fair value of all securities of affiliated companies as of March
31, 1995 amounted to $5,469,652. Transactions during the period in which the
issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
September 30, 1994 Gross Additions Gross Reductions March 31, 1995 Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
K-III Communications
Corp., $11.625 Exch.,
Series B 53,249 $5,383,979 3,139 $302,089 -- -- 56,388 $5,686,068 $302,089
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Strategic 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)--see accompanying statement $4,711,212,915
----------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 112,681,886
Investments sold 81,300,604
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 contracts--Note 5 122,643
----------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $2,302,359)--
see accompanying statement--Note 4 7,746,477
----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 235,990,249
Shares of beneficial interest redeemed 18,154,378
Dividends 14,019,735
Distribution and service plan fees--Note 6 2,804,791
Other 268,806
--------------
Total liabilities 279,728,973
===================================================================================================================================
Net Assets $4,643,263,905
==============
===================================================================================================================================
Composition of
Net Assets Paid-in capital $5,194,278,050
----------------------------------------------------------------------------------------------------------
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, written options and translation of assets
and liabilities denominated in foreign currencies (195,142,597)
--------------
Net assets $4,643,263,905
==============
===================================================================================================================================
Net Asset Value
Per Share Class A Shares:
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 charge 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>
See accompanying Notes to Financial Statements.
21 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 companies 1,927,618
Affiliated companies 302,089
--------------
Total income 251,364,780
===================================================================================================================================
Expenses Management fees--Note 6 12,485,016
----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 6 3,682,992
Class B--Note 6 7,986,106
----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 6 2,125,389
----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 948,370
----------------------------------------------------------------------------------------------------------
Shareholder reports 469,706
----------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,414
Class B 63,741
----------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 37,831
----------------------------------------------------------------------------------------------------------
Legal and auditing fees 35,635
----------------------------------------------------------------------------------------------------------
Other 25,645
--------------
Total expenses 27,861,845
===================================================================================================================================
Net Investment Income 223,502,935
===================================================================================================================================
Realized and Unrealized
Gain (Loss) on Investments,
Options Written and
Foreign Currency
Transactions Net realized loss from:
Investments and options written (294,935,347)
Closing and expiration of options written--Note 4 (14,875,135)
Foreign currency transactions (18,594,305)
--------------
Net realized loss (328,404,787)
----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written 57,857,416
Translation of assets and liabilities denominated in foreign currencies 15,996,354
--------------
Net change 73,853,770
--------------
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>
See accompanying Notes to Financial Statements.
22 Oppenheimer Strategic Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1995 Year Ended
(Unaudited) Sept. 30, 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
Distributions to
Shareholders Dividends from net investment income:
Class A ($.2182 and $.4329 per share, respectively) (144,270,531) (236,741,649)
Class B ($.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
Transactions
Net increase in net assets resulting from Class A beneficial interest
transactions--Note 2 8,602,927 685,155,178
----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial interest
transactions--Note 2 150,368,645 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>
See accompanying Notes to Financial Statements.
23 Oppenheimer Strategic Income Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------------------------------- -------------------------------------
Six Months Ended Six Months Ended
March 31, 1995 Year Ended September 30, March 31, 1995 Year Ended Sept. 30,
(Unaudited) 1994 1993 1992 1991 1990(2) (Unaudited) 1994 1993(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $4.75 $5.21 $5.07 $5.01 $4.87 $5.00 $4.76 $5.22 $4.89
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .23 .45 .48 .46 .56 .59 .21 .42 .36
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions (.25) (.35) .17 .14 .21 (.10) (.26) (.36) .34
------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations (.02) .10 .65 .60 .77 .49 (.05) .06 .70
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.22) (.43) (.50) (.46) (.57) (.57) (.20) (.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 (.22) (.56) (.51) (.54) (.63) (.62) (.20) (.52) (.37)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $4.51 $4.75 $5.21 $5.07 $5.01 $4.87 $4.51 $4.76 $5.22
======= ======= ======= ======= ======= ======= ======= ======= =======
====================================================================================================================================
Total Return, at Net
Asset Value(3) (.42)% 1.85% 13.30% 12.56% 16.97% 10.20% (1.01)% 1.07% 13.58%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $2,991 $3,143 $2,754 $1,736 $560 $177 $1,653 $1,586 $695
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in millions) $3,037 $3,082 $2,107 $1,084 $311 $93 $1,603 $1,236 $276
- ------------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding
at end of period (in
thousands) 663,784 661,897 528,587 342,034 111,739 36,418 366,178 333,489 133,235
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 9.88%(4) 8.72% 9.78% 9.39% 11.82% 12.79%(4) 9.10%(4) 7.90% 8.13%(4)
Expenses .94%(4) .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.69%(4) 1.71% 1.80%(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 66.9% 119.0% 148.6% 208.2% 194.7% 424.6% 66.9% 119.0% 148.6%
</TABLE>
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. Total returns are not annualized for
periods of less than one full year.
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 six
months ended March 31, 1995 were $3,262,530,007 and $2,841,432,985,
respectively.
See accompanying Notes to Financial Statements.
24 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited)
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 the close of the
New York Stock Exchange 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 and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or under consistently applied procedures established by the Board of
Trustees to determine fair value in good faith. Short-term "money market type"
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. Forward contracts are valued based on the closing
prices of the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer. Options are
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.
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 March 31, 1995, securities with an
aggregate market value of $42,169,075, representing .91% of the Fund's net
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 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. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
25 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
1. Significant
Accounting Policies
(continued)
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 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 or excise tax provision is required.
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.
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains (losses), and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gain (loss) was recorded by the Fund. 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. During the period ended March 31, 1995,
in accordance with Statement of Position 93-2, undistributed net investment
income and accumulated net realized loss were decreased by $39,389,659 due to
the recognition of certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes.
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.
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>
Six Months Ended March 31, 1995 Year Ended September 30, 1994
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 73,931,762 $339,303,475 236,638,548 $1,198,107,502
Dividends and distributions reinvested 20,518,912 93,796,832 46,661,271 234,357,544
Redeemed (92,564,333) (424,497,380) (149,989,676) (747,309,868)
----------- ------------ ------------ --------------
Net increase 1,886,341 $8,602,927 133,310,143 $685,155,178
=========== ============ ============ ==============
- --------------------------------------------------------------------------------------------------------
Class B:
Sold 54,907,870 $252,496,780 211,514,941 $1,074,296,304
Dividends and distributions reinvested 8,332,909 38,143,804 13,715,575 68,501,659
Redeemed (30,552,322) (140,271,939) (24,975,699) (123,334,817)
----------- ------------ ------------ --------------
Net increase 32,688,457 $150,368,645 200,254,817 $1,019,463,146
=========== ============ ============ ==============
</TABLE>
26 Oppenheimer Strategic Income Fund
<PAGE>
3. Unrealized Gains
And Losses on
Investments and
Options Written
At March 31, 1995, net unrealized depreciation on investments and options
written of $195,764,537 was composed of gross appreciation of $74,502,296, and
gross depreciation of $270,266,833.
4. Option Activity
The Fund may buy and sell put and call options, or write covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
In this report, securities designated to cover outstanding call options are
noted in the Statement of Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are detailed in a footnote to
the Statement of Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
Written option activity for the six months ended March 31, 1995 was as
follows:
<TABLE>
<CAPTION>
Call Options Put Options
Number Amount Number Amount
of Options of Premiums of Options of Premiums
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1994 428,512,533 $5,932,144 300,000 $609,375
Options written 319,249 1,714,679 66,538,263 1,354,070
Options canceled in closing purchase
transactions (428,650,783) (6,198,535) (300,000) (609,375)
Options expired prior to exercise (25,000) (500,000) -- --
Options outstanding at March 31, 1995 155,999 $948,288 66,538,263 $1,354,070
</TABLE>
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at a
negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks.
They may also be used to tactically shift portfolio currency risk. The Fund
generally enters into forward 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.
Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. The Fund will realize a gain or loss
upon the closing or settlement of the forward transaction.
In this report, securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Gains and losses on outstanding contracts (unreal ized appreciation
or depreciation on forward contracts) are reported in the Statement of Assets
and Liabilities. Realized gains and losses are reported with all other foreign
currency gains and losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to meet the terms
of the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
27 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
5. Forward
Contracts
(continued)
At March 31, 1995, the Fund had outstanding forward contracts to purchase
and sell foreign currencies as follows:
<TABLE>
<CAPTION>
Contract Unrealized
Contracts to Amount Valuation as of Appreciation
Purchase Expiration Date (000's) March 31, 1995 (Depreciation)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deutsche Mark 4/10/95--5/16/95 105,981 $77,518,657 $1,914,846
New Zealand Dollar 5/4/95 25,081 16,419,849 18,976
----------- -----------
$93,938,506 $1,933,822
=========== ===========
Contracts to Sell
- -----------------------------------------------------------------------------------------------------------
Argentine Austral 4/3/95--4/6/95 9,896 $9,898,685 $(2,435)
Australian Dollar 5/4/95 22,375 16,424,551 (23,678)
British Pound Sterling 4/4/95 871 1,418,967 (12,544)
Spanish Peseta 4/10/95--5/15/95 9,800,000 77,621,618 (2,017,808)
----------- -----------
$105,363,821 (2,056,465)
============ -----------
$(122,643)
===========
</TABLE>
6. 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 state
regulatory limit on Fund expenses.
For the six months ended March 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $8,005,768, of which $2,308,900
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B shares
totaled $9,478,623, of which $886,439 was paid to an affiliated broker/dealer.
During the six months ended March 31, 1995, OFDI received contingent deferred
sales charges of $2,947,531 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.
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 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 six months ended March 31, 1995, OFDI
paid $244,099 and $33,581, respectively, to an affiliated broker/dealer as
reimbursement for Class A and Class B personal service and maintenance expenses
and retained $6,953,364 as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.
28 Oppenheimer Strategic Income Fund
<PAGE>
7. Illiquid
Securities
At March 31, 1995, investments in securities included issues that are
illiquid or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid and
restricted securities. The aggregate value of these securities subject to this
limitation at March 31, 1995 was $146,044,241, which represents 3.1% of the
Fund's net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit March 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93-12/9/93 $100.00 $81.50
- ------------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93-12/9/93 $2.10 $2.00
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 11/18/93-12/17/93 $87.89 $91.50
- ------------------------------------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5,
Cl. B4, 7%, 4/25/23 4/29/93 $13.97 $14.00
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989--1990 Integrated Loan Facility Bonds:
6.75%, 7/1/01 6/17/93-11/12/93 $91.78 $86.50
7.937%, 10/26/03 10/25/93-12/17/93 $89.77 $84.50
- ------------------------------------------------------------------------------------------------------------------------------------
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, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25 8/10/94 $98.00 $98.09
Cl. 2-E, 8.70%, 9/25/25 8/10/94 $94.88 $94.66
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 8.625% Medium-Term Nts., Series C, 1/15/99 1/10/94 $78.13 $74.63
- ------------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.50% Medium-Term Nts., Series A, 12/15/01 1/27/94 $79.96 $65.00
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Agricultural Credit, Inc., Farmer Mac Agricultural Real
Estate Trust Sr. Sub. Mtg. Pass- Through Certificates, Series 1992-2:
Cl. B2, 8.961%, 1/15/03 8/18/92 $70.74 $75.92
Cl. B3, 9.294%, 4/15/09 8/18/92 $74.47 $74.63
- ------------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional, SA de C.V., 9%, 9/19/95 9/16/94 $99.62 $95.00
- ------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit British Pound Sterling Maximum
Rate Linked Nts., 10%, 6/2/95 5/20/94 $100.00 $96.38
- ------------------------------------------------------------------------------------------------------------------------------------
Rabobank Certificate of Deposit Japanese Yen Minimum Rate
Linked Nts., 10%, 6/2/95 5/20/94 $100.00 $100.50
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa (Republic of) Loan Participation Agreements, Eskom:
7.375%, 4/15/98 11/18/93 $94.75 $92.75
7.875%, 2/9/00 12/3/93 $90.50 $94.75
7.875%, 9/15/99 12/17/93 $89.75 $93.00
8.625%, 1/15/98 2/9/94 $95.25 $94.50
- ------------------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc., 10% CD Japanese
Yen Rate Linked Nts., 6/5/95 5/20/94 $100.00 $100.00
- ------------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 5/2/94 $9.50 $4.00
- ------------------------------------------------------------------------------------------------------------------------------------
United Mexican States, Gtd. Matador Bonds, Bankpesca
Restructured Sov. Loan, 7.562%, 10/26/06 1/13/94 $91.75 $53.25
- ------------------------------------------------------------------------------------------------------------------------------------
United Mexican States, Combined Facility 2, Loan
Participation Agreement, Tranche A, 7.625%, 3/20/99 10/25/94 $85.25 $56.50
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Banco Venezuela TCI, Zero
Coupon, 12/13/98 7/13/93-7/15/93 $72.64 $62.50
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain
unregistered securities are determined to be liquid and are not included within
the 10% limitation specified above.
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 & Wolf, 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 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
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you're investing with a leader in global, growth stock and flexible fixed income
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At OppenheimerFunds, we don't charge a fee to exchange shares of eligible funds
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Stock Funds
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4. Available only to residents of certain states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(c) Copyright 1995 Oppenheimer Management Corporation. All rights reserved.
31 Oppenheimer Strategic Income Fund
<PAGE>
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that affect your investments
1-800-835-3104
RS0230.001.0595 May 31, 1995
[Oppenheimer Funds Logo]
Oppenheimer Funds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
Bulk Rate
U.S. Postage
PAID
Permit No. 11
Philadelphia, PA
