[FRONT COVER]
Oppenheimer Strategic Income Fund
Semiannual Report March 31, 1996
[Picture of Patio Barbecue]
"We want
our money to
work hard,
but we're
concerned
about risk."
[Oppenheimer Logo] with [r]
<PAGE>
This Fund is for people who want high income
from an investment that's strategically designed
to lower risk.
News
Standardized Yields
For the 30 Days Ended 3/31/96:3
Class A
8.16%
Class B
7.80%
Class C
7.76%
The Fund's Class A shares
were ranked (FOUR STARS)
among 229 hybrid funds as
of 3/31/96 by Morningstar
Mutual Funds.4
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 these three fixed-income sectors to capitalize on world-wide investment
opportunities. At the same time, allocating the Fund's assets among three
distinct sectors can provide the diversification necessary to lower risk.
Performance
Total returns at net asset value for the 6 months ended 3/31/96 for Class A, B
and C shares were 6.03%, 5.63% and 5.63%, respectively.1
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 3/31/96 and since inception
of the Class on 10/16/89 were 10.17%, 9.16% and 9.92%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 3/31/96 and
since inception of the Class on 11/30/92 were 10.03% and 8.26%, respectively.
For Class C shares, cumulative total return since inception on 5/26/95 was
7.89%.2
Outlook
"The spectacular performance of 1995 is unlikely to be repeated, however, with
worldwide economic growth still slowing and inflation very low, we think the
outlook remains very promising. Looking ahead we are confident our focus on
yield, combined with our strategy of seeking lower risk through diversification
across three fixed-income sectors, positions the Fund to take advantage of the
coming environment."
David Negri and Art Steinmetz, Portfolio Managers
March 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future
results. Investment return and principal value of 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. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 3/31/95, 3/31/91,
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 3/31/95 and 11/30/92 (inception of class) and the deduction of the applicable
contingent deferred sales charge of 5% (1-year) and 2% (since inception). Class
C returns show results of hypothetical investments on 5/26/95 after the 1%
contingent deferred sales charge. An explanation of the different total returns
is in the Fund's prospectus.
3. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/96, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
4. Source: Morningstar Mutual Funds, 3/31/96. 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%), four stars is "above average" (next 22.5%) 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 3 and 4 stars, weighted 40%/60%,
respectively. There were 98 and 76 funds ranked in these respective periods.
Rankings are subject to change. The Fund's Class A, B and C shares have the same
portfolio.
2 Oppenheimer Strategic Income Fund
<PAGE>
(PHOTO OF JAMES C. SWAIN)
James C. Swain
Chairman
Oppenheimer
Strategic Income Fund
(PHOTO OF BRIDGET A. MACASKILL)
Bridget A. Macaskill
President
Oppenheimer
Strategic Income Fund
Dear Shareholder,
After posting double-digit returns in 1995, the bond market declined during the
first quarter of 1996 due to increased uncertainty about the strength of the
economy.
With yields on the 30-year U.S. Treasury bond trading between 6% and 6.75%,
investors were able to earn substantial income over inflation. But as interest
rates became more volatile, pushing bond yields higher, bond prices moved lower.
This created a negative total return, albeit a slight one, for the broad bond
market.
Although the Federal Reserve Board cut short-term interest rates a quarter
of a percentage point on January 31, intermediate- and long-term bond yields
continued to move higher. This movement in the market came as a result of recent
economic data suggesting the economy might be stronger than previous statistics
had indicated. The market had expected further interest rate cuts to stimulate
what was perceived to be a slowing economy. However, the stronger economic
data--particularly the February jobs report that showed an increase of over
700,000 new jobs--made lower interest rates less likely.
Another reason for the increased market volatility was the inability of
Congress and the President to agree on a balanced budget. Further concern was
generated by the rise of anti-business themes during the presidential primary
season, including the possibility of tariffs and tax reform.
Despite the significant decline in bond prices, the market has already
begun to stabilize. Upon closer examination of the economic fundamentals, the
market realized that it may have over-reacted to these short-term events. As a
result, we believe the demand for domestic fixed-income securities will continue
to be strong, both here and abroad.
With the general long-term trend for the U.S. economy being seen as slow
growth and low inflation, long-term interest rates should be able to return to
the 6% level with a corresponding recovery in bond prices. While that will lower
bond yields, our fixed-income managers are on the lookout for securities that
offer high coupon payments without adding undue risk.
While we still anticipate that interest rates will fluctuate and that bond
prices will continue to be volatile, patient investors should continue to
receive total returns which substantially exceed inflation over the long term.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds, and we look forward to helping you reach your investment goals
in the future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 19, 1996
3 Oppenheimer Strategic Income Fund
<PAGE>
Q + A
(TOP LEFT, PHOTO OF DAVID NEGRI WITH MARK FRANK)
(TOP RIGHT, PHOTO OF ART STEINMETZ)
Q What
is your
outlook
for the Fund?
An interview with your Fund's managers.
How has the Fund performed over the past six months?
The Fund performed very well, as all three sectors of the bond market that we
invest in--high yield, U.S. government and foreign bonds--turned in great
performance. Although these sectors don't typically rise or fall together, over
the past six months they all appreciated considerably, largely the result of
declining interest rates worldwide.
(BOTTOM LEFT, PHOTO OF LEN DARLING)
What investments or market conditions made positive contributions to
performance?
While all three of our investment sectors were strong this period, our holdings
in non-investment-grade high yield and foreign bonds provided the majority of
our returns. Of course, investors in high yield bonds are subject to greater
risk that the issuer will default on principal or interest payments. And
foreign investments entail greater risk and expenses, including adverse currency
fluctuation. 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.
As interest rates declined and investors' appetite for income increased,
the demand for high yield bonds increased and our holdings in this sector
appreciated. And by carefully researching issuers and selecting companies we
felt had the potential for continued strong earnings, we were able to limit the
additional credit risk these bonds typically involve.
After a difficult first half of 1995, many foreign bonds rebounded as their
economies grew in strength. This trend was reflected in our holdings of emerging
market bonds which provided very attractive
4 Oppenheimer Strategic Income Fund
<PAGE>
Facing page
Top left: David Negri, Portfolio
Manager, with Mark Frank, Member
of Fixed Income Investments Team
Top right: Art Steinmetz, Portfolio
Manager
Bottom: Len Darling, Executive VP,
Director of Fixed Income
Investments
This page
Top: Ashwin Vasan, Member of
Fixed Income Investments Team
Bottom: Bill Linden, Member of
Fixed Income Investments Team
A Very promising,
with slow
economic
growth and
very low
inflation.
income as well as appreciation over the period. Additionally, our holdings in
European developed market bonds experienced significant appreciation as
interest rates in those regions declined. 1
What areas are you currently targeting?
Within the high yield sector we're looking for companies that should be able to
profit regardless of a slowing economy. This has led us to focus on companies in
the media, cable, telecommunications and broadcasting industries which stand to
benefit from recent changes to the regulation of their industries.
Our focus in the foreign bond sector continues to be in the emerging
markets area. We expect these bonds to provide high income, with reduced credit
risk as many emerging economies improve. And, finally, as interest rates
stabilize and prepayment fears abate, we believe mortgage bonds will perform
well. We purchased mortgages when prices for these bonds were low, and expect
some appreciation in addition to the competitive income they offer.
(TOP RIGHT, PHOTO OF ASHWIN VASAN)
What is your outlook for the Fund?
The spectacular performance of 1995 is unlikely to be repeated. However, with
worldwide economic growth still slowing and inflation very low, we think the
outlook remains very promising. Looking ahead we are confident our focus on
yield combined with our strategy of seeking lower risk through diversification,
positions the Fund to take advantage of the coming environment. (solid box)
(BOTTOM, PHOTO OF BILL LINDEN)
1. The Fund's portfolio is subject to change.
5 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Certificates of Deposit--1.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Bank Pacific CD, Zero Coupon, 17.951%, 3/5/96(2)(3)(4) IDR 8,400,000,000 $ 3,623,814
------------------------------------------------------------------------------------------------------
Citibank CD:
12.70%, 5/15/96(2) CLP 2,994,992,000 7,278,672
12.75%, 5/24/96(2) CLP 2,858,161,618 6,946,135
13%, 5/6/96(2) CLP 2,322,974,667 5,645,481
------------------------------------------------------------------------------------------------------
CS First Boston, Inc. CD, 15.75%, 6/11/96(2)(5) IDR 27,688,800,000 11,845,475
------------------------------------------------------------------------------------------------------
Indonesia (Republic of) Bank Negara CD, Zero Coupon:
15.953%, 6/17/96(2)(4) IDR 39,500,000,000 16,305,895
15.068%, 7/18/96(2)(4) IDR 19,950,000,000 8,116,214
15.50%, 7/8/96(2)(4) IDR 15,450,000,000 6,339,285
------------------------------------------------------------------------------------------------------
Krungthai Thanakit CD, Zero Coupon, 10.087%, 6/10/96(2)(4) THB 75,900,000 2,952,925
------------------------------------------------------------------------------------------------------
Thai Military Bank Ltd. CD, 10.75%, 6/12/96(2) THB 250,000,000 9,908,837
------------
Total Certificates of Deposit (Cost $82,864,564) 78,962,733
===================================================================================================================================
Mortgage-Backed Obligations--21.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency--18.1%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--8.4% Federal Home Loan Mortgage Corp.:
Gtd. Multiclass Mtg. Participation Certificates,
Series 1455, Cl. J, 7.50%, 12/15/22 25,027,500 25,316,818
Series 176, Cl. F, 8.95%, 3/15/20 9,847,290 9,951,868
------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
7%, 1/1/26 13,206,277 12,867,801
7%, 11/1/25 8,394,509 8,179,358
7%, 12/1/25 37,108,229 36,157,148
7%, 4/15/11(6) 15,300,000 15,266,493
7%, 9/1/25 9,633,466 9,386,560
7.50%, 10/1/25 24,333,307 24,272,474
7.50%, 11/1/25 1,819,727 1,815,178
7.50%, 12/1/25 36,061,365 35,971,213
7.50%, 6/1/24 29,324,802 29,251,490
7.50%, 9/1/25 4,046,862 4,036,746
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, 10.50%, 11/25/20 38,755,000 43,890,037
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series G93-27, Cl. S, Inverse Floater, 1.763%, 8/25/23(7) 19,195,926 8,158,269
Series 1994-83, Cl. Z, 7.50%, 6/25/24 35,926,090 32,715,017
Interest-Only Stripped Mtg.-Backed Security:
Trust 215, Cl. 2, 15.758%--15.836%, 4/1/23(8) 40,966,691 12,802,091
Trust 218, Cl. 2, 16.651%, 4/1/23(8) 46,451,880 14,291,212
Trust 222, Cl. 2, 13.607%--16.469%, 6/1/23(8) 288,334,152 92,266,930
Trust 240, Cl. 2, 12.028%--17.431%, 9/1/23(8) 156,033,590 50,979,099
Trust 257, Cl. 2, 11.818%, 2/1/24(8) 3,581,164 1,178,427
Trust 258, Cl. 2, 14.61%, 3/1/24(8) 32,347,450 10,164,175
------------
478,918,404
</TABLE>
6 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--9.7% Government National Mortgage Assn.:
5.50%, 4/15/26(6) $ 50,000,000 $ 49,296,875
6%, 5/15/26(6) 40,440,000 40,364,175
7%, 10/15/25 18,653,306 18,169,440
7%, 3/15/24 1,077,569 1,049,617
7%, 3/15/26 1,018,655 992,231
7%, 8/15/25 9,850,468 9,594,948
7%, 1/15/24 5,418,967 5,278,399
7%, 10/15/25 26,882,045 26,184,726
7%, 11/15/25 18,033,241 17,565,460
7%, 2/15/26 23,680,217 23,065,954
7%, 9/15/25 7,481,646 7,287,573
7.50%, 1/15/26 4,875,963 4,865,285
7.50%, 11/15/25 22,350,855 22,301,909
7.50%, 4/15/26(6) 160,000,000 159,649,600
7.50%, 6/15/24 7,090,521 7,074,993
8%, 4/15/26(6) 25,000,000 25,515,500
13%, 10/15/15 43,748,486 52,566,541
13.50%, 6/15/15 56,420,015 68,515,056
------------------------------------------------------------------------------------------------------
U.S. Department of Veterans Affairs, Interest-Only Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Vendee Mtg. Trust:
Series 1992-2, Cl. IO, 18.594%, 9/1/22(8) 176,713,690 7,234,217
Series 1995-2B, Cl. 2-IO, 23.052%, 6/1/25(8) 16,705,102 584,679
Series 1995-3, Cl. 1-IO, 19.157%, 9/1/25(8) 383,520,181 6,471,903
------------
553,629,081
- -----------------------------------------------------------------------------------------------------------------------------------
Private--3.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Agricultural--0.2% Prudential Agricultural Credit, Inc., Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass-Through Certificates, Series 1992-2:
Cl. B2, 9.202%, 1/15/03(5)(9) 6,240,899 5,143,379
Cl. B3, 9.478%, 4/15/09(5)(9) 7,590,827 5,422,697
------------
10,566,076
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial--2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. F, 7.154%, 12/25/03(9)(10) 14,300,000 10,474,750
------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5:
Cl. B3, 7%, 4/25/23(5) 1,632,951 1,216,549
Cl. B4, 7%, 4/25/23(5) 1,574,633 198,797
------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp.,
Mtg. Pass-Through Certificates, Cl. 1E-1, 11%, 2/15/02(10) 15,000,000 14,453,025
------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(5) 2,500,000 2,585,156
Cl. 2-E, 8.70%, 9/25/25(5) 2,500,000 2,566,406
Cl. 2-G, 8.70%, 9/25/25(5) 4,870,000 4,903,481
------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. D, 7.585%, 6/15/21(9) 3,921,555 3,936,261
------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg.
Pass-Through Certificates, Series 1995-MD4:
Cl. A-4, 7.384%, 8/13/29 5,000,000 4,678,906
Cl. A-5, 7.384%, 8/13/29 20,000,000 17,928,125
</TABLE>
7 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial (continued) Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. C, 8.25%, 12/25/20 $ 1,667,384 $ 1,696,043
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 9,887,707 9,998,944
Series 1993-C1, Cl. B, 8.75%, 5/25/24 8,172,000 8,391,622
Series 1993-C1, Cl. D, 9.45%, 5/25/24 6,597,507 6,826,359
Series 1993-C1, Cl. E, 9.50%, 5/25/24 1,535,080 1,517,331
Series 1993-C2, Cl. E, 8.50%, 3/25/25 1,630,685 1,606,735
Series 1994-C1, Cl. C, 8%, 6/25/26 8,000,000 8,120,000
Series 1994-C1, Cl. E, 8%, 6/25/26 6,432,261 5,399,080
Series 1994-C2, Cl. D, 8%, 4/25/25 1,936,314 1,940,550
Series 1994-C2, Cl. E, 8%, 4/25/25 18,845,734 17,776,828
Series 1994-C2, Cl. G, 8%, 4/25/25 3,776,349 3,177,444
Series 1995-C1, Cl. F, 6.90%, 2/25/27 13,329,115 11,250,607
------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1996-CFL, Cl. D, 7.034%, 2/25/28 14,220,000 13,753,406
--------------
154,396,405
- -----------------------------------------------------------------------------------------------------------------------------------
Multi-Family--0.4% ACP Mortgage LP, Cl. E, 7.56%, 2/25/28(5)(9) 2,732,225 2,138,820
------------------------------------------------------------------------------------------------------
Countrywide Funding Corp.:
Series 1993-11, Cl. B1, 6.25%, 1/25/09 1,349,922 1,229,906
Series 1993-11, Cl. B3, 6.25%, 2/25/09(5) 787,458 262,507
Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,500,000 3,134,687
------------------------------------------------------------------------------------------------------
Multi-family Capital Access One, Inc., Series 1, Cl. D, 10.511%,
1/15/24(5)(9) 3,576,000 3,181,528
------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M6, Cl. B4, 7.395%, 6/25/21(9) 9,597,392 9,291,476
Series 1992-M4, Cl. B, 7.20%, 9/25/21 3,147,571 3,152,981
------------------------------------------------------------------------------------------------------
22,391,905
- -----------------------------------------------------------------------------------------------------------------------------------
Residential--0.1% 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(5)(9) 5,395,699 5,442,911
------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp., Sub. Bonds,
Series 1993-3, Cl. B2, 6.7125%, 8/25/08(5) 1,307,605 1,032,191
--------------
6,475,102
--------------
Total Mortgage-Backed Obligations (Cost $1,230,457,860) 1,226,376,973
===================================================================================================================================
U.S. Government Obligations--15.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--15.6%
U.S. Treasury Bonds:
10.75%, 8/15/05 45,000,000 58,429,660
11.625%, 11/15/02(18) 116,579,000 149,913,237
13.125%, 5/15/01 41,500,000 54,053,750
13.375%, 8/15/01 62,000,000 82,382,500
7.125%, 2/15/23(17) 18,400,000 18,975,000
7.875%, 2/15/21 51,000,000 57,008,461
8.125%, 8/15/21 100,000,000 114,875,000
STRIPS, Zero Coupon, 6.521%, 11/15/05(4) 40,000,000 21,496,399
STRIPS, Zero Coupon, 7.557%, 11/15/18(4) 50,000,000 10,316,948
STRIPS, Zero Coupon, 7.28%, 5/15/18(4) 300,000,000 64,098,267
STRIPS, Zero Coupon, 6.425%, 8/15/22(4) 115,000,000 18,591,128
------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 8.75%, 10/15/97 229,300,000 239,403,391
--------------
Total U.S. Government Obligations (Cost $897,386,948) 889,543,741
</TABLE>
8 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Foreign Government Obligations--32.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Algeria--0.1% Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.812%, 9/4/06(9)(10) $ 8,500,000 $ 4,632,500
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina--0.7% Argentina (Republic of):
Bonds, Bonos del Tesoro, Series 10, 5.742%, 4/1/00(9) 2,913,999 2,684,912
Bonds, Bonos del Tesoro, Series II, 5.297%, 9/1/97(9) 6,298,500 6,145,894
Par Bonds, 5%, 3/31/23(11) 500,000 259,375
Past Due Interest Bonds, Series L, 6.312%, 3/31/05(9) 15,250,000 10,999,062
Sr. Unsec. Unsub. Bonds, 13.45%, 10/21/97 ITL 1,290,000,000 833,073
------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina) Medium-Term Nts.,
10.625%, 3/29/99(5) 6,270,000 6,273,135
------------------------------------------------------------------------------------------------------
Province of Buenos Aires Sr. Unsub. Unsec. Nts.:
11.50%, 10/19/98(5) 9,600,000 9,984,000
9.50%, 7/14/97 975,000 982,312
------------
38,161,763
- -----------------------------------------------------------------------------------------------------------------------------------
Australia--3.8% Australia (Commonwealth of) Bonds:
10%, 10/15/07 AUD 64,990,000 54,473,731
9.50%, 8/15/03 AUD 59,040,000 47,864,141
------------------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 17, 15%, 7/15/02 AUD 2,020,000 1,875,568
------------------------------------------------------------------------------------------------------
Queensland Treasury Corp.:
Exchangeable Gtd. Nts., 8%, 8/14/01 AUD 80,413,000 60,738,339
Gtd. Nts., 8%, 5/14/03 AUD 250,000 185,347
------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 10.25%, 11/15/06 AUD 30,000,000 25,134,561
------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 10%, 7/15/05 AUD 30,250,000 25,279,182
------------
215,550,869
- -----------------------------------------------------------------------------------------------------------------------------------
Brazil--1.0% Banco do Estado de Sao Paulo SA Nts., 9.25%, 10/4/96 540,000 531,900
------------------------------------------------------------------------------------------------------
Banco Estado Minas Gerais:
8.25%, 2/10/00 9,500,000 8,371,875
8.25%, 2/10/00(5) 2,000,000 1,760,000
------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
Interest Due and Unpaid Bonds, 6.375%, 1/1/01(9) 40,971,150 36,822,821
Nts., Banco Estado Minas Gerais, 7.875%, 2/10/99 500,000 447,500
------------------------------------------------------------------------------------------------------
Petroquimica do Nordeste Sr. Unsec. Unsub. Nts., 9.50%, 10/19/01 11,950,000 11,621,375
------------
59,555,471
- -----------------------------------------------------------------------------------------------------------------------------------
Bulgaria--0.2% Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.25%, 7/28/24(9) 24,600,000 12,269,250
- -----------------------------------------------------------------------------------------------------------------------------------
Canada--4.6% Canada (Government of):
Bonds, 11.75%, 2/1/03 CAD 20,000,000 18,152,711
Bonds, 8.75%, 12/1/05 CAD 84,490,000 66,824,875
Bonds, 9%, 12/1/04 CAD 71,900,000 57,611,274
Bonds, 9.75%, 10/1/97 CAD 40,000,000 31,040,842
Bonds, 9.75%, 6/1/01 CAD 25,000,000 20,501,289
Bonds, Series A33, 11.50%, 9/1/00 CAD 21,915,000 18,872,503
Bonds, Series H9, 12%, 3/1/05 CAD 35,000,000 32,982,840
Debs., 10%, 6/1/08 CAD 19,690,000 16,916,662
------------
262,902,996
</TABLE>
9 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Colombia--0.6% Colombia (Republic of) 1989--1990 Integrated Loan Facility Bonds:
6.75%, 10/26/03(9)(10) $ 18,127,244 $ 16,541,110
6.875%, 7/1/01(9)(10) 20,342,251 19,020,005
------------
35,561,115
- -----------------------------------------------------------------------------------------------------------------------------------
Costa Rica--0.1% Central Bank of Costa Rica Interest Claim Bonds:
Series A, 6.094%, 5/21/05(9) 529,277 471,057
Series B, 6.094%, 5/21/05(9) 4,939,925 4,396,534
------------
4,867,591
- -----------------------------------------------------------------------------------------------------------------------------------
Czech Republic--0.0% CEZ AS, Zero Coupon Disc. Promissory Nts., 10.768%, 7/1/96(4)(6) CZK 16,500,000 591,584
- -----------------------------------------------------------------------------------------------------------------------------------
Denmark--2.8% Denmark (Kingdom of) Bonds:
7%, 11/10/24 DKK 175,000,000 26,333,259
8%, 5/15/03 DKK 516,025,000 95,624,042
9%, 11/15/00 DKK 185,600,000 36,093,463
------------
158,050,764
- -----------------------------------------------------------------------------------------------------------------------------------
Ecuador--0.6% Ecuador (Republic of) Disc. Bonds, 6.063%, 2/28/25(9) 58,310,000 31,633,175
- -----------------------------------------------------------------------------------------------------------------------------------
Finland--0.0% Finland (Republic of) Bonds, 9.50%, 3/15/04 FIM 1,000,000 238,791
- -----------------------------------------------------------------------------------------------------------------------------------
Germany--1.0% Germany (Republic of) Bonds:
6.75%, 7/15/04 DEM 182,000 126,627
7.50%, 9/9/04 DEM 425,000 308,592
7.75%, 10/1/04 DEM 20,000,000 14,584,282
Series 86, 6%, 6/20/16 DEM 8,000,000 4,787,372
Series 94, 7.50%, 11/11/04 DEM 50,300,000 36,539,782
------------------------------------------------------------------------------------------------------
Vereinsbank International SA Sr. Debs., 10.80%, 6/16/03 ITL 5,000,000,000 3,272,762
------------
59,619,417
- -----------------------------------------------------------------------------------------------------------------------------------
Great Britain--2.0% United Kingdom Treasury:
Bonds, 10%, 9/8/03 GBP 26,010,000 44,096,573
Debs., 8.50%, 12/7/05 GBP 12,300,000 19,216,022
Nts., 10%, 2/26/01 GBP 10,010,000 16,712,799
Nts., 12.50%, 11/21/05 GBP 10,000,000 19,009,705
Nts., 13%, 7/14/00 GBP 1,775,000 3,239,592
Nts., 7.75%, 9/8/06 GBP 150,000 221,390
Nts., 8%, 6/10/03 GBP 6,395,000 9,792,479
------------
112,288,560
- -----------------------------------------------------------------------------------------------------------------------------------
Ireland--0.0% National Treasury Management Agency (Irish Government) Bonds:
8%, 10/18/00 IEP 75,000 121,387
8%, 8/18/06 IEP 50,000 78,444
------------
199,831
- -----------------------------------------------------------------------------------------------------------------------------------
Italy--2.0% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
10.50%, 4/1/00 ITL 83,250,000,000 53,574,012
10.50%, 7/15/00 ITL 93,580,000,000 60,209,771
8.50%, 4/1/99 ITL 5,000,000,000 3,076,237
------------
116,860,020
- -----------------------------------------------------------------------------------------------------------------------------------
Jamaica--0.0% Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche A, 6.406%, 10/16/00(9)(10) 1,256,667 1,162,417
</TABLE>
10 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Jordan--0.0% Hashemite Kingdom of Jordan Interest Arrears Bonds, 6.438%, 12/23/05(9) $ 800,000 $ 622,000
- -----------------------------------------------------------------------------------------------------------------------------------
Mexico--1.8% Banco Nacional de Comercio Exterior SNC:
Debs., 10.555%, 6/23/97(9) 280,000 286,300
International Finance BV Gtd. Bonds, 12.25%, 12/3/98 GBP 1,500,000 2,329,822
International Finance BV Gtd. Bonds, 12.65%, 6/21/98 ESP 3,028,000,000 24,578,712
International Finance BV Gtd. Bonds, 13%, 1/29/97 ESP 1,250,000,000 10,221,961
International Finance BV Gtd. Bonds, 7.50%, 7/1/00 4,330,000 3,924,062
International Finance BV Gtd. Nts., 8%, 4/14/00 7,655,000 7,080,875
Zero Coupon, 10.58%, 6/5/96(4)(5) 9,650,000 9,505,250
------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
37.786%, 3/6/97(4) MXP 24,075,650 2,312,670
40.976%, 9/12/96(4) MXP 40,252,260 4,516,847
------------------------------------------------------------------------------------------------------
United Mexican States:
Nts., 10.812%, 7/21/97(9) 220,000 227,920
Nts., 9.75%, 2/6/01 4,600,000 4,479,250
Combined Facility 2, Loan Participation Agreement,
Tranche A, 6.50%, 3/20/99(9)(10) 1,001,063 795,845
Combined Facility 3, Loan Participation Agreement,
Tranche A, 6.50%, 9/20/97(9)(10) 104,800 83,316
Nacional Financiera SNC Nts., 13.60%, 4/2/98 ESP 1,773,000,000 14,623,820
Petroleos Mexicanos Gtd. Medium-Term Nts., 7.60%, 6/15/00 14,360,000 13,426,600
Petroleos Mexicanos Gtd. Unsec. Unsub. Nts., 7.875%, 3/2/99 CAD 5,600,000 3,930,382
------------
102,323,632
- -----------------------------------------------------------------------------------------------------------------------------------
Morocco--1.2% Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.594%, 1/1/09(9) 62,330,000 43,007,700
Tranche B, 6.521%, 1/1/04(9) 31,858,823 24,551,206
------------
67,558,906
- -----------------------------------------------------------------------------------------------------------------------------------
Netherlands--0.4% Landeskreditbank Baden-Wurttemberg:
Gtd. Bonds, 6%, 1/25/06 DEM 22,460,000 14,535,873
Nts., 6.50%, 9/15/08 DEM 10,500,000 6,863,052
------------
21,398,925
- -----------------------------------------------------------------------------------------------------------------------------------
New Zealand--1.5% New Zealand (Republic of) Bonds:
10%, 3/15/02 NZD 66,350,000 48,885,276
10%, 7/15/97 NZD 21,345,000 14,783,956
9%, 11/15/96 NZD 33,835,000 23,007,798
------------
86,677,030
- -----------------------------------------------------------------------------------------------------------------------------------
Panama--0.7% Panama (Republic of) Debs., 6.75%, 5/10/02(9) 46,171,000 41,092,190
- -----------------------------------------------------------------------------------------------------------------------------------
Poland--1.1% Poland (Republic of):
Past-Due Interest Bonds, 3.75%, 10/27/14(11) 500,000 380,000
Treasury Bills, Zero Coupon, 20.903%, 1/2/97(4) PLZ 6,000,000 2,000,207
Treasury Bills, Zero Coupon, 20.712%, 1/29/97(4) PLZ 9,960,000 3,265,589
Treasury Bills, Zero Coupon, 21.089%, 10/23/96(4) PLZ 10,000,000 3,454,166
Treasury Bills, Zero Coupon, 21.076%, 11/13/96(4) PLZ 20,000,000 6,787,796
Treasury Bills, Zero Coupon, 20.20%, 3/19/97(4) PLZ 8,680,000 2,786,436
Treasury Bills, Zero Coupon, 24.942%, 4/17/96(4) PLZ 24,250,000 9,291,959
</TABLE>
11 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Poland (continued) Treasury Bills, Zero Coupon, 22.267%, 4/24/96(4) PLZ 5,300,000 $ 2,022,100
Treasury Bills, Zero Coupon, 24.992%, 5/2/96(4) PLZ 25,670,000 9,767,991
Treasury Bills, Zero Coupon, 25.026%, 5/8/96(4) PLZ 2,000,000 758,411
Treasury Bills, Zero Coupon, 22.353%, 6/5/96(4) PLZ 13,730,000 5,122,506
Treasury Bills, Zero Coupon, 22.037%, 7/17/96(4) PLZ 2,250,000 819,676
Treasury Bills, Zero Coupon, 22.356%, 7/24/96(4) PLZ 1,100,000 399,155
Treasury Bills, Zero Coupon, 22.153%, 7/31/96(4) PLZ 5,000,000 1,807,178
Treasury Bills, Zero Coupon, 21.436%, 8/12/96(4) PLZ 7,050,000 2,533,109
Treasury Bills, Zero Coupon, 21.785%, 8/14/96(4) PLZ 20,000,000 7,173,737
Treasury Bills, Zero Coupon, 21.641%, 8/7/96(4) PLZ 1,000,000 359,403
Treasury Bills, Zero Coupon, 21.443%, 8/7/96(4) PLZ 5,000,000 1,800,596
-------------
60,530,015
- -----------------------------------------------------------------------------------------------------------------------------------
South Africa--0.1% Eskom Loan Participation Agreements:
6.875%, 9/15/99(9)(10) 6,005,265 5,810,095
7.688%, 4/15/98(9)(10) 1,729,885 1,706,100
------------------------------------------------------------------------------------------------------
South Africa (Republic of) Debs., 9.625%, 12/15/99 500,000 530,000
-------------
8,046,195
- -----------------------------------------------------------------------------------------------------------------------------------
Spain--2.7% Spain (Kingdom of):
Bonds, Bonos y Obligacion del Estado, 10.15%, 1/31/06 ESP 5,015,000,000 41,382,635
Debs., Bonos y Obligacion del Estado, 10.10%, 2/28/01 ESP 2,477,600,000 20,600,088
Debs., Bonos y Obligacion del Estado, 7.30%, 7/30/97 ESP 5,049,000,000 40,102,772
Gtd. Bonds, Bonos y Obligacion del Estado, 11.30%, 1/15/02 ESP 2,590,000,000 22,578,195
Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 ESP 3,541,800,000 31,405,935
-------------
156,069,626
- -----------------------------------------------------------------------------------------------------------------------------------
Supranational--1.4% Eurofima Sr. Unsec. Nts., 10.75%, 5/19/03 ITL 8,000,000,000 5,249,159
------------------------------------------------------------------------------------------------------
European Bank for Reconstruction & Development
Sr. Unsec. Medium-Term Nts., 10%, 12/20/96 CZK 326,600,000 11,952,869
------------------------------------------------------------------------------------------------------
International Bank for Reconstruction &
Development Bonds, 12.50%, 7/25/97 NZD 66,300,000 47,302,470
------------------------------------------------------------------------------------------------------
Nordic Investment Bank Unsec. Unsub. Bonds, 10.80%, 5/24/03 ITL 21,000,000,000 13,745,599
-------------
78,250,097
- -----------------------------------------------------------------------------------------------------------------------------------
Sweden--1.1% Sweden (Kingdom of) Bonds:
Series 1030, 13%, 6/15/01 SEK 230,100,000 41,560,535
Series 1033, 10.25%, 5/5/03 SEK 72,000,000 11,891,591
Series 1035, 6%, 2/9/05 SEK 75,000,000 9,496,357
-------------
62,948,483
- -----------------------------------------------------------------------------------------------------------------------------------
Thailand--0.1% Thai Fuji Finance Zero Coupon Bonds, 19.237%, 6/3/96(4) THB 162,500,000 6,329,514
- -----------------------------------------------------------------------------------------------------------------------------------
Venezuela--0.6% Venezuela (Republic of):
Collateralized Par Bonds, Series W-A, 6.75%, 3/31/20 5,000,000 2,840,600
Collateralized Par Bonds, Series W-B, 6.75%, 3/31/20 1,500,000 852,180
Debs., Banco Venezuela TCI, Zero Coupon, 6.13%, 12/13/98(4)(10) 5,931,033 4,685,517
Disc. Bonds, Series DL, 6.563%, 12/18/07(9) 41,300,000 25,012,104
-------------
33,390,401
-------------
Total Foreign Government Obligations (Cost $1,822,912,352) 1,839,383,129
</TABLE>
12 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Corporate Bonds and Notes--26.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Industry--2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--0.5% NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(12) $16,635,000 $12,559,425
11.75% Sr. Sec. Nts., 10/15/03 3,700,000 3,857,250
-----------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 3,500,000 3,899,535
-----------------------------------------------------------------------------------------------------
Sherritt, Inc., 11% Debs., 3/31/04 CAD 10,000,000 7,780,028
-----------
28,096,238
- ----------------------------------------------------------------------------------------------------------------------------------
Metals/Mining--0.4% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03 11,826,000 12,772,080
-----------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02 9,825,000 9,825,000
-----------------------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05 2,250,000 2,604,375
-----------
25,201,455
---------------------------------------------------------------------------------------------------------------------------------
Paper--1.0% Crown Paper Co., 11% Sr. Sub. Nts., 9/1/05 2,750,000 2,564,375
-----------------------------------------------------------------------------------------------------
Domtar, Inc.:
10.85% Debs., 8/5/17 CAD 1,700,000 1,339,761
11.25% Debs., 9/15/17 5,625,000 5,990,625
12% Nts., 4/15/01 1,050,000 1,207,500
-----------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 2,350,000 2,402,875
-----------------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV, 12.50% Sr. Sec. Gtd. Nts.,
Series C, 6/15/06 3,250,000 3,278,437
-----------------------------------------------------------------------------------------------------
Noranda Forest, Inc., 11% Debs., 7/15/98 CAD 2,000,000 1,592,704
-----------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 4,025,000 3,843,875
-----------------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05 1,000,000 1,015,000
-----------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 8.875% First Priority Sr. Sec. Nts., 7/15/00(9) 4,800,000 4,776,000
-----------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02 5,000,000 4,800,000
-----------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.25% Sr. Nts., 4/1/06 5,000,000 5,050,000
10.875% Sr. Sub. Nts., 4/1/08 3,500,000 3,517,500
-----------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 2,485,381 2,500,652
-----------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 4,625,000 4,902,500
-----------------------------------------------------------------------------------------------------
Stone Container Corp.:
10.75% First Mtg. Nts., 10/1/02 4,700,000 4,700,000
10.75% Sr. Sub. Nts., 6/15/97 900,000 915,750
-----------
54,397,554
- ----------------------------------------------------------------------------------------------------------------------------------
Steel--0.2% Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00 6,850,000 6,781,500
-----------------------------------------------------------------------------------------------------
Sheffield Steel Corp., 12% First Mtg. Nts., 11/1/01 4,000,000 3,720,000
-----------------------------------------------------------------------------------------------------
Wheel-Pittsburgh Corp., 9.375% Sr. Nts., 11/15/03 3,700,000 3,496,500
-----------
13,998,000
</TABLE>
13 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Related--4.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Products--1.1% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 11.874%, 5/27/98(4) $13,150,000 $10,914,500
------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 24,950,000 27,569,750
------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(12) 18,110,000 10,866,000
------------------------------------------------------------------------------------------------------
Marvel Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 11.927%, 4/15/98(4) 5,000,000 3,825,000
------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(5) 6,200,000 6,231,000
------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 5,200,000 5,213,000
----------
64,619,250
- -----------------------------------------------------------------------------------------------------------------------------------
Food/Beverages/Tobacco--0.6% Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 3,600,000 3,690,000
------------------------------------------------------------------------------------------------------
Doane Products Co., 10.625% Sr. Nts., 3/1/06 2,250,000 2,306,250
------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc. Nts.,
2/15/03(12) 6,430,000 5,497,650
------------------------------------------------------------------------------------------------------
Empresas La Moderna SA, 11.375% Gtd. Nts., 1/25/99(5) 4,650,000 4,757,531
------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04(13) 8,050,000 3,139,500
------------------------------------------------------------------------------------------------------
Pulsar Internacional SA de CV, 11.80% Nts., 9/19/96(10) 15,000,000 15,150,000
-----------
34,540,931
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare--1.0% AmeriSource Health Corp., 11.25% Sr. Debs., 7/15/05(14) 9,350,844 10,379,437
------------------------------------------------------------------------------------------------------
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 5,450,000 7,159,937
------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., 7/15/02 5,400,000 6,021,000
------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04(12) 1,750,000 1,172,500
------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04 6,000,000 6,690,000
------------------------------------------------------------------------------------------------------
Mediq/PRN Life Support Services, Inc., 12.125% Sr. Sec. Nts., 7/1/99 3,000,000 3,157,500
------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 6,290,000 7,170,600
------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 3,750,000 4,171,875
------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05 200,000 215,500
------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., 0%/12% Sr. Sub. Disc. Nts., 8/15/04(12) 10,302,000 10,250,490
-----------
56,388,839
- -----------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming--1.0% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00(10) 5,775,000 3,753,750
------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 3,725,000 4,172,000
------------------------------------------------------------------------------------------------------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts., 9.897%,
6/15/98(4) 3,000,000 2,550,000
------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 33,500 --
------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00(10)(13) 2,100,000 1,470,000
------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 7,750,000 8,253,750
------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., 12/15/07(5) 5,550,000 5,328,000
------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., 11/15/02(5) 5,500,000 6,572,500
------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 4,350,000 4,415,250
------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 3,070,000 3,284,900
</TABLE>
14 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming (continued) Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 $ 100,000 $ 72,500
------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., 3/15/03(5) 4,800,000 4,896,000
------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 6,300,000 6,300,000
------------------------------------------------------------------------------------------------------
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01 3,725,000 4,190,625
-----------
55,259,275
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure--0.1% Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02 6,845,068 7,212,990
- -----------------------------------------------------------------------------------------------------------------------------------
Restaurants--0.6% Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,070,000 3,177,450
------------------------------------------------------------------------------------------------------
Family Restaurants, Inc., 0%/10.875% Sr. Sub. Disc. Nts.,
2/1/04(12) 4,000,000 620,000
------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
14.25% Sr. Sub. Nts., 5/15/98 3,000,000 3,060,000
9.25% Sr. Nts., 3/1/99 6,965,000 6,825,700
9.75% Sr. Sub. Nts., 6/1/02 19,000,000 18,430,000
-----------
32,113,150
- -----------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel--0.5% Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02 2,500,000 2,581,250
------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.:
18.222%, 10/23/96(4) IDR 20,500,000,000 7,833,915
19.111%, 2/28/97(4) IDR 2,450,000,000 886,158
20.60%, 7/27/97(4) IDR 6,000,000,000 1,976,903
------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 12,325,000 13,002,875
-----------
26,281,101
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--1.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 2,500,000 2,613,770
------------------------------------------------------------------------------------------------------
DeepTech International, Inc., 12% Sr. Sec. Nts., 12/15/00 1,000,000 955,000
------------------------------------------------------------------------------------------------------
Falcon Drilling, Inc., 8.875% Sr. Nts., 3/15/03(5) 3,000,000 2,985,000
------------------------------------------------------------------------------------------------------
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 6,785,000 7,429,575
------------------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99 8,300,000 8,756,500
------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 3,500,000 3,675,000
8.50% Debs., 4/1/08 1,000,000 957,500
------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Sr. Gtd. Nts., 7/15/02 13,000,000 14,495,000
------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05 2,452,000 2,770,760
9.375% Sub. Debs., 2/1/06 5,500,000 5,500,000
------------------------------------------------------------------------------------------------------
Plains Resources, Inc.:
10.25% Sr. Sub. Nts., 3/15/06(5) 800,000 808,000
12% Sr. Sub. Nts., 10/1/99 1,200,000 1,272,000
------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 125,000 140,360
------------------------------------------------------------------------------------------------------
Triton Energy Corp.:
0%/9.75% Sr. Sub. Disc. Nts., 12/15/00(12) 800,000 777,000
Zero Coupon Sr. Sub. Disc. Nts., 10.397%, 11/1/97(4) 11,350,000 10,044,750
------------------------------------------------------------------------------------------------------
United Meridian Corp., 10.375% Sr. Sub. Gtd. Nts., 10/15/05 2,750,000 2,915,000
------------------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., 9% Sr. Sub. Nts., 12/15/05 3,600,000 3,510,000
-----------
69,605,215
</TABLE>
15 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services--2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks & Thrifts--0.9% Banco Bamerindus do Brasil SA:
10.50% Debs., 6/23/97 $ 1,250,000 $ 1,228,125
11% Sr. Unsub. Unsec. Bonds, 10/6/97 2,230,000 2,190,975
9% Unsub. Unsec. Bonds, 10/29/98 1,740,000 1,435,500
------------------------------------------------------------------------------------------------------
Banco de Colombia, 5.20% Cv. Jr. Sub. Unsec. Nts., 2/1/99 1,250,000 1,096,875
------------------------------------------------------------------------------------------------------
Banco Ganadero SA:
Zero Coupon Nts., 9.947%, 7/1/96(4)(5) 8,790,000 8,588,008
Zero Coupon Sr. Unsub. Unsec. Nts., 9.25%, 5/24/96(4) 730,000 721,532
Zero Coupon Sr. Unsub. Unsec. Nts., 9.943%, 6/15/96(4)(5) 8,190,000 8,034,887
------------------------------------------------------------------------------------------------------
Banco Mexicano SA, 8% Sr. Unsub. Unsec. Exchangeable
Medium-Term Nts., 11/4/98 640,000 598,400
------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7% Cv. Jr. Sub. Unsec. Gtd. Nts.,
12/15/99 300,000 265,125
------------------------------------------------------------------------------------------------------
Banco Nacional de Obras y Servicios Publicos SA, 6.875% Nts.,
10/1/98 1,000,000 937,500
------------------------------------------------------------------------------------------------------
Bank Nederlandse Gemeenten, 10.50% Unsec. Bonds, 6/18/03 ITL 8,000,000,000 5,128,123
------------------------------------------------------------------------------------------------------
Indorayon, Zero Coupon Promissory Nts., 17.239%, 2/12/97(4)IDR 27,600,000,000 10,287,012
------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc., 14.25% Indian Rupee
Indexed Nts., 6/26/96(2) INR 228,978,900 6,714,904
------------------------------------------------------------------------------------------------------
SCF Finance Co., Zero Coupon Bonds, 10.294%, 6/1/96(4) THB 85,000,000 3,295,995
------------------------------------------------------------------------------------------------------
Thai Investment & Securities Co., Zero Coupon Bonds,
11.377%, 4/30/96(4) THB 50,000,000 1,966,025
------------
52,488,986
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--1.0% Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98 12,980,000 11,941,600
------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(10) 857,481 943,230
------------------------------------------------------------------------------------------------------
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 18,105,000 18,376,575
9.75%, 12/10/01 2,000,000 2,000,000
------------------------------------------------------------------------------------------------------
GPA Holland BV:
8.50% Medium-Term Nts., 2/10/97(5) 10,500,000 10,565,625
8.94% Medium-Term Nts., Series C, 2/16/99 2,000,000 1,960,000
------------------------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,935,000
------------------------------------------------------------------------------------------------------
GPA Netherlands BV, 8.50% Medium-Term Nts., 3/3/97(5) 6,500,000 6,540,625
------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., 13% Sr. Nts., 5/1/00 2,850,000 3,106,500
-----------
57,369,155
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--0.2% Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 2,500,000 2,762,500
------------------------------------------------------------------------------------------------------
Terra Nova Insurance (UK) Holdings PLC, 10.75% Sr. Nts., 7/1/05 6,300,000 7,087,500
-----------
9,850,000
- -----------------------------------------------------------------------------------------------------------------------------------
Housing Related--1.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Building Materials--0.5% Building Materials Corp., 0%/11.75% Sr. Deferred Coupon Nts.,
Series B, 7/1/04(12) 9,000,000 6,705,000
------------------------------------------------------------------------------------------------------
Dal-Tile International, Inc., Zero Coupon Sr. Sec. Nts.,
11.972%, 7/15/98(4) 8,750,000 7,065,625
------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 12,375,000 11,880,000
-----------
25,650,625
</TABLE>
16 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate--0.7%
Blue Bell Funding, Inc., 11.85% Extd. Sec. Nts., 5/1/99 $ 4,442,000 $ 4,386,475
------------------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05 CAD 1,547,050 1,146,835
Units (each unit consists of one $10 principal amount of 8.50%
cv. sub. debs., 12/15/15 and 40 common shares)(15) CAD 930,410 1,229,199
------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Sub. Gtd. Nts., 4/15/02 6,900,000 6,382,500
------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 17,075,000 17,459,187
------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 15,000,000 11,325,000
------------
41,929,196
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--1.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Electronics/ Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 4,550,000 5,027,750
Computers--0.7% ------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., 8/1/05 5,350,000 5,590,750
------------------------------------------------------------------------------------------------------
Dell Computer Corp., 11% Sr. Nts., 8/15/00 9,500,000 10,355,000
------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 7,600,000 8,360,000
------------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 1,000,000 1,045,000
------------------------------------------------------------------------------------------------------
Unisys Corp.:
13.50% Credit Sensitive Nts., 7/1/97(9) 5,250,000 5,630,625
8.875% Nts., 7/15/97 1,000,000 990,000
-----------
36,999,125
- -----------------------------------------------------------------------------------------------------------------------------------
Automotive--0.6% Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04 4,370,000 4,741,450
------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Nts., 10/15/99 4,500,000 5,452,456
------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.:
11.25% Sr. Nts., 10/1/02 2,500,000 2,450,000
9.50% Sr. Sec. Nts., 6/1/00 3,672,000 3,580,200
------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 2,500,000 2,487,500
------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 9.50% Medium-Term Nts., 6/1/96 6,075,000 6,099,743
------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 9,600,000 7,920,000
-----------
32,731,349
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods--0.0% Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 1,815,000 1,833,150
- -----------------------------------------------------------------------------------------------------------------------------------
Media--5.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcasting--1.0% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 3,600,000 3,528,000
------------------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 1,750,000 1,697,500
------------------------------------------------------------------------------------------------------
Chancellor Broadcasting Co., 12.50% Sr. Sub. Nts., 10/1/04 3,740,000 4,132,700
------------------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03 7,125,000 7,160,625
------------------------------------------------------------------------------------------------------
New World Communications Group Holding Corp.,
Zero Coupon Sr. Disc. Nts., Series B, 13.50%, 6/15/99(4) 1,250,000 906,250
------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,240,000
------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 17,600,000 18,788,000
</TABLE>
17 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcasting (continued)
SCI Television, Inc., 11% Sr. Nts., Series 1, 6/30/05 $ 2,153,155 $ 2,271,579
-----------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 11.375% Sr. Sub. Nts., 10/1/00 3,000,000 3,225,000
-----------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 12/15/03 9,275,000 9,228,625
10% Sr. Sub. Nts., 9/30/05 450,000 447,750
-----------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 5,500,000 5,864,375
------------
59,490,404
- ------------------------------------------------------------------------------------------------------------------------------------
Cable Television--3.0% American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(12) 16,056,495 12,142,724
-----------------------------------------------------------------------------------------------------------
Australis Media Ltd., Units (each unit consists of $1,000 principal
amount of 0%/14% sr. sub. disc. nts., 5/15/03 and one warrant
to purchase 57.721 ordinary shares)(12)(15) 11,750,000 8,107,500
-----------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04(12) 24,100,000 17,291,750
-----------------------------------------------------------------------------------------------------------
Cablevision Industries Corp.:
10.75% Sr. Nts., 1/30/02 1,000,000 1,085,000
9.25% Sr. Debs., Series B, 4/1/08 4,400,000 4,730,000
-----------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 6,325,000 6,688,687
9.875% Sr. Sub. Debs., 2/15/13 4,550,000 4,743,375
-----------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc.Debs., 11/15/07(12) 3,800,000 2,204,000
-----------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc.:
11% Sr. Sub. Debs., 6/1/07 3,000,000 3,397,500
9% Sr. Debs., 9/1/08 2,000,000 2,190,000
-----------------------------------------------------------------------------------------------------------
CS Wireless Systems, Inc., Units (each unit consists of four
$1,000 principal 0%/11.375% sr. disc. nts., 3/1/06 and
1.1 shares of common stock)(5)(12)(15) 3,750,000 810,000
-----------------------------------------------------------------------------------------------------------
Diamond Cable Communications PLC, 0%/11.75% Sr. Disc. Nts., 12/15/05(12) 150,000 88,500
-----------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(12) 19,350,000 14,222,250
-----------------------------------------------------------------------------------------------------------
Fundy Cable Ltd./Ltee, 11% Sr. Sec. Second Priority Nts., 11/15/05 4,000,000 4,160,000
-----------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03(9) 11,825,000 11,795,438
-----------------------------------------------------------------------------------------------------------
International CableTel, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(12) 900,000 650,250
0%/11.50% Sr. Deferred Coupon Nts., Series A, 2/1/06(5)(12) 10,040,000 5,722,800
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(12) 8,950,000 5,728,000
-----------------------------------------------------------------------------------------------------------
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Sr. Sub. Gtd. Disc. Nts., Series II, 8/1/04(12) 6,900,000 5,028,375
-----------------------------------------------------------------------------------------------------------
People's Choice TV Corp., 0%/13.125% Sr. Disc. Nts., 6/1/04(12) 6,600,000 4,191,000
-----------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd.:
10% Sr. Sec. Second Priority Debs., 12/1/07 10,100,000 10,554,500
11% Sr. Sub. Gtd. Debs., 12/1/15 2,000,000 2,170,000
-----------------------------------------------------------------------------------------------------------
TeleWest PLC, 0%/11% Sr. Disc. Debs., 10/1/07(12) 26,175,000 15,835,875
-----------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 3,600,000 4,126,500
-----------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.:
Series B, 14%, 11/15/99(4) 2,000,000 1,300,000
12.785%, 11/15/99(4) 26,750,000 17,387,500
-----------------------------------------------------------------------------------------------------------
Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05(12) 3,400,000 2,176,000
------------
168,527,524
</TABLE>
18 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Diversified Media--1.3% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts.,
Series A, 10/1/03 $ 9,050,000 $ 9,909,750
--------------------------------------------------------------------------------------------------------
GSPI Corp., 10.15% First Mtg. Bonds, 6/24/10(5) 816,805 944,431
--------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 2,650,000 2,577,125
--------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 12,000,000 12,660,000
--------------------------------------------------------------------------------------------------------
News America Holdings, Inc.:
10.125% Sr. Gtd. Debs., 10/15/12 3,300,000 3,823,799
12% Sr. Nts., 12/15/01 2,500,000 2,743,677
--------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 10.75% Sr. Nts., 8/15/03 2,400,000 2,424,000
--------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(12) 24,500,000 20,641,250
9.75% Sr. Sec. Nts., 8/1/00 2,525,000 2,651,250
--------------------------------------------------------------------------------------------------------
Time Warner Entertainment LP/Time Warner, Inc., 8.375% Sr. Debs.,
3/15/23 9,254,000 9,404,256
--------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 5,000,000 5,424,650
--------------------------------------------------------------------------------------------------------
Universal Outdoor Holdings, Inc., 11% Sr. Nts., 11/15/03 3,281,000 3,297,405
------------
76,501,593
- ------------------------------------------------------------------------------------------------------------------------------------
Entertainment/Film--0.2% Imax Corp., 7% Sr. Nts., 3/1/01(11) 13,780,000 13,573,300
- ------------------------------------------------------------------------------------------------------------------------------------
Publishing/Printing--0.0% Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(12) 3,400,000 2,227,000
- ------------------------------------------------------------------------------------------------------------------------------------
Other--1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Conglomerates--0.6% Acadia Partners LP, 13% Sr. Sub. Nts., 10/1/97(5) 25,000,000 25,875,000
--------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., 12.25% Sub. Nts., 7/1/96 1,565,000 1,576,738
--------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99 5,215,000 5,260,631
--------------------------------------------------------------------------------------------------------
Talley Industries, Inc., 0%/12.25% Sr. Disc Debs., 10/15/05(12) 4,146,000 3,161,325
------------
35,873,694
- ------------------------------------------------------------------------------------------------------------------------------------
Environmental--0.2% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 10,000,000 9,000,000
--------------------------------------------------------------------------------------------------------
Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts., 2/15/03(13) 1,000,000 695,000
------------
9,695,000
- ------------------------------------------------------------------------------------------------------------------------------------
Services--0.5% Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 12,160,000 11,400,000
--------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA, 8.25% Gtd. Nts., 2/17/01(5) 9,700,000 5,074,313
--------------------------------------------------------------------------------------------------------
Protection One, Inc., 0%/13.625% Sr. Disc. Nts., 6/30/05(12) 4,200,000 3,549,000
--------------------------------------------------------------------------------------------------------
Sociedad Comercial del Plata SA, 10.75% Medium-Term Nts., 3/6/98(5) 6,750,000 6,792,188
------------
26,815,501
- ------------------------------------------------------------------------------------------------------------------------------------
Retail--1.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Retailing--0.5% Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 8,050,000 8,291,500
--------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 6,600,000 6,319,500
--------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 6,970,000 6,586,650
--------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 5,000,000 5,650,000
------------
26,847,650
</TABLE>
19 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Supermarkets--0.6%
Grand Union Co., 12% Sr. Nts., 9/1/04 $ 26,648,000 $23,450,240
--------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03(14) 3,051,268 3,036,012
--------------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 4,000,000 4,170,000
--------------------------------------------------------------------------------------------------------
Penn Traffic Co.:
10.25% Sr. Nts., 2/15/02 1,500,000 1,492,500
9.625% Sr. Sub. Nts., 4/15/05 2,400,000 2,082,000
--------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 1,065,000 1,163,513
--------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 13.75% Sr. Sub. Nts., 6/15/05 1,500,000 1,530,000
-----------
36,924,265
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Air Transportation--0.3% American International Group, Inc., 11.70% Unsec. Unsub. Bonds,
12/4/01(ITL) 3,000,000,000 2,042,490
--------------------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 11,000,000 11,770,000
--------------------------------------------------------------------------------------------------------
Northwest Airlines, Inc., 12.0916% Sr. Gtd. Nts., 12/31/00 3,124,752 3,245,837
------------
17,058,327
- ------------------------------------------------------------------------------------------------------------------------------------
Railroads--0.3% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(12) 23,816,000 16,552,120
- ------------------------------------------------------------------------------------------------------------------------------------
Shipping--0.2% Sea Containers Ltd.:
12.50% Sr. Sub. Debs., Series A, 12/1/04 1,050,000 1,147,125
9.50% Sr. Sub. Debs., 7/1/03 1,250,000 1,250,000
--------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 10,150,000 10,530,625
------------
12,927,750
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities--5.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--1.3% Beaver Valley II Funding Corp., 9% Second Lease Obligation
Bonds, 6/1/17 956,000 770,460
--------------------------------------------------------------------------------------------------------
C.A. La Electricidad de Caracas, 6.625% Exchange Eurobonds, 9/30/03(9) 3,273,205 1,820,721
--------------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(12) 14,990,000 14,352,925
--------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 5,750,000 5,850,625
--------------------------------------------------------------------------------------------------------
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 20,350,000 21,409,805
10.30% Lease Obligation Bonds, Series 1986A, 1/15/14 16,700,000 17,570,387
--------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08 7,127,586 6,842,483
9.50% Sr. Sec. Nts., 12/28/08(5) 5,737,931 4,992,000
------------
73,609,406
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommunications--4.0% A+ Network, Inc., 11.875% Sr. Sub. Nts., 11/1/05 7,825,000 8,059,750
--------------------------------------------------------------------------------------------------------
American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(5)(12) 6,100,000 3,248,250
0%/13% Sr. Disc. Nts., 11/1/05(5)(12) 3,400,000 1,921,000
--------------------------------------------------------------------------------------------------------
Arch Communications Group, Inc., 0%/10.875% Sr. Disc. Nts., 3/15/08(12) 10,900,000 6,267,500
--------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/10.875% Sr. Disc. Nts., 3/1/06(5)(12) 5,400,000 3,159,000
--------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(12) 6,800,000 5,015,000
--------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(5)(12) 13,850,000 10,179,750
</TABLE>
20 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05(5) $ 2,200,000 $ 1,540,000
(continued) --------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 12.184%, 8/15/00(4) 21,595,000 13,172,950
--------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(12) 26,956,000 21,362,630
--------------------------------------------------------------------------------------------------------
Cencall Communications Corp., 0%/10.125% Sr. Disc. Nts., 1/15/04(12) 5,050,000 3,004,750
--------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., Zero Coupon Nts., Series B, 7.835%, 3/5/00(4) 7,423,000 5,455,905
--------------------------------------------------------------------------------------------------------
Comunicacion Celular SA, Units (each unit consists of $1,000 principal
0%/13.125% sr. deferred coupon bond, 11/15/03 and one warrant for
12,860 shares of common stock at $1.32 per 1,000 shares)(5)(12)(15) 7,250,000 4,241,250
--------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp.,
0%/13.125% Sr. Sec. Disc. Nts., 3/15/04(5)(12) 6,100,000 3,751,500
--------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., 7/15/05(12) 23,000,000 14,030,000
--------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 750,000 840,000
--------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., Units (each unit consists of eight
0%/13.875% sr. disc. nts., 12/15/05 and one
0%/13.875% cv. sr. sub. disc. nt., 12/15/05)(5)(12)(15) 17,000,000 10,030,000
--------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(12) 28,039,000 24,534,125
--------------------------------------------------------------------------------------------------------
In-Flight Phone Corp., 0%/14% Sr. Disc. Nts., 5/15/02(12) 13,050,000 4,110,750
--------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(12) 15,650,000 10,152,938
--------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(12) 19,000,000 11,993,750
0%/9.375% Sr. Disc. Nts., 1/15/04(12) 20,351,000 15,593,954
--------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/11.50% Sr. Disc. Nts., 9/1/03(12) 6,440,000 4,298,700
--------------------------------------------------------------------------------------------------------
Philippine Long Distance Telephone Co., 10.625% Debs., 6/2/04 500,000 538,750
--------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(12) 4,300,000 3,418,500
0%/14% Sr. Sub. Disc. Nts., 11/15/01(12) 25,917,000 23,195,715
--------------------------------------------------------------------------------------------------------
Telefonica de Argentina SA, 11.875% Unsec. Nts., 11/1/04 300,000 311,250
--------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 11,100,000 12,931,500
9.50% Sr. Nts., 2/1/04 2,350,000 2,320,625
--------------------------------------------------------------------------------------------------------
228,679,792
------------
Total Corporate Bonds and Notes (Cost $1,502,205,308) 1,531,868,910
Shares
====================================================================================================================================
Common Stocks--1.0%
- ------------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc.(16) 10,700 89,613
--------------------------------------------------------------------------------------------------------
American Telecasting, Inc.(16) 72,500 1,069,375
--------------------------------------------------------------------------------------------------------
Australis Media Ltd.(16) 1,000,000 445,865
--------------------------------------------------------------------------------------------------------
Berg Electronics Corp.(16) 38,740 910,390
--------------------------------------------------------------------------------------------------------
Celcaribe SA(5)(16) 2,065,020 3,097,530
--------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(16) 130,550 4,406,062
--------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I(10) 525 525,000
</TABLE>
21 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stocks (continued) El Paso Electric Co.(16) 854,506 $ 4,753,190
-------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(16) 68,985 172,462
-------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc.(10)(16) 183,000 4,163,250
-------------------------------------------------------------------------------------------------------
Grand Union Co.(16) 244,257 1,465,542
-------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.(16) 400,000 3,375,000
-------------------------------------------------------------------------------------------------------
IntelCom Group, Inc.(16) 376,800 6,688,200
-------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.(16) 42,670 954,741
-------------------------------------------------------------------------------------------------------
Ladish, Inc. 806,000 604,500
-------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. B(16) 40,319 791,260
-------------------------------------------------------------------------------------------------------
Omnipoint Corp.(16) 640,625 16,335,938
-------------------------------------------------------------------------------------------------------
People's Choice TV Corp.(16) 20,000 365,000
-------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, Inc.(10)(16) 38,000 204,250
-------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(10)(16) 232,222 232,222
-------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Cl. A(16) 95,000 1,520,000
-------------------------------------------------------------------------------------------------------
Walter Industries, Inc.(16) 199,583 2,744,266
-------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $45,687,483) 54,913,656
===================================================================================================================================
Preferred Stocks and Other Securities--1.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp., 8.375%, Series K 150,000 3,843,750
-------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125%, Series L(5)(14) 50,000 4,975,000
8.50% Cum. Cv., Series I 225,000 6,356,250
-------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 65,975 7,240,757
-------------------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Series A Preferred Stock(14) 29,800 3,069,400
-------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual
Preferred Stock, Series A 160,000 4,300,000
-------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum 135,000 15,187,500
-------------------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 25,000 1,190,625
-------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exchangeable, Series B(14) 63,234 6,544,753
Sr. Exchangeable, Series A 80,000 2,150,000
-------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp., 8.255% Cv. Preferred Redeemable
Increased Dividend Equity Securities 22,400 310,800
-------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B(19) 238,000 4,016,250
-------------------------------------------------------------------------------------------------------
TGX Corp., Series A(10) 692,000 1,211,000
-------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 80,000 2,350,000
-------------------------------------------------------------------------------------------------------
Total Preferred Stocks and Other Securities (Cost $60,997,566) 62,746,085
</TABLE>
22 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Units See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Rights, Warrants and Certificates--0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(5) 3,400 $ 178,500
--------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99 119,070 893,025
Exp. 8/00(5) 8,000 296,000
--------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A(10) 37,200 372
Litigation Trust(10) 118,975 1,190
--------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(10) 262,500 65,625
--------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 74,086 2,222
--------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 9,789 --
--------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03 16,370 245,550
--------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03(5) 6,600 33,000
--------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99 7,250 36,250
--------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/05(5) 690,000 3,450,000
--------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc. Wts., Exp. 11/99(5) 5,400 135,000
--------------------------------------------------------------------------------------------------------
IHF Holdings, Inc. Wts., Exp. 3/99 1,750 157,500
--------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02(5) 13,050 --
--------------------------------------------------------------------------------------------------------
IntelCom Group, Inc. Wts., Exp. 9/05(5) 46,860 480,315
--------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 102,500 2,613,750
--------------------------------------------------------------------------------------------------------
People's Choice TV Corp. Wts., Exp. 6/00 6,600 66,000
--------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03 182,000 2,616,250
Exp. 6/05 13,440 124,320
--------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/96(5) 16,941 847
--------------------------------------------------------------------------------------------------------
United International Securities Ltd. Wts., Exp. 11/99 20,345 590,005
--------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil-linked Payment Obligation Wts., Exp. 4/20 7,500 --
--------------------------------------------------------------------------------------------------------
Venezuela Government Wts., Exp. 4/20 25,000 --
------------
Total Rights, Warrants and Certificates (Cost $2,444,174) 11,985,721
Face
Amount(1)
====================================================================================================================================
Structured Instruments--2.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Banque Paribas, Grand Cayman Branch, 31.81% Pass-Through
Certificates of Deposit, 2/1/97 HUF 444,000,000 3,181,269
--------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, New York Branch, 5.60% CD
Linked Nts., 1/30/97 (indexed to the closing Nikkei 225 Index
on 1/23/97 10 yr. Japanese Yen swap rate & New Zealand Dollar
on 1/28/97)(2) NZD 5,400,512 3,741,469
--------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch, 16% CD
Linked Nts., 9/11/96 (indexed to the Russian Federation GKO,
Zero Coupon, 9/4/96) 7,800,000 7,780,500
</TABLE>
23 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments CS First Boston Corp. Argentina Structured Product Asset Return
(continued) Trust Certificates, 9.40%, 9/1/97 [representing debt of Argentina
(Republic of) Bonos del Tesoro Bonds, Series II, 5.742%, 9/1/97
and an interest rate swap between Credit Suisse Financial
Products and the Trust](5) $ 4,857,142 $ 4,815,307
-------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co. Argentina Local Market Securities Trust,
11.30%, 4/1/00 [representing debt of Argentina (Republic of) Bonos
del Tesoro Bonds, Series 10, 5.742%, 4/1/00 and an interest rate
swap between Goldman Sachs and the Trust](10) 17,517,391 16,641,522
-------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. Units, 9.75%, 6/15/99 (representing
debt of Chemical Banking Corp., sub. capital nts., and equity of
Citicorp, 7.75% preferred, series 22)(10)(15) 10,000,000 11,223,000
-------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. Repackaged Argentina Domestic Securities
Trust, 14.75%, 9/1/02 [representing debt of Argentina (Republic of)
Bonos de Consolidacion de Deudas Bonds, Series I, 5.32%, 9/1/02](10) 6,000,000 5,775,000
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.384%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(4) 5,800,000 5,316,280
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.38%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(4) 7,200,000 6,599,520
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.638%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(4) 4,300,000 3,941,380
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.886%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(4) 5,900,000 5,407,940
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.61%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(4) 18,000,000 16,498,800
-------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
10.15%, 3/4/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 3/3/97)(4) 14,000,000 12,601,400
-------------------------------------------------------------------------------------------------------
Swiss Bank Corp., New York Branch, 6.60% CD Linked Nts.,
1/30/97 (indexed to the closing Nikkei 225 Index on 1/23/97) NZD 37,133,797 26,183,690
-------------------------------------------------------------------------------------------------------
United Mexican States Linked Nts. (indexed to the greater of Cetes
Option Amount or USD LIBOR Option Amount, 11/27/96)(5) 18,225,000 20,001,938
------------
Total Structured Instruments (Cost $147,331,840) 149,709,015
Date Strike Contracts
====================================================================================================================================
Call Option Purchased--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
OTC Deutsche Mark/U.S. Dollar Call Opt.
(Cost $322,449) May 96 1.495 DEM 65,805,847 743,606
====================================================================================================================================
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
OTC Deutsche Mark/U.S. Dollar Put Opt. May 96 1.495 DEM 65,805,847 355,352
-------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 $45.25 10,000 7,000
-------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 $50.00 12,300 225,668
Total Put Options Purchased ---------
(Cost $1,603,022) 588,020
</TABLE>
24 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
====================================================================================================================================
Repurchase Agreement--0.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.375%,
dated 3/29/96, to be repurchased at $30,213,527 on 4/1/96,
collateralized by U.S. Treasury Nts., 6.75%--8.625%,
8/15/97--11/15/00, with a value of $30,867,447 (Cost $30,200,000) $30,200,000 $ 30,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $5,824,413,564) 102.9% 5,877,021,589
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (2.9) (164,791,341)
----------- --------------
Net Assets 100.0% $5,712,230,248
=========== ==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD -- Australian Dollar IDR -- Indonesian Rupiah
CAD -- Canadian Dollar IEP -- Irish Punt
CLP -- Chilean Peso INR -- Indian Rupee
CZK -- Czech Koruna ITL -- Italian Lira
DEM -- German Deutsche Mark MXP -- Mexican Peso
DKK -- Danish Krone NZD -- New Zealand Dollar
ESP -- Spanish Peseta PLZ -- Polish Zloty
FIM -- Finnish Markka SEK -- Swedish Krona
GBP -- British Pound Sterling THB -- Thai Baht
HUF -- Hungarian Forint
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. Issuer is in default. The security is being valued under procedures
established by the Board of Trustees to determine fair value in good faith.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
5. 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 $275,839,377 or 4.83% of the Fund's net
assets, at March 31, 1996.
6. When-issued security to be delivered and settled after March 31, 1996.
7. 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 $8,158,269 or
0.14% of the Fund's net assets at March 31, 1996.
8. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes in prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs). Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing and amount of future
cash flows.
9. Represents the current interest rate for a variable rate security.
10. Identifies issues considered to be illiquid--See Note 8 of Notes to
Financial Statements.
11. Represents the current interest rate for an increasing rate security.
12. Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
13. Non-income producing--issuer is in default of interest payment.
14. Interest or dividend is paid in kind.
15. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
16. Non-income producing security.
25 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
17. Securities with an aggregate market value of $1,546,875 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
18. A sufficient amount of liquid assets have been designated to cover
outstanding written call options, as follows:
<TABLE>
<CAPTION>
Face/Contracts Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Call Option on Argentina (Republic of)
Past Due Interest Bonds, Series L, 6.312%, 3/31/05 8,930,000 4/96 $73.5625 $ 129,485 $ 94,658
- ---------------------------------------------------------------------------------------------------------------------------------
Call Option on German Deutsche Mark 65,805,847 5/96 1.4947 DEM 1,585,921 1,296,375
- ---------------------------------------------------------------------------------------------------------------------------------
Call Option on Morocco (Kingdom of) Loan
Participation Agreement, Tranche A, 6.594%, 1/1/09 7,370,000 4/96 $69.25 128,975 121,531
- ---------------------------------------------------------------------------------------------------------------------------------
Call Option on New Zealand Dollar 54,222,819 4/96 1.46 NZD 363,971 222,314
- ---------------------------------------------------------------------------------------------------------------------------------
Call Option on New Zealand Dollar 27,111,409 4/96 1.46 NZD 183,273 84,045
---------- ----------
$2,391,625 $1,818,923
========== ==========
</TABLE>
19. 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, 1996.
The aggregate fair value of all securities of affiliated companies as of March
31, 1996 amounted to $4,016,250. Transactions during the period in which the
issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
September 30, 1995 Gross Additions Gross Reductions March 31, 1996
------------------- ------------------- ------------------- ------------------- Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc.,
$19.00 Cv., Series B 238,000 $4,634,250 -- $ -- -- $ -- 238,000 $4,634,250 $252,875
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
===================================================================================================================================
Assets Investments, at value--see accompanying statement:
Unaffiliated companies (cost $5,819,779,314) $5,873,005,339
Affiliated companies (cost $4,634,250) 4,016,250
-------------------------------------------------------------------------------------------------------
Cash 1,590,782
-------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 1,169,453
-------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 155,161,939
Interest, dividends and principal paydowns 121,551,679
Shares of beneficial interest sold 14,168,264
-------------------------------------------------------------------------------------------------------
Other 94,097
--------------
Total assets 6,170,757,803
===================================================================================================================================
Liabilities Options written, at value (premiums received $2,391,625)--
see accompanying statement--Note 7 1,818,923
-------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 1,658,079
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased
(including $294,659,034 purchased on a when-issued basis)--Note 1 420,494,206
Dividends 15,278,533
Shares of beneficial interest redeemed 14,298,417
Distribution and service plan fees 3,468,463
Shareholder reports 691,802
Daily variation on futures contracts--Note 6 339,549
Transfer and shareholder servicing agent fees 94,270
Closed forward foreign currency exchange contracts 43,619
Trustees' fees 3,324
Other 338,370
--------------
Total liabilities 458,527,555
===================================================================================================================================
Net Assets $5,712,230,248
==============
===================================================================================================================================
Composition of Paid-in capital $5,982,623,515
Net Assets -------------------------------------------------------------------------------------------------------
Overdistributed net investment income (5,711,320)
-------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (318,216,548)
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 53,534,601
--------------
Net assets $5,712,230,248
==============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$3,345,648,459 and 705,606,415 shares of beneficial interest outstanding) $4.74
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $4.98
-------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $2,258,380,941 and 475,371,532 shares of beneficial interest outstanding) $4.75
-------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $108,200,848 and 22,835,055 shares of beneficial interest outstanding) $4.74
</TABLE>
See accompanying Notes to Financial Statements.
27 Oppenheimer Strategic Income Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
===================================================================================================================================
Investment Income Interest (net of foreign withholding taxes of $1,008,753) $278,907,569
-------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 2,202,485
Affiliated companies 252,875
------------
Total income 281,362,929
===================================================================================================================================
Expenses Management fees--Note 4 14,655,498
-------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 4,050,112
Class B 10,512,818
Class C 420,240
-------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 2,957,702
-------------------------------------------------------------------------------------------------------
Shareholder reports 1,127,109
-------------------------------------------------------------------------------------------------------
Custodian fees and expenses 1,006,200
-------------------------------------------------------------------------------------------------------
Legal and auditing fees 99,902
-------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 279
Class B 80,340
Class C 13,093
-------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 42,443
-------------------------------------------------------------------------------------------------------
Other 273,852
------------
Total expenses 35,239,588
===================================================================================================================================
Net Investment Income 246,123,341
===================================================================================================================================
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) Investments (including premiums on options exercised) 41,483,084
Closing of futures contracts 679,955
Closing and expiration of options written (796,469)
Foreign currency transactions (466,486)
------------
Net realized gain 40,900,084
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 22,950,724
Translation of assets and liabilities denominated in foreign currencies 1,505,317
------------
Net change 24,456,041
------------
Net realized and unrealized gain 65,356,125
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $311,479,466
============
</TABLE>
See accompanying Notes to Financial Statements.
28 Oppenheimer Strategic Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30,
(Unaudited) 1995
<S> <C> <C> <C>
===================================================================================================================================
Operations Net investment income $ 246,123,341 $ 448,882,414
------------------------------------------------------------------------------------------------------
Net realized gain (loss) 40,900,084 (348,292,355)
------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 24,456,041 296,653,910
-------------- --------------
Net increase in net assets resulting from operations 311,479,466 397,243,969
===================================================================================================================================
Dividends and Dividends from net investment income:
Distributions to Class A (152,642,543) (254,120,541)
Shareholders Class B (89,226,401) (153,748,570)
Class C (3,565,350) (5,287,754)
------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (17,363,434)
Class B -- (10,505,263)
Class C -- (361,299)
------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (9,994,119)
Class B -- (5,867,961)
Class C -- (14,565)
===================================================================================================================================
Beneficial Interest Net increase in net assets resulting from beneficial interest
Transactions transactions--Note 2:
Class A 86,073,529 119,123,728
Class B 286,622,691 378,396,143
Class C 40,556,174 66,237,938
===================================================================================================================================
Net Assets Total increase 479,297,566 503,738,272
------------------------------------------------------------------------------------------------------
Beginning of period 5,232,932,682 4,729,194,410
-------------- --------------
End of period (including overdistributed net investment
income of $5,711,320 and $6,400,367, respectively) $5,712,230,248 $5,232,932,682
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
29 Oppenheimer Strategic Income Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
------------------------------------------
Six Months
Ended
March 31, 1996 Year Ended September 30,
(Unaudited) 1995 1994
<S> <C> <C> <C>
=========================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $ 4.68 $ 4.75 $ 5.21
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .41 .45
Net realized and unrealized gain (loss) .06 (.03) (.35)
------- ------- ------
Total income from investment operations .28 .38 .10
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.41) (.43)
Distributions from net realized gain -- (.01) --
Distributions in excess of net realized gain -- -- (.12)
Tax return of capital -- (.03) (.01)
------- ------- ------
Total dividends and distributions to shareholders (.22) (.45) (.56)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.74 $ 4.68 $ 4.75
====== ====== ======
=====================================================================================================
Total Return, at Net Asset Value(3) 6.03% 8.62% 1.85%
=====================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $3,346 $3,219 $3,143
- -----------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,299 $3,085 $3,082
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.28%(4) 9.63% 8.72%
Expenses 0.98%(4) 0.99% 0.95%
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 83.7% 141.5% 119.0%
</TABLE>
1. For the period from May 26, 1995 (inception of offering) to September 30,
1995.
2. For the period from November 30, 1992 (inception of offering) to September
30, 1993.
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.
30 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- -------------------------------------- --------------------------------------------------- ----------------------------
Six Months Six Months Year
Ended Ended Ended
March 31, 1996 Year Ended September 30, March 31, 1996 Sept. 30,
1993 1992 1991 (Unaudited) 1995 1994 1993(2) (Unaudited) 1995(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
==================================================================================================================================
$ 5.07 $ 5.01 $ 4.87 $ 4.69 $ 4.76 $ 5.22 $ 4.89 $ 4.68 $ 4.68
- ----------------------------------------------------------------------------------------------------------------------------------
.48 .46 .56 .23 .37 .42 .36 .22 .13
.17 .14 .21 .03 (.03) (.36) .34 .04 .01
- ------ ------ ------ ------ ------ ------ ------ ------ ------
.65 .60 .77 .26 .34 .06 .70 .26 .14
- ----------------------------------------------------------------------------------------------------------------------------------
(.50) (.46) (.57) (.20) (.37) (.39) (.36) (.20) (.12)
(.01) (.08) (.06) -- (.01) -- (.01) -- (.01)
-- -- -- -- -- (.12) -- -- --
-- -- -- -- (.03) (.01) -- -- (.01)
- ------ ------ ------ ------ ------ ------ ------ ------ ------
(.51) (.54) (.63) (.20) (.41) (.52) (.37) (.20) (.14)
- ----------------------------------------------------------------------------------------------------------------------------------
$ 5.21 $ 5.07 $ 5.01 $ 4.75 $ 4.69 $ 4.76 $ 5.22 $ 4.74 $ 4.68
====== ====== ====== ====== ====== ====== ====== ====== ======
==================================================================================================================================
13.30% 12.56% 16.97% 5.63% 7.79% 1.07% 13.58% 5.63% 3.09%
==================================================================================================================================
$2,754 $1,736 $ 560 $2,258 $1,947 $1,586 $ 695 $ 108 $ 67
- ----------------------------------------------------------------------------------------------------------------------------------
$2,107 $1,084 $ 311 $2,106 $1,711 $1,236 $ 276 $ 84 $ 24
- ----------------------------------------------------------------------------------------------------------------------------------
9.78% 9.39% 11.82% 8.50%(4) 8.83% 7.90% 8.13%(4) 8.42%(4) 8.28%(4)
1.09% 1.16%(5) 1.27%(5) 1.74%(4) 1.75% 1.71% 1.80%(4) 1.76%(4) 2.02%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
148.6% 208.2% 194.7% 83.7% 141.5% 119.0% 148.6% 83.7% 141.5%
</TABLE>
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 period ended March 31, 1996 were $4,999,956,054 and $4,400,712,700,
respectively. See accompanying Notes to Financial Statements.
31 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 objective is to seek a high level of current
income by investing mainly in debt securities and by writing covered call
options on them. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All three 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 are valued 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 foreign currency exchange
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.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains, in a segregated account with its custodian, assets with a
market value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of March 31, 1996,
the Fund had entered into outstanding when-issued or forward commitments of
$294,659,034.
In connection with its ability to purchase securities on a when-issued
or forward commitment basis, the Fund may enter into mortgage "dollar-rolls" in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
- --------------------------------------------------------------------------------
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, 1996, securities
with an aggregate market value of $8,928,314, representing .16% 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 Statement of Operations.
32 Oppenheimer Strategic Income Fund
<PAGE>
================================================================================
1. Significant
Accounting Policies
(continued)
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of the collateral declines,
or if the seller enters an insolvency proceeding, realization of the value of
the collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, 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, Class B and Class C 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 and losses and the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes. The character of 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.
- --------------------------------------------------------------------------------
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 periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
33 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996 Year Ended September 30, 1995(1)
------------------------------- --------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Class A:
Sold 77,896,474 $370,186,265 148,016,674 $683,433,740
Dividends and distributions reinvested 21,526,524 102,352,028 44,280,828 204,225,816
Issued in connection with the acquisition
of Quest for Value Global Income
Fund--Note 9 970,667 4,571,842 -- --
Redeemed (82,333,409) (391,036,606) (166,648,327) (768,535,828)
----------- ------------ ------------ ------------
Net increase 18,060,256 $ 86,073,529 25,649,175 $119,123,728
=========== ============ ============ ============
- -----------------------------------------------------------------------------------------------------------------
Class B:
Sold 79,959,592 $380,821,179 116,898,296 $540,870,128
Dividends and distributions reinvested 10,537,847 50,183,780 19,012,767 87,850,572
Issued in connection with the acquisition
of Quest for Value Global Income
Fund--Note 9 280,096 1,322,051 -- --
Redeemed (30,605,156) (145,704,319) (54,200,534) (250,324,557)
----------- ------------ ----------- ------------
Net increase 60,172,379 $286,622,691 81,710,529 $378,396,143
=========== ============ ============ ============
- -----------------------------------------------------------------------------------------------------------------
Class C:
Sold 10,050,168 $ 47,810,170 2,871,521 $ 13,389,069
Dividends and distributions reinvested 493,971 2,347,919 90,363 421,261
Issued in connection with the
acquisition of:
Oppenheimer Strategic Diversified
Income Fund--Note 9 -- -- 11,908,408 55,016,842
Quest for Value Global Income
Fund--Note 9 36,170 170,362 -- --
Redeemed (2,059,190) (9,772,277) (556,356) (2,589,234)
----------- ------------ ----------- ------------
Net increase 8,521,119 $ 40,556,174 14,313,936 $ 66,237,938
=========== ============ ============ ============
</TABLE>
1. For the year ended September 30, 1995 for Class A and Class B shares and for
the period from May 26, 1995 (inception of offering) to September 30, 1995 for
Class C shares.
================================================================================
3. Unrealized Gains
And Losses on
Investments
At March 31, 1996, net unrealized appreciation on investments and options
written of $53,180,727 was composed of gross appreciation of $165,266,416, and
gross depreciation of $112,085,689.
================================================================================
4. 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 a fee of .75% on the first
$200 million of average annual net assets with a reduction of .03% on each $200
million thereafter to $800 million, .60% on the next $200 million and .50% on
net assets in excess of $1 billion. The Manager has agreed to reimburse the
Fund if aggregate expenses (with specified exceptions) exceed the most
stringent applicable regulatory limit on Fund expenses.
For the six months ended March 31, 1996, commissions (sales charges
paid by investors) on sales of Class A shares totaled $8,793,635, of which
$2,487,882 was retained by OppenheimerFunds 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 and Class C shares totaled $14,119,678 and $455,835, of which
$441,377 and $16,537, respectively, was paid to an affiliated broker/dealer.
During the six months ended March 31, 1996, OFDI received contingent deferred
sales charges of $2,498,775 and $28,175, respectively, upon redemption of Class
B and Class C shares as reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are
allocated ratably to these companies.
34 Oppenheimer Strategic Income Fund
<PAGE>
================================================================================
4. Management Fees
And Other Transactions
With Affiliates
(continued)
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a
portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed .25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the six months ended March 31, 1996, OFDI paid
$278,735 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
The Fund has adopted a reimbursement type Distribution and Service Plan
for Class B shares to reimburse OFDI for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of .75% per year on Class B shares that are
outstanding for 6 years or less. OFDI also receives a service fee of .25% per
year to reimburse dealers for providing personal services for accounts that
hold Class B shares. Both fees are computed on the average annual net assets of
Class B shares, determined as of the close of each regular business day. If the
Plan is terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain expenses
it incurred before the Plan was terminated. During the six months ended March
31, 1996, OFDI paid $64,940 to an affiliated broker/dealer as reimbursement for
Class B personal service and maintenance expenses and retained $8,609,912 as
reimbursement for Class B sales commissions and service fee advances, as well
as financing costs. As of March 31, 1996, OFDI had incurred unreimbursed
expenses of $85,819,308 for Class B.
The Fund has adopted a compensation type Distribution and Service Plan
for Class C shares to compensate OFDI for its services and costs in
distributing Class C shares and servicing accounts. Under the Plan, the Fund
pays OFDI an annual asset-based sales charge of .75% per year on Class C
shares. OFDI also receives a service fee of .25% per year to compensate dealers
for providing personal services for accounts that hold Class C shares. Both
fees are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for certain expenses it
incurred before the Plan was terminated. During the six months ended March 31,
1996, OFDI paid $8,439 to an affiliated broker/dealer as compensation for Class
C personal service and maintenance expenses and retained $236,407 as
compensation for Class C sales commissions and service fee advances, as well as
financing costs. As of March 31, 1996, OFDI had incurred unreimbursed expenses
of $1,686,358 for Class C.
================================================================================
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.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
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.
35 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
===============================================================================
5. Forward Contracts
(continued)
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.
At March 31, 1996, the Fund had outstanding forward contracts to purchase and
sell foreign currencies as follows:
<TABLE>
<CAPTION>
Contract
Amount Valuation as of Unrealized Unrealized
Contracts to Purchase Expiration Date (000s) March 31, 1996 Appreciation Depreciation
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
British Pound (GBP) 4/3/96 11,058 GBP $ 16,879,073 $ -- $ 439
German Deutsche Mark (DEM) 4/22/96--5/20/96 179,506 DEM 121,910,776 433,622 492,555
Czech Koruna (CZK) 4/1/96 16,067 CZK 591,584 1,086 --
------------ ---------- ----------
$139,381,433 434,708 492,994
============ ---------- ----------
Contracts to Sell
- ----------------------------------------------------------------------------------------------------------------------------
Australian Dollar (AUD) 4/9/96 2,581 AUD $ 2,017,114 $ -- $ 10,613
Danish Krone (DKK) 4/3/96 96,385 DKK 16,914,859 -- 6,431
German Deutsche Mark (DEM) 4/15/96-6/3/96 325,620 DEM 220,934,049 649,780 117,806
Italian Lira (ITL) 4/22/96-5/2/96 54,350,000 ITL 34,536,486 84,965 190,199
Swiss Franc (CHF) 5/8/96-5/20/96 116,000 CHF 97,962,220 -- 840,036
------------ ---------- ----------
$372,364,728 734,745 1,165,085
============ ---------- ----------
$1,169,453 $1,658,079
========== ==========
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
At March 31, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contracts to Sell Date Futures Contracts March 31, 1996 (Depreciation)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 6/96 491 $52,513,984 $828,563
U.S. Treasury Bonds 6/96 197 21,959,344 (12,188)
--- ----------- --------
688 $74,473,328 $816,375
=========== ========
</TABLE>
================================================================================
7. Option Activity
The Fund may buy and sell put and call options, or write covered put and 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.
36 Oppenheimer Strategic Income Fund
<PAGE>
================================================================================
7. Option Activity
(continued)
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
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, 1996 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, 1995 -- $ -- 49,000 $ 718,500
- ---------------------------------------------------------------------------------------------------
Options written 147,247,040 3,413,437 -- --
- ---------------------------------------------------------------------------------------------------
Options cancelled in closing purchase
transactions (80,664) (959,312) -- --
- ---------------------------------------------------------------------------------------------------
Options expired prior to exercise -- -- (19,000) (313,500)
- ---------------------------------------------------------------------------------------------------
Options exercised (10,000) (62,500) (30,000) (405,000)
----------- ---------- ------- ---------
Options outstanding at March 31, 1996 147,156,376 $2,391,625 -- $ --
=========== ========== ======= =========
</TABLE>
================================================================================
8. Illiquid and
Restricted Securities
At March 31, 1996, 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 or restricted securities. The aggregate value of these securities
subject to this limitation at March 31, 1996 was $140,724,091, which represents
2.46% 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, 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.812%, 9/4/06 3/21/96 $ 55.50 $ 54.50
- -------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A 12/30/92 $ -- $ .01
Litigation Trust 12/30/92 $ -- $ .01
- -------------------------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93--12/9/93 $ 100.00 $ 65.00
- -------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93--12/9/93 $ 2.10 $ .26
- -------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. F, 7.154%, 12/25/03 8/23/95 $ 74.45 $ 73.25
- -------------------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Cl. 1E-1, 11%, 2/15/02 5/16/94--7/26/95 $ 99.29 $ 96.35
- -------------------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc, 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93--12/15/95 $ 95.98 $ 70.00
- -------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan Facility Bonds:
6.875%, 7/1/01 6/17/93--12/5/95 $ 93.80 $ 93.50
6.75%,10/26/03 10/25/93--12/5/95 $ 90.57 $ 91.25
- -------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.:
Common Stock 4/14/92 $1,000.00 $1,000.00
14% Sub. Nts., 6/10/02 4/14/92 $ 100.00 $ 110.00
- -------------------------------------------------------------------------------------------------------------------------------
Eskom Loan Participation Agreements:
7.688%, 4/15/98 11/18/93 $ 97.48 $ 98.63
6.875%, 9/15/99 12/17/93 $ 93.67 $ 96.75
- -------------------------------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc. Common Stock 1/18/96 $ 21.25 $ 22.75
</TABLE>
37 Oppenheimer Strategic Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
8. Illiquid and
Restricted Securities
(continued)
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit March 31, 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co. Argentina Local Market Securities Trust,
11.30%, 4/1/00 [representing debt of Argentina (Republic of)
Bonos del Tesoro Bonds, Series 10, 5.742%, 4/1/00 and an
interest rate swap between Goldman Sachs and the Trust] 8/24/94 $100.00 $ 95.00
- -------------------------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche A, 6.406%, 10/16/00 7/12/95-8/15/95 $ 90.34 $ 92.50
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. Units, 9.75%, 6/15/99
(representing debt of Chemical Banking Corp., sub. capital nts.,
and equity of Citicorp, 7.75% preferred, series 22) 5/15/95 $110.05 $112.23
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. Repackaged Argentina Domestic
Securities Trust, 14.75%, 9/1/02 [representing debt of Argentina
(Republic of) Bonos de Consolidacion de Deudas Bonds,
Series 1, 5.32%, 9/1/02] 9/19/94-10/19/94 $100.32 $ 96.25
- -------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional SA de CV, 11.80% Nts., 9/19/96 9/14/95 $100.00 $101.00
- -------------------------------------------------------------------------------------------------------------------------------
TGX Corp., Series A Preferred Stock 3/30/95 $ 1.75 $ 1.75
- -------------------------------------------------------------------------------------------------------------------------------
Thrifty Payless Holdings, Inc. Common Stock 1/5/95 $ 3.75 $ 5.38
- -------------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Common Stock 5/2/94 $ 9.50 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------------
United Mexican States:
Combined Facility 2, Loan Participation Agreement,
Tranche A, 6.50%, 3/20/99 10/25/94 $ 89.20 $ 79.50
Combined Facility 3, Loan Participation Agreement,
Tranche A, 6.50%, 9/20/97 10/25/94 $ 94.29 $ 79.50
- -------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Banco Venezuela TCI,
Zero Coupon, 6.13%, 12/13/98 7/13/93-7/15/93 $ 84.96 $ 79.00
</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.
===============================================================================
9. Acquisition of Oppenheimer
Strategic Diversified
Income Fund and
Quest for Value
Global Income Fund
On August 18, 1995, the Fund acquired all of the net assets of Oppenheimer
Strategic Diversified Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Oppenheimer Strategic Diversified Income Fund
shareholders on July 12, 1995. The Fund issued 11,908,408 shares of beneficial
interest (Class C), valued at $55,016,842 in exchange for the net assets,
resulting in combined Class C net assets of $63,020,965 on August 18, 1995. The
net assets acquired included net unrealized appreciation of $1,082,464. The
exchange qualifies as a tax-free reorganization for federal income tax
purposes.
On November 24, 1995, the Fund acquired all of the net assets of Quest
for Value Global Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Quest for Value Global Income Fund Shareholders
on November 16, 1995. The Fund issued 970,667, 280,096 and 36,170 shares of
beneficial interest for Class A, Class B and Class C, respectively, valued at
$4,571,842, $1,322,051 and $170,362 in exchange for the net assets, resulting
in combined Class A net assets of $3,267,253,290, Class B net assets of
$2,032,945,347 and Class C net assets of $75,252,729 on November 24, 1995. The
net assets acquired included net unrealized appreciation of $338,553. The
exchange qualifies as a tax-free reorganization for federal income tax
purposes.
38 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
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, President
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President and Secretary
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and OppenheimerFunds Services
Shareholder Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
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. Shares of Oppenheimer funds are not
deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the
FDIC or any other agency, and involve investment
risks, including possible loss of the principal amount
invested.
39 Oppenheimer Strategic Income Fund
<PAGE>
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24 hours a day, automated
information and transactions
1-800-533-3310
Telecommunications Device
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RS0230.001.0396 May 31, 1996
[Photo of Jennifer Leonard]
[Caption] Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
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[Oppenheimer Logo]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
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