<PAGE> 1
ANNUAL REPORT SEPTEMBER 30, 1997
OPPENHEIMER
STRATEGIC
INCOME FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
10 Statement of Investments
42 Statement of Assets &
Liabilities
44 Statement of Operations
45 Statements of Changes in Net Assets
46 Financial Highlights
48 Notes to Financial Statements
59 Independent Auditors' Report
60 Federal Income Tax Information
61 Officers & Trustees
64 Information & Services
REPORT HIGHLIGHTS
- -------------------------------------------------------------------------------
- - NON-INFLATIONARY GROWTH became the U.S. Treasury market's dominant theme
during the past year. As a result, the bond market has rallied strongly,
particularly over the past six months.
- - UPGRADED QUALITY: Because the difference in income was so little from a
low-quality to a relatively higher-quality corporate bond, we've taken this
opportunity to upgrade these bonds in our portfolio.
- - MORTGAGE-BACKED SECURITIES issued by U.S. government agencies have done very
well, and our overweighted position has helped the Fund's overall performance.
AVG ANNUAL TOTAL RETURNS
For the 1-year period ended
9/30/97 without sales charges(1)
CLASS A
11.29%
CLASS B
10.43%
CLASS C
10.67%
Total returns include changes 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 changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
2 Oppenheimer Strategic Income Fund
<PAGE> 3
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer Strategic Income Fund
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer Strategic Income Fund
DEAR SHAREHOLDER,
- -------------------------------------------------------------------------------
As you are no doubt aware, during the end of October and early November many
stock markets around the world recorded their all-time largest point declines,
followed by subsequent gains and continued volatility, leaving investors
uncertain about what would occur next.
To put those events in focus, let's look at a "snapshot" of the
two-week time period. Sharp declines in the overseas stock markets,
particularly in Asia, triggered a series of sell-offs throughout Europe, Latin
America and the United States. In response, the U.S. stock market, as measured
by the Dow Jones Industrial Average, dropped 554 points on October 27, its
largest point decline in history. However, almost as quickly, the U.S. stock
market bounced back over the succeeding few days, regaining nearly all of its
losses.
While no one could have predicted the timing or extent of these
fluctuations, many analysts, including our fund managers here at
OppenheimerFunds, had warned of a correction for several months. We believed
that U.S. valuations were too high, stocks were expensive relative to bonds,
recent corporate earnings were somewhat disappointing and that Federal Reserve
Chairman Alan Greenspan could possibly seek a short-term interest rate hike.
As a result, when October 27 arrived, our equity funds held
above-average cash positions relative to many of our competitors. Not only did
our higher cash levels serve as a protection, they also enabled us to buy the
stocks of numerous excellent companies that were selling at more reasonable
prices. In addition, our international and global funds were not as impacted
because they weren't heavily invested in Southeast Asia and Japan. Finally, on
the fixed-income side, our bond funds were generally characterized by
longer-than-normal durations, which allowed us to lock in higher yields.
In conclusion, many of our funds experienced relatively strong
performance during the October-November market shake-ups. We'd like to take
this opportunity to remind shareholders that stock market volatility is a
normal and expected part of the business cycle. As Alan Greenspan suggested, in
years to come this period will likely be remembered as a positive change for a
market that was growing too quickly.
For frequent market updates, please visit our website at
WWW.OPPENHEIMERFUNDS.COM or call 1-800-835-3104 to listen to our recorded
messages. In the meantime, 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
November 7, 1997
3 Oppenheimer Strategic Income Fund
<PAGE> 4
AVG ANNUAL TOTAL RETURNS
For the Period Ended 9/30/97(1)
<TABLE>
<CAPTION>
CLASS A
Since
1 year 5 year Inception
<S> <C> <C>
6.00% 8.54% 10.33%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Since
1 year 5 year Inception
<S> <C> <C>
5.43% N/A 9.22%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Since
1 year 5 year Inception
<S> <C> <C>
9.67% N/A 11.01%
</TABLE>
CUMULATIVE TOTAL RETURN
For the Period Ended 9/30/97(1)
<TABLE>
<CAPTION>
CLASS A
<S> <C>
5 year
50.66% $15,066(2)
</TABLE>
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund's Class A shares provided an average annual
total return of 11.29%, without sales charges, for the one-year period ended
September 30, 1997.(3) Earlier in the year, we focused our investments on
securities, such as U.S. Treasury bonds, that have very high credit quality.
At the time, we were cautious with respect to anticipated interest rate hikes,
but quickly repositioned the Fund when it became apparent that the economy
would continue to grow moderately.
<TABLE>
<CAPTION>
GROWTH OF $10,000
Over five years
(without sales charges)(2)
Oppenheimer Strategic Income Fund Lehman Brothers Aggregate
Class A shares Bond Index
<S> <C>
10000 10000
9956.57 10025.9
10576.2 10440.9
11016.2 10718.2
11358.3 10997.5
11899.9 11003.5
11473.7 10687.3
11424.1 10577.5
11586.1 10642.1
11370.6 10682.4
11515.8 11221.2
12196.4 11904.9
12578.5 12139
13119.3 12656
13338 12430.3
13694 12501.2
14227.5 12731.4
14770.4 13113.5
14717.6 13040.7
15316.5 13521
15832.8 13971.8
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
4.75%. Class A shares were first publicly offered on 10/16/89. Class B returns
include the applicable contingent deferred sales charge of 5% (1-year) and 3%
(since inception on 11/30/92). Class C returns for the 1-year result include
the contingent deferred sales charge of 1%. Class C shares have an inception
date of 5/26/95. An explanation of the different performance calculations is in
the Fund's prospectus. Class B and C shares are subject to an annual 0.75%
asset-based sales charge.
2. Results of a hypothetical $10,000 investment in Class A shares on September
30, 1992. The Lehman Brothers Aggregate Bond Index is an unmanaged broad-based
index of U.S. corporate bond issues, U.S. government securities and
mortgage-backed securities and cannot be purchased directly by investors.
4 Oppenheimer Strategic Income Fund
<PAGE> 5
STANDARDIZED YIELDS(4)
For the 30 Days Ended 9/30/97
CLASS A
7.31%
CLASS B
6.92%
CLASS C
6.92%
ASSET ALLOCATION(5)
<TABLE>
<S> <C>
- - U.S. CORPORATE 39.6
- - FOREIGN GOV'T 23.1
- - U.S. GOV'T AGENCY 19.6
- - U.S. TREASURY 11.8
- - FOREIGN CORPORATE 5.9
</TABLE>
PORTFOLIO REVIEW
- -------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund is for investors looking for high income from
a Fund that aims to lower volatility.
WHAT WE LOOK FOR
- - Investments that provide HIGH INCOME.
- - RELATIVE VALUE, as compared with other securities or sectors of the market.
- - DIVERSIFICATION sought from securities that tend to "zig" when others may
"zag."
<TABLE>
<CAPTION>
TOP 5 ISSUES(5)
.........................................
<S> <C>
FNMA 12.5%
.........................................
U.S. Treasury Bonds 9.0
.........................................
GNMA 6.1
.........................................
U.S. Treasury Notes 3.7
.........................................
FHLMC 2.4
.........................................
</TABLE>
3. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
4. Standardized yield is based on net investment income for the 30-day period
ended 9/30/97. Falling net asset values will tend to artificially raise yields.
5. Portfolio data is as of 9/30/97, and is subject to change. Portfolio data
are dollar-weighted based on total market value of investments. The Fund may
invest without limit in below-investment-grade securities which carry a greater
risk that the issuer may default on principal or interest payments.
5 Oppenheimer Strategic Income Fund
<PAGE> 6
"THE BOND MARKET RALLIED OVER THE PAST SIX MONTHS, WHICH HELPED OUR OVERALL
PERFORMANCE."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED OVER THE PAST 12 MONTHS?
Oppenheimer Strategic Income Fund's Class A shares provided an average annual
total return of 11.29% without sales charges for the one-year period ended
September 30, 1997.(1) Early in the year, we expected interest rates to rise in
response to stronger-than-expected economic growth, so we focused our
investments on securities, such as U.S. Treasury bonds, that have very high
credit quality. Although we quickly repositioned the Fund when it became
apparent that the economy would continue to grow moderately, our slow start
hindered the Fund's performance.
WHAT SECTORS OF THE FIXED-INCOME MARKETS WERE MOST ATTRACTIVE OVER THE PERIOD?
Just about every sector of the fixed-income markets has done quite well over
the past 12 months, with the important exception of foreign government bonds.
The market for U.S. Treasury securities has been characterized by
swings in sentiment from fear to relief regarding the inflation environment.
After a brief period of concern in March, during which the Federal Reserve
raised short-term interest rates modestly, non-inflationary growth became the
U.S. Treasury market's dominant theme. As a result, the market has rallied
strongly over the past six months.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
6 Oppenheimer Strategic Income Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Art Steinmetz
David Negri
(Fund Managers)
Ashwin Vasan
Mortgage-backed securities issued by U.S. government agencies have also done
very well. Despite the trend toward lower interest rates, mortgage refinancing
activity has been light, and volatility in the mortgage-related markets has
remained relatively low. We've reaped some of the benefits of that benign
environment because we've been overweighted in mortgage-backed securities
throughout 1997.
Within the corporate bond sector, our favorite sectors are those that
can show good growth rates. For example, telecommunications technologies has
been one area we've liked. At the same time, we've attempted to manage the
credit risks of corporate bonds by focusing on better-quality issues. It's been
a volatile sector, but has continued to provide competitively high yields. As
the differences in yields between investment-grade corporate bonds and
lower-quality bonds has narrowed, the Fund has increased its holdings in
higher-rated bonds.
The important exception to the market's positive performance we
mentioned earlier has been in the foreign bond sector. Because the U.S. dollar
has been very strong relative to other major currencies this year, returns from
foreign investments have eroded for U.S. shareholders. While foreign
investments can involve greater risks and expenses, we attempted to manage the
risks of fluctuating currency exchange rates in the futures markets. We also
manage risks by diversifying among multiple nations that are in different
stages of the economic cycle.
7 Oppenheimer Strategic Income Fund
<PAGE> 8
"U.S. TREASURY AND MORTGAGE-BACKED SECURITIES SHOULD BENEFIT ..."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
HAVE YOU HELD ANY BONDS FROM THE EMERGING MARKETS?
Yes, we've had 15% to 20% of the Fund's assets invested in bonds from emerging
markets. Because their currencies tend to be closely linked to the U.S. dollar,
these holdings help reduce the Fund's currency exchange risks. Economic growth
has been strong in the emerging markets, so their bonds have done quite well.
Our emerging market positions have been primarily in Latin America, with
somewhat smaller exposure to Eastern Europe. We've had very little exposure to
the emerging Asian markets, which have experienced great difficulty this year.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
We are optimistic regarding the prospects of the fixed-income markets over the
foreseeable future. In the United States, continuation of the current
moderate-growth, low-inflation economic environment should cause interest rates
to decline modestly from current levels. However, we do not expect that decline
to occur in a straight line. We believe that investors will continue to react
to new economic data as it is released, causing short-term market volatility.
From a broader perspective, however, U.S. Treasury and mortgage-backed
securities should benefit in the event the low-inflation scenario continues to
unfold.
Further, we believe that U.S. corporate bonds should also continue to
benefit from a low-inflation economy and strong earnings growth. We are
particularly attracted to bonds from companies that may receive a credit-rating
upgrade as their financial conditions improve.
8 Oppenheimer Strategic Income Fund
<PAGE> 9
"... AS THE LOW-INFLATION SCENARIO CONTINUES TO UNFOLD."
On the other hand, the foreign markets appear less attractive. While
we expect continued strength in the developed markets of Europe and the
emerging markets of Latin America, we are concerned about the negative effects
of the difficulties in Asia. If and when Japan's central bank begins to raise
interest rates, it could signal an end to the current global interest-rate
environment. Ironically, the only people that aren't now benefiting from low
interest rates in Japan are the Japanese, because their stock market continues
to do poorly. Virtually every other stock market in the world is doing well as
low interest rates have fueled a speculative boom in financial assets. To the
extent that Japan leads a worldwide increase in interest rates, bonds
throughout the world may suffer.
This scenario, if it occurs, is still many months away. Yet, we remain
vigilant in monitoring international economic developments. We look forward to
taking advantage of changing economic fortunes through our multisector
discipline.
9 Oppenheimer Strategic Income Fund
<PAGE> 10
STATEMENT OF INVESTMENTS September 30, 1997
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
======================================================================================================================
MORTGAGE-BACKED OBLIGATIONS--26.3%
- ----------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--21.1%
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED--15.0%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
Series 1455, Cl. J, 7.50%, 12/15/22 $ 9,527,500 $ 10,005,477
Series 1562, Cl. C, 7%, 3/15/21 10,000,000 10,073,330
Series 1751, Cl. PK, 8%, 9/15/24 6,735,000 7,275,401
Series 1914, Cl. H, 6.50%, 8/15/24 9,970,000 9,508,887
Series 1920, Cl. M, 6.50%, 6/15/23 11,950,000 11,684,932
Interest-Only Stripped Mtg.-Backed Security,
Series 177, Cl. B, 10.346%-12.833%, 7/1/26(2) 365,473,113 119,235,605
Principal-Only Stripped Mtg.-Backed Security,
Series 179, 4.852%-4.912%, 9/1/26(3) 41,692,785 31,940,582
- ----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.375%, 8/15/07(AUD) 67,605,000 49,485,819
6.50%, 4/1/26 2,450,814 2,388,736
7%, 10/25/27(4) 78,080,000 77,762,995
7%, 11/1/12(4) 70,160,000 70,818,101
7%, 4/1/26 13,290,472 13,252,861
7%, 9/26/00(NZD) 48,610,000 31,006,240
7.50%, 10/1/27(4) 212,500,000 216,019,000
7.50%, 11/25/12(4) 150,000,000 153,141,000
7.50%, 6/1/24-8/1/26 156,133,805 159,018,910
Sr. Unsub. Medium-Term Nts., 6.50%, 7/10/02(AUD) 31,660,000 23,684,739
Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Trust 1989-4, Cl. D, 10%, 2/25/19 9,000,000 10,240,246
Trust 1990-143, Cl. J, 8.75%, 12/25/20 33,289,442 35,499,579
Trust 1990-18, Cl. K, 9.60%, 3/25/20 10,100,000 11,526,134
Trust 1992-162, Cl. C, 7%, 10/25/21 5,850,000 5,842,687
Trust 1994-51, Cl. PH, 6.50%, 1/25/23 13,841,000 13,776,086
Trust 1997-25, Cl. B, 7%, 12/18/22 8,618,000 8,654,352
Interest-Only Stripped Mtg.-Backed Security:
Trust 215, Cl. 2, 7.844%-10.204%, 4/1/23(2) 99,635,079 30,668,922
Trust 222, Cl. 2, 8.694%-10.309%, 6/1/23(2) 72,966,762 22,802,113
Trust 258, Cl. 2, 10.294%, 3/1/24(2) 28,471,631 8,634,912
Principal-Only Stripped Mtg.-Backed Security:
Trust 1994-57, Cl. D, 4.652%, 1/25/24(3) 9,094,765 6,062,230
Trust 1997-7, Cl. GA, 6.889%, 7/25/23(3) 5,961,179 3,256,294
Trust 277-C1, 5.331%, 4/1/27(3) 43,024,112 31,165,592
--------------
1,184,431,762
</TABLE>
10 Oppenheimer Strategic Income Fund
<PAGE> 11
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GNMA/GUARANTEED--6.1%
Government National Mortgage Assn.:
12.50%, 12/15/13 $ 10,797,431 $ 12,735,463
13%, 10/15/15 30,513,919 37,026,734
13.50%, 6/15/15 39,545,027 48,924,614
6%, 11/1/27(4) 175,000,000 176,093,750
7.50%, 10/1/27(4) 130,000,000 132,234,700
7.50%, 1/30/07-6/15/27 32,021,644 32,608,053
8%, 5/15/26 13,805,691 14,284,059
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 10,480,422
- ----------------------------------------------------------------------------------------------------------------------
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, 13.67%, 9/15/22(2)(5) 150,282,020 6,536,681
Series 1995-2B, Cl. 2-IO, 22.639%, 6/15/25(2)(5) 15,029,235 589,428
Series 1995-3, Cl. 1-IO, 20.516%, 9/15/25(2)(5) 359,011,879 6,955,855
--------------
478,469,759
- ----------------------------------------------------------------------------------------------------------------------
PRIVATE--5.2%
- ----------------------------------------------------------------------------------------------------------------------
AGRICULTURAL--0.1%
Prudential Agricultural Credit, Inc., Farmer Mac Agricultural
Real Estate Trust Sr. Sub. Mtg. Pass-Through Certificates,
Series 1992-2:
Cl. B2, 9.199%, 1/15/03(5)(6) 5,671,990 5,108,337
Cl. B3, 9.475%, 4/15/09(5)(6) 7,109,361 6,071,839
--------------
11,180,176
- ----------------------------------------------------------------------------------------------------------------------
COMMERCIAL--4.0%
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1995-MD4, Cl. A-4, 7.384%, 8/13/29 5,000,000 5,167,969
Series 1995-MD4, Cl. A-5, 7.384%, 8/13/29 20,000,000 20,146,875
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 10,000,000 9,712,500
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(6) 17,082,312 16,180,152
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(6) 5,532,925 5,088,562
- ----------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1:
Cl. E, 7.76%, 12/25/03(6) 2,609,000 2,628,567
Cl. F, 7.76%, 12/25/03(6)(7) 14,300,000 11,493,625
- ----------------------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Bonds, Series 1993-5:
Cl. B3, 7%, 4/25/23(5) 1,629,234 1,479,040
Cl. B4, 7%, 4/25/23(5) 1,247,587 299,421
- ----------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Collateralized Mtg.
Obligation, Series 1996-C1, Cl. E, 8.115%, 12/25/20(6)(7) 2,750,000 2,843,672
</TABLE>
11 Oppenheimer Strategic Income Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Criimi Mae Financial Corp., Collateralized Mtg. Obligations,
Trust I, Cl. A-2, 7.56%, 8/30/05(7) $ 6,300,000 $ 6,391,547
- ----------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation Certificates,
Series 1994-M1, Cl. E3A, 8.406%, 2/15/02(5)(6) 15,000,000 15,000,000
- ----------------------------------------------------------------------------------------------------------------------
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 2,602,344
Cl. 2-E, 8.70%, 9/25/25(5) 2,500,000 2,609,375
Cl. 2-G, 8.70%, 9/25/25(5) 4,870,000 5,013,056
- ----------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
Collateralized Mtg. Obligations, Series 1997-C1,
Cl. G, 7.414%, 7/20/29 19,440,000 18,395,100
Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, Cl. X, 1.63%, 7/15/27(2) 184,125,000 18,930,352
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl. D, 7.919%, 6/15/21(6) 3,159,456 3,255,474
- ----------------------------------------------------------------------------------------------------------------------
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 8,762,128
Cl. F, 7.51%, 2/15/28(5)(6) 13,360,980 9,966,456
- ----------------------------------------------------------------------------------------------------------------------
Nykredit AS, Mtg.-Backed Security, Series ANN, 6%, 10/1/26(DKK) 139,995,000 19,454,234
- ----------------------------------------------------------------------------------------------------------------------
Realkredit Danmark, Mtg.-Backed Security, 6%, 10/1/26(DKK) 139,995,000 19,402,190
- ----------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 9,580,443 9,637,328
Series 1993-C1, Cl. B, 8.75%, 5/25/24 7,074,009 7,050,798
Series 1993-C1, Cl. D, 9.45%, 5/25/24 6,597,507 6,656,782
Series 1993-C1, Cl. E, 9.50%, 5/25/24 835,336 839,318
Series 1993-C2, Cl. E, 8.50%, 3/25/25 123,442 123,018
Series 1994-C1, Cl. C, 8%, 6/25/26 8,000,000 8,196,875
Series 1994-C1, Cl. E, 8%, 6/25/26 5,887,424 5,797,273
Series 1994-C2, Cl. E, 8%, 4/25/25 17,227,761 17,440,417
Series 1994-C2, Cl. G, 8%, 4/25/25 6,290,199 6,308,382
Series 1995-C1, Cl. F, 6.90%, 2/25/27 9,487,609 8,887,222
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1,
Cl. E, 9.18%, 1/20/06 4,550,000 4,700,719
- ----------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates:
Series 1995-C4, Cl. E, 8.804%, 6/25/26(5)(6) 9,453,000 9,721,820
Series 1996-C3, Cl. E, 8.458%, 6/25/30(7) 9,350,000 9,297,406
Series 1996-CFL, Cl. D, 7.034%, 2/25/28 14,220,000 14,357,756
--------------
313,837,753
- ----------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--0.4%
ACP Mortgage LP, Cl. E, 7.156%, 2/25/28(6)(7) 2,376,695 2,159,822
</TABLE>
12 Oppenheimer Strategic Income Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Countrywide Funding Corp.:
Mtg. Pass-Through Certificates, Series 1993-12, Cl. B1,
6.625%, 2/25/24 $ 3,500,000 $ 3,313,516
Series 1993-11, Cl. B1, 6.25%, 2/25/09 1,238,056 1,187,276
Series 1993-11, Cl. B3, 6.25%, 2/25/09(7) 722,201 281,997
- ----------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through Certificates, Series 1997-MC1,
Cl. F, 7.452%, 5/20/07(5) 2,939,000 2,814,092
Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%, 6/15/06(7) 9,700,000 9,245,313
- ----------------------------------------------------------------------------------------------------------------------
Multifamily Capital Access One, Inc., Series 1, Cl. D,
10.382%, 1/15/24(5)(6) 3,576,000 3,383,231
- ----------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1991-M6, Cl. B4, 7.174%, 6/25/21(6) 589,258 585,484
Series 1992-M4, Cl. B, 7.20%, 9/25/21 1,129,974 1,132,976
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-CL,
Cl. F, 9.186%, 1/20/28(4) 9,632,000 8,199,240
--------------
32,302,947
- ----------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.7%
Amresco Commercial Mortgage Funding I Corp., Multiclass Mtg.
Pass-Through Certificates, Series 1997-C1:
Cl. E, 7%, 6/17/29(5) 1,550,000 1,407,109
Cl. H, 7%, 6/17/29(5) 1,600,000 1,442,500
- ----------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/13(7) 2,400,000 2,268,000
Cl. G, 7.50%, 6/20/14(5) 3,271,000 2,964,344
Cl. H, 7.50%, 8/20/14(5) 2,580,000 1,930,163
- ----------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1:
8.134%, 2/25/11(5)(6) 14,500,000 11,944,375
8.134%, 5/25/08(5)(6) 8,500,000 8,407,031
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1997-HF1, Cl. F, 6.86%, 2/15/20(5) 3,475,000 3,170,938
- ----------------------------------------------------------------------------------------------------------------------
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) 5,324,241 5,567,160
- ----------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Commercial Mortgage Pass-
Through Certificates, Series 1997-QS8, Cl. M3, 7.50%, 8/25/27 3,270,500 3,255,170
- ----------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. Sub. Bonds, Series
1993-3, Cl. B2, 6.713%, 8/25/08 1,195,807 1,173,759
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series
1996-B, Cl. 1, 7.136%, 4/25/26 14,783,871 10,182,391
--------------
53,712,940
--------------
Total Mortgage-Backed Obligations (Cost $2,043,741,276) 2,073,935,337
</TABLE>
13 Oppenheimer Strategic Income Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
======================================================================================================================
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--12.7%
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26(8) $ 65,380,000 $ 61,436,799
6.50%, 11/15/26 1,870,000 1,882,273
8.125%, 8/15/21(8) 100,000,000 119,687,592
9.375%, 2/15/06 71,100,000 86,008,814
11.625%, 11/15/04 70,035,000 91,964,774
11.875%, 11/15/03 68,150,000 88,083,937
12%, 8/15/13 71,700,000 103,382,503
13.125%, 5/15/01(8) 41,500,000 51,109,863
13.375%, 8/15/01 70,400,000 88,220,064
13.75%, 8/15/04 13,810,000 19,653,369
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.375%, 5/15/99 1,000,000 1,009,063
6.50%, 5/15/05 9,750,000 9,963,290
7.25%, 5/15/04 28,160,000 29,928,813
7.50%, 10/31/99(9) 74,300,000 76,691,565
7.875%, 11/15/04 45,800,000 50,394,333
8.50%, 11/15/20 21,000,000 22,535,644
10.75%, 5/15/03 53,370,000 65,161,459
14.25%, 2/15/02(9) 27,100,000 35,619,587
--------------
Total U.S. Government Obligations (Cost $999,215,213) 1,002,733,742
======================================================================================================================
FOREIGN GOVERNMENT OBLIGATIONS--24.9%
- ----------------------------------------------------------------------------------------------------------------------
ARGENTINA--1.9%
Argentina (Republic of) Bonds:
5%, 12/20/02(JPY) 1,820,000,000 16,109,475
Bonos de Consolidacion de Deudas, Series I, 5.625%,
4/1/01(6) 10,153,637 9,863,812
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Floating Rate Bonds, Series L, 6.688%,
3/31/05(6) 15,878,900 15,156,410
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 5.50%, 3/31/23(11) 34,050,000 25,792,875
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Bonds, 11.50%,
8/14/01(GBP) 2,575,000 4,497,632
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.,
5.50%, 3/27/01(JPY) 4,300,000,000 38,531,878
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Nts., 5.50%, 3/27/01(JPY) 1,620,000,000 14,516,661
- ----------------------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina) Medium-Term Nts.,
10.625%, 8/7/06(8) 15,000,000 16,631,250
- ----------------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Sr. Unsec. Unsub. Medium-Term
Nts., 11.50%, 10/19/98(5) 950,000 991,563
- ----------------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Sr. Unsec. Unsub. Nts., 11.50%,
10/19/98(5) 5,000,000 5,218,750
--------------
147,310,306
</TABLE>
14 Oppenheimer Strategic Income Fund
<PAGE> 15
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA--3.6%
Australia (Commonwealth of) Bonds, 10%, 2/15/06(AUD) 38,510,000 $ 35,005,846
- ----------------------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Bonds, 8%, 12/1/01(AUD) 87,180,000 68,702,265
- ----------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts.:
10.50%, 5/15/03(AUD) 220,000 194,321
8%, 5/14/03(AUD) 77,250,000 61,673,219
8%, 8/14/01(AUD) 99,508,000 78,137,052
8%, 9/14/07(AUD) 46,460,000 38,007,606
- ----------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03(AUD) 6,330,000 5,122,368
--------------
286,842,677
- ----------------------------------------------------------------------------------------------------------------------
BRAZIL--1.3%
Banco Estado Minas Gerais:
8.25%, 2/10/00 11,800,000 11,763,125
8.25%, 2/10/00(7) 2,000,000 1,993,750
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, 10.125%, 5/15/27 30,800,000 30,923,198
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 54,530,829 46,427,889
- ----------------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA Bonds, 13%, 2/5/99(ITL) 15,600,000,000 9,693,314
- ----------------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA Medium-Term Nts.,
11.437%, 12/9/99(5)(6) 500,000 530,000
--------------
101,331,276
- ----------------------------------------------------------------------------------------------------------------------
BULGARIA--0.3%
Bulgaria (Republic of) Disc. Bonds, Tranche A,
6.688%, 7/28/24(6) 9,730,000 8,100,225
- ----------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer
Bonds, Tranche A, 2.30%, 7/28/12(11) 22,620,000 14,900,925
--------------
23,001,150
- ----------------------------------------------------------------------------------------------------------------------
CANADA--1.6%
Canada (Government of) Bonds:
9.75%, 6/1/01(CAD) 82,400,000 68,866,647
Series A-33, 11.50%, 9/1/00(CAD) 64,645,000 55,043,622
--------------
123,910,269
- ----------------------------------------------------------------------------------------------------------------------
COLOMBIA--0.1%
Financiera Energetica Nacional SA Eurobonds, 9.375%,
6/15/06(7) 3,650,000 3,951,125
- ----------------------------------------------------------------------------------------------------------------------
DENMARK--1.0%
Denmark (Kingdom of) Bonds, 8%, 3/15/06(DKK) 473,345,000 80,488,951
- ----------------------------------------------------------------------------------------------------------------------
ECUADOR--0.1%
Ecuador (Republic of) Past Due Interest Bonds, 5.727%,
2/27/15(6) 15,965,976 11,635,205
</TABLE>
15 Oppenheimer Strategic Income Fund
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GERMANY--1.2%
Germany (Republic of) Bonds:
Series 94, 6.25%, 1/4/24(8)(DEM) 167,100,000 $ 95,764,843
Series 95, 6.875%, 5/12/05(DEM) 1,000,000 619,470
--------------
96,384,313
- ----------------------------------------------------------------------------------------------------------------------
GREAT BRITAIN--1.3%
United Kingdom Treasury Bonds, 8.50%, 12/7/05(GBP) 29,375,000 53,502,615
- ----------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 7.75%, 9/8/06(GBP) 29,160,000 51,020,732
--------------
104,523,347
- ----------------------------------------------------------------------------------------------------------------------
GREECE--0.0%
Hellenic Republic Bonds, 11.10%, 6/30/00(6)(GRD) 217,464,000 786,625
- ----------------------------------------------------------------------------------------------------------------------
Hellenic Republic Treasury Bills, Zero Coupon,
10.62%, 2/5/98(12)(GRD) 487,500,000 1,690,188
--------------
2,476,813
- ----------------------------------------------------------------------------------------------------------------------
HUNGARY--0.4%
Hungary (Government of) Bonds:
Series 98/I, 23.50%, 5/17/98(HUF) 3,536,000,000 18,523,194
Series 98/J, 23.50%, 7/25/98(HUF) 1,000,000,000 5,275,876
Series 99-G, 16.50%, 7/24/99(HUF) 1,946,000,000 9,684,865
--------------
33,483,935
- ----------------------------------------------------------------------------------------------------------------------
INDONESIA--0.2%
PT Hutama Karya Medium-Term Nts., Zero Coupon:
15.38%, 11/19/97(12)(IDR) 5,000,000,000 1,481,870
25.14%, 9/3/98(12)(IDR) 25,000,000,000 5,962,699
- ----------------------------------------------------------------------------------------------------------------------
Perusahaan Listr, 17%, 8/21/01(IDR) 9,000,000,000 2,512,270
--------------
9,956,839
- ----------------------------------------------------------------------------------------------------------------------
IRELAND--0.5%
Ireland (Government of) Bonds, 9.25%, 7/11/03(IEP) 11,685,000 20,093,654
- ----------------------------------------------------------------------------------------------------------------------
National Treasury Management Agency (Irish Government)
Bonds, 8%, 8/18/06(IEP) 10,710,000 17,707,787
--------------
37,801,441
- ----------------------------------------------------------------------------------------------------------------------
ITALY--1.5%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
10.50%, 4/1/05(ITL) 25,280,000,000 18,591,088
12%, 1/1/02(ITL) 65,065,000,000 46,566,869
9%, 10/1/03(ITL) 27,270,000,000 18,308,951
9.50%, 2/1/01(ITL) 31,285,000,000 20,326,156
9.50%, 5/1/01(ITL) 18,530,000,000 12,122,067
--------------
115,915,131
</TABLE>
16 Oppenheimer Strategic Income Fund
<PAGE> 17
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEXICO--2.4%
Banco Nacional de Comercio Exterior SNC International
Finance BV Gtd. Registered Bonds, 11.25%, 5/30/06 $ 14,575,000 $ 16,743,031
- ----------------------------------------------------------------------------------------------------------------------
Banco Nacional de Obras y Servicios SNC Bonds, 9.625%,
11/15/03 10,000,000 10,587,500
- ----------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
23.41%, 12/31/97(12)(MXP) 398,444,080 48,963,564
24.71%, 12/4/97(12)(MXP) 93,010,960 11,584,190
23.44%, 2/4/98(12)(MXP) 36,832,060 4,447,757
- ----------------------------------------------------------------------------------------------------------------------
Fideicomiso Petacalco Trust Nts., 10.16%, 12/23/09(5) 8,000,000 8,370,000
- ----------------------------------------------------------------------------------------------------------------------
Mexican Williams Bonds, 6.75%, 11/15/08(5)(6) 1,500,000 1,410,000
- ----------------------------------------------------------------------------------------------------------------------
United Mexican States Bonds:
10.375%, 1/29/03(DEM) 19,525,000 12,685,484
11.50%, 5/15/26 18,525,000 22,415,250
16.50%, 9/1/08(5)(GBP) 2,445,000 6,121,969
- ----------------------------------------------------------------------------------------------------------------------
United Mexican States:
Collateralized Fixed Rate Par Bonds, Series B, 6.25%, 12/31/19 33,900,000 28,221,750
Nacional Financiera SNC Nts., 13.60%, 4/2/98(ESP) 1,773,000,000 12,316,623
Petroleos Mexicanos Gtd. Unsec. Unsub. Nts.,
7.875%, 3/2/99(CAD) 5,600,000 4,166,326
--------------
188,033,444
- ----------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--1.5%
New Zealand (Government of) Bonds:
7%, 7/15/09(NZD) 34,160,000 22,519,668
8%, 11/15/06(NZD) 27,205,000 19,029,365
8%, 7/15/98(NZD) 121,620,000 78,224,424
--------------
119,773,457
- ----------------------------------------------------------------------------------------------------------------------
NORWAY--0.2%
Norway (Government of) Bonds, 9.50%, 10/31/02(NOK) 106,700,000 17,883,651
- ----------------------------------------------------------------------------------------------------------------------
PERU--0.2%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.25%, 3/7/17(6) 20,045,000 12,377,788
- ----------------------------------------------------------------------------------------------------------------------
POLAND--0.6%
Poland (Republic of) Bonds:
15%, 10/12/99(PLZ) 28,900,000 7,505,990
15%, 6/12/99(PLZ) 9,500,000 2,479,871
16%, 2/12/99(PLZ) 115,052,000 30,849,086
16%, 6/12/98(PLZ) 14,900,000 4,111,738
--------------
44,946,685
</TABLE>
17 Oppenheimer Strategic Income Fund
<PAGE> 18
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RUSSIA--0.9%
City of St. Petersburg Sr. Unsub. Nts., 9.50%, 6/18/02(7) $ 19,530,000 $ 20,164,725
- ----------------------------------------------------------------------------------------------------------------------
Ministry of Finance (Russian Government) Unsec. Unsub.
Bonds, 10%, 6/26/07(7) 14,600,000 15,446,798
- ----------------------------------------------------------------------------------------------------------------------
Russian (Government of) Principal Loans Debs., 5.80%,
12/29/49 (4)(6) 48,650,000 36,320,266
--------------
71,931,789
- ----------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--0.9%
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05(ZAR) 174,418,290 34,230,778
Series 162, 12.50%, 1/15/02(ZAR) 107,822,000 22,165,785
Series 175, 9%, 10/15/02(ZAR) 87,076,530 15,426,233
--------------
71,822,796
- ----------------------------------------------------------------------------------------------------------------------
SPAIN--1.6%
Spain (Kingdom of) Debs., Bonos y Obligacion del
Estado, 10.10%, 2/28/01(ESP) 1,720,000,000 13,328,641
- ----------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion
del Estado:
10.30%, 6/15/02(ESP) 3,018,100,000 24,391,427
10.50%, 10/30/03(ESP) 2,996,320,000 25,214,716
12.25%, 3/25/00(ESP) 8,161,000,000 63,843,104
--------------
126,777,888
- ----------------------------------------------------------------------------------------------------------------------
SWEDEN--0.4%
Sweden (Kingdom of) Bonds, Series 1033, 10.25%, 5/5/03(SEK) 194,600,000 31,173,394
- ----------------------------------------------------------------------------------------------------------------------
TURKEY--0.5%
Turkey (Government of) Treasury Bills, Zero Coupon:
103.54%, 8/5/98(12)(TRL) 96,500,000,000 21,807,778
101.87%, 9/16/98(12)(TRL) 74,250,000,000 17,802,133
--------------
39,609,911
- ----------------------------------------------------------------------------------------------------------------------
VENEZUELA--0.7%
Venezuela (Republic of) Debs., Banco Venezuela TCI,
Zero Coupon, 6.13%, 12/13/98(5)(12) 3,954,016 3,766,201
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds, Series DL,
6.75%, 12/18/07(6) 31,000,000 29,663,125
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) New Money Bonds:
Series A, 6.875%, 12/18/05(6) 8,000,000 7,700,000
Series B, 6.75%, 12/18/05(6) 12,000,000 11,550,000
Series P, 6.75%, 12/18/05(6) 3,250,000 3,134,219
--------------
55,813,545
--------------
Total Foreign Government Obligations (Cost $1,946,836,566) 1,959,157,126
</TABLE>
18 Oppenheimer Strategic Income Fund
<PAGE> 19
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
======================================================================================================================
<S> <C> <C>
LOAN PARTICIPATIONS--0.0%
- ----------------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 6.563%, 10/16/00(5)(6) $ 978,482 $ 949,128
Tranche B, 6.563%, 11/15/04(5)(6) 270,000 253,800
- ----------------------------------------------------------------------------------------------------------------------
United Mexican States, Combined Facility 2, Loan Participation
Agreement, Tranche A, 13.595%, 3/20/99(5)(6) 478,769 440,468
--------------
Total Loan Participations (Cost $1,589,191) 1,643,396
======================================================================================================================
CORPORATE BONDS AND NOTES--34.0%
- ----------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--3.5%
- ----------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.9%
Harris Chemical North America, Inc.:
10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 720,000 754,200
10.75% Gtd. Sr. Sub. Nts., 10/15/03 1,440,000 1,494,000
- ----------------------------------------------------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07(7) 2,200,000 2,326,500
- ----------------------------------------------------------------------------------------------------------------------
ISP Holdings, Inc., 9% Sr. Nts., Series B, 10/15/03 7,850,000 8,242,500
- ----------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(7) 5,400,000 5,467,500
- ----------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 1,970,000 2,181,775
- ----------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(7) 4,795,000 4,818,975
- ----------------------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Gtd. Sec.
Nts., 6/15/07 14,990,000 14,877,575
- ----------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 3,500,000 3,711,897
- ----------------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(7) 7,765,000 7,959,125
- ----------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/15/08(13) 10,810,000 7,648,075
- ----------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 2,330,000 2,551,350
11.75% Sr. Unsec. Sub. Nts., 8/15/06 8,400,000 9,303,000
--------------
71,336,472
- ----------------------------------------------------------------------------------------------------------------------
CONTAINERS--0.3%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(5) 4,375,000 4,768,750
- ----------------------------------------------------------------------------------------------------------------------
IVEX Holdings Corp., 0%/13.25% Sr. Disc. Debs., Series B,
3/15/05(13) 18,915,000 16,172,325
- ----------------------------------------------------------------------------------------------------------------------
Ivex Packaging Corp., 12.50% Sr. Sub. Nts., 12/15/02(5) 1,440,000 1,558,800
--------------
22,499,875
- ----------------------------------------------------------------------------------------------------------------------
METALS/MINING--0.2%
Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03 11,080,000 12,284,950
- ----------------------------------------------------------------------------------------------------------------------
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 5,515,000 5,377,125
--------------
17,662,075
</TABLE>
19 Oppenheimer Strategic Income Fund
<PAGE> 20
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER--1.5%
Ainsworth Lumber Ltd., 12.50% Sr. Nts., 7/15/07(7)(10) $ 8,125,000 $ 8,125,000
- ----------------------------------------------------------------------------------------------------------------------
Asia Pulp & Paper International Finance Co., Zero
Coupon Asian Currency Nts.:
14.46%, 1/23/98(12)(IDR) 10,670,000,000 3,029,712
26.84%, 12/4/97(12)(IDR) 9,000,000,000 2,645,451
14.71%, 12/8/97(12)(IDR) 8,600,000,000 2,520,805
- ----------------------------------------------------------------------------------------------------------------------
Domtar, Inc., 10.85% Debs., 8/5/17(CAD) 1,700,000 1,597,265
- ----------------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05(NZD) 4,900,000 3,453,539
10.75% Cv. Sub. Nts., 12/15/97(NZD) 4,755,000 3,055,806
14.50% Cv. Sub. Nts., 9/30/00(NZD) 4,900,000 3,646,769
- ----------------------------------------------------------------------------------------------------------------------
Florida Coast Paper Co. LLC, 12.75% First Mtg. Nts., 6/1/03 2,950,000 3,200,750
- ----------------------------------------------------------------------------------------------------------------------
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(5) 1,520,000 1,637,800
- ----------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07(7) 4,300,000 4,396,750
- ----------------------------------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV, 11.375% Gtd.
Sec. Nts., 6/15/99 5,400,000 5,663,250
- ----------------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 12,375,000 12,900,937
- ----------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 9.063% First Priority Sr. Sec.
Nts., 7/15/00(6) 3,950,000 3,910,500
- ----------------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc.:
9.25% First Priority Sr. Sec. Nts., 2/1/02 11,350,000 12,016,812
9.875% Second Priority Sr. Nts., 5/1/06 13,055,000 14,197,312
- ----------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Nts., 8/1/07(7) 15,690,000 16,474,500
- ----------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized
Nts., 7/20/15 2,327,018 2,387,181
- ----------------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 5,250,000 5,971,875
- ----------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 3,805,000 3,885,856
--------------
114,717,870
- ----------------------------------------------------------------------------------------------------------------------
STEEL--0.6%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 17,100,000 18,147,375
- ----------------------------------------------------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 7,950,000 9,321,375
- ----------------------------------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 7,600,000 8,208,000
- ----------------------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Nts.,
8/1/07(7) 6,250,000 6,414,062
- ----------------------------------------------------------------------------------------------------------------------
Sheffield Steel Corp., 12% First Mtg. Nts., 11/1/01 4,000,000 4,140,000
--------------
46,230,812
</TABLE>
20 Oppenheimer Strategic Income Fund
<PAGE> 21
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER RELATED--4.7%
- ----------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--1.1%
- ----------------------------------------------------------------------------------------------------------------------
Coleman Escrow Corp., Zero Coupon Sr. First Priority Disc. Nts.,
11.03%, 5/15/01(7)(12) $13,900,000 $ 9,521,500
- ----------------------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07(7) 2,625,000 2,700,469
- ----------------------------------------------------------------------------------------------------------------------
Icon Fitness Corp., 0%/14% Sr. Disc. Nts., 11/15/06(5)(13) 8,800,000 4,972,000
- ----------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 10,400,000 11,830,000
- ----------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04(13) 8,750,000 7,481,250
- ----------------------------------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd. Unsec.
Unsub. Nts., 3/29/01(5) 1,850,000 1,840,750
- ----------------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03(13) 4,585,000 2,934,400
- ----------------------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99(5) 4,222,000 4,258,942
- ----------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
10.78%, 3/15/01(12) 24,805,000 18,045,637
- ----------------------------------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 3,226,000 3,709,900
- ----------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(5) 4,705,000 5,563,662
- ----------------------------------------------------------------------------------------------------------------------
Vitro SA, 13% Nts., 12/7/99(6)(MXP) 21,374,000 5,865,832
- ----------------------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04(5) 5,700,000 6,127,500
--------------
84,851,842
- ----------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--0.3%
CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04 4,360,000 4,403,600
- ----------------------------------------------------------------------------------------------------------------------
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 3,000,000 3,135,000
- ----------------------------------------------------------------------------------------------------------------------
Doane Products Co., 10.625% Sr. Nts., 3/1/06(5) 3,000,000 3,225,000
- ----------------------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc.
Nts., 2/15/03(5)(13) 6,430,000 6,526,450
- ----------------------------------------------------------------------------------------------------------------------
Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06 2,000,000 2,320,000
- ----------------------------------------------------------------------------------------------------------------------
Stroh Brewery Co., 11.10% Sr. Sub. Nts., 7/1/06(5) 123,000 128,535
- ----------------------------------------------------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07(7) 3,000,000 3,120,000
--------------
22,858,585
- ----------------------------------------------------------------------------------------------------------------------
HEALTHCARE--0.5%
Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06 3,810,000 3,924,300
- ----------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc.:
11% Sr. Sub. Nts., 4/30/06(6)(7) 605,000 647,350
9.50% Sr. Sub. Nts., 9/15/07(7) 5,350,000 5,537,250
- ----------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts.,
Series A, 4/15/04 6,960,000 7,699,500
- ----------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts.,
Series B, 4/1/06(5) 900,000 938,250
- ----------------------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02(5) 9,865,000 10,728,187
- ----------------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(7) 12,055,000 12,476,925
--------------
41,951,762
</TABLE>
21 Oppenheimer Strategic Income Fund
<PAGE> 22
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOTEL/GAMING--2.0%
Arizona Charlie's, Inc., 12% First Mtg. Nts.,
Series B, 11/15/00(5)(14) $ 5,775,000 $ 3,089,625
- ----------------------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 3,725,000 4,283,750
- ----------------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 9.25% Sr. Nts., 10/1/03 4,950,000 5,197,500
- ----------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., Promissory Nts., 8/1/95(14) 33,500 --
- ----------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(5)(14) 2,100,000 367,500
- ----------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07(7) 7,725,000 7,840,875
- ----------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 4,950,000 5,321,250
- ----------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 7,150,000 6,971,250
- ----------------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 17,585,000 18,728,025
- ----------------------------------------------------------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375% Bonds, 2/13/02(5) 2,500,000 2,625,000
- ----------------------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 5,900,000 6,091,750
- ----------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07(7) 21,450,000 22,120,312
- ----------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(7) 13,350,000 13,850,625
- ----------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 12,350,000 16,240,250
- ----------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 3,230,000 3,528,775
9.50% Gtd. Sr. Sub. Nts., 4/15/07 9,230,000 9,806,875
- ----------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 100,000 85,500
- ----------------------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 9,850,000 11,376,750
- ----------------------------------------------------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr. Sub. Nts., 10/1/07(7) 10,150,000 10,327,625
- ----------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06 7,525,000 7,656,687
- ----------------------------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City
Funding, Inc., 11.25% First Mtg. Nts., 5/1/06 3,145,000 3,062,444
--------------
158,572,368
- ----------------------------------------------------------------------------------------------------------------------
RESTAURANTS--0.4%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 7,600,000 8,094,000
- ----------------------------------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,570,000 3,815,437
- ----------------------------------------------------------------------------------------------------------------------
Family Restaurants, Inc., 10.875% Sr. Sub. Disc. Nts., 2/1/04 4,000,000 2,820,000
- ----------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99(5) 4,645,000 4,766,931
9.75% Sr. Sub. Nts., 6/1/02(5) 14,000,000 14,490,000
--------------
33,986,368
</TABLE>
22 Oppenheimer Strategic Income Fund
<PAGE> 23
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TEXTILE/APPAREL--0.4%
CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(5) $ 3,850,000 $ 3,792,250
- ----------------------------------------------------------------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03 2,225,000 2,403,000
- ----------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 4,025,000 4,070,281
- ----------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.,
9.39%, 7/14/98(12) 11,350,000 10,352,897
- ----------------------------------------------------------------------------------------------------------------------
Tultex Corp., 9.625% Sr. Nts., 4/15/07 3,450,000 3,704,437
- ----------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06 5,300,000 5,538,500
--------------
29,861,365
- ----------------------------------------------------------------------------------------------------------------------
ENERGY--2.8%
- ----------------------------------------------------------------------------------------------------------------------
Belco Oil & Gas Corp., 8.875% Sr. Sub. Nts., 9/15/07(7) 1,650,000 1,670,625
- ----------------------------------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(7) 19,750,000 19,996,875
- ----------------------------------------------------------------------------------------------------------------------
Canadian Forest Oil Ltd., 8.75% Sr. Sub. Nts., 9/15/07(7) 4,535,000 4,537,834
- ----------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
12% Gtd. Sr. Exchangeable Nts., 3/1/01 5,000,000 5,400,000
8.50% Sr. Nts., 3/15/12 3,000,000 2,925,000
9.125% Sr. Nts., 4/15/06 2,630,000 2,682,600
- ----------------------------------------------------------------------------------------------------------------------
Clark Oil & Refining Corp., 10.50% Sr. Nts., 12/1/01 1,900,000 1,966,500
- ----------------------------------------------------------------------------------------------------------------------
Clark R&M Holdings, Inc., Zero Coupon Sr. Sec. Nts.,
Series A, 10.52%, 2/15/00(12) 16,700,000 13,213,875
- ----------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr. Nts., 5/15/03(7) 1,700,000 1,846,625
- ----------------------------------------------------------------------------------------------------------------------
Dailey Petroleum Services Corp., 9.75% Gtd. Sr.
Unsec. Nts., 8/15/07(7) 4,115,000 4,300,175
- ----------------------------------------------------------------------------------------------------------------------
DI Industries, Inc., 8.875% Sr. Nts., 7/1/07 4,840,000 5,009,400
- ----------------------------------------------------------------------------------------------------------------------
Energy Corp. of America, 9.50% Sr. Sub. Nts., 5/15/07 8,150,000 8,231,500
- ----------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., 2/15/07 1,000,000 1,000,000
9.50% Sr. Sub. Nts., 11/1/06 16,600,000 17,471,500
- ----------------------------------------------------------------------------------------------------------------------
Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99(5) 6,785,000 6,988,550
- ----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., Units (each unit consists of $1,000
principal amount of 0%/12.25% sr. disc. nts., 9/1/04 and
14 warrants to purchase one ordinary share)(7)(13)(15) 13,500,000 14,073,750
- ----------------------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 15,750,000 16,498,125
- ----------------------------------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 1,640,000 1,676,900
- ----------------------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 8.50% Debs., 4/1/08 1,000,000 1,013,200
- ----------------------------------------------------------------------------------------------------------------------
Mesa Operating Co.:
0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(13) 11,290,000 9,032,000
10.625% Gtd. Sr. Sub. Nts., 7/1/06 14,800,000 17,112,500
- ----------------------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 9,675,000 10,158,750
- ----------------------------------------------------------------------------------------------------------------------
Parker Drilling Corp., 9.75% Gtd. Sr. Nts., 11/15/06 8,800,000 9,460,000
- ----------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 16,220,000 15,327,900
- ----------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sub. Nts., 5/15/07(7) 9,680,000 9,922,000
- ----------------------------------------------------------------------------------------------------------------------
Rutherford-Moran Oil Corp., 10.75% Sr. Sub. Nts., 10/1/04(7) 2,150,000 2,233,312
</TABLE>
23 Oppenheimer Strategic Income Fund
<PAGE> 24
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
Statia Terminals International/Statia Terminals (Canada),
Inc., 11.75% First Mtg., Series B, 11/15/03 $ 1,775,000 $ 1,883,719
- ----------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07(7) 8,250,000 8,219,062
- ----------------------------------------------------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07(7) 3,750,000 3,675,000
--------------
217,527,277
- ----------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--2.7%
- ----------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--0.9%
Alliance & Leicester Building Society, 8.75% Unsec.
Sub. Nts., 12/7/06(GBP) 10,660,000 18,834,576
- ----------------------------------------------------------------------------------------------------------------------
Banco Bamerindus do Brasil SA, 9% Unsec. Unsub.
Bonds, 10/29/98 3,240,000 3,288,600
- ----------------------------------------------------------------------------------------------------------------------
Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99(5) 1,250,000 1,293,750
- ----------------------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 11% Sub. Exchangeable
Capital Debs., 7/15/03 9,750,000 10,505,625
- ----------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 4,167,000 4,604,535
- ----------------------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., 10.625% Sr. Sub. Nts., 10/1/03 7,015,000 7,769,112
- ----------------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(5) 10,000,000 10,500,000
- ----------------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(7) 11,100,000 11,571,750
--------------
68,367,948
- ----------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.4%
Aames Financial Corp., 9.125% Sr. Nts., 11/1/03 7,815,000 8,010,375
- ----------------------------------------------------------------------------------------------------------------------
Americredit Corp., 9.25% Sr. Nts., 2/1/04 2,190,000 2,233,800
- ----------------------------------------------------------------------------------------------------------------------
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 6,250,000 6,546,875
- ----------------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts.,
26.59%, 7/10/98(12)(IDR) 27,000,000,000 6,634,757
- ----------------------------------------------------------------------------------------------------------------------
Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98 12,980,000 13,045,809
- ----------------------------------------------------------------------------------------------------------------------
Cityscape Financial Corp., 12.75% Sr. Nts., 6/1/04(7) 3,560,000 3,123,900
- ----------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(5) 412,897 455,220
- ----------------------------------------------------------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr. Nts., 9/15/04(7) 3,300,000 3,366,000
- ----------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd. Bonds, 8/1/27 5,350,000 5,644,250
- ----------------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03(5) 9,275,000 10,457,562
- ----------------------------------------------------------------------------------------------------------------------
Pindo Deli Finance Mauritius Ltd., 10.75% Gtd. Nts., 10/1/07(4)(5) 5,520,000 5,713,200
- ----------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 19,900,000 21,442,250
- ----------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.375% Sr. Nts., 5/31/02(5)(6) 14,526,000 15,035,519
- ----------------------------------------------------------------------------------------------------------------------
Washington Mutual Capital I, 8.375% Gtd. Bonds, 6/1/27 2,000,000 2,093,618
- ----------------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc., 13% Nts., 1/1/04 5,965,000 6,054,475
--------------
109,857,610
</TABLE>
24 Oppenheimer Strategic Income Fund
<PAGE> 25
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE--0.4%
American International Group, Inc., 11.70% Unsec.
Unsub. Bonds, 12/4/01(ITL) 3,000,000,000 $ 2,124,637
- ----------------------------------------------------------------------------------------------------------------------
Residential Reinsurance, 11.416% Nts., 12/15/98(6) 20,000,000 20,353,125
- ----------------------------------------------------------------------------------------------------------------------
Terra Nova Insurance (UK) Holdings plc, 10.75% Sr. Nts., 7/1/05 900,000 1,005,558
- ----------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 9,445,000 10,082,537
--------------
33,565,857
- ----------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--0.7%
- ----------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--0.4%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 3,350,000 3,475,625
- ----------------------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07(7) 4,680,000 4,843,800
- ----------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., 9/1/07(7) 10,550,000 10,721,437
9.25% Sr. Nts., 3/15/07 6,000,000 6,120,000
--------------
25,160,862
- ----------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE--0.3%
Blue Bell Funding, Inc., 11.85% Sec. Extendible Adjustable
Rate Nts., 5/1/99 4,414,000 4,546,420
- ----------------------------------------------------------------------------------------------------------------------
Continental Homes Holding Corp., 10% Gtd. Unsec.
Bonds, 4/15/06 660,000 699,600
- ----------------------------------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05(CAD) 1,547,050 1,325,778
Units (each unit consists of one $10 principal amount of 8.50%
cv. sub. debs., 12/15/15 and 40 common shares)(15)(CAD) 930,410 2,195,231
- ----------------------------------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 2,400,000 2,640,000
- ----------------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 8,571,000 9,063,832
- ----------------------------------------------------------------------------------------------------------------------
International de Ceramica SA, 9.75% Gtd. Unsec. Unsub. Nts., 8/1/02(5) 3,510,000 3,553,875
--------------
24,024,736
- ----------------------------------------------------------------------------------------------------------------------
MANUFACTURING--3.0%
- ----------------------------------------------------------------------------------------------------------------------
AEROSPACE--1.1%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 25,940,000 27,885,500
- ----------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(7) 3,525,000 3,608,719
- ----------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05(7) 8,050,000 8,492,750
12.25% Pass-Through Certificates, 12/1/02 12,650,000 14,231,250
- ----------------------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 9.75%, 12/10/01(5) 2,000,000 2,092,500
- ----------------------------------------------------------------------------------------------------------------------
Northwest Airlines Corp., 12.092% Sr. Gtd. Nts., 12/31/00(5) 1,309,418 1,348,701
- ----------------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Cl. A, 6/15/04(5) 4,480,538 4,582,695
- ----------------------------------------------------------------------------------------------------------------------
Rohr, Inc., 11.625% Sr. Nts., 5/15/03 10,665,000 12,078,113
- ----------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., 9/1/07(7) 9,975,000 10,149,563
--------------
84,469,791
</TABLE>
25 Oppenheimer Strategic Income Fund
<PAGE> 26
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE--0.8%
Aftermarket Technology Corp., 12% Sr. Sub. Nts.,
Series B, 8/1/04 $ 3,400,000 $ 3,769,750
- ----------------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., 7/15/07(7) 4,775,000 5,013,750
- ----------------------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Nts., 10/15/99 4,500,000 5,102,959
- ----------------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 10,600,000 12,176,750
- ----------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 6,690,000 7,517,888
9.125% Sr. Sub. Nts., 7/15/07(7) 6,550,000 6,779,250
- ----------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 4,335,000 4,573,425
- ----------------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 2,825,000 3,107,500
- ----------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Sub. Nts., 6/15/07(7) 12,100,000 12,674,750
--------------
60,716,022
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--1.1%
Burke Industries, Inc., 10% Sr. Nts., 8/15/07(7) 3,475,000 3,587,938
- ----------------------------------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 8,700,000 9,461,250
12.50% Debs., 7/15/07(7)(10) 3,311,568 3,642,725
- ----------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 11,503,000 12,797,088
- ----------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07(7) 6,300,000 6,583,500
- ----------------------------------------------------------------------------------------------------------------------
Insilco Corp., 10.25% Sr. Sub. Nts., 8/15/07(7) 8,650,000 8,974,375
- ----------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05(7) 7,835,000 8,598,913
- ----------------------------------------------------------------------------------------------------------------------
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 9,275,000 10,434,375
- ----------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07(7) 4,550,000 4,618,250
- ----------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. (America), 9.625% Sr. Sub. Nts., 6/15/07(5) 6,400,000 6,568,000
- ----------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07 2,585,000 2,675,475
- ----------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 4,575,000 4,792,313
- ----------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(5) 5,000,000 5,187,500
--------------
87,921,702
- ----------------------------------------------------------------------------------------------------------------------
MEDIA--5.3%
- ----------------------------------------------------------------------------------------------------------------------
BROADCASTING--1.4%
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 2,710,000 2,967,450
- ----------------------------------------------------------------------------------------------------------------------
Azteca Holdings SA, 11% Sr. Nts., 6/15/02(7) 5,730,000 6,059,475
- ----------------------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 9,825,000 10,119,750
- ----------------------------------------------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co., 8.75% Sr. Sub. Nts., 6/15/07(7) 7,400,000 7,603,500
- ----------------------------------------------------------------------------------------------------------------------
Conecel Holdings Ltd., Units (each unit consists of $1,000
principal amount of 14% sec. nts., 10/1/00 and one warrant
to purchase Class B common stock)(4)(5)(15) 4,075,000 4,197,250
- ----------------------------------------------------------------------------------------------------------------------
Consorcio Ecuatoriano, 14% Nts., 5/1/02(5) 7,035,000 7,615,388
</TABLE>
26 Oppenheimer Strategic Income Fund
<PAGE> 27
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BROADCASTING (CONTINUED)
Jacor Communications Co., 8.75% Gtd. Sr. Sub. Nts., 6/15/07(7) $ 4,400,000 $ 4,504,500
- ----------------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 2,000,000 2,149,708
- ----------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 8,425,000 9,225,375
- ----------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., 5/15/04(7)(11) 3,000,000 2,895,000
- ----------------------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Sec. Nts., 6/30/05(5) 2,153,155 2,266,196
- ----------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 1,900,000 2,092,375
- ----------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 1,800,000 1,899,000
9% Sr. Sub. Nts., 7/15/07(7) 18,050,000 18,004,875
- ----------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.:
11% Sr. Nts., 3/15/04 2,400,000 2,628,000
12.50% Sr. Nts., 6/15/02 1,000,000 1,145,000
- ----------------------------------------------------------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Gtd. Sr. Nts., Series A, 2/15/04 3,300,000 3,460,875
10.50% Gtd. Sr. Nts., Series B, 2/15/07 5,150,000 5,478,313
- ----------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 13,125,000 12,862,500
9% Sr. Sub. Nts., Series B, 1/15/06 825,000 829,125
--------------
108,003,655
- ----------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--2.4%
Adelphia Communications Corp.:
10.50% Sr. Nts., 7/15/04(7) 6,040,000 6,440,150
9.25% Sr. Nts., 10/1/02(7) 7,175,000 7,246,750
9.875% Sr. Nts., 3/1/07 2,100,000 2,178,750
- ----------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(13) 3,744,080 1,497,632
- ----------------------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 4,400,000 4,761,587
- ----------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.50% Sr. Sub. Debs., 5/15/16 7,950,000 9,063,000
9.875% Sr. Sub. Debs., 2/15/13 2,620,000 2,842,700
9.875% Sr. Sub. Nts., 5/15/06 2,215,000 2,408,813
- ----------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(13) 2,525,000 2,288,281
- ----------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02(7) 13,100,000 14,508,250
- ----------------------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(5) 8,259,155 8,176,564
- ----------------------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Bonds, 11/9/01(5) 7,600,684 7,524,678
- ----------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(13) 18,170,000 15,262,800
- ----------------------------------------------------------------------------------------------------------------------
FrontierVision Holdings LP, 0%/11.875% Sr. Disc.
Nts., 9/15/07(7)(13) 1,075,000 741,750
- ----------------------------------------------------------------------------------------------------------------------
Fundy Cable Ltd./Ltee, 11% Sr. Sec. Second Priority
Nts., 11/15/05(5) 3,400,000 3,723,000
- ----------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(6) 11,649,000 12,318,818
</TABLE>
27 Oppenheimer Strategic Income Fund
<PAGE> 28
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CABLE TELEVISION (CONTINUED)
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(13) $ 1,900,000 $ 1,724,250
- ----------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 10,950,000 10,908,938
- ----------------------------------------------------------------------------------------------------------------------
Panamsat International Systems LP, 12.75% Debs., 4/15/05(6) 17,492,000 21,165,320
- ----------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub.
Disc. Nts., 8/1/03(5)(13) 20,500,000 20,077,084
- ----------------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr.
Sec. Debs., 12/1/07 5,000,000 5,500,000
- ----------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 20,000,000 14,436,779
- ----------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/10.875% Sr. Sub. Nts., 2/15/07(7)(13) 5,030,000 3,294,650
10.875% Sr. Sub. Nts., 2/15/07(7) 9,365,000 9,880,075
- ----------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 2,900,000 3,220,586
--------------
191,191,205
- ----------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--1.2%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 9,050,000 9,728,750
- ----------------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(7) 795,459 757,246
- ----------------------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 1,425,000 1,503,375
- ----------------------------------------------------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07(7) 2,075,000 2,209,875
- ----------------------------------------------------------------------------------------------------------------------
ITT Promedia, 9.125% Sr. Sub. Nts., 9/15/07(7)(DEM) 33,825,000 19,989,301
- ----------------------------------------------------------------------------------------------------------------------
ITT Publimedia BV, 9.375% Sr. Sub. Nts., 9/15/07(7) 4,750,000 4,940,000
- ----------------------------------------------------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07 3,870,000 4,179,600
- ----------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07(7) 4,250,000 4,239,375
9.625% Sr. Sub. Nts., 12/1/06 8,575,000 9,089,500
- ----------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 3,300,000 3,846,255
- ----------------------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07 4,650,000 4,766,250
- ----------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment LP/Time Warner, Inc.,
8.375% Sr. Debs., 3/15/23 8,209,000 8,892,702
- ----------------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
9.125% Debs., 1/15/13 2,000,000 2,324,918
9.15% Debs., 2/1/23 9,000,000 10,472,256
- ----------------------------------------------------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 6,785,000 7,259,950
9.75% Sr. Sub. Nts., Series B, 10/15/06 3,175,000 3,397,250
--------------
97,596,603
- ----------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.2%
Imax Corp., 10% Sr. Nts., 3/1/01 13,780,000 14,589,575
</TABLE>
28 Oppenheimer Strategic Income Fund
<PAGE> 29
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUBLISHING/PRINTING--0.1%
Hollinger International Publishing, Inc.,
9.25% Gtd. Sr. Sub. Nts., 3/15/07 $ 2,700,000 $ 2,821,500
- ----------------------------------------------------------------------------------------------------------------------
Sun Media Corp.:
9.50% Sr. Sub. Nts., 2/15/07 3,100,000 3,224,000
9.50% Sr. Sub. Nts., 5/15/07 1,000,000 1,040,000
--------------
7,085,500
- ----------------------------------------------------------------------------------------------------------------------
OTHER--1.2%
- ----------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.4%
Acadia Partners LP, 13% Sr. Sub. Nts., 10/1/97(7) 25,000,000 25,187,500
- ----------------------------------------------------------------------------------------------------------------------
Cia Latino Americana de Infraestructura & Servicios SA-
CLISA, 11.625% Gtd. Sr. Nts., 6/1/04(5) 650,000 690,625
- ----------------------------------------------------------------------------------------------------------------------
Grupo Mexicano de Desarrollo SA, 8.25% Gtd. Nts., 2/17/01(7)(14) 6,000,000 2,715,000
- ----------------------------------------------------------------------------------------------------------------------
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(13) 1,075,000 1,058,875
- ----------------------------------------------------------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75% Bonds, 12/30/99 4,870,000 4,943,050
--------------
34,595,050
- ----------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL--0.1%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts., 6/1/07(7)(13) 4,150,000 2,816,813
- ----------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 10.25% Sr. Sub. Nts., 12/1/06 3,435,000 3,769,913
--------------
6,586,726
- ----------------------------------------------------------------------------------------------------------------------
SERVICES--0.7%
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03(16) 10,660,000 10,899,850
9.625% Sr. Sub. Nts., 3/15/07 1,450,000 1,508,000
- ----------------------------------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(5)(13) 6,650,000 5,220,250
- ----------------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 4,850,000 4,753,000
- ----------------------------------------------------------------------------------------------------------------------
Neodata Services, Inc., 12% Sr. Deferred Coupon Nts.,
Series B, 5/1/03 4,475,000 4,905,719
- ----------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(13) 5,600,000 6,048,000
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 11,090,000 12,919,850
- ----------------------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 5,000,000 5,693,750
--------------
51,948,419
- ----------------------------------------------------------------------------------------------------------------------
RETAIL--1.2%
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.3%
Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts.,
Series B, 9/1/03 3,000,000 3,187,500
- ----------------------------------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(5) 6,025,000 6,559,719
- ----------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 6,600,000 7,326,000
- ----------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(5) 5,185,000 5,522,025
</TABLE>
29 Oppenheimer Strategic Income Fund
<PAGE> 30
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SPECIALTY RETAILING (CONTINUED)
Specialty Retailers, Inc.:
8.50% Gtd. Sr. Nts., 7/15/05 $ 2,175,000 $ 2,240,250
9% Gtd. Sr. Sub. Nts., 7/15/07 1,000,000 1,025,000
--------------
25,860,494
- ----------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--0.9%
Fleming Cos., Inc.:
10.625% Sr. Sub. Nts., 7/31/07(7) 14,750,000 15,487,500
10.50% Sr. Sub. Nts., 12/1/04(7) 4,100,000 4,305,000
- ----------------------------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 4,000,000 4,223,480
- ----------------------------------------------------------------------------------------------------------------------
P&C Food Markets, Inc., 11.50% Sr. Nts., 10/15/01 2,225,000 2,158,250
- ----------------------------------------------------------------------------------------------------------------------
Ralph's Grocery Co.:
11% Sr. Sub. Nts., 6/15/05(7) 3,925,000 4,317,500
10.45% Sr. Nts., 6/15/04 12,790,000 14,069,000
- ----------------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., 7/1/07(7) 19,050,000 19,288,125
- ----------------------------------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Sr. Sub. Nts., 7/1/04(7) 7,225,000 7,450,781
--------------
71,299,636
- ----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--6.9%
- ----------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--4.0%
Amphenol Corp., 9.875% Sr. Sub. Nts., 5/15/07 2,150,000 2,289,750
- ----------------------------------------------------------------------------------------------------------------------
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs.,
Series B, 3/1/05(13) 3,400,000 2,873,000
- ----------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(5)(13) 11,525,000 11,121,625
- ----------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc.:
0%/13% Sr. Disc. Nts., 6/15/05(5)(13) 6,700,000 4,723,500
Units (each unit consists of $1,000 principal amount of
0%/14% sr. disc. nts., 10/1/07 and one warrant to purchase
13.671 shares of common stock at $14.30 per share)(5)(13)(15) 10,200,000 5,189,250
- ----------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 11.16%, 8/15/00(12) 24,615,000 19,076,625
- ----------------------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(5)(13) 26,956,000 26,282,100
- ----------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc.
Nts., 12/15/05(13) 11,075,000 8,583,125
- ----------------------------------------------------------------------------------------------------------------------
Comcast Cellular Communications, Inc., 9.50% Sr. Nts., 5/1/07(7) 1,275,000 1,338,750
- ----------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon
Bonds, 11/15/03(13) 15,659,000 12,214,020
- ----------------------------------------------------------------------------------------------------------------------
Dial Call Communications, Inc., 0%/12.25% Sr. Disc. Nts.,
4/15/04(13) 13,430,000 12,607,413
- ----------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07(7) 2,250,000 2,264,063
- ----------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 1,140,000 1,128,600
- ----------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 6,345,000 6,424,313
</TABLE>
30 Oppenheimer Strategic Income Fund
<PAGE> 31
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (CONTINUED)
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., 7/15/05(13) $ 7,175,000 $ 4,340,875
12% Cv. Sr. Sub. Nts., 2/15/01(5) 750,000 637,500
- ----------------------------------------------------------------------------------------------------------------------
Globalstar LP/Globalstar Capital Corp., 11.375%
Sr. Nts., 2/15/04(7) 3,070,000 3,208,150
- ----------------------------------------------------------------------------------------------------------------------
HighwayMaster Communications, Inc., Units (each
unit consists of $1,000 principal amount of 13.75% sr. nts.,
9/15/05 and one warrant to purchase 6.566 shares of
common stock at $9.625 per share)(7)(15) 3,300,000 3,456,750
- ----------------------------------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 7,200,000 7,353,000
- ----------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc.
Nts., 6/1/06(13) 9,275,000 6,353,375
- ----------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc.
Nts., 6/1/06(13) 20,200,000 15,756,000
- ----------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts., 9/15/07(7)(13) 18,100,000 11,267,250
0%/11.50% Sr. Disc. Nts., 9/1/03(13) 13,000,000 12,658,750
- ----------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07(4) 6,400,000 6,624,000
- ----------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA, 0%/14% Sr. Disc. Nts.,
Series B, 3/15/04(13) 5,400,000 4,293,000
- ----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 5,710,000 5,938,400
11.625% Sr. Nts., Series A, 8/15/06 10,105,000 10,509,200
- ----------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04 19,105,000 19,964,725
- ----------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(13) 7,900,000 8,038,250
0%/14% Sr. Sub. Disc. Nts., 11/15/01(13) 24,067,000 26,955,040
10.75% Sr. Nts., 11/1/04 2,355,000 2,555,175
- ----------------------------------------------------------------------------------------------------------------------
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)(13)(15) 18,540,000 11,170,350
- ----------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 0%/12.50%
Sr. Disc. Nts., 8/15/06(13) 3,240,000 2,470,500
- ----------------------------------------------------------------------------------------------------------------------
Teletrac, Inc., Units (each unit consists of $1,000 principal
amount of 14% sr. nts., 8/1/07 and one warrant to buy .537495
ordinary share)(5)(15) 2,450,000 2,566,375
- ----------------------------------------------------------------------------------------------------------------------
Therma-Wave, Inc., 10.625% Sr. Nts., 5/15/04(7) 1,300,000 1,397,500
- ----------------------------------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 3,190,000 3,285,700
- ----------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 3,800,000 4,294,000
- ----------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 9,965,000 11,260,450
9.50% Sr. Nts., 2/1/04 10,070,000 10,019,650
- ----------------------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(7) 5,625,000 5,821,875
--------------
318,311,974
</TABLE>
31 Oppenheimer Strategic Income Fund
<PAGE> 32
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY--2.9%
American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(13) $ 840,000 $ 579,600
0%/13% Sr. Disc. Nts., 11/1/05(13) 1,495,000 1,091,350
13.75% Sr. Nts., 7/15/07(7) 5,925,000 6,784,125
- ----------------------------------------------------------------------------------------------------------------------
Bell Cablemedia plc:
0%/11.875% Sr. Disc. Nts., 9/15/05(13) 7,950,000 6,933,823
0%/11.95% Sr. Disc. Nts., 7/15/04(5)(13) 22,800,000 21,318,000
- ----------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts., 3/1/06(13) 7,150,000 5,809,375
0%/11.875% Sr. Disc. Nts., 11/1/06(13) 11,615,000 9,103,256
10% Sr. Nts., 6/1/07 14,350,000 16,359,000
- ----------------------------------------------------------------------------------------------------------------------
BTI Telecom Corp., 10.50% Sr. Nts., 9/15/07(7) 6,600,000 6,831,000
- ----------------------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc.:
0%/13.25% Sr. Disc. Nts., 12/1/04(13) 6,800,000 6,154,000
0%/9.27% Sr. Disc. Nts., 8/15/07(13) 6,050,000 4,053,500
8.375% Sr. Nts., 8/15/07(CAD) 6,400,000 4,813,586
- ----------------------------------------------------------------------------------------------------------------------
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)(13)(15) 17,325,000 12,907,125
- ----------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07(13) 6,260,000 4,945,400
- ----------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc.
Nts., 12/15/05(13) 15,025,000 11,343,875
- ---------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub.
Disc. Nts., 12/15/05(7)(13) 1,800,000 1,356,750
- ----------------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(13) 12,220,000 9,378,850
- ----------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(13) 1,465,000 1,098,750
0%/13.50% Sr. Disc. Nts., 9/15/05(13) 14,200,000 11,502,000
- ----------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc.
Nts., 7/15/07(13) 13,000,000 9,100,000
- ----------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(13) 5,145,000 3,678,675
9.25% Sr. Nts., 7/15/07(7) 1,725,000 1,845,750
- ----------------------------------------------------------------------------------------------------------------------
MGC Communications, Inc., Units (each unit consists
of $1,000 principal amount of 13% sr. sec. nts., 10/1/04
and one warrant to purchase 8.07 shares of common stock
at $0.01 per share)(7)(15) 5,100,000 5,329,500
- ----------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(13) 900,000 825,750
10% Sr. Nts., 2/15/07 7,725,000 8,111,250
- ----------------------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(7) 1,500,000 2,000,625
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)(13)(15) 13,200,000 12,606,000
</TABLE>
32 Oppenheimer Strategic Income Fund
<PAGE> 33
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY (CONTINUED)
PTC International Finance BV, 0%/10.75% Gtd. Sr. Sub.
Unsec. Bonds, 7/1/07(7)(13) $ 6,532,000 $ 4,000,850
- ----------------------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27(4)(CAD) 14,580,000 10,515,713
- ----------------------------------------------------------------------------------------------------------------------
Telefonica de Argentina SA, 11.875% Unsec. Nts., 11/1/04 300,000 365,250
- ----------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc., 0%/11.125% Sr.
Disc. Nts., 7/1/07(13) 21,350,000 16,759,750
- ----------------------------------------------------------------------------------------------------------------------
Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(13) 10,975,000 8,286,125
- ----------------------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc., 14% Sr. Nts., 3/1/04 2,715,000 2,592,825
- ----------------------------------------------------------------------------------------------------------------------
Videotron Holdings plc, 0%/11% Sr. Disc. Nts., 8/15/05(13) 1,650,000 1,431,375
--------------
229,812,803
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.9%
- ----------------------------------------------------------------------------------------------------------------------
RAILROADS--0.3%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts., Series B, 12/15/03(13) 27,791,000 24,247,648
- ----------------------------------------------------------------------------------------------------------------------
SHIPPING--0.3%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(7) 11,800,000 12,685,000
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and one warrant)(7)(15) 11,325,000 12,740,625
--------------
25,425,625
- ----------------------------------------------------------------------------------------------------------------------
TRUCKING--0.3%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(7) 9,965,000 10,064,650
- ----------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(7) 14,783,746 12,806,420
- ----------------------------------------------------------------------------------------------------------------------
Western Star Truck Holdings Ltd., 8.75% Sr. Nts., 5/1/07(7) 2,875,000 2,990,000
--------------
25,861,070
- ----------------------------------------------------------------------------------------------------------------------
UTILITIES--1.1%
- ----------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.1%
AES Corp., 8.375% Sr. Sub. Nts., 8/15/07 5,000,000 5,037,500
- ----------------------------------------------------------------------------------------------------------------------
C.A. La Electricidad de Caracas, 6.75% Exchange Eurobonds,
9/30/03(5)(6) 3,158,996 2,949,713
- ----------------------------------------------------------------------------------------------------------------------
CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 1,200,000 1,291,500
- ----------------------------------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 18,365,000 19,880,113
- ----------------------------------------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06(5) 595,000 653,013
8.75% Sr. Nts., 7/15/07(7) 10,000,000 10,225,000
9.25% Sr. Nts., 2/1/04 1,370,000 1,414,525
- ----------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 9,300,000 10,323,000
- ----------------------------------------------------------------------------------------------------------------------
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16(5) 9,329,000 9,935,385
10.30% Lease Obligation Bonds, Series 1986A, 1/15/14(5) 11,837,000 12,606,405
</TABLE>
33 Oppenheimer Strategic Income Fund
<PAGE> 34
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08 $6,305,092 $ 6,472,399
9.50% Sr. Sec. Nts., 12/28/08(7) 5,075,862 5,210,550
--------------
85,999,103
- ----------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.0%
Beaver Valley II Funding Corp., 9% Second Lease Obligation
Bonds, 6/1/17(5) 956,000 1,030,090
- ----------------------------------------------------------------------------------------------------------------------
CE Casecnan Water & Energy, Inc., 11.95% Sr. Nts.,
Series B, 11/15/10 1,800,000 1,998,000
--------------
3,028,090
--------------
Total Corporate Bonds and Notes (Cost $2,562,024,038) 2,677,584,375
<CAPTION>
SHARES
======================================================================================================================
<S> <C> <C>
COMMON STOCKS--0.5%
- ----------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5)(17) 1,658,520 7,048,710
- ----------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc.(17) 39,200 492,450
- ----------------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(17) 46,550 605,150
- ----------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(5) 525 526,312
- ----------------------------------------------------------------------------------------------------------------------
El Paso Electric Co. 500,506 3,003,036
- ----------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(5) 68,985 344,925
- ----------------------------------------------------------------------------------------------------------------------
Grand Union Co.(17) 218,257 381,950
- ----------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.(17) 168,400 2,336,550
- ----------------------------------------------------------------------------------------------------------------------
Ladish Co., Inc.(5)(17) 806,000 2,619,500
- ----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.(5)(17) 640,625 12,856,543
- ----------------------------------------------------------------------------------------------------------------------
Optel, Inc.(5)(17) 10,950 110
- ----------------------------------------------------------------------------------------------------------------------
Sheridan Energy, Inc.(17)(18) 394,283 1,429,276
- ----------------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc.(17) 170,000 4,547,500
- ----------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc.(17) 119,583 2,384,186
--------------
Total Common Stocks (Cost $26,526,796) 38,576,198
======================================================================================================================
PREFERRED STOCKS--2.0%
- ----------------------------------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum.
Exchangeable Preferred 9,396 1,129,869
- ----------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable
Preferred Stock, Non-Vtg. 108,875 3,075,719
- ----------------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Redeemable Trust
Preferred Securities(5) 10,050,000 10,150,500
- ----------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125% Exchangeable Preferred Stock, Series M(10) 59,798 6,570,305
8.50% Cum. Cv., Series I 36,500 1,067,625
- ----------------------------------------------------------------------------------------------------------------------
California Federal Bank, 11.50% Non-Cum., Non-Vtg. 111,500 12,717,969
- ----------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred(5)(17)(18) 130,000 3,250,000
</TABLE>
34 Oppenheimer Strategic Income Fund
<PAGE> 35
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS (CONTINUED)
Clark USA, Inc., 11.50% Cum. Preferred Stock(4)(7)(10) 1,700 $ 1,746,750
- ----------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 307,300 11,139,625
- ----------------------------------------------------------------------------------------------------------------------
Crown American Realty Trust, 11% Cum. Non-Vtg.
Preferred, Series A 49,500 2,648,250
- ----------------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(5)(10) 600,000 5,850,000
- ----------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable Preferred Stock, Series B(4)(7)(10) 5,250 5,460,000
- ----------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Preferred Stock, Series A(10) 106,122 11,806,072
- ----------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 12,605,000 13,109,200
- ----------------------------------------------------------------------------------------------------------------------
Golden State Bancorp., 8.75% Cv. Preferred Stock, Series A 20,000 1,483,750
- ----------------------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exchangeable, Series B(5)(10) 70,912 7,702,820
9.20% Preferred Stock, Series E(7) 46,400 4,674,800
Sr. Exchangeable, Series A 80,000 2,160,000
- ----------------------------------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv.(18) 159,100 3,897,950
- ----------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr.
Exchangeable Preferred(10) 176,594 11,611,056
- ----------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 325,000 7,881,250
- ----------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum., Series E, Non-Vtg. 2,200 2,546,500
- ----------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 14.25% Cum. Sr.
Exchangeable Preferred Stock, Non-Vtg.(7) 5,000 5,237,500
- ----------------------------------------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 80,000 3,685,000
- ----------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
Preferred Stock(18) 387,400 10,048,188
9.16% Cv. Preferred Stock, Series B(18) 280,000 8,260,000
--------------
Total Preferred Stocks (Cost $144,060,275) 158,910,698
======================================================================================================================
OTHER SECURITIES--0.3%
- ----------------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable, Series B 244,770 11,320,612
- ----------------------------------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred(5) 162,350 5,966,363
- ----------------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 8% Cv. Depositary Shares each Representing
1/100 Share of Dividend Enhanced Convertible Stock 50,000 6,150,000
--------------
Total Other Securities (Cost $20,375,020) 23,436,975
<CAPTION>
UNITS
======================================================================================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.1%
- ----------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(5) 5,225 496,375
- ----------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99(5) 119,070 1,191
Wts., Exp. 8/00(5) 8,000 80
- ----------------------------------------------------------------------------------------------------------------------
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
</TABLE>
35 Oppenheimer Strategic Income Fund
<PAGE> 36
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
======================================================================================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99(5) 74,086 $ --
- ----------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(5) 16,370 278,290
- ----------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(5)(18) 130,000 65,000
- ----------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/05 7,425 55,316
- ----------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(5) 8,109 445,995
- ----------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03(5) 6,600 33,000
- ----------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(5) 7,250 203,000
- ----------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/05(5) 690,000 1,035,000
- ----------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(5) 1,035 41,917
- ----------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(5) 46,860 702,900
- ----------------------------------------------------------------------------------------------------------------------
IHF Capital, Inc., Series I Wts., Exp. 11/99(5) 5,400 270,000
- ----------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc. Wts., Exp. 11/99(5) 1,750 280,000
- ----------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 13,050 --
- ----------------------------------------------------------------------------------------------------------------------
Mexican Value Rts. 25,000,000 --
- ----------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97(5) 29,300 18,312
Wts., Exp. 12/97(5) 29,300 410,200
- ----------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 2/09(5) 165,715 --
- ----------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/04(5) 21,600 216
- ----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(5) 102,500 2,057,047
- ----------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(5) 182,000 2,366,000
Exp. 6/05(5) 13,440 174,720
- ----------------------------------------------------------------------------------------------------------------------
Stroh Brewery Co. Wts., Exp. 7/06(5) 19,164 148,521
- ----------------------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc. Wts., Exp. 3/07(5) 2,715 5,430
- ----------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc. Wts., Exp. 11/99(5) 20,345 244,140
- ----------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(5)(18) 196,400 257,775
--------------
Total Rights, Warrants and Certificates (Cost $3,355,785) 9,657,246
<CAPTION>
FACE
AMOUNT(1)
======================================================================================================================
<S> <C> <C>
STRUCTURED INSTRUMENTS--6.5%
- ----------------------------------------------------------------------------------------------------------------------
AIG International, Inc., Goldman Sachs Commodity Index Total
Return Leveraged-Linked Contingent Payment Promissory Nts.,
6.178%, 3/30/99(19) $ 5,000,000 5,000,000
- ----------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Canada Banker's Acceptance Indexed Yield Nts., 8.405%,
5/22/98 19,350,000 19,220,355
- ----------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
CD Linked Nts.:
12.50%, 3/6/98 25,000,000 25,156,250
5.106%, 11/21/97 (linked to the Goldman Sachs Commodity
Index Excess Return)(19) 2,000,000 2,519,000
</TABLE>
36 Oppenheimer Strategic Income Fund
<PAGE> 37
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRUCTURED INSTRUMENTS (CONTINUED)
Bayerische Landesbank Girozentrale (New York Branch)
Goldman Sachs Commodity Index Excess Return
Leveraged-Linked Nts., 5.488%, 12/8/97(19) $ 8,750,000 $ 9,792,125
- ----------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Lehman Brothers High Yield Bond Index Nts., 12.50%, 2/4/98 14,250,000 14,291,325
- ----------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98 17,500,000 16,968,000
- ----------------------------------------------------------------------------------------------------------------------
Business Development Bank of Canada, Goldman Sachs
Commodity Index Excess Return Leveraged-Linked
Commercial Paper, 5.40%, 12/22/97(19) 7,000,000 7,750,400
- ----------------------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce (New York Branch)
Canadian Dollar Three Month Banker's Acceptance Linked
Maximum Rate Nts., 8.66%, 4/13/98 1,000,000 1,001,000
- ----------------------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce (New York Branch)
Three Month British Pound LIBOR Forward Linked Nts.,
5.79%, 5/22/98 20,440,000 20,260,128
- ----------------------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, U.S. Dollar/Japanese
Yen Basis Arbitrage Nts., 10.379%, 4/14/98(5)(6) 9,735,000 9,735,000
- ----------------------------------------------------------------------------------------------------------------------
Cargill Financial Services Corp., Goldman Sachs Commodity
Index Total Return Leveraged-Linked Nts., 5.469%, 12/4/97(19) 8,000,000 8,308,520
- ----------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston (Cayman) Ltd.:
OAO Bank Menatep Credit & Russian Rouble Convertibility
Linked Nts., Zero Coupon, 11.05%, 12/16/97(5)(12) 38,700,000 37,763,886
City of Moscow, Credit & Convertibility Linked Nts.,
Series EM 215, Zero Coupon, 12.05%, 12/30/97(12) 11,250,000 10,923,199
- ----------------------------------------------------------------------------------------------------------------------
Daiwa Finance Corp. (New York), Daiwa Physical
Commodity Index Leveraged-Linked Nts., 4.656%, 12/15/97(6)(20) 2,800,000 2,973,880
- ----------------------------------------------------------------------------------------------------------------------
First Boston Corp. (The), Russian GKO Linked Nts., Zero
Coupon, 13.95%, 1/20/98(12) 9,800,000 9,472,984
- ----------------------------------------------------------------------------------------------------------------------
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, 5.80%, 4/1/00 and an
interest rate swap between Goldman Sachs and the Trust](5) 11,334,782 11,646,489
- ----------------------------------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp.:
Zero Coupon Czech Koruna Linked Promissory Nts., 10.98%,
11/17/97(5)(12)(CZK) 26,368,371 789,329
Zero Coupon Czech Koruna/U.S. Dollar Linked Nts.,
11.10%, 3/4/98(12) 9,645,000 7,956,161
Greek Drachma Linked Nts., Zero Coupon, 9.99%, 8/7/98(12) 19,500,000 18,323,760
PT Polysindo Linked Nts., Zero Coupon, 10.43%, 7/15/98(5)(12) 1,973,463 1,771,677
- ----------------------------------------------------------------------------------------------------------------------
ING Barings (U.S.) Financial Holdings Corp., Chilean Peso
Linked Nts., with Chilean Sovereign Risk, Zero Coupon,
9.22%, 6/25/98(12) 16,000,000 14,889,600
</TABLE>
37 Oppenheimer Strategic Income Fund
<PAGE> 38
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
======================================================================================================================
<S> <C> <C>
STRUCTURED INSTRUMENTS (CONTINUED)
Lehman Brothers Holdings, Inc.:
Greek Drachma/Swiss Franc Linked Nts., Zero Coupon,
14.71%, 1/15/98(12) $ 6,630,630 $ 6,749,981
U.S. Dollar Nts. Linked to the Greek Drachma/Swiss Franc
Exchange Rate, Zero Coupon, 23.05%, 12/26/97(12) 10,200,000 10,931,340
- ----------------------------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., Guatemalan Letras de Tesoreria Linked
Nts., Zero Coupon, 8.66%, 11/24/97(12) 7,800,000 7,700,160
- ----------------------------------------------------------------------------------------------------------------------
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) 10,000,000 11,807,000
- ----------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, Japanese
Government Bond 193 Currency Protected Bank Nts.,
8.14%, 4/29/98 8,100,000 6,164,100
- ----------------------------------------------------------------------------------------------------------------------
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, 5.625%, 9/1/02](5) 6,000,000 7,410,000
- ----------------------------------------------------------------------------------------------------------------------
Salomon, Inc.:
Chilean Peso Indexed Credit Linked Nts., Zero Coupon,
9.32%, 7/22/98(12) 3,750,000 3,467,250
Chilean Peso Indexed Enhanced Access Nts., Zero Coupon:
9.44%, 6/11/98(12) 20,000,000 18,692,000
9.18%, 6/18/98(12) 9,750,000 9,097,725
Chilean Peso Linked Nts., Zero Coupon:
9.33%, 6/24/98(12) 4,865,000 4,504,017
9.18%, 9/9/98(12) 4,865,000 4,408,663
Russian S-Account Credit Linked Nts., Zero Coupon:
13.71%, 4/3/98(12) 19,350,000 18,283,815
14.17%, 5/22/98(12) 9,600,000 8,938,560
14.10%, 5/7/98(12) 32,150,000 30,066,680
9.79%, 7/31/98(12) 19,500,000 17,778,150
27.11%, 8/7/98(12) 41,200,000 37,504,360
- ----------------------------------------------------------------------------------------------------------------------
SPARC EM Ltd., Russian GKO Linked/U.S. Dollar Nts.,
Zero Coupon, 12.24%, 10/15/97(12) 4,850,000 4,832,719
- ----------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank:
Indian Rupee Linked Nts.:
15%, 10/20/97 7,020,000 6,909,084
32.641%, 11/28/97 3,656,000 3,762,755
35.115%, 11/28/97 3,656,000 3,749,228
Korean Wong Principal & Interest Linked Deposit:
11.62%, 6/30/98 9,516,534 8,945,542
11.68%, 7/3/98 14,601,366 13,726,744
U.S. Dollar/Chinese Yuan Linked Nts., 12.903%, 12/5/97 6,581,000 6,640,229
- ----------------------------------------------------------------------------------------------------------------------
Union Bank of Switzerland, Indian Rupee Linked
Nts., 5.40%, 11/17/97 4,680,000 4,692,168
--------------
Total Structured Instruments (Cost $514,246,318) 513,275,338
</TABLE>
38 Oppenheimer Strategic Income Fund
<PAGE> 39
<TABLE>
<CAPTION>
MARKET VALUE
DATE STRIKE CONTRACTS SEE NOTE 1
====================================================================================================================
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED--0.1%
- --------------------------------------------------------------------------------------------------------------------
German Mark/Japanese Yen Call Opt. 12/97 68.78(DEM/JPY) 86,060,000 $ 798,034
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.375%, 8/15/27
Call Opt. 10/97 99.672% 295,500 2,862,656
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.125%, 8/15/07
Call Opt. 11/97 101.25 250,000 859,375
------------
Total Call Options Purchased (Cost $5,884,796) 4,520,065
====================================================================================================================
PUT OPTIONS PURCHASED--0.0%
German Mark/Japanese Yen Put Opt. 12/97 68.59(DEM/JPY) 85,780,000 1,329,590
- --------------------------------------------------------------------------------------------------------------------
German Mark Put Opt. 10/97 1.796(DEM) 43,830,000 58,820
- --------------------------------------------------------------------------------------------------------------------
German Mark Put Opt. 10/97 1.759(DEM) 85,551,000 377,194
- --------------------------------------------------------------------------------------------------------------------
German Mark Put Opt. 10/97 1.792(DEM) 43,830,000 66,797
- --------------------------------------------------------------------------------------------------------------------
German Mark Put Opt. 10/97 1.89(DEM) 90,580,000 --
- --------------------------------------------------------------------------------------------------------------------
German Mark Put Opt. 11/97 1.784(DEM) 169,270,000 899,501
------------
Total Put Options Purchased (Cost $5,193,484) 2,731,902
<CAPTION>
FACE
AMOUNT(1)
====================================================================================================================
<S> <C> <C>
CERTIFICATES OF DEPOSIT--0.1%
- --------------------------------------------------------------------------------------------------------------------
Bank Dagang Nasional Indonesia, Zero Coupon
Negotiable CD, 14.35%, 11/24/97(12)(IDR) 10,000,000,000 2,969,428
- --------------------------------------------------------------------------------------------------------------------
Bank Tabugan Negara Negotiable CD, Zero Coupon,
14.70%, 10/28/97(12)(IDR) 3,000,000,000 907,513
- --------------------------------------------------------------------------------------------------------------------
Wijaya Karya Negotiable CD, Zero Coupon, 14.79%,
12/19/97(12)(IDR) 20,000,000,000 5,826,178
------------
Total Certificates of Deposit (Cost $13,636,815) 9,703,119
====================================================================================================================
REPURCHASE AGREEMENTS--0.0%
- --------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
6.125%, dated 9/30/97, to be repurchased at $3,100,527 on
10/1/97, collateralized by U.S. Treasury Bonds, 6.875%-12%,
5/15/05-8/15/25, with a value of $2,433,948 and U.S. Treasury
Nts., 5.875%-7.25%, 8/15/98-5/15/04, with a value of $729,927
(Cost $3,100,000) $ 3,100,000 3,100,000
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $8,289,785,573) 107.5% 8,478,965,517
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (7.5) (592,075,007)
------------ --------------
NET ASSETS 100.0% $7,886,890,510
============ ==============
</TABLE>
39 Oppenheimer Strategic Income Fund
<PAGE> 40
STATEMENT OF INVESTMENTS (Continued)
- -------------------------------------------------------------------------------
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C>
AUD--Australian Dollar IEP--Irish Punt
CAD--Canadian Dollar ITL--Italian Lira
CZK--Czech Koruna JPY--Japanese Yen
DEM--German Mark MXP--Mexican Peso
DKK--Danish Krone NOK--Norwegian Krone
ESP--Spanish Peseta NZD--New Zealand Dollar
GBP--British Pound Sterling PLZ--Polish Zloty
GRD--Greek Drachma SEK--Swedish Krona
HUF--Hungarian Forint TRL--Turkish Lira
IDR--Indonesian Rupiah ZAR--South African Rand
</TABLE>
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 September 30, 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 $752,116,975 or 9.54% of the Fund's net
assets, at September 30, 1997.
8. A sufficient amount of liquid assets has been designated to cover
outstanding written options, as follows:
<TABLE>
<CAPTION>
CONTRACTS/FACE EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL/PUT DATE 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 $1,800,000
- -------------------------------------------------------------------------------------------------------------------------
British Pound Sterling Call Option 47,170,000 10/6/97 0.625(GBP) 556,606 780,664
- -------------------------------------------------------------------------------------------------------------------------
German Mark Call Option 130,890,000 10/16/97 1.72(DEM) 342,521 311,518
- -------------------------------------------------------------------------------------------------------------------------
Japanese Yen Call Option 4,860,600,000 10/1/97 119.00(JPY) 214,435 9,721
- -------------------------------------------------------------------------------------------------------------------------
Japanese Yen Put Option 4,860,600,000 10/1/97 121.00(JPY) 210,894 58,327
---------- ----------
$1,462,456 $2,960,230
========== ==========
</TABLE>
40 Oppenheimer Strategic Income Fund
<PAGE> 41
- -------------------------------------------------------------------------------
9. Securities with an aggregate market value of $12,971,445 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
10. Interest or dividend is paid in kind.
11. Represents the current interest rate for an increasing rate security.
12. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
13. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
14. Non-income producing--issuer is in default of interest payment.
15. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
16. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
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 September 30,
1997. The aggregate fair value of securities of affiliated companies held by
the Fund as of September 30, 1997 amounts to $27,208,189. Transactions during
the period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
SHARES/UNITS SHARES/UNITS
SEPTEMBER 30, GROSS GROSS SEPTEMBER 30, DIVIDEND
1996 ADDITIONS REDUCTIONS 1997 INCOME
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CGA Group Ltd.,
Preferred -- 130,000 -- 130,000 $ --
- --------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts.,
Exp. 12/49 -- 130,000 -- 130,000 --
- --------------------------------------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp.,
$2.625 Cv. 82,000 77,100 -- 159,100 406,875
- --------------------------------------------------------------------------------------------------------------------------
Sheridan Energy, Inc. -- 394,283 -- 394,283 --
- --------------------------------------------------------------------------------------------------------------------------
Walden Residential
Properties, Inc.,
Preferred Stock -- 387,400 -- 387,400 570,602
- --------------------------------------------------------------------------------------------------------------------------
Walden Residential
Properties, Inc., 9.16% Cv.
Preferred Stock, Series B 280,000 -- -- 280,000 641,200
- --------------------------------------------------------------------------------------------------------------------------
Walden Residential
Properties, Inc. Wts.,
Exp. 1/02 -- 196,400 -- 196,400 --
----------
$1,618,677
==========
</TABLE>
19. Security is linked to a Goldman Sachs Commodity Index. The index is
composed of the futures prices of twenty-two different commodities in five main
commodity groups (energy, agriculture, livestock, industrial metals and
precious metals) in rough proportion to the value of their production in the
world economy.
20. Security is linked to the Daiwa Physical Commodity Excess Return Index
which is calculated in the same manner as the Daiwa Physical Commodity Index
(DPCI), but with a Treasury bill rate of zero. The DPCI is a passively managed
index showing the total return from holding unleveraged long positions in
futures contracts of physical commodities. Nineteen commodity markets
representing five major commodity industry groups are included in the
calculation of the DPCI. These five major commodity groups are: grains, metals,
energy, livestock and food/fiber.
See accompanying Notes to Financial Statements.
41 Oppenheimer Strategic Income Fund
<PAGE> 42
STATEMENT OF ASSETS & LIABILITIES September 30, 1997
<TABLE>
<S> <C>
=====================================================================================================
ASSETS
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $8,264,915,023) $8,451,757,328
Affiliated companies (cost $24,870,550) 27,208,189
- -----------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 11,047,547
- -----------------------------------------------------------------------------------------------------
Receivables:
Investments sold 759,979,849
Interest, dividends and principal paydowns 146,163,544
Shares of beneficial interest sold 25,035,803
Closed forward foreign currency exchange contracts 4,255,405
Daily variation on futures contracts--Note 6 308,031
- -----------------------------------------------------------------------------------------------------
Other 32,282
--------------
Total assets 9,425,787,978
=====================================================================================================
LIABILITIES
Bank overdraft 1,967,258
- -----------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 5,289,749
- -----------------------------------------------------------------------------------------------------
Options written, at value (premiums received $1,462,456)--
see accompanying statement--Note 7 2,960,230
- -----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $1,424,306,645 purchased
on a when-issued basis)--Note 1 1,498,961,120
Shares of beneficial interest redeemed 8,647,125
Dividends 8,312,459
Distribution and service plan fees 4,776,771
Closed forward foreign currency exchange contracts 4,355,184
Daily variation on futures contracts--Note 6 1,227,794
Transfer and shareholder servicing agent fees 718,700
Other 1,681,078
--------------
Total liabilities 1,538,897,468
=====================================================================================================
NET ASSETS $7,886,890,510
==============
=====================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $7,853,553,513
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income 16,158,180
- -----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (171,522,575)
- -----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 188,701,392
--------------
Net assets $7,886,890,510
==============
</TABLE>
42 Oppenheimer Strategic Income Fund
<PAGE> 43
<TABLE>
<S> <C>
=========================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $3,969,438,182 and 801,890,287 shares of
beneficial interest outstanding) $4.95
Maximum offering price per share (net asset value plus
sales charge of 4.75% of offering price) $5.20
- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $3,500,902,742 and 705,698,727
shares of beneficial interest outstanding) $4.96
- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per share
(based on net assets of $416,549,586 and 84,230,913 shares of
beneficial interest outstanding) $4.95
</TABLE>
See accompanying Notes to Financial Statements.
43 Oppenheimer Strategic Income Fund
<PAGE> 44
STATEMENT OF OPERATIONS For the Year Ended September, 30 1997
<TABLE>
<S> <C>
=====================================================================================================
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $1,014,978) $668,426,986
- -----------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 10,144,788
Affiliated companies 1,618,677
------------
Total income 680,190,451
=====================================================================================================
EXPENSES
Distribution and service plan fees--Note 4:
Class A 9,227,904
Class B 30,147,429
Class C 2,902,518
- -----------------------------------------------------------------------------------------------------
Management fees--Note 4 37,014,867
- -----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 7,681,822
- -----------------------------------------------------------------------------------------------------
Shareholder reports 1,580,641
- -----------------------------------------------------------------------------------------------------
Custodian fees and expenses 1,387,036
- -----------------------------------------------------------------------------------------------------
Registration and filing fees 208,886
- -----------------------------------------------------------------------------------------------------
Legal and auditing fees 122,562
- -----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 94,635
- -----------------------------------------------------------------------------------------------------
Other 289,682
-----------
Total expenses 90,657,982
=====================================================================================================
NET INVESTMENT INCOME 589,532,469
=====================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 176,727,616
Closing of futures contracts (29,166,867)
Closing and expiration of options written--Note 7 14,670,101
Foreign currency transactions (36,622,046)
------------
Net realized gain 125,608,804
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 84,914,787
Translation of assets and liabilities denominated in
foreign currencies (64,385,554)
------------
Net change 20,529,233
------------
Net realized and unrealized gain 146,138,037
=====================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $735,670,506
============
</TABLE>
See accompanying Notes to Financial Statements.
44 Oppenheimer Strategic Income Fund
<PAGE> 45
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1996
====================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 589,532,469 $ 499,559,590
- --------------------------------------------------------------------------------------------------------------------
Net realized gain 125,608,804 43,346,428
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 20,529,233 139,093,599
-------------- --------------
Net increase in net assets resulting from operations 735,670,506 681,999,617
====================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (316,472,362) (288,582,659)
Class B (232,118,433) (175,634,637)
Class C (22,358,462) (8,327,086)
- --------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (11,371,215)
Class B -- (8,353,085)
Class C -- (562,714)
====================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 357,127,802 197,278,497
Class B 838,896,025 568,088,963
Class C 235,000,607 103,676,464
====================================================================================================================
NET ASSETS
Total increase 1,595,745,683 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 $16,158,180 and $(6,688,731), respectively] $7,886,890,510 $6,291,144,827
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
45 Oppenheimer Strategic Income Fund
<PAGE> 46
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
YEAR ENDED SEPTEMBER 30,
1997 1996 1995 1994 1993
===============================================================================================
<S> <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
- -----------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 .44 .41 .45 .48
Net realized and unrealized
gain (loss) .09 .15 (.03) (.35) .17
----- ----- ----- ----- -----
Total income from investment operations .52 .59 .38 .10 .65
- -----------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.41) (.41) (.41) (.43) (.50)
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 (.41) (.43) (.45) (.56) (.51)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $4.95 $4.84 $4.68 $4.75 $5.21
===== ===== ===== ===== =====
===============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 11.29% 13.06% 8.62% 1.85% 13.30%
===============================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $3,969 $3,526 $3,219 $3,143 $2,754
- -----------------------------------------------------------------------------------------------
Average net assets (in millions) $3,735 $3,340 $3,085 $3,082 $2,107
- -----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.77% 9.09% 9.63% 8.72% 9.78%
Expenses 0.93% 0.97% 0.99% 0.95% 1.09%
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 116.5% 104.8% 141.5% 119.0% 148.6%
</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.
46 Oppenheimer Strategic Income Fund
<PAGE> 47
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------------------------- ----------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1997 1996 1995 1994 1993(2) 1997 1996 1995(1)
=============================================================================================
<C> <C> <C> <C> <C> <C>
$4.85 $4.69 $4.76 $5.22 $4.89 $4.83 $4.68 $4.68
- ---------------------------------------------------------------------------------------------
.39 .40 .37 .42 .36 .37 .38 .13
.10 .15 (.03) (.36) .34 .13 .16 .01
- ------ ----- ----- ----- ----- ----- ----- -----
.49 .55 .34 .06 .70 .50 .54 .14
- ---------------------------------------------------------------------------------------------
(.38) (.37) (.37) (.39) (.36) (.38) (.37) (.12)
-- -- (.01) -- (.01) -- -- (.01)
-- -- -- (.12) -- -- -- --
-- (.02) (.03) (.01) -- -- (.02) (.01)
- ------ ----- ----- ----- ----- ----- ----- -----
(.38) (.39) (.41) (.52) (.37) (.38) (.39) (.14)
- ---------------------------------------------------------------------------------------------
$4.96 $4.85 $4.69 $4.76 $5.22 $4.95 $4.83 $4.68
====== ===== ===== ===== ===== ===== ===== =====
=============================================================================================
10.43% 12.19% 7.79% 1.07% 13.58% 10.67% 11.96% 3.09%
=============================================================================================
$3,501 $2,590 $1,947 $1,586 $695 $417 $175 $67
- ---------------------------------------------------------------------------------------------
$3,018 $2,250 $ 1,711 $1,236 $276 $291 $110 $24
- ---------------------------------------------------------------------------------------------
7.94% 8.30% 8.83% 7.90% 8.13%(4) 7.73% 8.18% 8.28%(4)
1.69% 1.72% 1.75% 1.71% 1.80%(4) 1.69% 1.74% 2.02%(4)
- ---------------------------------------------------------------------------------------------
116.5% 104.8% 141.5% 119.0% 148.6% 116.5% 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
and mortgage "dollar-rolls") for the period ended September 30, 1997 were
$9,979,242,934 and $8,316,552,760, 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.
47 Oppenheimer Strategic Income Fund
<PAGE> 48
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Strategic Income Fund (the Fund) is a separate series of
Oppenheimer Strategic Funds Trust, a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment 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 advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All 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.
- -------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in commodity and foreign currency-linked
structured notes whereby the market value and redemption price are linked to
commodity indices and foreign currency exchange rates. The structured notes may
be leveraged, which increases the notes' volatility relative to the face value
of the security. Fluctuations in values of the securities are recorded as
unrealized gains and losses in the accompanying
48 Oppenheimer Strategic Income Fund
<PAGE> 49
===============================================================================
financial statements. During the period ended September 30, 1997, the market
value of these securities comprised an average of 6% of the Fund's net assets,
and resulted in realized and unrealized losses of $18,301,605.
- -------------------------------------------------------------------------------
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 September 30,
1997, the Fund had entered into outstanding when-issued or forward commitments
of $1,424,306,645.
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 September 30, 1997,
securities with an aggregate market value of $6,172,125, representing 0.08% 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 foreign 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.
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price
49 Oppenheimer Strategic Income Fund
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS (Continued)
===============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. At September 30, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $153,183,000, expiring in 2004.
- -------------------------------------------------------------------------------
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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended September 30, 1997, amounts have been
reclassified to reflect an increase in undistributed net investment income of
$4,263,699, an increase in accumulated net realized loss on investments of
$6,135,352, and an increase in paid-in capital of $1,871,653.
- -------------------------------------------------------------------------------
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.
50 Oppenheimer Strategic Income Fund
<PAGE> 51
===============================================================================
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.
===============================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1997 YEAR ENDED SEPTEMBER 30, 1996
--------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 202,106,435 $ 987,184,469 161,911,012 $ 769,839,764
Dividends and distributions
reinvested 43,528,618 212,702,206 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 (172,636,408) (842,758,873) (163,843,683) (778,536,821)
------------ -------------- ------------ -------------
Net increase 72,998,645 $ 357,127,802 41,345,223 $ 197,278,497
============ ============== ============ =============
- -----------------------------------------------------------------------------------------------------------------
Class B:
Sold 225,061,705 $1,101,712,593 164,417,334 $ 783,491,575
Dividends and distributions
reinvested 27,158,643 132,987,856 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 (80,881,214) (395,804,424) (67,336,963) (320,686,061)
------------ -------------- ------------ -------------
Net increase 171,339,134 $ 838,896,025 119,159,710 $ 568,088,963
============ ============== ============ =============
- -----------------------------------------------------------------------------------------------------------------
Class C:
Sold 57,786,493 $ 282,043,074 25,473,363 $ 121,173,723
Dividends and distributions
reinvested 3,188,795 15,572,159 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 (12,845,030) (62,614,626) (4,978,579) (23,646,110)
------------ -------------- ------------ -------------
Net increase 48,130,258 $ 235,000,607 21,786,719 $ 103,676,464
============ ============== ============ =============
</TABLE>
51 Oppenheimer Strategic Income Fund
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At September 30, 1997, net unrealized appreciation on investments and options
written of $187,682,170 was composed of gross appreciation of $291,749,879, and
gross depreciation of $104,067,709.
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 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 average annual net assets in excess of $1
billion.
For the year ended September 30, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $20,149,168, of which
$5,660,176 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 $41,868,645 and $2,728,179,
respectively, of which $1,299,100 and $67,266, respectively, was paid to an
affiliated broker/dealer. During the year ended September 30, 1997, OFDI
received contingent deferred sales charges of $6,604,974 and $191,856,
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.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder 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 maintaining accounts
of their customers that hold Class A shares. During the year ended September
30, 1997, OFDI paid $640,887 to an affiliated broker/dealer as reimbursement
for Class A personal service and maintenance expenses.
52 Oppenheimer Strategic Income Fund
<PAGE> 53
================================================================================
The Fund has adopted a 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 year ended September 30, 1997, OFDI
paid $165,360 to an affiliated broker/dealer as reimbursement for Class B
personal service and maintenance expenses and retained $24,820,626 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 September 30, 1997, OFDI had incurred unreimbursed expenses of
$112,265,649 for Class B.
The Fund has adopted a 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 year ended September 30, 1997, OFDI
paid $31,149 to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $1,957,863 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 distributing shares before the Plan was terminated. As of September 30,
1997, OFDI had incurred unreimbursed expenses of $5,708,962 for Class C.
53 Oppenheimer Strategic Income Fund
<PAGE> 54
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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.
Risks include the potential inability of the counterparty to meet
the terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. At September 30, 1997, the Fund had
outstanding forward contracts as follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
EXPIRATION DATE (000S) SEPT. 30, 1997 APPRECIATION DEPRECIATION
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
- ---------------------
Canadian Dollar (CAD) 10/2/97-10/20/97 170,414 CAD $123,415,758 $ 296,136 $ --
----------- ----------
CONTRACTS TO SELL
- -----------------
Australian Dollar (AUD) 10/6/97-11/24/97 526,890 AUD 381,761,656 1,541,467 1,556,056
British Pound Sterling (GBP) 10/1/97-10/14/97 24,349 GBP 39,316,728 -- 326,373
Canadian Dollar (CAD) 1/21/98 14,580 CAD 10,616,618 -- 16,836
German Mark (DEM) 10/1/97-12/19/97 77,192 DEM 43,859,098 70,352 329,908
Indonesia Rupiah (IDR) 10/28/97 57,681,875 IDR 17,543,192 4,101,038 --
Irish Punt (IEP) 11/24/97-11/28/97 78,220 IEP 113,555,922 4,643,973 --
Japanese Yen (JPY) 11/17/97 8,270,000 JPY 69,117,377 244,362 --
Mexican Peso (MXP) 11/3/97 267,920 MXP 34,042,782 58,918 --
South African Rand (ZAR) 10/27/97 115,063 ZAR 24,502,573 -- 264,510
Spanish Peseta (ESP) 10/3/97 3,481,541 ESP 23,346,792 91,301 --
Swiss Franc (CHF) 10/21/97-11/19/97 175,165 CHF 121,355,664 -- 2,796,066
----------- ----------
10,751,411 5,289,749
----------- ----------
Total Unrealized Appreciation and Depreciation $11,047,547 $5,289,749
=========== ==========
</TABLE>
54 Oppenheimer Strategic Income Fund
<PAGE> 55
================================================================================
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 (initial margin) in an amount 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 September 30, 1997, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF VALUATION AS OF APPRECIATION
EXPIRATION DATE CONTRACTS SEPTEMBER 30, 1997 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
- ---------------------
U.S. Treasury Nts., 10 yr. 12/97 125 $ 13,765,625 $ 152,344
U.S. Treasury Bonds, 30 yr. 12/97 2,550 293,967,188 (1,516,250)
-----------
(1,363,906)
-----------
CONTRACTS TO SELL
- -----------------
French Government Bonds 12/97 1,265 106,344,023 (895,618)
Gold 12/97 62 2,088,780 (78,880)
Standard & Poor's 500 12/97 50 23,862,500 (493,700)
U.S. Treasury Nts., 2 yr. 12/97 145 30,021,797 (90,625)
U.S. Treasury Nts., 5 yr. 12/97 2,153 231,245,656 (1,455,609)
-----------
(3,014,432)
-----------
$(4,378,338)
===========
</TABLE>
55 Oppenheimer Strategic Income Fund
<PAGE> 56
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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 year ended September 30, 1997 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
-------------------------------------- ------------------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
September 30, 1996 236,465,210 $ 1 ,790,304 14,230,476 $ 722,937
Options written 6,289,590,996 21,817,179 46,434,239,635 6,492,357
Options closed or expired (1,333,863,881) (14,997,877) (36,707,870,111) (6,738,997)
Options exercised (153,517,325) (7,358,043) (4,880,000,000) (265,404)
-------------- ------------ ---------------- -----------
Options outstanding at
September 30, 1997 5,038,675,000 $ 1,251,563 4,860,600,000 $ 210,893
============== ============ ================ ===========
</TABLE>
56 Oppenheimer Strategic Income Fund
<PAGE> 57
================================================================================
8. ILLIQUID AND RESTRICTED SECURITIES
At September 30, 1997, investments in 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 periodically) 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 September 30, 1997 was $648,184,785, which
represents 8.22% of the Fund's net assets, of which $38,306,073 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
COST PER UNIT AS OF
SECURITY ACQUISITION DATE PER UNIT SEPTEMBER 30, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS
Arizona Charlie's, Inc., 12% First Mtg.
Nts., Series B, 11/15/00 11/18/93-12/9/93 100.00% 53.50%
- ---------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First
Mtg. Nts., Series A, 11/15/00 11/18/93-12/17/93 95.98 17.50
- ---------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00 110.25
- ---------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 5/15/95 110.05 118.07
- ---------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Banco
Venezuela TCI, Zero Coupon, 6.13%, 12/13/98 7/13/93-7/15/93 72.64 95.25
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 1,002.50
- ---------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. 11/29/95 16.00 20.07
- ---------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 20.07
- ---------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred 6/17/97 25.00 25.00
- ---------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts. Exp. 12/49 6/17/97 -- .50
</TABLE>
57 Oppenheimer Strategic Income Fund
<PAGE> 58
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
9. ACQUISITION OF QUEST FOR VALUE GLOBAL INCOME FUND
On November 24, 1995, the Fund acquired all of the net assets of Quest for
Value Global Income Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Quest for Value Global Income Fund shareholders on November 16,
1995. The Fund issued 970,667, 280,096 and 36,170 shares of beneficial interest
for Class A, Class B and Class C, respectively, valued at $4,571,842,
$1,322,051 and $170,362 in exchange for the net assets, resulting in combined
Class A net assets of $3,267,253,290, Class B net assets of $2,032,945,347 and
Class C net assets of $75,252,729 on November 24, 1995. The net assets acquired
included net unrealized appreciation of $338,553. The exchange qualified as a
tax-free reorganization for federal income tax purposes.
================================================================================
10. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other OppenheimerFunds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended
September 30, 1997.
58 Oppenheimer Strategic Income Fund
<PAGE> 59
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Strategic Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Strategic Income Fund as of
September 30, 1997, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended September
30, 1997 and 1996, and the financial highlights for the period October 1, 1992
to September 30, 1997. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1997 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the financial position of
Oppenheimer Strategic Income Fund at September 30, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1997
59 Oppenheimer Strategic Income Fund
<PAGE> 60
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1998, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1997.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended
September 30, 1997 which are not designated as capital gain distributions
should be multiplied by 1.74% to arrive at the net amount eligible for the
corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
60 Oppenheimer Strategic Income Fund
<PAGE> 61
OPPENHEIMER STRATEGIC INCOME FUND
A Series of Oppenheimer Strategic Funds Trust
================================================================================
OFFICERS AND TRUSTEES James C. Swain, Chairman and
Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, 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 ADVISOR 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.
This is a copy of a report to shareholders of
Oppenheimer Strategic Income Fund. This report
must be preceded or accompanied by a Prospectus
of Oppenheimer Strategic Income Fund. For
material information concerning the Fund, see the
Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by
any bank, and are not insured by the FDIC or any
other agency, and involve investment risks,
including possible loss of the principal amount
invested.
61 Oppenheimer Strategic Income Fund
<PAGE> 62
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
==================================================================================================================
REAL ASSET FUNDS
- ------------------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==================================================================================================================
STOCK FUNDS
- ------------------------------------------------------------------------------------------------------------------
Developing Markets Fund Quest Small Cap Value Fund Global Fund
Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund
International Growth Fund Quest Capital Value Fund Disciplined Value Fund
Discovery Fund Growth Fund Quest Value Fund
==================================================================================================================
STOCK & BOND FUNDS
- ------------------------------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==================================================================================================================
BOND FUNDS
- ------------------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==================================================================================================================
MUNICIPAL FUNDS
- ------------------------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==================================================================================================================
MONEY MARKET FUNDS(4)
- ------------------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==================================================================================================================
LIFESPAN
- ------------------------------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. 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.
62 Oppenheimer Strategic Income Fund
<PAGE> 63
INTERNET
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WWW.OPPENHEIMERFUNDS.COM
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INFORMATION AND SERVICES
- -------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
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And when you need help, our Customer Service Representatives are only a
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When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
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So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OPPENHEIMERFUNDS LOGO]
RA0230.001.0997 November 28, 1997
