<PAGE>
OPPENHEIMER STRATEGIC INCOME FUND
Semiannual Report March 31, 1997
[PHOTO]
"We want
our money to
WORK hard,
but we're
concerned
about risk."
[LOGO]
OPPENHEIMERFUNDS
THE RIGHT WAY TO INVEST
<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 3/31/97:(3)
Class A
7.94%
Class B
7.56%
Class C
7.53%
"THE FUND'S CLASS A SHARES WERE RANKED **** BY MORNINGSTAR MUTUAL FUNDS AMONG
1,172 (3-YEAR) AND 630 (5-YEAR) TAXABLE BOND FUNDS AS OF 3/31/97.(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 three fixed income sectors to capitalize on
worldwide investment opportunities. At the same time, allocating the Fund's
assets among three distinct fixed income sectors can provide the
diversification necessary to lower risk.
PERFORMANCE
Total returns for the six months ended 3/31/97 were 3.47% for Class A shares,
3.07% for Class B shares and 3.28% for Class C shares, without deducting sales
charges.(1)
Your Fund's average annual total returns for Class A shares for the 1-
and 5-year periods ended 3/31/97 and since inception on 10/16/89 were 5.08%,
8.43% and 9.98%, respectively. For Class B shares, average annual total
returns for the 1-year period ended 3/31/97 and since inception on 11/30/92
were 4.48% and 8.57%, respectively. For Class C shares, average annual total
returns for the 1-year period ended 3/31/97 and since inception on 5/26/95
were 8.47% and 9.98%, respectively.(2)
OUTLOOK
"We expect continued, modest economic growth, but are cautious about too much
inflation. And, we remain confident that opportunities exist both domestically
and internationally to provide solid performance in 1997."
David Negri and Art Steinmetz, Portfolio Managers
March 31, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT 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. Includes change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
2. Class A returns include the current maximum initial sales charge of 4.75%.
Class B returns include the applicable contingent deferred sales charge of 5% (1
year) and 2% (since inception). Class C returns include the 1% contingent
deferred sales charge for the 1-year result. An explanation of the different
total returns is in the Fund's prospectus. Class B and Class C shares are
subject to an annual 0.75% asset-based sales charge.
3. Standardized yield is based on net investment income for the 30-day period
ended 3/31/97. Falling net asset values will tend to artificially raise yields.
4. Source: MORNINGSTAR MUTUAL FUNDS, 3/31/97. Morningstar, Inc. ranks mutual
funds in broad investment classes, based on risk-adjusted investment return
after considering sales charges and expenses. Return and risk are measured as
performance above and below 90-day U.S. Treasury bill returns, respectively.
Current star rankings are based on the weighted average of 3-, 5- and 10-year
(if applicable) rankings for a fund or class and are subject to change monthly.
The top 10%: 5 stars. Next 22.5%:4 stars. Middle 35%: 3 stars. Next 22.5%: 2
stars. Bottom 10%: 1 star. The Fund's Class A shares are ranked 4 stars (3-year)
and 4 stars (5-year), weighted 40% and 60%, respectively, and 4 stars (1-year)
among 1,696 funds.
2 Oppenheimer Strategic Income Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Strategic Income Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Strategic Income Fund
Dear Shareholder,
As we enter the second quarter, we are optimistic regarding the prospects for
fixed income investors who maintain a long-term perspective. While U.S.
economic policy makers face a considerable challenge in 1997, maintaining the
delicate balance between moderate growth and low inflation, we believe
current political and economic stability creates a favorable environment for
long-term investments. In fact, the current economic trend appears to follow
the pattern that emerged in early 1996.
The similarities between the first few months of 1996 and those of 1997
are striking. In both cases, economic growth was slightly more robust than
expected, and many experts were concerned that an overheating economy would
generate inflation. On March 18th, as a preemptive move against inflation,
Federal Reserve Board Chairman Alan Greenspan raised short-term interest
rates by a modest amount. This was the first change in monetary policy since
January 1996, and the first increase in short-term interest rates in over two
years. Today, it appears this initial interest-rate increase may not be the
last, and investors remain concerned about high stock market valuations and
the potential re-emergence of inflation.
At OppenheimerFunds, we are optimistic regarding the long-term
expectations for fixed income markets. We maintain that economic growth will
not accelerate substantially but should continue at a modest rate. In
addition, as investors in general become more realistic about stock market
returns, we foresee fixed income investments becoming attractive relative to
potentially more volatile investments in equities.
In the near term, select yield-oriented securities, such as
mortgage-backed and foreign securities--particularly those in emerging
markets--are well-positioned for producing higher returns and current income.
That's because mortgage-backed securities perform well in a rising
interest-rate environment, and emerging market securities tend to be less
sensitive to U.S. interest-rate and currency movements. Our long-term outlook
is that we may see an increase in the demand for U.S. fixed income products
which could drive yields lower and make it difficult to maintain today's
income stream. However, this increased demand could provide the fixed income
investor with enhanced long-term investment opportunities.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds, THE RIGHT WAY TO INVEST. 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 21, 1997
3 Oppenheimer Strategic Income Fund
<PAGE>
Q + A [PHOTO] [PHOTO]
Q What investments made
POSITIVE contributions to performance?
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
Continued U.S. economic growth and low inflation meant modest to strong returns
across Oppenheimer Strategic Income Fund's three investment sectors--high yield,
U.S. government and foreign bonds. Because the yield on U.S. government bonds
fell during the period, we reduced the duration of our U.S. Treasury holdings to
protect the Fund from excess interest-rate exposure. We've also increased the
Fund's holdings of foreign government bonds. The diversification worked well,
and the Fund's Class A shares returned performance of 3.47%, without deducting
sales charges, for the six-month period ending March 31, 1997.(1)
[PHOTO]
WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
During the period, we were heavily exposed to high-yield corporate bonds in
the telecommunications sector. The break-up of monopolies, both in the United
States and abroad, has been beneficial for new companies in the sector.
Our investments in dollar-denominated emerging market bonds,
particularly in Latin America, returned exceptional performance. Although
yields remain attractive, we are beginning to see high valuations and are
looking to diversify into other foreign debt instruments, such as those found
in the developing economies of Eastern Europe. Of course, any foreign
investment entails greater expenses and risks, such as adverse market changes
due to currency fluctuations. But, by diversifying the portfolio by country
and industry, we aim to reduce those risks.
As the real estate market improved and strong economic growth helped to
lower office vacancy rates, we increased our exposure to a new source of
mortgage-backed bonds called commercial
1. Includes change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
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 Our investments
in LATIN
AMERICA
returned
exceptionally
well.
mortgage-backed securities. These bonds are attractive because they provide
higher yield for the same credit risk as a comparable industrial corporate
bond. In addition, the Fund's exposure to the government sector was
concentrated in mortgage-backed bonds, which maintained a positive spread to
Treasuries and provided respectable return.(2)
WHAT INVESTMENTS DID NOT PERFORM AS EXPECTED?
Oversupply and regulatory changes hurt the performance of our gaming sector
holdings. Returns for these holdings were respectable but disappointing when
compared with some of the Fund's best performers. Also, weaker growth in Asia
and Europe dampened demand for our holdings in the metal/mining and paper
product industries. Although our investments in these three industries
underperformed our expectations, the Fund's low exposure minimized the
impact on performance.
[PHOTO]
WHAT AREAS ARE YOU CURRENTLY TARGETING?
Because of the recent interest-rate hike by the Federal Reserve, we will
continue to keep an eye on the Fund's U.S. Treasury durations. As long as
there continues to be a possibility of another Fed increase we will keep our
interest-rate exposure to a minimum.
We will also continue to diversify outside of the traditional
dollar-denominated emerging market bonds that are sensitive to interest-rate
increases. We are looking into money market instruments denominated in the
local currencies of Eastern Europe and Southeast Asia.
[PHOTO]
WHAT IS YOUR OUTLOOK FOR THE FUND?
We expect continued, modest economic growth, but are cautious about too much
inflation. Employment rates are reaching levels that historically have begun
applying upward pressure on wages. Rising wage pressure is a key component of
inflation, and rising inflation could tempt the Federal Reserve to raise
interest rates and slow economic growth. Since we believe that the first rate
hike by the Fed will not be the last, we are taking steps to diversify the
portfolio away from interest-rate sensitive investments. We remain confident
that opportunities exist both domestically and internationally to provide solid
performance in 1997.
2. The Fund's portfolio is subject to change.
5 Oppenheimer Strategic Income Fund
<PAGE>
FINANCIALS
CONTENTS
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS AND LIABILITIES 29
STATEMENT OF OPERATIONS 30
STATEMENTS OF CHANGES IN NET ASSETS 31
FINANCIAL HIGHLIGHTS 32
NOTES TO FINANCIAL STATEMENTS 34
6 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS MARCH 31, 1997 (UNAUDITED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS
- --26.3%
- --------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--22.4%
- --------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--16.4% Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1455, Cl. J, 7.50%,
12/15/22 $ 25,027,500 $ 24,667,605
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1751, Cl. PK, 8%, 9/15/24 6,735,000 6,831,816
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 176, Cl. F, 8.95%, 3/15/20 1,306,187 1,302,922
Interest-Only Stripped Mtg.-Backed Security,
Trust 177, Cl. B, 13.044%--15.508%, 7/1/26(2) 378,193,421 140,995,238
Interest-Only Stripped Mtg.-Backed Security, Trust 179,
16.734%, 9/1/26(2) 22,929,881 8,075,618
Principal-Only Stripped Mtg.-Backed Security, Trust 179,
3.922%, 9/1/26(3) 22,929,881 15,015,490
-----------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 4/1/26 2,473,306 2,302,527
7%, 9/1/25--5/1/26 97,461,063 93,376,191
7.50%, 3/15/12(4) 150,000,000 150,046,500
7.50%, 4/25/27(4) 262,800,000 257,872,500
7.50%, 6/1/24--8/1/26 187,474,681 184,220,898
8.50%, 4/1/27(4) 100,000,000 102,375,000
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Trust 1990-18, Cl. K, 9.60%, 3/25/20 10,100,000 10,993,219
Interest-Only Stripped Mtg.-Backed Security, Trust 215,
Cl. 2, 13.684%--16.047%, 4/1/23(2) 104,273,486 35,762,548
Interest-Only Stripped Mtg.-Backed Security, Trust 222,
Cl. 2, 11.841%--14.683%, 6/1/23(2) 171,320,587 59,962,206
Interest-Only Stripped Mtg.-Backed Security, Trust 258,
Cl. 2, 13.44%, 3/1/24(2) 29,890,264 10,050,601
Principal-Only Stripped Mtg.-Backed Security, Trust 267,
Cl. 1,Zero Coupon, 5.752%--5.765%, 10/1/24(3) 49,904,485 34,527,666
--------------
1,138,378,545
- ---------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--6.0% GOVERNMENT NATIONAL MORTGAGE ASSN.:
13%, 10/15/15 34,754,082 41,813,506
13.50%, 6/15/15 44,790,458 54,700,347
6%, 5/20/27(4) 175,000,000 173,796,875
7.50%, 11/15/25--1/15/26 32,943,703 32,339,669
7.50%, 4/15/27(4) 75,000,000 73,476,750
8%, 5/15/26 14,489,812 14,563,857
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1994-5,
Cl. PQ, 7.493%, 7/16/24 10,000,000 9,643,700
-----------------------------------------------------------------------------------------------
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, 16.032%, 9/1/22(2)(5) 159,359,592 6,760,333
Series 1995-2B, Cl. 2-IO, 26.116%, 6/1/25(2)(5) 15,768,127 567,899
Series 1995-3, Cl. 1-IO, 20.514%, 9/1/25(2)(5) 370,026,265 6,764,543
-------------
414,427,479
- --------------------------------------------------------------------------------------------------------------------------------
PRIVATE--3.9%
- --------------------------------------------------------------------------------------------------------------------------------
AGRICULTURAL--0.2% Prudential Agricultural Credit, Inc., Farmer Mac Agricultural
Real Estate
Trust Sr. Sub. Mtg. Pass-Through Certificates, Series 1992-2:
Cl. B2, 9.388%, 1/15/03(5)(6) 5,821,491 5,316,659
Cl. B3, 9.403%, 4/15/09(5)(6) 7,320,309 5,767,031
------------
11,083,690
</TABLE>
7 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL--2.9% Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-MD4:
Cl. A-4, 7.384%, 8/13/29 $ 5,000,000 $ 4,821,875
Cl. A-5, 7.384%, 8/13/29 20,000,000 18,562,500
-----------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. F, 7.776%, 12/25/03(5)(6) 14,300,000 10,774,156
-----------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5:
Cl. B3, 7%, 4/25/23(5) 1,629,234 1,236,691
Cl. B4, 7%, 4/25/23(5) 1,418,668 241,174
-----------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Collateralized Mtg.
Obligation, Series 1996-C1, Cl. E, 8.105%, 12/25/20(5)(6) 2,750,000 2,724,219
-----------------------------------------------------------------------------------------------
Criimi Mae Financial Corp., Collateralized Mtg. Obligations,
Trust I, Cl. A-2, 7.56%, 8/30/05 6,300,000 6,109,031
-----------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Cl. 1E-1, 11%, 2/15/02(5) 15,000,000 14,678,235
-----------------------------------------------------------------------------------------------
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 2,572,656
Cl. 2-E, 8.70%, 9/25/25(5) 2,500,000 2,559,375
Cl. 2-G, 8.70%, 9/25/25(5) 4,870,000 4,912,613
-----------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl. D, 7.513%, 6/15/21(6) 3,462,885 3,485,069
-----------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates,Series 1996-C1:
Cl. E, 7.51%, 2/15/28(5)(6) 9,365,000 7,509,559
Cl. F, 7.51%, 2/15/28(5)(6) 13,360,980 8,976,908
-----------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1994-MD1, Cl. B2, 8.419%, 3/15/18(6)(7) 10,580,000 9,358,341
-----------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 9,668,166 9,708,954
Series 1993-C1, Cl. B, 8.75%, 5/25/24 8,172,000 8,270,319
Series 1993-C1, Cl. D, 9.45%, 5/25/24 6,597,507 6,737,189
Series 1993-C1, Cl. E, 9.50%, 5/25/24 1,014,915 1,015,708
Series 1993-C2, Cl. E, 8.50%, 3/25/25 573,017 568,003
Series 1994-C1, Cl. C, 8%, 6/25/26 8,000,000 8,090,000
Series 1994-C1, Cl. E, 8%, 6/25/26 6,039,150 5,516,386
Series 1994-C2, Cl. E, 8%, 4/25/25 17,670,386 17,432,941
Series 1994-C2, Cl. G, 8%, 4/25/25 3,379,801 3,072,450
Series 1995-C1, Cl. F, 6.90%, 2/25/27 10,697,761 9,350,513
-----------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1,
Cl. E, 9.18%, 1/20/06 4,550,000 4,271,313
-----------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates:
Series 1995-C4, Cl. E, 8.723%, 6/25/26(5)(6) 9,453,000 8,859,233
Series 1996-C3, Cl. E, 8.458%, 6/25/30(5) 9,350,000 8,715,953
Series 1996-CFL, Cl. D, 7.034%, 2/25/28 14,220,000 13,944,488
-------------
204,075,852
</TABLE>
8 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MULTI-FAMILY--0.5% ACP Mortgage LP, Cl. E, 7.395%, 2/25/28(6)(7) $ 2,511,058 $ 1,999,431
-----------------------------------------------------------------------------------------------
Countrywide Funding Corp.:
Series 1993-11, Cl. B1, 6.25%, 1/25/09 1,276,804 1,158,002
Series 1993-11, Cl. B3, 6.25%, 2/25/09(7) 744,805 273,716
Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,500,000 3,093,945
-----------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5) 9,700,000 8,308,656
-----------------------------------------------------------------------------------------------
Multifamily Capital Access One, Inc., Series 1, Cl. D, 8.82%,
1/15/24(5)(6) 3,576,000 3,200,520
-----------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1991-M6, Cl. B4, 6.757%, 6/25/21(6) 7,242,798 7,104,732
Series 1992-M4, Cl. B, 7.20%, 9/25/21 1,776,723 1,772,282
-----------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-CL, Cl. F,
9.185%, 1/20/28(6) 9,632,000 7,091,560
-------------
34,002,844
- --------------------------------------------------------------------------------------------------------------------------------
OTHER--0.1% Mortgage Securities Corp. I, Collateralized Mtg. Obligations,
Interest-Only Stripped Mtg.-Backed Security, Cl. 1, 1.49%,
2/15/17(2) 80,190,000 6,335,010
- --------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.2% 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)(6) 5,351,413 5,423,323
-----------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. Sub. Bonds,
Series 1993-3, Cl. B2, 6.713%, 8/25/08 1,234,729 1,165,083
-----------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-B, Cl. 1, 7.136%, 4/25/26 14,873,639 9,686,458
-------------
16,274,864
-------------
Total Mortgage-Backed Obligations (Cost $1,819,079,851) 1,824,578,284
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS
- --12.1%
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
11.625%, 11/15/02 11,579,000 14,169,812
11.875%, 11/15/03(8)(9) 91,700,000 115,685,323
13.125%, 5/15/01(9)(10) 41,500,000 50,941,288
13.375%, 8/15/01 73,000,000 91,135,971
6.50%, 11/15/26 35,970,000 33,103,657
8.125%, 8/15/21(9) 79,800,000 87,755,099
-----------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
10.75%, 5/15/03 45,680,000 54,487,696
14.25%, 2/15/02 53,000,000 69,280,962
6%, 2/15/26 98,080,000 83,889,095
6.375%, 5/15/99 1,000,000 998,126
7.25%, 2/15/98(9) 101,000,000 101,978,484
7.25%, 5/15/04 24,100,000 24,582,022
7.50%, 10/31/99 97,400,000 99,530,714
7.50%, 5/15/02 3,443,000 3,550,597
8.75%, 10/15/97(8) 7,300,000 7,411,784
-------------
Total U.S. Government Obligations (Cost $865,631,923) 838,500,630
</TABLE>
9 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS
- --30.6%
- ---------------------------------------------------------------------------------------------------------------------------------
ARGENTINA--3.0% Argentina (Republic of):
Bonds, 5%, 12/20/02 (JPY) 1,820,000,000 $14,672,375
Bonds, Bonos de Consolidacion de Deudas, Series I,
3.176%, 4/1/01(6)(11) (ARP) 26,934,740 23,800,851
Bonds, Bonos de Consolidacion de Deudas, Series I,
5.438%, 4/1/01(6)(11) 67,079,020 63,932,881
Nts., 11.75%, 2/12/07(7) (ARP) 29,400,000 29,512,013
Par Bonds, 5.50%, 3/31/23(12) 7,660,000 4,797,075
Past Due Interest Bonds, Series L, 6.75%, 3/31/05(6) 15,878,900 14,241,388
Unsec. Unsub. Bonds, 11.50%, 8/14/01 (GBP) 2,575,000 4,494,201
Unsec. Unsub. Medium-Term Nts., 5.50%, 3/27/01 (JPY) 2,000,000,000 16,750,256
Unsec. Unsub. Nts., 5.50%, 3/27/01 (JPY) 1,620,000,000 13,567,707
-----------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina) Medium-Term Nts.,
10.625%, 8/7/06 15,000,000 15,450,000
-----------------------------------------------------------------------------------------------
Buenos Aires (Province of) Sr. Unsec. Unsub.:
Medium-Term Nts., 11.50%, 10/19/98(5) 950,000 995,125
Nts., 11.50%, 10/19/98(5) 5,000,000 5,212,500
-------------
207,426,372
- ---------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA--2.7% Australia (Commonwealth of) Bonds:
12%, 7/15/99 (AUD) 55,000,000 47,725,750
7.50%, 7/15/05 (AUD) 2,170,000 1,657,265
-----------------------------------------------------------------------------------------------
Queensland Treasury Corp.:
Exchangeable Gtd. Nts., 8%, 8/14/01 (AUD) 80,413,000 64,016,264
Gtd. Nts., 10.50%, 5/15/03 (AUD) 220,000 194,447
-----------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 10.25%, 11/15/06 (AUD) 76,480,000 68,099,735
-----------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, Series 3, 8%,
7/15/03 (AUD) 6,315,000 4,966,025
-------------
186,659,486
- ---------------------------------------------------------------------------------------------------------------------------------
BRAZIL--0.8% Banco Estado Minas Gerais:
8.25%, 2/10/00 11,800,000 11,490,250
8.25%, 2/10/00(7) 2,000,000 1,947,500
-----------------------------------------------------------------------------------------------
Brazil (Federal Republic of):
Eligible Interest Bonds, 6.50%, 4/15/06(6) 23,600,000 21,107,250
Multi-Year Discount Facility Agreement Trust Certificates,
Series REGS, 6.547%, 9/15/07(6)(7) 14,126,018 12,457,383
-----------------------------------------------------------------------------------------------
Comtel Brasileira Ltd. Nts., 10.75%, 9/26/04(7) 500,000 528,750
-----------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA:
Bonds, 13%, 2/5/99 (ITL) 15,600,000,000 9,935,560
Medium-Term Nts., 11.301%, 12/9/99(6) 450,000 471,375
Medium-Term Nts., 11.301%, 12/9/99(5)(6) 500,000 523,750
---------
58,461,818
- ---------------------------------------------------------------------------------------------------------------------------------
CANADA--5.1% Canada (Government of) Bonds:
11.75%, 2/1/03 (CAD) 38,800,000 35,551,569
7%, 12/1/06 (CAD) 32,580,000 24,055,271
8.75%, 12/1/05 (CAD) 1,000,000 822,841
9.75%, 12/1/01 (CAD) 36,540,000 30,416,544
9.75%, 6/1/01(9) (CAD) 232,065,000 191,735,854
Series A-33, 11.50%, 9/1/00 (CAD) 64,645,000 55,243,324
-----------------------------------------------------------------------------------------------
NAV Canada Bonds, Series 97-2, 7.56%, 3/1/27 (CAD) 19,430,000 13,948,591
------------
351,773,994
</TABLE>
10 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COLOMBIA--0.1% Financiera Energetica Nacional SA Eurobonds, 9.375%, 6/15/06(7) $ 3,650,000 $ 3,772,731
- ---------------------------------------------------------------------------------------------------------------------------------
FINLAND--2.3% Finland (Republic of) Bonds:
7.25%, 4/18/06 (FIM) 303,000,000 65,055,545
9.50%, 3/15/04 (FIM) 405,000,000 98,324,181
-----------
163,379,726
- ---------------------------------------------------------------------------------------------------------------------------------
GERMANY--2.3% Germany (Republic of) Bonds:
Series 94, 6.25%, 1/4/24(9) (DEM) 275,425,000 156,763,866
Series 95, 6.875%, 5/12/05 (DEM) 1,000,000 645,052
------------
157,408,918
- ---------------------------------------------------------------------------------------------------------------------------------
GREAT BRITAIN--1.7% United Kingdom Treasury:
Bonds, 10%, 9/8/03 (GBP) 31,690,000 58,344,083
Bonds, 8.50%, 12/7/05 (GBP) 2,200,000 3,802,526
Nts., 12.50%, 11/21/05 (GBP) 10,000,000 20,561,805
Nts., 13%, 7/14/00 (GBP) 1,775,000 3,387,013
Nts., 7.75%, 9/8/06 (GBP) 150,000 246,895
Nts., 9.75%, 8/27/02 (GBP) 16,785,000 30,240,771
-------------
116,583,093
- ---------------------------------------------------------------------------------------------------------------------------------
INDONESIA--0.9% Bank Tabugan Negara Negotiable CD, Zero Coupon:
14.701%, 10/28/97(13) (IDR) 3,000,000,000 1,163,750
13.151%, 2/3/98(13) (IDR) 26,099,817,000 9,786,680
-----------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon:
15.378%, 11/19/97(13) (IDR) 10,000,000,000 3,815,243
15.103%, 4/15/97(13) (IDR) 4,000,000,000 1,660,989
17.331%, 4/30/97(13) (IDR) 10,000,000,000 4,129,316
16.594%, 7/16/97(13) (IDR) 10,000,000,000 4,004,739
14.767%, 9/3/98(13) (IDR) 25,000,000,000 8,525,572
-----------------------------------------------------------------------------------------------
Wijaya Karya Negotiable:
CD, Zero Coupon, 14.788%, 12/19/97(13) (IDR) 20,000,000,000 7,546,380
Promissory Nts., Zero Coupon, 14.705%, 12/9/97(13) (IDR) 59,600,000,000 22,571,145
Promissory Nts., Zero Coupon, 15.09%, 5/12/97(13) (IDR) 7,500,000,000 3,081,753
------------
66,285,567
- ---------------------------------------------------------------------------------------------------------------------------------
IRELAND--0.2% Ireland (Government of) Bonds, 9.25%, 7/11/03 (IEP) 9,220,000 16,835,214
- ---------------------------------------------------------------------------------------------------------------------------------
ITALY--1.6% Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Poliennali:
10.50%, 7/15/00 (ITL) 79,005,000,000 51,194,003
10.50%, 7/15/98 (ITL) 23,550,000,000 14,590,905
9%, 10/1/03 (ITL) 27,270,000,000 17,221,005
9.50%, 5/1/01 (ITL) 44,270,000,000 28,274,947
-------------
111,280,860
- ---------------------------------------------------------------------------------------------------------------------------------
MALAYSIA--0.0% Petronas Carigali Nts., Zero Coupon, 6.013%, 5/12/97(13) (MYR) 9,300,000 3,724,996
</TABLE>
11 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEXICO--2.2% Banco Nacional de Comercio Exterior SNC:
Debs., 10.629%, 6/23/97(6) $ 280,000 $ 283,885
International Finance BV Gtd. Nts., 8%, 8/5/03 18,000,000 17,257,500
International Finance BV Gtd. Registered Bonds, 11.25%,
5/30/06 14,575,000 15,904,969
-----------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
26.819%, 12/31/97(13) (MXP) 485,944,080 52,160,421
24.707%, 12/4/97(13) (MXP) 270,577,960 29,514,191
23.437%, 2/4/98(13) (MXP) 36,832,060 3,877,097
-----------------------------------------------------------------------------------------------
Mexican Williams Bonds, 6.631%, 11/15/08(5)(6) 1,500,000 1,342,500
-----------------------------------------------------------------------------------------------
United Mexican States:
Bonds, 10.375%, 1/29/03 (DEM) 19,525,000 13,013,608
Bonds, 16.50%, 9/1/08(5) (GBP) 2,445,000 5,489,403
Nacional Financiera SNC Nts., 13.60%, 4/2/98 (ESP) 1,773,000,000 13,194,008
Petroleos Mexicanos Gtd. Unsec. Unsub. Nts., 7.875%,
3/2/99 (CAD) 5,600,000 4,148,898
-----------
156,186,480
- ---------------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--1.8% New Zealand (Government of):
Bonds, 10%, 7/15/97 (NZD) 88,610,000 61,982,766
Bonds, 8%, 11/15/06 (NZD) 41,305,000 28,856,369
Index Linked Bonds, 4.60%, 2/15/16 (NZD) 27,139,000 18,093,199
-----------------------------------------------------------------------------------------------
Transpower Finance Ltd. Gtd. Unsec. Unsub. Bonds:
8%, 2/15/01(5) (NZD) 9,710,000 6,683,822
8%, 3/15/02 (NZD) 9,710,000 6,654,408
------------
122,270,564
- ---------------------------------------------------------------------------------------------------------------------------------
POLAND--1.1% Poland (Republic of) Bonds:
15%, 6/12/99 (PLZ) 9,500,000 2,797,432
16%, 2/12/99 (PLZ) 203,367,000 61,541,718
16%, 6/12/98 (PLZ) 34,900,000 10,696,198
------------
75,035,348
- ---------------------------------------------------------------------------------------------------------------------------------
ROMANIA--0.0% Romanian Commercial Bank Bonds, 9.125%, 3/10/00(5) 2,920,000 2,863,425
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--0.6% South Africa (Republic of) Bonds, 12.50%, 12/21/06 (ZAR) 47,500,000 9,247,167
-----------------------------------------------------------------------------------------------
Telkom SA Ltd. Bonds, Series TK05, 12%, 3/31/98 (ZAR) 138,389,000 30,298,377
------------
39,545,544
- ---------------------------------------------------------------------------------------------------------------------------------
SPAIN--1.7% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del
Estado:
10.30%, 6/15/02 (ESP) 3,018,100,000 24,688,507
10.50%, 10/30/03 (ESP) 2,996,320,000 25,121,147
12.25%, 3/25/00 (ESP) 8,161,000,000 66,729,412
-------------
116,539,066
- ---------------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL--0.7% International Bank for Reconstruction & Development Bonds,
12.50%, 7/25/97(5) (NZD) 66,300,000 46,842,008
- ---------------------------------------------------------------------------------------------------------------------------------
SWEDEN--1.0% Sweden (Kingdom of):
Bonds, Series 1030, 13%, 6/15/01 (SEK) 365,100,000 60,823,200
Debs., Series 1038, 6.50%, 10/25/06 (SEK) 71,200,000 8,973,743
-------------
69,796,943
</TABLE>
12 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA--0.8% Venezuela (Republic of):
Collateralized Par Bonds, Series W-A, 6.75%, 3/31/20 $ 15,000,000 $ 10,575,000
Debs., Banco Venezuela TCI, Zero Coupon, 6.13%,
12/13/98(5)(13) 3,954,028 3,519,085
Disc. Bonds, Series DL, 6.50%, 12/18/07(6) 26,000,000 22,490,000
New Money Bonds, Series A, 6.625%, 12/18/05(6) 8,000,000 7,005,000
New Money Bonds, Series B, 6.50%, 12/18/05(6) 12,000,000 10,507,500
New Money Bonds, Series P, 6.50%, 12/18/05(6) 3,250,000 2,874,219
-------------
56,970,804
-------------
Total Foreign Government Obligations (Cost $2,151,447,628) 2,129,642,957
- ---------------------------------------------------------------------------------------------------------------------------------
LOAN PARTICIPATIONS--1.2%
- ---------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989--1990 Integrated Loan Facility
Bonds:
6.563%, 7/1/01(5)(6) 16,953,458 15,936,251
6.688%, 10/26/03(5)(6) 17,691,077 16,143,108
-----------------------------------------------------------------------------------------------
Eskom Loan Participation Agreements:
6.875%, 9/15/99(5)(6) 4,289,475 4,155,430
7.188%, 4/15/98(5)(6) 1,037,931 1,024,957
-----------------------------------------------------------------------------------------------
GPA Investment BV Nts., 6.40%, 11/19/98(5) 2,000,000 1,935,000
-----------------------------------------------------------------------------------------------
Hellenic Republic Bonds, 14.80%, 6/30/00(6) (GRD) 217,464,000 845,014
-----------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 6.437%, 10/16/00(5)(6) 1,258,050 1,201,438
Tranche B, 6.312%, 11/15/04(5)(6) 270,000 237,600
-----------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.375%, 1/1/09(6) 13,235,000 11,423,459
Tranche B, 6.375%, 1/1/04(6) 27,876,470 26,987,908
-----------------------------------------------------------------------------------------------
United Mexican States Loan Participation Agreement:
Combined Facility 2, Tranche A, 6.437%, 3/20/99(5)(6) 652,867 600,638
Combined Facility 3, Tranche A, 6.437%, 9/20/97(5)(6) 28,640 26,635
-----------
Total Loan Participations (Cost $78,060,555) 80,517,438
- ---------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--29.4%
- ---------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--3.1%
- ---------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.5% Harris Chemical North America, Inc.:
10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 720,000 730,800
10.75% Gtd. Sr. Sub. Nts., 10/15/03 1,440,000 1,445,400
-----------------------------------------------------------------------------------------------
ISP Holdings, Inc., 9% Sr. Nts., 10/15/03(7) 7,850,000 7,928,500
-----------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(14) 8,615,000 7,796,575
11.75% Sr. Sec. Nts., 10/15/03 2,700,000 2,855,250
-----------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 3,500,000 3,755,951
-----------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/15/08(14) 1,105,000 690,625
-----------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 3,900,000 4,114,500
-----------------------------------------------------------------------------------------------
Tri Polyta Finance BV, 11.375% Gtd. Sec. Nts., 12/1/03 5,050,000 5,100,500
-----------
34,418,101
- ---------------------------------------------------------------------------------------------------------------------------------
METALS/MINING--0.4% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03(5) 11,826,000 12,949,470
-----------------------------------------------------------------------------------------------
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 16,000,000 16,440,000
-------------
29,389,470
</TABLE>
13 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PAPER--1.7% APP International Finance Co. BV, 11.75% Gtd. Sec. Nts.,
10/1/05 $ 5,175,000 $ 5,498,437
-----------------------------------------------------------------------------------------------
Asia Pulp & Paper International Finance Co.,
Zero Coupon Asian Currency Nts.:
14.463%, 1/23/98(13) (IDR) 10,670,000,000 3,980,634
16.317%, 11/14/97(13) (IDR) 26,000,000,000 9,954,913
16.923%, 12/4/97(13) (IDR) 8,600,000,000 3,268,906
14.712%, 12/8/97(13) (IDR) 8,600,000,000 3,264,174
17.875%, 5/1/97(7)(13) (IDR) 29,000,000,000 11,970,561
15.789%, 5/15/97(7)(13) (IDR) 1,550,000,000 636,494
16.777%, 8/18/97(13) (IDR) 25,000,000,000 9,917,679
16.557%, 9/12/97(13) (IDR) 10,000,000,000 3,931,961
14.25%, 9/17/97(13) (IDR) 800,000,000 313,333
-----------------------------------------------------------------------------------------------
Domtar, Inc., 10.85% Debs., 8/5/17 (CAD) 1,700,000 1,448,397
-----------------------------------------------------------------------------------------------
Florida Coast Paper Co. LLC, 12.75% First Mtg. Nts., 6/1/03 2,950,000 3,009,000
-----------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV:
11.875% Gtd. Sr. Sec. Nts., 6/15/02 1,800,000 1,948,500
12.50% Gtd. Sr. Sec. Nts., Series C, 6/15/06 5,400,000 5,994,000
-----------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 12,375,000 12,684,375
-----------------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
10.625% Second Priority Sr. Sec. Nts., 4/15/05 2,910,000 2,859,075
8.875% First Priority Sr. Sec. Nts., 7/15/00(6) 9,000,000 8,820,000
-----------------------------------------------------------------------------------------------
Repap Wisconsin, Inc.:
9.25% First Priority Sr. Sec. Nts., 2/1/02 5,500,000 5,445,000
9.875% Second Priority Sr. Nts., 5/1/06 13,345,000 12,978,012
-----------------------------------------------------------------------------------------------
Riverwood International Corp., 10.25% Sr. Nts., 4/1/06 1,800,000 1,674,000
-----------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts.,
7/20/15 2,381,241 2,354,155
-----------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 5,000,000 5,475,000
-----------------------------------------------------------------------------------------------
Stone Container Corp.
10.75% First Mtg. Nts., 10/1/02 2,640,000 2,610,300
10.75% Sr. Sub. Nts., 6/15/97 900,000 905,625
-----------
120,942,531
- ---------------------------------------------------------------------------------------------------------------------------------
STEEL--0.5% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 20,450,000 20,296,625
-----------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 5,150,000 5,150,000
-----------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 10.75% Sr. Nts., 3/1/00(5) 5,075,000 5,011,562
-----------------------------------------------------------------------------------------------
Sheffield Steel Corp., 12% First Mtg. Nts., 11/1/01 4,000,000 3,750,000
-----------
34,208,187
- ---------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--4.0%
- ---------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--1.5% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14.874%, 5/27/98(13) 16,450,000 14,476,000
-----------------------------------------------------------------------------------------------
E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06 5,500,000 5,665,000
-----------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05 (NZD) 4,900,000 3,503,233
10.75% Cv. Sub. Nts., 12/15/97 (NZD) 4,755,000 3,347,896
14.50% Cv. Sub. Nts., 9/30/00 (NZD) 4,900,000 3,915,285
-----------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts.,
8/1/02(5) 24,950,000 26,946,000
-----------------------------------------------------------------------------------------------
Icon Fitness Corp., 0%/14% Sr. Disc. Nts., 11/15/06(7)(14) 4,600,000 2,535,750
</TABLE>
14 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER PRODUCTS Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series
(CONTINUED) B, 7/15/02(5) $ 5,400,000 $ 6,196,500
-----------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B,
11/15/04(5)(14) 8,750,000 6,410,862
-----------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(14) 18,110,000 10,096,325
-----------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
10.75%, 3/15/01(7)(13) 11,655,000 7,313,512
-----------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 4,705,000 5,375,462
-----------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 5,700,000 5,742,750
-----------
101,524,575
- ---------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--0.3% CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04(5) 1,910,000 1,957,750
-----------------------------------------------------------------------------------------------
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 3,600,000 3,780,000
-----------------------------------------------------------------------------------------------
Doane Products Co., 10.625% Sr. Nts., 3/1/06 3,000,000 3,142,500
-----------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc.
Nts., 2/15/03(14) 6,430,000 6,221,025
-----------------------------------------------------------------------------------------------
Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06 2,000,000 2,280,000
-----------------------------------------------------------------------------------------------
Stroh Brewery Co., 11.10% Sr. Sub. Nts., 7/1/06 123,000 128,227
-----------
17,509,502
- ---------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--0.4% Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06 7,750,000 7,827,500
-----------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts.,
Series A, 4/15/04 8,000,000 8,880,000
-----------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 9,865,000 10,826,837
-----------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 3,200,000 3,104,000
-----------
30,638,337
- ---------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--0.7% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A,
11/15/00(5) 5,775,000 3,927,000
-----------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 3,725,000 4,162,687
-----------------------------------------------------------------------------------------------
Boyd Gaming Corp., 9.25% Sr. Nts., 10/1/03 3,650,000 3,412,750
-----------------------------------------------------------------------------------------------
Capital Gaming International, Inc., Promissory Nts., 8/1/95(15) 33,500 --
-----------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00(5)(15) 2,100,000 1,491,000
-----------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 2,990,000 2,937,675
-----------------------------------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375% Bonds, 2/13/02(7) 2,500,000 2,479,687
-----------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B,
12/15/07 5,900,000 5,885,250
-----------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B,
11/15/02 6,850,000 8,870,750
-----------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 2,330,000 2,452,325
9.50% Gtd. Sr. Sub. Nts., 4/15/07(7) 4,530,000 4,473,375
-----------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 100,000 71,750
-----------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina Finance Corp.,
13.50% First Mtg. Nts., Series B, 3/15/03 6,500,000 7,215,000
-----------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 4,635,000 4,206,262
------------
51,585,511
</TABLE>
15 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESTAURANTS--0.5% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06(5) $ 7,000,000 $ 7,297,500
-----------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,570,000 3,775,275
-----------------------------------------------------------------------------------------------
Family Restaurants, Inc., 0%/10.875% Sr. Sub. Disc. Nts., 2/1/04 4,000,000 2,820,000
-----------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 6,465,000 6,610,462
9.75% Sr. Sub. Nts., 6/1/02 14,000,000 14,140,000
-----------
34,643,237
- ---------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--0.6% CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03 3,350,000 3,266,250
-----------------------------------------------------------------------------------------------
GFSI, Inc., 9.625% Sr. Sub. Nts., 3/1/07(7) 5,060,000 5,097,950
-----------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd. Unsec.
Unsub. Nts., 3/29/01 1,850,000 1,854,625
-----------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02 1,696,000 1,844,400
-----------------------------------------------------------------------------------------------
Polysindo International Finance Co. BV, 11.375% Gtd. Sec. Nts.,
6/15/06 7,350,000 7,882,875
-----------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 4,025,000 4,075,312
-----------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.:
19.856%, 4/29/97(13) (IDR) 11,440,000,000 4,718,544
20.60%, 7/27/97(13) (IDR) 6,000,000,000 2,381,472
20.147%, 7/8/97(13) (IDR) 5,000,000,000 1,996,739
-----------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07(7) 2,585,000 2,604,387
-----------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06(7) 5,300,000 5,326,500
-----------
41,049,054
- ---------------------------------------------------------------------------------------------------------------------------------
ENERGY--2.5%
- ---------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
10.50% Sr. Nts., 6/1/02(5) 900,000 967,500
12% Sr. Nts., 3/1/01 5,000,000 5,462,500
9.125% Sr. Nts., 4/15/06 4,825,000 4,987,844
-----------------------------------------------------------------------------------------------
Esso Malaysia Berhad, Zero Coupon Promissory Nts.,
7.274%, 7/10/97(13) MYR 28,500,000 11,281,666
-----------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., 2/15/07(7) 1,000,000 952,500
9.50% Sr. Sub. Nts., 11/1/06 12,050,000 12,215,687
-----------------------------------------------------------------------------------------------
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 6,785,000 7,217,544
-----------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 14,750,000 15,192,500
-----------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 6,525,000 6,769,687
-----------------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 3,500,000 3,675,000
8.50% Debs., 4/1/08 1,000,000 973,750
-----------------------------------------------------------------------------------------------
Mesa Operating Co.:
0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(14) 21,800,000 14,878,500
10.625% Gtd. Sr. Sub. Nts., 7/1/06 15,700,000 16,367,250
-----------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 9,175,000 9,427,312
-----------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02(5) 13,000,000 14,105,000
-----------------------------------------------------------------------------------------------
Parker Drilling Corp., 9.75% Gtd. Sr. Nts., 11/15/06 3,700,000 3,774,000
-----------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06(5) 16,220,000 15,409,000
-----------------------------------------------------------------------------------------------
TransTexas Gas Corp., 11.50% Gtd. Sr. Sec. Nts., 6/15/02 29,150,000 32,210,750
-----------------------------------------------------------------------------------------------
Triton Energy Corp., 9.75% Sr. Sub. Disc. Nts., 12/15/00 800,000 838,000
-----------
176,705,990
</TABLE>
16 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL SERVICES--3.1%
- ---------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--1.5% ABN AMRO (Kuala Lumpur), Zero Coupon Promissory Nts.,
7.222%, 5/27/97(13) MYR 19,600,000 $ 7,827,207
-----------------------------------------------------------------------------------------------
Alliance & Leicester Building Society, 8.75% Unsec. Sub. Nts.,
12/7/06 GBP 10,660,000 17,666,129
-----------------------------------------------------------------------------------------------
Banco Bamerindus do Brasil SA, 9% Unsec. Unsub. Bonds, 10/29/98 3,240,000 3,191,400
-----------------------------------------------------------------------------------------------
Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99(5) 1,250,000 1,131,250
-----------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 11% Sub. Exchangeable
Capital Debs., 7/15/03 9,750,000 10,261,875
-----------------------------------------------------------------------------------------------
Bank Dagang Nasional Indonesia, Zero Coupon Negotiable CD:
14.457%, 11/20/97(13) (IDR) 7,500,000,000 2,878,653
14.91%, 11/21/97(13) (IDR) 12,400,000,000 4,757,726
14.346%, 11/24/97(13) (IDR) 10,000,000,000 3,832,907
-----------------------------------------------------------------------------------------------
Bank of America Malaysia, Zero Coupon Nts., 7.202%,
4/25/97(13) MYR 8,650,000 3,476,383
-----------------------------------------------------------------------------------------------
Citibank Malaysia Banker's Acceptance, Zero Coupon
Negotiable CD, 7.157%, 5/7/97(13) MYR 1,300,000 521,216
-----------------------------------------------------------------------------------------------
Deutsche Bank Malaysia, Zero Coupon Negotiable CD,
4.688%, 5/27/97(13) MYR 25,000,000 9,983,683
-----------------------------------------------------------------------------------------------
First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts., 10/1/03(7) 13,650,000 14,503,125
-----------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 8,500,000 9,307,500
-----------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(7) 11,100,000 11,058,375
-----------------------------------------------------------------------------------------------
Standard Charter Berhad Banker's Acceptance,
Zero Coupon Negotiable CD:
7.185%, 5/15/97(13) (MYR) 1,500,000 600,448
7.187%, 5/7/97(13) (MYR) 1,500,000 601,403
-----------
101,599,280
- ---------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.5% Aames Financial Corp., 9.125% Sr. Nts., 11/1/03 1,945,000 1,901,237
-----------------------------------------------------------------------------------------------
Americredit Corp., 9.25% Sr. Nts., 2/1/04(7) 8,400,000 8,169,000
-----------------------------------------------------------------------------------------------
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 5,500,000 5,438,125
-----------------------------------------------------------------------------------------------
Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98 12,980,000 12,769,075
-----------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(5) 504,459 557,428
-----------------------------------------------------------------------------------------------
General Electric Capital Corp., 11.625% Nts., 10/29/97 SKK 913,800,000 27,408,710
-----------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000
principal amount of 11.50% sr. nts., 3/15/07 and one warrant
to purchase 6.84 shares of common stock)(16) 5,200,000 5,135,000
-----------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.,
9.39%, 7/14/98(13) 11,350,000 10,056,611
-----------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 18,625,000 20,021,875
-----------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc., 13% Nts., 1/1/04 10,500,000 10,578,750
------------
102,035,811
- ---------------------------------------------------------------------------------------------------------------------------------
INSURANCE--0.1% Terra Nova Insurance (UK) Holdings plc, 10.75% Sr. Nts., 7/1/05 900,000 995,764
-----------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03(7) 7,750,000 7,711,250
----------
8,707,014
</TABLE>
17 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HOUSING RELATED--0.4%
- ---------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--0.1% Building Materials Corp. of America, 8.625% Sr. Nts., 12/15/06 $ 3,350,000 $ 3,278,812
-----------------------------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts., 3/15/07(7) 1,850,000 1,831,500
-----------
5,110,312
- ---------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/ Blue Bell Funding, Inc., 11.85% Sec. Extendible Adjustable
REAL ESTATE--0.3% Rate Nts., 5/1/99 4,414,000 4,524,350
-----------------------------------------------------------------------------------------------
Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06 660,000 663,300
-----------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05 (CAD) 1,547,050 1,251,003
Units (each unit consists of one $10 principal amount of
8.50% cv. sub. debs., 12/15/15 and 40 common shares)(16) (CAD) 930,410 1,502,207
-----------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 2,400,000 2,502,000
-----------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 6,900,000 7,158,750
----------
17,601,610
- ---------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--2.4%
- ---------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/ America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 25,940,000 27,301,850
COMPUTERS--1.3% -----------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02(5) 11,000,000 11,880,000
-----------------------------------------------------------------------------------------------
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B,
3/1/05(14) 3,400,000 2,635,000
-----------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(7) 1,800,000 1,764,000
-----------------------------------------------------------------------------------------------
GPA Delaware, Inc.:
8.75% Gtd. Nts., 12/15/98 19,105,000 19,296,050
9.75%, 12/10/01(5) 2,000,000 2,078,750
-----------------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts., Series C, 2/16/99(5) 2,000,000 2,035,000
-----------------------------------------------------------------------------------------------
Northwest Airlines, Inc., 12.092% Sr. Gtd. Nts., 12/31/00(5) 2,674,346 2,747,891
-----------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 7,600,000 8,464,500
-----------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07(7) 3,190,000 3,110,250
-----------------------------------------------------------------------------------------------
Unisys Corp.:
11.75% Sr. Nts., 10/15/04 3,800,000 3,971,000
15% Credit Sensitive Nts., 7/1/97(5)(6) 5,250,000 5,538,750
-----------
90,823,041
- ---------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--0.4% Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04 3,400,000 3,757,000
-----------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Nts., 10/15/99 4,500,000 5,157,949
-----------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 9,650,000 10,566,750
-----------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 5,165,000 5,604,025
-----------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 3,200,000 3,328,000
-----------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04(5) 2,700,000 2,706,750
-----------
31,120,474
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--0.7% Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06 8,200,000 8,630,500
-----------------------------------------------------------------------------------------------
Communications & Power Industries, Inc.,
12% Sr. Sub. Nts., Series B, 8/1/05(5) 11,103,000 12,352,087
-----------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.:
11.25% Sr. Nts., 10/1/02 2,500,000 2,643,750
9.50% Gtd. Sr. Sec. Nts., 6/1/00(5) 3,672,000 3,736,260
</TABLE>
18 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL GOODS Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 $ 8,700,000 $ 9,004,500
(CONTINUED) -----------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05(5) 3,226,000 3,621,185
-----------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 2,900,000 2,856,932
-----------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(5) 5,000,000 5,050,000
-----------
47,895,214
- ---------------------------------------------------------------------------------------------------------------------------------
MEDIA--3.0%
- ---------------------------------------------------------------------------------------------------------------------------------
BROADCASTING--0.6% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 2,800,000 2,772,000
-----------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 2,250,000 2,328,750
-----------------------------------------------------------------------------------------------
Chancellor Broadcasting Co., 12.50% Sr. Sub. Nts., 10/1/04(5) 3,740,000 4,207,500
-----------------------------------------------------------------------------------------------
New City Communications, Inc., 11.375% Sr. Sub. Nts., 11/1/03(5) 7,125,000 7,766,250
-----------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,178,078
-----------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 8,025,000 8,325,937
-----------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Sec. Nts., 6/30/05(5) 2,153,155 2,309,259
-----------------------------------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Sr. Nts., 2/15/04(7) 4,000,000 3,921,300
10.50% Sr. Nts., 2/15/07(7) 7,850,000 7,693,000
-----------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06 825,000 787,875
-----------
42,289,949
- ---------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--1.4% American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(14) 3,744,080 1,235,546
-----------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 4,400,000 4,567,767
-----------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.50% Sr. Sub. Debs., 5/15/16 7,950,000 8,069,250
10.75% Sr. Sub. Debs., 4/1/04 6,050,000 6,246,625
9.875% Sr. Sub. Debs., 2/15/13 2,620,000 2,547,950
9.875% Sr. Sub. Nts., 5/15/06 1,715,000 1,723,575
-----------------------------------------------------------------------------------------------
Echostar I, 8.25% Bonds, 2/26/01(5) 3,712,210 3,665,808
-----------------------------------------------------------------------------------------------
Echostar II, 8.25% Bonds, 11/9/01(5) 3,292,940 3,251,779
-----------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(14) 1,215,000 1,044,900
-----------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(14) 1,620,000 1,304,100
-----------------------------------------------------------------------------------------------
Fundy Cable Ltd./Ltee, 11% Sr. Sec. Second Priority Nts.,
11/15/05(5) 3,400,000 3,519,000
-----------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(6) 11,649,000 11,852,857
-----------------------------------------------------------------------------------------------
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(14) 1,900,000 1,541,375
-----------------------------------------------------------------------------------------------
Optel, Inc., Units (each unit consists of $1,000 principal amount
of 13% sr. nts., 2/15/05 and one warrant to purchase one share
non-vtg. common stock)(7)(16) 7,800,000 7,176,000
-----------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts.,
8/1/03(14) 24,500,000 23,091,250
-----------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs.,
12/1/07 5,000,000 5,212,500
-----------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/10.875% Sr. Sub. Nts., 2/15/07(7)(14) 2,105,000 957,775
10.875% Sr. Sub. Nts., 2/15/07(7) 3,260,000 2,868,800
-----------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 3,600,000 3,893,144
-----------
93,770,001
</TABLE>
19 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED MEDIA--0.7% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A,
10/1/03 $ 9,050,000 $ 9,547,750
-----------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(7) 802,929 732,392
-----------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 1,425,000 1,503,375
-----------------------------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07(7) 4,325,000 4,195,250
-----------------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 8,575,000 8,596,437
-----------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,694,419
-----------------------------------------------------------------------------------------------
Time Warner Entertainment LP/Time Warner, Inc., 8.375% Sr. Debs.,
3/15/23 9,254,000 9,171,130
-----------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 2,000,000 2,127,844
-----------------------------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 6,785,000 6,869,813
9.75% Sr. Sub. Nts., Series B, 10/15/06(7) 3,175,000 3,123,406
-----------
49,561,816
- ---------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.2% Imax Corp., 10% Sr. Nts., 3/1/01 13,780,000 14,072,825
- ---------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.1% Hollinger International Publishing, Inc., 9.25% Gtd. Sr.
Sub. Nts., 3/15/07 2,700,000 2,632,500
-----------------------------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07(7) 3,100,000 3,014,750
-----------
5,647,250
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER--1.3%
- ---------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.6% Acadia Partners LP, 13% Sr. Sub. Nts., 10/1/97(7) 25,000,000 25,812,500
-----------------------------------------------------------------------------------------------
Empresas ICA Sociedad Controladora SA de CV, 11.875% Nts., 5/30/01 3,500,000 3,740,625
-----------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA, 8.25% Gtd. Nts., 2/17/01(7) 6,000,000 3,915,000
-----------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99(5) 4,222,000 4,248,388
-----------------------------------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75% Bonds, 12/30/99(7) 4,870,000 5,006,969
----------
42,723,482
- ---------------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL--0.0% Allied Waste North America, Inc., 10.25% Sr. Sub. Nts., 12/1/06(7) 1,905,000 1,985,963
-----------------------------------------------------------------------------------------------
Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts., 2/15/03(5)(15) 1,000,000 517,500
----------
2,503,463
- ---------------------------------------------------------------------------------------------------------------------------------
SERVICES--0.7% Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 10,660,000 10,526,750
-----------------------------------------------------------------------------------------------
Coinstar, Inc., Units (each unit consists of $1,000 principal
amount of %/13% sr. sub. disc. nts., 10/1/06 and one warrant to
purchase seven ordinary shares)(5)(14)(16) 6,650,000 4,821,250
-----------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09(7) 5,000,000 4,850,000
-----------------------------------------------------------------------------------------------
Neodata Services, Inc., 12% Sr. Nts., Series B, 5/1/03 4,000,000 4,270,000
-----------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(14) 4,650,000 4,475,625
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 8,500,000 8,085,625
-----------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(7) 15,000,000 12,656,250
-----------
49,685,500
</TABLE>
20 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL--1.4%
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.5% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B,
9/1/03 $ 4,000,000 $ 4,210,000
-----------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(5) 6,025,000 6,190,688
-----------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01(5) 6,050,000 6,624,750
-----------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 6,600,000 7,045,500
-----------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 5,185,000 5,483,138
-----------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 5,000,000 5,625,000
-----------
35,179,076
- ---------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--0.9% Grand Union Co., 12% Sr. Nts., 9/1/04 28,023,000 27,952,943
-----------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 6,350,000 6,746,875
-----------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 4,000,000 4,052,404
-----------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 9.625% Sr. Sub. Nts., 5/1/03 1,130,000 1,084,800
-----------------------------------------------------------------------------------------------
Ralph's Grocery Co.:
(New), 11% Sr. Sub. Nts., 6/15/05(7) 7,900,000 8,186,375
10.45% Sr. Nts., 6/15/04 11,090,000 11,672,225
13.75% Sr. Sub. Nts., 6/15/05 1,500,000 1,590,000
-----------------------------------------------------------------------------------------------
Smith's Food & Drug Centers, Inc., 11.25% Sr. Unsec. Sub. Nts.,
5/15/07 3,230,000 3,528,775
----------
64,814,397
- ---------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.3%
- ---------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.0% American International Group, Inc., 11.70% Unsec. Unsub.
Bonds, 12/4/01 (ITL) 3,000,000,000 2,075,903
- ---------------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.3% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(5)(14) 25,566,000 20,772,375
- ---------------------------------------------------------------------------------------------------------------------------------
UTILITIES--7.9%
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.9% Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds,
6/1/17 956,000 928,515
-----------------------------------------------------------------------------------------------
C.A. La Electricidad de Caracas, 6.688% Exchange Eurobonds,
9/30/03(5)(6) 3,158,996 2,882,585
-----------------------------------------------------------------------------------------------
CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 1,000,000 1,037,500
-----------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 20,740,000 22,191,800
-----------------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 2,955,000 3,180,319
9.25% Sr. Nts., 2/1/04 1,370,000 1,393,975
-----------------------------------------------------------------------------------------------
CE Casecnan Water & Energy, Inc., 11.95% Sr. Nts., Series B, 11/15/10 1,800,000 2,014,875
-----------------------------------------------------------------------------------------------
Centragas Natural Gas Transmission System,
10.65% Sr. Sec. Bonds, 12/1/10(7) 8,398,799 8,997,214
-----------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 9,500,000 10,331,250
-----------------------------------------------------------------------------------------------
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 9,530,000 10,161,363
10.30% Lease Obligation Bonds, Series 1986A, 1/15/14 12,206,000 13,014,648
-----------------------------------------------------------------------------------------------
New Zealand Electric Corp., 10% Debs., 10/15/01 (NZD) 19,420,000 14,227,871
-----------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08 6,579,310 6,776,690
9.50% Sr. Sec. Nts., 12/28/08(7) 5,296,551 5,455,448
-----------------------------------------------------------------------------------------------
Tenaga Nasional Berhad, Zero Coupon Malaysian Commercial Paper,
7.108%, 5/26/97(13) (MYR) 65,300,000 26,082,542
-----------
128,676,595
</TABLE>
21 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS--6.0% American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(14) $ 6,050,000 $ 3,372,875
0%/13% Sr. Disc. Nts., 11/1/05(14) 7,400,000 4,421,500
-----------------------------------------------------------------------------------------------
Bell Cablemedia plc:
0%/11.875% Sr. Disc. Nts., 9/15/05(14) 7,950,000 6,360,000
0%/11.95% Sr. Disc. Nts., 7/15/04(14) 23,300,000 20,300,125
-----------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts., 3/1/06(14) 1,600,000 1,024,000
0%/11.875% Sr. Disc. Nts., 11/1/06(14) 24,800,000 15,190,000
-----------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(14) 6,800,000 5,712,000
-----------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(5)(14) 11,400,000 9,804,000
-----------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05(5)(14) 6,700,000 4,522,500
-----------------------------------------------------------------------------------------------
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 14.902%, 8/15/00(13) 34,615,000 25,009,338
-----------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(14) 26,956,000 25,001,690
-----------------------------------------------------------------------------------------------
Colt Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary shares)(14)(16) 14,730,000 8,911,650
-----------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07(14) 5,525,000 3,757,000
-----------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon Bonds,
11/15/03(14) 8,859,000 6,134,858
-----------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(14) 28,700,000 18,798,500
-----------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07(7) 2,640,000 2,587,200
-----------------------------------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., 7/15/05(14) 21,100,000 12,396,250
12% Cv. Sr. Sub. Nts., 2/15/01 750,000 622,500
-----------------------------------------------------------------------------------------------
Globalstar LP/Globalstar Capital Corp., Units (each unit consists
of $1,000 principal amount of 11.375% sr. nts., 2/15/04 and one
warrant to purchase 2.0645 ordinary shares)(7)(16) 4,315,000 4,250,275
-----------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(7)(14) 1,800,000 1,242,000
-----------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(14) 14,325,000 8,774,063
-----------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts., Series B,
4/15/03(14) 1,035,000 577,013
-----------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(14) 1,465,000 922,950
0%/13.50% Sr. Disc. Nts., 9/15/05(14) 16,025,000 10,937,063
-----------------------------------------------------------------------------------------------
McCaw International Ltd., Units (each unit consists of $1,000
principal amount of 0%/13% sr. disc. nts., 4/15/07 and one warrant
to purchase 0.10616 share of common stock)(7)(14)(16) 10,700,000 5,082,500
-----------------------------------------------------------------------------------------------
McLeod, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(7)(14) 2,590,000 1,450,400
-----------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 8,810,000 7,092,050
-----------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(14) 5,815,000 4,426,669
0%/9.375% Sr. Disc. Nts., 1/15/04(14) 23,896,000 21,715,490
-----------------------------------------------------------------------------------------------
Mobile Telecommunications Technologies Corp., 13.50% Sr. Nts.,
12/15/02 1,150,000 1,040,750
-----------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(14) 900,000 724,500
10% Sr. Nts., 2/15/07(7) 7,725,000 7,416,000
-----------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA, 0%/14% Sr. Disc. Nts., Series B,
3/15/04(5)(14) 5,400,000 3,348,000
</TABLE>
22 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS Omnipoint Corp.:
(CONTINUED) 11.625% Sr. Nts., 8/15/06(7) $ 11,400,000 $ 10,089,000
11.625% Sr. Nts., 8/15/06 8,525,000 7,544,625
-----------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 17,585,000 17,892,738
-----------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(7) 1,500,000 1,561,875
Units (each unit consists of $1,000 principal amount of 0%/14%
sr. disc. nts., 6/1/04 and one warrant to purchase 34 ordinary
shares)(5)(14)(16) 13,200,000 11,088,000
-----------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(14) 7,900,000 7,110,000
0%/14% Sr. Sub. Disc. Nts., 11/15/01(5)(14) 23,817,000 23,936,085
10.75% Sr. Nts., 11/1/04 1,455,000 1,447,725
-----------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each unit consists of $1,000
principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and one
warrant to purchase six ordinary shares)(5)(14)(16) 18,540,000 10,289,700
-----------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.,
0%/12.50% Sr. Disc. Nts., 8/15/06(14) 3,240,000 2,122,200
-----------------------------------------------------------------------------------------------
Telefonica de Argentina SA, 11.875% Unsec. Nts., 11/1/04 300,000 336,000
-----------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(14) 21,675,000 14,522,250
9.875% Sr. Nts., 7/1/06 2,270,000 2,366,475
-----------------------------------------------------------------------------------------------
TeleWest plc, 0%/11% Sr. Disc. Debs., 10/1/07(14) 15,625,000 10,273,438
-----------------------------------------------------------------------------------------------
UNIFI Communications, Inc., Units (each unit consists of $1,000
principal amount of 14% sr. nts., 3/1/04 and one warrant
to purchase 27.52 ordinary shares)(7)(16) 11,400,000 11,457,000
-----------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 13,350,000 13,984,125
9.50% Sr. Nts., 2/1/04 9,670,000 8,146,975
-----------------------------------------------------------------------------------------------
Videotron Holdings plc, 0%/11% Sr. Disc. Nts., 8/15/05(14) 1,650,000 1,307,625
-----------------------------------------------------------------------------------------------
Western Wireless Corp.:
10.50% Sr. Sub. Nts., 2/1/07 1,125,000 1,119,375
10.50% Sr. Sub. Nts., 6/1/06 7,925,000 7,885,375
------------
417,406,295
------------
Total Corporate Bonds and Notes (Cost $2,016,420,390) 2,046,686,178
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--0.4%
- ---------------------------------------------------------------------------------------------------------------------------------
Berg Electronics Corp.(7)(17) 22,240 633,840
-----------------------------------------------------------------------------------------------
Celcaribe SA(5)(17) 1,658,520 4,560,930
-----------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(5) 525 527,625
-----------------------------------------------------------------------------------------------
El Paso Electric Co.(17) 500,506 3,003,036
-----------------------------------------------------------------------------------------------
Equitable Bag, Inc.(5)(17) 68,985 344,925
-----------------------------------------------------------------------------------------------
Grand Union Co.(17) 218,257 777,541
</TABLE>
23 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS GST Telecommunications, Inc.(17) 235,400 $ 1,765,500
(CONTINUED) -----------------------------------------------------------------------------------------------
Ladish Co., Inc.(5)(17) 806,000 1,511,250
-----------------------------------------------------------------------------------------------
Omnipoint Corp.(5)(17) 640,625 5,933,789
-----------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(5)(17) 232,222 232,222
-----------------------------------------------------------------------------------------------
Vail Resorts, Inc.(17) 200,000 3,900,000
-----------------------------------------------------------------------------------------------
Walter Industries, Inc.(17) 130,483 1,777,831
-----------
Total Common Stocks (Cost $27,857,489) 24,968,489
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.5%
- ---------------------------------------------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum. Exchangeable
Preferred Stock(7)(11) 4,137 406,460
-----------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25%, 12/31/26(7) 100,500 9,924,375
-----------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125% Exchangeable Preferred Stock, Series M(11) 56,590 5,064,805
8.50% Cum. Cv., Series I 51,500 1,062,187
-----------------------------------------------------------------------------------------------
California Federal Bank:
10.625% Non-Cum., Series B 89,475 9,842,250
11.50% Non-Cum. 111,500 12,599,500
-----------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 371,100 12,524,625
-----------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(5)(11) 600,000 6,240,000
-----------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Series A Preferred Stock(11) 100,323 11,085,691
-----------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable
Perpetual Preferred Stock, Series A(5) 160,000 4,680,000
-----------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 20,750,000 20,750,000
-----------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 25,000 1,468,750
-----------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exchangeable, Series B(5)(11) 70,912 7,764,868
Sr. Exchangeable, Series A 80,000 2,120,000
-----------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv.(17)(18) 152,500 3,736,250
-----------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Units (each unit
consists of one sr. exchangeable preferred share and one
warrant)(7)(16)(17) 80,550 3,644,888
-----------------------------------------------------------------------------------------------
Panamsat Corp., 12.75% Sr. Preferred Exchangeable(5)(11) 16,429 19,714,800
-----------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 325,000 7,475,000
-----------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable, Series B(5)(17) 86,770 3,232,183
-----------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred Stock(5)(17) 162,350 5,519,900
-----------------------------------------------------------------------------------------------
TGX Corp., Series A(5)(17) 788,566 1,379,991
-----------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 80,000 2,850,000
-----------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
Preferred Stock 387,400 9,878,700
9.16% Cv. Preferred Stock, Series B 280,000 7,910,000
-----------
Total Preferred Stocks (Cost $164,270,033) 170,875,223
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER SECURITIES--0.1%
- ---------------------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 8% Depositary Cv. Shares each Representing
1/100 Share of Dividend Enhanced Convertible Stock (Cost $9,567,179) 125,000 9,812,500
</TABLE>
24 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES
- --0.1%
- ---------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05 5,225 $209,000
-----------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99 119,070 96,744
Exp. 8/00 8,000 5,000
-----------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(5) 118,975 1,190
-----------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00(5) 780 6
-----------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(5) 262,500 65,625
-----------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99(5) 74,086 741
-----------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 6/05 39,200 289,100
-----------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(5) 16,370 278,290
-----------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(5) 8,109 567,630
-----------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03(5) 6,600 31,350
-----------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(5) 7,250 217,500
-----------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/05 690,000 1,035,000
-----------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(5) 1,035 31,050
-----------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05 46,860 281,160
-----------------------------------------------------------------------------------------------
IHF Capital, Inc., Series I Wts., Exp. 11/99(5) 5,400 270,000
-----------------------------------------------------------------------------------------------
IHF Holdings, Inc. Wts., Exp. 11/99(5) 1,750 262,500
-----------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 13,050 --
-----------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/04(5) 21,600 216
-----------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(5) 102,500 949,406
-----------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(5) 182,000 1,100,190
Exp. 6/05(5) 13,440 81,245
-----------------------------------------------------------------------------------------------
Stroh Brewery Co. Wts., Exp. 7/06(5) 19,164 153,312
-----------------------------------------------------------------------------------------------
United International Holdings, Inc. Wts., Exp. 11/99(5) 20,345 101,725
-----------------------------------------------------------------------------------------------
Venezuela Government Wts., Exp. 4/20 75,000 --
-----------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(5) 196,400 306,875
----------
Total Rights, Warrants and Certificates (Cost $3,497,833) 6,334,855
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STRUCTURED INSTRUMENTS--6.4%
- ---------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank, New York Branch CD:
10.30%, 3/16/98 (linked to Greek Drachma on 3/14/98) $48,500,000 47,893,750
13.75%, 8/18/97 (indexed to the cross currency rates of
Greek Drachma and Chilean Peso) 25,400,000 25,273,000
-----------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, New York Branch:
CD Linked Nts., 5.57%, 8/6/97 (linked to the Goldman Sachs
Commodity Index Excess Return Index)(4) 8,750,000 8,750,000
Lehman Brothers High Yield Bond Index Nts., 12.50%, 7/8/97 11,250,000 10,939,500
Lehman Brothers High Yield Bond Index Nts., 12.50%, 8/1/97 4,600,000 4,462,460
Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98 17,500,000 17,286,500
-----------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch
CD, 16.75%, 4/16/97 (indexed to the Federation GKO, Zero Coupon,
4/9/97) 9,600,000 9,594,000
</TABLE>
25 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
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, 5.438%, 9/1/97 and
an interest rate swap between Credit Suisse Financial Products and
the Trust](5) $ 1,428,571 $ 1,395,508
-----------------------------------------------------------------------------------------------
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, 5.627%, 4/1/00 and an interest rate
swap between Goldman Sachs and the Trust](5) 13,395,652 13,496,120
-----------------------------------------------------------------------------------------------
ING (U.S.) Capital Holdings Corp.:
Pass-Through Nts., 11.50%, 7/8/97 (Linked to the European Bank of
Reconstruction & Development Czech Crown Denominated Nts.,
11.50%, 7/8/97) (CZK) 416,250,000 14,265,637
Zero Coupon Chilean Peso Linked Nts. with Chilean Sovereign Risk,
11.53%, 6/27/97(13) 15,000,000 14,412,900
Zero Coupon Chilean Peso Linked Nts., 11.813%, 6/23/97(13) 4,625,000 4,428,206
Zero Coupon Chilean Peso Linked Nts., 11.741%, 6/24/97(13) 6,500,000 6,221,605
Zero Coupon Czech Koruna Linked Nts., 11.911%, 6/26/97(13) 9,020,000 8,350,716
Zero Coupon Czech Koruna Linked Nts., 11.964%, 7/7/97(13) (CZK) 155,201,203 5,181,570
Zero Coupon Czech Koruna Linked Promissory Nts., 12.285%,
6/20/97(13) (CZK) 346,661,289 11,640,584
Zero Coupon Czech Koruna Linked Promissory Nts., 12.184%,
6/23/97(13) (CZK) 539,944,685 18,112,264
-----------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp., Zero Coupon:
Czech Koruna Linked Promissory Nts., 10.979%, 11/17/97(13)(CZK) 26,368,371 841,628
Czech Koruna/U.S. Dollar Linked Nts., 11.098%, 3/3/98(13) 9,645,000 8,550,292
Czech Koruna/U.S. Dollar Linked Nts., 11.098%, 3/4/98(13) 9,645,000 8,608,163
Korean Won/U.S. Dollar Linked Nts., 10.87%, 6/9/97(13) 10,190,000 9,144,914
Nts., Linked to the Czech Koruna/Swiss Franc Exchange Rate,
14.955%, 7/27/97(13) (CZK) 61,020,007 1,922,618
Nts., Linked to the Greek Drachma/Swiss Franc Exchange Rate,
14.829%, 12/4/97(13) 19,750,000 17,811,143
Nts., Linked to the Greek Drachma/Swiss Franc Exchange Rate,
14.48%, 7/17/97(13) 9,880,000 9,281,865
Slovakia Koruna Linked Nts., 12.522%, 9/4/97(13) 4,420,000 4,219,774
South African Rand/U.S. Dollar Linked Nts., 15.41%, 3/18/98(13) 19,400,000 16,782,940
-----------------------------------------------------------------------------------------------
Internationale Nederlanden Bank NV, Prague Branch,
Zero Coupon Promissory Nts., 10.516%, 4/28/97(13) (CZK) 116,600,000 3,973,590
-----------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Zero Coupon :
Greek Drachma/Swiss Franc Linked Nts., 14.709%, 1/15/98(13) 6,630,630 6,645,217
U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc, 15.639%,
12/23/97(13) 10,200,000 10,781,400
U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc, 15.453%,
12/26/97(13) 9,700,000 10,245,140
U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc, 15.499%,
12/30/97(13) 150,000 156,990
-----------------------------------------------------------------------------------------------
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)(16) 10,000,000 11,704,000
-----------------------------------------------------------------------------------------------
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,
5.438%, 9/1/02](5) 6,000,000 6,960,000
-----------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
9.896%, 5/2/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 5/3/97)(13) 4,550,000 4,515,420
</TABLE>
26 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STRUCTURED INSTRUMENTS Salomon, Inc., Zero Coupon:
(CONTINUED) Chilean Peso-Indexed Enhanced Access Nts.:
10.116%, 6/17/97(13) $8,927,536 $8,886,469
10.636%, 9/9/97(13) 9,830,000 9,312,942
Russia S-Account Credit Linked Nts.:
12.071%, 8/15/97(13) 14,500,000 13,815,600
11.862%, 8/28/97(13) 29,000,000 27,503,600
12.097%, 8/7/97(13) 19,485,000 18,617,918
12.068%, 8/8/97(13) 10,850,000 10,362,835
-----------------------------------------------------------------------------------------------
SPARC EM Ltd., Zero Coupon Russian GKO Linked/U.S. Dollar Nts.,
12.238%, 10/15/97(13) 4,850,000 4,542,015
------------
Total Structured Instruments (Cost $452,444,391) 446,890,793
<CAPTION>
DATE STRIKE CONTRACTS
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PUT OPTIONS PURCHASED--0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Deutsche Mark Put Opt. 5/97 1.633 (DEM) 83,765,000 1,377,683
------------------------------------------------------------------------------------------------
Deutsche Mark Put Opt. 5/97 1.64 (DEM) 371,340,000 5,327,615
------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds, Buoni del
Tesoro Poliennali, 9.50%, 5/1/01 Put Opt. 7/97 102.30% (ITL) 29,104 23,284
--------------
Total Put Options Purchased (Cost $6,320,441) 6,728,582
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $7,594,597,713) 109.2% 7,585,535,929
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (9.2) (636,302,505)
-------- --------------
NET ASSETS 100.0% $6,949,233,424
-------- --------------
-------- --------------
<CAPTION>
<S><C>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso IEP--Irish Punt
AUD--Australian Dollar ITL--Italian Lira
CAD--Canadian Dollar JPY--Japanese Yen
CZK--Czech Koruna MXP--Mexican Peso
DEM--German Deutsche Mark MYR--Malaysian Ringgit
ESP--Spanish Peseta NZD--New Zealand
FIM--Finnish Markka Dollar
GBP--British Pound PLZ--Polish Zloty
Sterling SEK--Swedish Krona
GRD--Greek Drachma SKK--Slovakian Koruna
IDR-Indonesian Rupiah ZAR--South African Rand
2. 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.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment rates
rise. The price of these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity. Interest rates disclosed represent
current yields based upon the current cost basis and estimated timing of
future cash flows.
4. When-issued security to be delivered and settled after March 31, 1997.
5. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
6. Represents the current interest rate for a variable rate security.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $329,610,786 or 4.74% of the Fund's
net assets, at March 31, 1997.
8. Securities with an aggregate market value of $13,472,940 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
</TABLE>
27 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
9. A sufficient amount of liquid assets has been designated to cover outstanding
written call and put options, as follows:
CONTRACTS/FACE EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL/PUT DATES PRICE RECEIVED SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Banco Hipotecario Nacional (Argentina)
Medium-Term Nts.,
10.625%, 8/7/06 Call Option $ 15,000,000 8/7/00 100.00% $ 138,000 $ 750,000
- ---------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar Put Option 177,170,000 5/23/97 1.375 (CAD) 505,740 1,116,172
- ---------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar Put Option 88,280,000 6/18/97 1.38 (CAD) 266,759 447,844
- ---------------------------------------------------------------------------------------------------------------------------------
Germany (Republic of) Bonds, Series
118, 5.25%, 2/21/01 Put Option 27,577,703 7/16/97 99.57% (DEM) 661,865 19,304
- ---------------------------------------------------------------------------------------------------------------------------------
New Zealand Dollar Call Option 42,830,000 5/29/97 1.434 (NZD) 307,396 244,131
- ---------------------------------------------------------------------------------------------------------------------------------
New Zealand Dollar Call Option 19,600,000 5/28/97 1.438 (NZD) 135,240 127,988
- ---------------------------------------------------------------------------------------------------------------------------------
New Zealand Dollar Call Option 73,500,000 5/23/97 1.441 (NZD) 514,500 517,440
- ---------------------------------------------------------------------------------------------------------------------------------
New Zealand Dollar Call Option 39,080,000 6/9/97 1.42 (NZD) 281,376 155,538
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6%, 2/15/26
Call Option $ 98,080,000 4/11/97 93.00% 613,000 --
----------- ----------
$3,423,876 $3,378,417
----------- ----------
----------- ----------
<CAPTION>
<S><C>
10. A sufficient amount of securities has been designated to cover
outstanding forward foreign currency exchange contracts. See Note 5 of Notes
to Financial Statements.
11. Interest or dividend is paid in kind.
12. Represents the current interest rate for an increasing rate security.
13. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
14. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
15. Non-income producing--issuer is in default of interest payment.
16. 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.
17. Non-income producing security.
18. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended March 31, 1997.
The aggregate fair value of all securities of affiliated companies as of
March 31, 1997 amounted to $3,736,250. Transactions during the period in
which the issuer was an affiliate are as follows:
<CAPTION>
BALANCE BALANCE
SEPTEMBER 30, 1996 GROSS ADDITIONS GROSS REDUCTIONS MARCH 31, 1997
-------------------- -------------------- -------------------- --------------------
SHARES COST SHARES COST SHARES COST SHARES COST
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kelley Oil & Gas Corp.,
$2.625 Cv. 82,000 $1,754,725 70,500 $1,717,438 -- $ -- 152,500 $3,472,163
See accompanying Notes to Financial Statements.
</TABLE>
28 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES March 31, 1997 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value--see accompanying statement:
Unaffiliated companies (cost $7,591,125,550) $7,581,799,679
Affiliated companies (cost $3,472,163) 3,736,250
-------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange
contracts--Note 5 10,803,007
-------------------------------------------------------------------------------------------
Receivables:
Investments sold 344,582,872
Interest, dividends and principal paydowns 128,208,411
Shares of beneficial interest sold 34,256,463
Closed forward foreign currency exchange contracts 797,256
Daily variation on futures contracts--Note 6 215,321
-------------------------------------------------------------------------------------------
Other 53,899
-------------------------------------------------------------------------------------------
Total assets 8,104,453,158
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES Bank overdraft 1,290,909
-------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange
contracts--Note 5 1,385,420
-------------------------------------------------------------------------------------------
Options written, at value (premiums received $3,423,876)--
see accompanying statement--Note 7 3,378,417
-------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $1,060,863,256 purchased on a
when-issued basis)--Note 1 1,103,803,574
Shares of beneficial interest redeemed 21,523,599
Dividends 15,374,331
Distribution and service plan fees 4,207,853
Closed forward foreign currency exchange contracts 1,158,904
Transfer and shareholder servicing agent fees 783,044
Daily variation on futures contracts--Note 6 554,499
Other 1,759,184
---------------
Total liabilities 1,155,219,734
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS $6,949,233,424
---------------
---------------
- -----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $7,135,375,302
NET ASSETS --------------------------------------------------------------------------------------------
Undistributed net investment income 6,358,441
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency
transactions (195,937,401)
-------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 3,437,082
---------------
Net assets $6,949,233,424
---------------
---------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $3,680,816,928 and 766,130,601 shares of beneficial interest
outstanding) $4.80
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $5.04
-------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $2,977,474,474 and 618,447,595 shares of
beneficial interest outstanding) $4.81
-------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $290,942,022 and 60,612,491 shares of beneficial interest
outstanding) $4.80
See accompanying Notes to Financial Statements.
</TABLE>
29 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1997 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest (net of foreign withholding taxes of $431,395) $322,908,749
-------------------------------------------------------------------------------------------
Dividends 5,311,638
-------------
Total income 328,220,387
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES Distribution and service plan fees--Note 4:
Class A 4,471,996
Class B 13,975,009
Class C 1,146,713
-------------------------------------------------------------------------------------------
Management fees--Note 4 17,585,362
-------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 3,763,033
-------------------------------------------------------------------------------------------
Shareholder reports 789,802
-------------------------------------------------------------------------------------------
Custodian fees and expenses 487,022
-------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 122,177
Class C 35,750
-------------------------------------------------------------------------------------------
Trustees' fees and expenses 49,007
-------------------------------------------------------------------------------------------
Other 191,512
------------
Total expenses 42,617,383
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 285,603,004
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) Investments (including premiums on options exercised) 73,377,276
Closing of futures contracts (20,542,519)
Closing and expiration of options written--Note 7 11,349,835
Foreign currency transactions 30,874,034
------------
Net realized gain 95,058,626
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (119,267,656)
Translation of assets and liabilities denominated in foreign currencies (45,467,421)
--------------
Net change (164,735,077)
--------------
Net realized and unrealized loss (69,676,451)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $215,926,553
-------------
-------------
See accompanying Notes to Financial Statements.
</TABLE>
30 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30,
(UNAUDITED) 1996
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $285,603,004 $499,559,590
--------------------------------------------------------------------------------------------------
Net realized gain 95,058,626 43,346,428
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (164,735,077) 139,093,599
-------------- --------------
Net increase in net assets resulting from operations 215,926,553 681,999,617
--------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A (155,190,337) (288,582,659)
SHAREHOLDERS Class B (108,471,703) (175,634,637)
Class C (8,893,792) (8,327,086)
--------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (11,371,215)
Class B -- (8,353,085)
Class C -- (562,714)
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from beneficial
TRANSACTIONS interest
transactions--Note 2:
Class A 182,456,600 197,278,497
Class B 412,359,228 568,088,963
Class C 119,902,048 103,676,464
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 658,088,597 1,058,212,145
-------------------------------------------------------------------------------------------------
Beginning of period 6,291,144,827 5,232,932,682
-------------- --------------
End of period [including undistributed (overdistributed)
net investment income of $6,358,441 and $(6,688,731),
respectively] $6,949,233,424 $6,291,144,827
-------------- --------------
-------------- --------------
See accompanying Notes to Financial Statements.
</TABLE>
31 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
-----------------------------------------------------------------------
SIX MONTHS ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $4.84 $4.68 $4.75 $5.21 $5.07 $5.01
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .44 .41 .45 .48 .46
Net realized and unrealized gain (loss) (.05) .15 (.03) (.35) .17 .14
------ ----- ------ ------ ----- -----
Total income from investment operations .17 .59 .38 .10 .65 .60
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.21) (.41) (.41) (.43) (.50) (.46)
Distributions from net realized gain -- -- (.01) -- (.01) (.08)
Distributions in excess of net realized gain -- -- -- (.12) -- --
Tax return of capital distribution -- (.02) (.03) (.01) -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions to shareholders (.21) (.43) (.45) (.56) (.51) (.54)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.80 $4.84 $4.68 $4.75 $5.21 $5.07
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 3.47% 13.06% 8.62% 1.85% 13.30% 12.56%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $3,681 $3,526 $3,219 $3,143 $2,754 $1,736
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,656 $3,340 $3,085 $3,082 $2,107 $1,084
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.91%(4) 9.09% 9.63% 8.72% 9.78% 9.39%
Expenses 0.93%(4) 0.97% 0.99% 0.95% 1.09% 1.16%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 47.9% 104.8% 141.5% 119.0% 148.6% 208.2%
</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 (or inception of offering), 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.
32 Oppenheimer Strategic Income Fund
<PAGE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
SIX MONTHS ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995 1994 1993(2)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $4.85 $4.69 $4.76 $5.22 $4.89
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .20 .40 .37 .42 .36
Net realized and unrealized gain (loss) (.05) .15 (.03) (.36) .34
------ ------ ------ ------ ------
Total income from investment operations .15 .55 .34 .06 .70
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.19) (.37) (.37) (.39) (.36)
Distributions from net realized gain -- -- (.01) -- (.01)
Distributions in excess of net realized gain -- -- -- (.12) --
Tax return of capital distribution -- (.02) (.03) (.01) --
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (.19) (.39) (.41) (.52) (.37)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.81 $4.85 $4.69 $4.76 $5.22
------ ------ ------ ------ ------
------ ------ ------ ------ ------
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 3.07% 12.19% 7.79% 1.07% 13.58%
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $2,977 $2,590 $1,947 $1,586 $695
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,813 $2,250 $1,711 $1,236 $276
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.13%(4) 8.30% 8.83% 7.90% 8.13%(4)
Expenses 1.69%(4) 1.72% 1.75% 1.71% 1.80%(4)
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 47.9% 104.8% 141.5% 119.0% 148.6%
<CAPTION>
CLASS C
---------------------------------------------
SIX MONTHS ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995(1)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $4.83 $4.68 $4.68
- ---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .19 .38 .13
Net realized and unrealized gain (loss) (.03) .16 .01
------ ------ -----
Total income from investment operations .16 .54 .14
- ---------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.19) (.37) (.12)
Distributions from net realized gain -- -- (.01)
Distributions in excess of net realized gain -- -- --
Tax return of capital distribution -- (.02) (.01)
------ ------ -----
Total dividends and distributions to shareholders (.19) (.39) (.14)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $4.80 $4.83 $4.68
------ ------ -----
------ ------ -----
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 3.28% 11.96% 3.09%
- ---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $291 $175 $67
- ---------------------------------------------------------------------------------------------------
Average net assets (in millions) $231 $110 $24
- ---------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.04%(4) 8.18% 8.28%(4)
Expenses 1.71%(4) 1.74% 2.02%(4)
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 47.9% 104.8% 141.5%
</TABLE>
4. Annualized.
5. 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, 1997 were $4,051,911,085 and
$3,308,701,502, respectively. For the years ended September 30, 1995 and
1994, purchases and sales of investment securities included mortgage
"dollar-rolls."
See accompanying Notes to Financial Statements.
33 Oppenheimer Strategic Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Strategic Income Fund (the Fund) is a
ACCOUNTING POLICIES separate series of Oppenheimer Strategic Income
Fund, 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 in U.S. government, foreign and
lower-rated corporate bonds and by writing covered
call options on them. The Fund's investment
adviser 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
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 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 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, 1997, the Fund had
entered into outstanding when-issued or forward
commitments of $1,060,863,256.
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, 1997, securities with an aggregate
market value of $2,008,500, representing 0.03% 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.
34 Oppenheimer Strategic Income Fund
<PAGE>
- --------------------------------------------------------------------------------
1. SIGNIFICANT REPURCHASE AGREEMENTS. The Fund requires the
ACCOUNTING POLICIES custodian to take possession, to have legally
(CONTINUED) 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 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 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.
35 Oppenheimer Strategic Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no
BENEFICIAL INTEREST 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, 1997 YEAR ENDED SEPTEMBER 30, 1996
------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 98,223,090 $ 480,733,873 161,911,012 $ 769,839,764
Dividends and distributions reinvested 21,170,798 103,592,232 42,307,227 201,403,712
Issued in connection with the acquisition
of Quest for Value Global Income
Fund--Note 9 -- -- 970,667 4,571,842
Redeemed (82,154,929) (401,869,505) (163,843,683) (778,536,821)
------------ -------------- ------------ --------------
Net increase 37,238,959 $ 182,456,600 41,345,223 $ 197,278,497
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 108,480,414 $ 531,983,658 164,417,334 $ 783,491,575
Dividends and distributions reinvested 12,509,416 61,331,691 21,799,243 103,961,398
Issued in connection with the acquisition
of Quest for Value Global Income
Fund--Note 9 -- -- 280,096 1,322,051
Redeemed (36,901,828) (180,956,121) (67,336,963) (320,686,061)
------------ -------------- ------------ --------------
Net increase 84,088,002 $ 412,359,228 119,159,710 $ 568,088,963
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 28,172,096 $ 137,775,948 25,473,363 $ 121,173,723
Dividends and distributions reinvested 1,245,837 6,092,183 1,255,765 5,978,489
Issued in connection with the acquisition of
Quest for Value Global Income
Fund--Note 9 -- -- 36,170 170,362
Redeemed (4,906,097) (23,966,083) (4,978,579) (23,646,110)
------------ -------------- ------------ --------------
Net increase 24,511,836 $ 119,902,048 21,786,719 $ 103,676,464
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At March 31, 1997, net unrealized depreciation on
LOSSES ON INVESTMENTS investments and options written of $9,016,325 was
composed of gross appreciation of $153,583,514,
and gross depreciation of $162,599,839.
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND Management fees paid to the Manager were in
OTHER TRANSACTIONS accordance with the investment advisory agreement
WITH AFFILIATES with the Fund which provides for a fee of 0.75% of
the first $200 million of the Fund's average
annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next
$200 million, 0.60% of the next $200 million and
0.50% of the net assets in excess of $1 billion.
For the six months ended March 31, 1997,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $9,890,226, of
which $3,011,916 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 $20,224,388 and
$1,327,430, of which $602,337 and $37,093,
respectively, was paid to an affiliated
broker/dealer. During the six months ended March
31, 1997, OFDI received contingent deferred sales
charges of $3,130,009 and $73,359, 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.
36 Oppenheimer Strategic Income Fund
<PAGE>
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES The Fund has adopted a Service Plan for Class A
AND OTHER TRANSACTIONS shares to reimburse OFDI for a portion of its
WITH AFFILIATES costs incurred in connection with the personal
(CONTINUED) service and maintenance of accounts that hold
Class A shares. Reimbursement is made quarterly at
an annual rate that may not exceed 0.25% 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, 1997, OFDI paid $311,793 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 0.75% per year
on Class B shares. OFDI also receives a service
fee of 0.25% 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. During the six months ended March
31, 1997, OFDI paid $78,628 to an affiliated
broker/dealer as reimbursement for Class B
personal service and maintenance expenses and
retained $11,521,964 as reimbursement for Class B
sales commissions and service fee advances, as
well as financing costs. 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. As of March 31,
1997, OFDI had incurred unreimbursed expenses of
$99,866,541 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 0.75% per year
on Class C shares. OFDI also receives a service
fee of 0.25% 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. During the six months ended March
31, 1997, OFDI paid $13,307 to an affiliated
broker/dealer as compensation for Class C personal
service and maintenance expenses and retained
$782,414 as compensation for Class C sales
commissions and service fee advances, as well as
financing costs. 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. As of March 31, 1997,
OFDI had incurred unreimbursed expenses of
$4,126,971 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.
37 Oppenheimer Strategic Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS Risks include the potential inability of the
(CONTINUED) 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, 1997, 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 DATES (000s) MARCH 31, 1997 APPRECIATION DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New Zealand Dollar (NZD) 4/7/97 20,435 NZD $ 14,196,007 $ -- $ 8,261
------------- ------------- -------------
-------------
CONTRACTS TO SELL
- ----------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar (CAD) 4/14/97--5/23/97 352,635 CAD $ 255,547,606 $ 5,313,019 $ --
French Franc (FRF) 4/28/97 160,165 FRF 28,583,613 532,002 --
New Zealand Dollar (NZD) 4/4/97--4/14/97 127,191 NZD 88,350,254 1,008,430 --
Swiss Franc (CHF) 4/7/97--7/2/97 344,636 CHF 240,642,359 3,949,556 1,377,159
------------- ------------- -------------
$ 613,123,832 10,803,007 1,377,159
------------- ------------- -------------
-------------
Total Unrealized Appreciation and Depreciation $ 10,803,007 $ 1,385,420
------------- -------------
------------- -------------
</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, 1997, the Fund had outstanding futures
contracts to sell debt securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATES FUTURES CONTRACTS MARCH 31, 1997 APPRECIATION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts., 2 yr. 6/97 254 $ 51,974,750 $ 157,438
U.S. Treasury Nts., 5 yr. 6/97 348 36,295,313 352,938
U.S. Treasury Nts., 10 yr. 6/97 131 13,820,501 20,470
U.S. Treasury Bonds, 30 yr. 6/97 930 99,713,438 1,317,656
French Government Bonds, 10 yr. 6/97 1,409 160,538,605 1,953,042
--------------- ------------
$ 362,342,607 $ 3,801,544
--------------- ------------
--------------- ------------
</TABLE>
38 Oppenheimer Strategic Income Fund
<PAGE>
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY The Fund may buy and sell put and call options, or
write put and covered call options on portfolio
securities in order to produce incremental
earnings or protect against changes in the value
of portfolio securities.
The Fund generally purchases put options
or writes covered call options to hedge against
adverse movements in the value of portfolio
holdings. When an option is written, the Fund
receives a premium and becomes obligated to sell
or purchase the underlying security at a fixed
price, upon exercise of the option.
Options are valued daily based upon the
last sale price on the principal exchange on which
the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a
gain or loss upon the expiration or closing of the
option transaction. When an option is exercised,
the proceeds on sales for a written call option,
the purchase cost for a written put option, or the
cost of the security for a purchased put or call
option is adjusted by the amount of premium
received or paid.
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, 1997 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, 1996 236,465,210 $ 1,790,304 14,230,476 $ 722,937
- ------------------------------------------------------------------------------------------------------------------------
Options written 958,483,797 10,791,249 265,639,635 3,803,973
- ------------------------------------------------------------------------------------------------------------------------
Options closed or expired (896,238,601) (9,636,633) (14,392,534) (3,092,546)
- ------------------------------------------------------------------------------------------------------------------------
Options exercised (123,587,325) (955,408) -- --
------------ ------------ ----------- ------------
Options outstanding at March 31, 1997 175,123,081 $ 1,989,512 265,477,577 $ 1,434,364
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
</TABLE>
39 Oppenheimer Strategic Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued)
- --------------------------------------------------------------------------------
8. ILLIQUID AND At September 30, 1996, investments in securities
RESTRICTED SECURITIES included issues that are illiquid or restricted.
Restricted 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. A security may be considered
illiquid if it lacks a readily available market or
if its valuation has not changed for a certain
period of time. The Fund intends to invest no more
than 10% of its net assets (determined at the time
of purchase and reviewed from time to time) in
illiquid or restricted securities. Certain
restricted securities, eligible for resale to
qualified institutional investors, are not subject
to that limit. The aggregate value of illiquid or
restricted securities subject to this limitation at
March 31, 1997 was $620,089,285, which represents
8.92% of the Fund's net assets. Information
concerning restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATES COST PER UNIT MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS
Arizona Charlie's, Inc., 12% First Mtg.
Nts., Series A, 11/15/00 11/18/93--12/9/93 100.00% 68.00%
- --------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First
Mtg. Nts., Series A, 11/15/00 11/18/93--12/17/93 95.98 71.00
- --------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00 110.50
- --------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 5/15/95 110.05 117.04
- --------------------------------------------------------------------------------------------------------------
Transpower Finance Ltd. Gtd. Unsec. Unsub.
Bonds, 8%, 2/15/01 5/17/96 70.01 68.83
- --------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Banco
Venezuela TCI, Zero Coupon, 6.13%, 12/13/98 7/13/93--7/15/93 72.64 89.00
STOCKS AND WARRANTS
- --------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93--12/9/93 $ 2.10 $ .25
- --------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 1,000.00 1,005.00
- --------------------------------------------------------------------------------------------------------------
Omnipoint Corp. 11/29/95 16.00 9.26
- --------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 9.26
- --------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 5/2/94 9.50 1.00
</TABLE>
- --------------------------------------------------------------------------------
9. ACQUISITION OF On November 24, 1995, the Fund acquired all
QUEST FOR VALUE of the net assets of Quest for Value Global Income
GLOBAL INCOME FUND 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.
40 Oppenheimer Strategic Income Fund
<PAGE>
OPPENHEIMER STRATEGIC INCOME FUND
A SERIES OF OPPENHEIMER STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive
Officer
Bridget A. Macaskill, President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Sam Freedman, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER OppenheimerFunds Services
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, are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
41 Oppenheimer Strategic Income Fund
<PAGE>
OPPENHEIMERFUNDS FAMILY
- --------------------------------------------------------------------------------
OppenheimerFunds offers over 50 funds designed to
fit virtually every investment goal. Whether
you're investing for retirement, your children's
education or tax-free income, we have the funds to
help you seek your objective.
When you invest with OppenheimerFunds,
you can feel comfortable knowing that you are
investing with a respected financial institution
with over 35 years of experience in helping people
just like you reach their financial goals. And
you're investing with a leader in global, growth
stock and flexible fixed-income investments--with
over 3 million shareholder accounts and more than
$60 billion under OppenheimerFunds' management and
that of our affiliates.
At OppenheimerFunds we don't charge a fee
to exchange shares. And you can exchange shares
easily by mail or by telephone.1 For more
information on Oppenheimer funds, please contact
your financial adviser or call us at
1-800-525-7048 for a prospectus. You may also
write us at the address shown on the back cover.
As always, please read the prospectus carefully
before you invest.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
REAL ASSET FUNDS Real Asset Fund Gold & Special Minerals Fund
- ------------------------------------------------------------------------------------------------------
STOCK FUNDS Developing Markets Fund Growth Fund
Global Emerging Growth Fund Global Fund
Enterprise Fund(2) Quest Global Value Fund
International Growth Fund Disciplined Value Fund
Discovery Fund Oppenheimer Fund
Quest Small Cap Value Fund Value Stock Fund
Capital Appreciation Fund(3) Quest Value Fund
- ------------------------------------------------------------------------------------------------------
STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Multiple Strategies Fund(4)
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
- ------------------------------------------------------------------------------------------------------
BOND FUNDS International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
- ------------------------------------------------------------------------------------------------------
MUNICIPAL FUNDS California Municipal Fund(5) Insured Municipal Fund
Florida Municipal Fund(5) Intermediate Municipal Fund
New Jersey Municipal Fun(5)
New York Municipal Fund(5) ROCHESTER DIVISION
Pennsylvania Municipal Fund(5) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
- ------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS(6) Money Market Fund Cash Reserves
- ------------------------------------------------------------------------------------------------------
LIFESPAN Growth Fund Income Fund
Balanced Fund
- ------------------------------------------------------------------------------------------------------
<CAPTION>
<S><C>
1. Exchange privileges are subject to change or termination. Shares may be
exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund."
5. Available only to investors in certain states.
6. An investment in money market funds is neither insured nor guaranteed by
the U.S. government and there can be no assurance that a money market fund
will be able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203. -C- Copyright 1997
OppenheimerFunds, Inc. All rights reserved.
</TABLE>
42 Oppenheimer Strategic Income Fund
<PAGE>
(THIS PAGE LEFT BLANK INTENTIONALLY)
<PAGE>
INFORMATION
GENERAL INFORMATION
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Saturday 10 a.m.-2 p.m. ET
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TELECOMMUNICATIONS DEVICE
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1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
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messages on the economy and
issues that affect your investments
1-800-835-3104
RS0230.001.0397 May 31, 1997
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So call us today--we're here to help.
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