<PAGE> 1
[PHOTO]
ANNUAL REPORT SEPTEMBER 30, 2000
OPPENHEIMER
STRATEGIC INCOME FUND
[OPPENHEIMER FUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
1 President's Letter
3 An Interview
with Your Fund's
Managers
7 Fund Performance
11 FINANCIAL
STATEMENTS
58 INDEPENDENT
AUDITORS' REPORT
59 Federal
Income Tax
Information
60 Officers and Trustees
REPORT HIGHLIGHTS
--------------------------------------------------------------------------------
THE FUND SUCCESSFULLY NAVIGATED A NUMBER OF ECONOMIC EVENTS that affected the
international fixed income markets. Economic recovery bolstered emerging market
securities, WHICH TURNED IN THE BEST SECTOR PERFORMANCE OVER THE PERIOD.
HIGH YIELD CORPORATE BONDS AND MORTGAGE-BACKED SECURITIES ARE CURRENTLY
INEXPENSIVE, and offer compelling value.
AVERAGE ANNUAL TOTAL RETURNS*
For the 1-Year Period
Ended 9/30/00
<TABLE>
<S> <C>
Class A
Without With
Sales Chg. Sales Chg.
---------------------
6.18% 1.13%
Class B
Without With
Sales Chg. Sales Chg.
---------------------
5.37% 0.54%
Class C
Without With
Sales Chg. Sales Chg.
---------------------
5.39% 4.43%
Class Y
---------------------
6.55%
</TABLE>
*SEE NOTES ON PAGE 10 FOR FURTHER DETAILS.
<PAGE> 3
[PHOTOS]
JAMES C. SWAIN
Chairman
Oppenheimer
Strategic Income Fund
BRIDGET A. MACASKILL
President
Oppenheimer
Strategic Income Fund
PRESIDENT'S LETTER
--------------------------------------------------------------------------------
DEAR SHAREHOLDER,
Over the past several decades, our investment teams have learned the importance
of avoiding complacency when it comes to navigating the financial
markets--especially when times are good. Right now, times appear particularly
good. The U.S. economy is in its tenth year of expansion. In the bond market,
U.S. Treasury issues have been performing favorably over the past year. In
addition, despite volatility in the second quarter, the stock market has been
providing attractive returns from a wide spectrum of industry sectors,
capitalization ranges and investment styles.
We have arrived at this juncture after months of monitoring the rapid pace of
global economic growth and its implications for inflation, as well as the
Federal Reserve Board's evolving monetary policy. At this point, economic
indicators suggest a dampening of short-term inflationary pressures. While
recent increases in oil prices are certainly taking their toll, we don't believe
this signals a return to 1970's-style inflation. Accordingly, if the Fed
continues in its diligence, the economy could maintain its healthy rate of
growth.
In the bond market, the achievement of a federal budget surplus has prompted
the Treasury to buy back many of its long-term securities. The resulting supply
shortage boosted these securities' returns, causing an inversion of the yield
curve--an unusual situation in which shorter term Treasuries yield more than
their longer term counterparts. Other bond sectors are offering many
opportunities in the form of attractive valuations.
Perhaps most important is that we have begun to see encouraging signs in the
stock market. Formerly high-flying Internet stocks have generally come down to
earth, and investors have
1 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 4
PRESIDENT'S LETTER
--------------------------------------------------------------------------------
begun to refocus on companies with strong business fundamentals and justifiable
valuations. Investors have also returned to long-neglected, value-oriented
companies.
What else do these various trends tell us? They tell us that the ability to
discriminate between long-term potential and short-lived fads has become more
critical than ever. Trying to generate good long-term performance requires
tracking the best companies through intensive research, combined with
hard-earned experience.
At OppenheimerFunds, our seasoned portfolio management teams fight
complacency by remaining constantly aware of the risks that face the economy and
financial markets. Virtually anything could affect the overall markets--a surge
in inflation, a decline in productivity, deteriorating corporate earnings, or
even the new Administration's proposals regarding tax reform, healthcare and
Social Security. However, by remaining vigilant in our quest for fundamentally
sound businesses, we believe we can find good investments that can weather
market volatility.
In this environment, we encourage you to consult your financial advisor and
to stay on track with your long-term financial plan. For our part, we will
continue to monitor the opportunities and risks ever present in the financial
markets. Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest.
Sincerely,
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
October 20, 2000
THESE GENERAL MARKET VIEWS REPRESENT OPINIONS OF OPPENHEIMERFUNDS, INC. AND ARE
NOT INTENDED TO PREDICT OR DEPICT PERFORMANCE OF THE SECURITIES MARKETS OR ANY
PARTICULAR FUND. SPECIFIC DISCUSSION, AS IT APPLIES TO YOUR FUND, IS CONTAINED
IN THE PAGES THAT FOLLOW. STOCKS AND BONDS HAVE DIFFERENT TYPES OF INVESTMENT
RISKS; STOCKS ARE SUBJECT TO MARKET VOLATILITY AND BONDS ARE SUBJECT TO CREDIT
AND INTEREST RATE RISKS.
2 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 5
[PHOTOS]
PORTFOLIO MANAGEMENT TEAM (L TO R)
Art Steinmetz
David Negri
AN INTERVIEW WITH YOUR FUND'S MANAGERS
--------------------------------------------------------------------------------
Q HOW DID OPPENHEIMER STRATEGIC INCOME FUND PERFORM DURING THE 12 MONTHS THAT
ENDED SEPTEMBER 30, 2000?
A. We are pleased with the Fund's performance. It has worked very much as
designed in that we strategically allocated the Fund's assets to earn high
current income. In addition, the Fund achieved positive returns with reasonably
low volatility. This performance resulted in the Fund's Class A shares being
ranked in the top-performance quartile, ranking 23 of 125 (1-year) and 12 of 83
(3-year) among multi-sector income funds for the periods ended September 30,
2000, as rated by Lipper Analytical Services.(1)
That said, the period proved challenging for several of the fixed income
asset classes in which the Fund invests. A series of economic events contributed
to these challenges and greatly influenced how we structured the Fund. Most
notably, these events included the year-long tightening of the money supply by
the U.S. Federal Reserve, the U.S. Treasury buyback of long-term government
debt, the strength of the U.S. dollar against foreign currencies, and the steady
flow of foreign capital into U.S. markets.
SPECIFICALLY, HOW DID THESE EVENTS AFFECT THE VARIOUS ASSET CLASSES?
On the domestic front, long-term U.S. Treasury securities rallied because of
heightened investor demand and limited supply following the announcement of the
buyback in January 2000.
In addition, the gradual cooling of the U.S. economy, a result of tighter
monetary policy, was beneficial for interest-rate-sensitive securities, with
prices rising as bond yields declined.
1. Source: Lipper Analytical Services, Inc., 9/30/00. Lipper rankings are based
on total returns but do not consider sales charges. The Fund's Class A shares
were ranked 23 of 125 (1-year), 12 of 83 (3-year), 17 of 56, 2nd quartile
(5-year) and 6 of 10, 3rd quartile (10-year) among multi-sector income funds for
the periods ended 9/30/00.
3 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 6
"By taking a flexible approach to investing in the fixed income markets, the
Fund provided high current income in addition to positive returns with
relatively low volatility."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
--------------------------------------------------------------------------------
Mortgage-backed securities performed solidly, although the rally in U.S.
Treasuries kept them at bay. The high yield market, however, was hurt by
oversupply, inflation fears and declining demand.
Abroad, emerging market securities performed exceptionally well, bolstered by
economic recovery, rising oil prices and the anticipated "soft landing" of the
U.S. economy. On the other hand, developed foreign markets fared poorly, as
struggling currencies promoted a one-way flow of capital into the United States.
WHAT WAS YOUR STRATEGY FOR MANAGING THE FUND IN THIS ENVIRONMENT?
For the most part, we emphasized higher yielding, credit-sensitive securities
over those with greater interest rate sensitivity. Credit-sensitive securities
include high yield corporate bonds and emerging market debt. Both of these asset
classes provided above-average income streams, which helped offset the effects
of declining bond prices on the Fund. In terms of interest rate-sensitive
securities, we focused on long-term U.S. Treasuries. While comprising only about
7% of the portfolio at period-end, long-term Treasuries offered substantial
price appreciation that benefited the Fund.(2)
The Fund, as always, invests primarily in three core sectors: U.S. Government
issues, foreign government bonds, including emerging market debt and high yield
corporate securities both foreign and domestic. Looking at our U.S. Government
allocation, we reduced our Treasury holdings slightly over the period and
increased our allocation to mortgage-backed securities, which we considered more
attractively valued. On the international side, we incrementally reduced our
holdings in developed market currencies while increasing our exposure to
dollar-denominated emerging market debt. In the high yield category, we upgraded
the quality of our telecommunications and media positions. However, the bulk of
our high yield holdings remained in lower rated securities that, in our view,
offer better return potential.
2. The Fund's portfolio is subject to change. Percentage is based on total
market value of investments.
4 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 7
AVERAGE ANNUAL
TOTAL RETURNS
For the Periods Ended 9/30/00(3)
<TABLE>
<CAPTION>
Class A
1-Year 5-Year 10-Year
-----------------------------------
<S> <C> <C>
1.13% 5.71% 8.13%
Class B Since
1-Year 5-Year Inception
-----------------------------------
0.54% 5.65% 7.00%
Class C Since
1-Year 5-Year Inception
-----------------------------------
4.43% 5.90% 6.11%
Class Y Since
1-Year 5-Year Inception
-----------------------------------
6.55% N/A 3.31%
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------
STANDARDIZED YIELDS(4)
For the 30 Days Ended 9/30/00
-----------------------------------
<S> <C>
Class A 10.40%
-----------------------------------
Class B 10.15
-----------------------------------
Class C 10.18
-----------------------------------
Class Y 11.54
-----------------------------------
</TABLE>
WHICH BOND MARKET SECTORS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE?
Emerging market debt was by far our best performer for the period. The global
financial crisis of 1998 provided a compelling buying opportunity as these
securities fell drastically out of favor. With economic recovery, especially in
the core markets of Russia, Brazil and Mexico, investor interest has moved in
tandem. Mortgage-backed securities also performed reasonably well, despite the
overwhelming attention placed on U.S. Treasuries.
One subset of mortgage-backed securities, "interest only" bonds, were the
standout in this category. Unlike most fixed income securities, which decline in
value when interest rates rise, prices of "interest only" bonds have appreciated
with each rate hike over the past year.
HOW DID THE REMAINING SECTORS FARE?
High yield corporate bonds provided generally modest returns, reflecting equally
modest demand. In an attempt to rekindle investor interest, new securities were
issued at higher yields, creating pricing pressures on existing securities. This
negatively affected the total return of many high yield bonds. Still, we
received generous coupon income and, in essence, were getting paid to wait.
Our most profound disappointment during the period was the performance of
foreign bonds from developed markets. Even though European economies were
growing at slower, more sustainable rates than the U.S. economy--in reality, a
positive sign of growth investor sentiment favored faster growing U.S. issues.
Japan, on the other hand, continued to be mired in recession, which kept bond
yields there unattractively low.
3. See page 10 for further details.
4. Standardized yield is based on net investment income for the 30-day period
ended September 30, 2000. Falling share prices will tend to artificially raise
yields.
5 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 8
PORTFOLIO ALLOCATION(5)
[PIE CHART]
<TABLE>
<S> <C>
-Corporate
Bonds 36.9%
-Government Agency Bonds 28.4
-Foreign
Government
Bonds 14.8
-U.S. Government
Bonds 7.1
-Other Bonds 5.8
-Cash Equivalents 4.0
-Stocks 3.0
</TABLE>
WHAT IS YOUR OUTLOOK GOING FORWARD?
Apart from being generally neutral on interest rates, we believe there are
several key sectors of the market that are currently inexpensive and offer good
value. Both high yield corporate bonds and mortgage-backed securities present
interesting opportunities, and we'll continue to monitor these areas closely.
Emerging markets should continue to offer attractive yields, although we
currently see limited possibilities for additional price appreciation. In
contrast, we remain less optimistic about developed foreign markets, which could
lead us to reallocate assets in search of more strategic opportunities. That
search is the most telling reason why Oppenheimer Strategic Income Fund is an
important part of The Right Way to Invest.
<TABLE>
<CAPTION>
CORPORATE BONDS & NOTES--TOP TEN INDUSTRIES(6)
----------------------------------------------------------------
<S> <C>
Media/Entertainment--Telecommunications 7.1%
----------------------------------------------------------------
Media/Entertainment--Wireless Communications 5.1
----------------------------------------------------------------
Media/Entertainment--Cable/Wireless Video 3.4
----------------------------------------------------------------
Transportation 2.6
----------------------------------------------------------------
Financial 2.1
----------------------------------------------------------------
Gaming/Leisure 2.0
----------------------------------------------------------------
Energy 2.0
----------------------------------------------------------------
Service 1.6
----------------------------------------------------------------
Information Technology 1.5
----------------------------------------------------------------
Chemicals 1.4
</TABLE>
5. Portfolio data is subject to change. Percentages are as of September 30,
2000, and 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,
and in foreign securities, which entail higher expenses and risks, such as
currency fluctuation.
6. Portfolio data is subject to change. Percentages are as of September 30,
2000, and are based on net assets.
6 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 9
FUND PERFORMANCE
--------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED? Below is a discussion by OppenheimerFunds, Inc. of
the Fund's performance during its fiscal year ended September 30, 2000, followed
by a graphical comparison of the Fund's performance to two appropriate
broad-based market indices.
MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the Fund's fiscal year,
Oppenheimer Strategic Income Fund performed reasonably well, reflecting an
effective allocation strategy. The U.S. Treasury buyback and a tighter monetary
policy benefited interest-rate-sensitive securities. Global economic recovery,
rising oil prices and a potential soft landing of the U.S. economy fueled some
credit-sensitive assets. The portfolio focused on high yield corporate bonds,
emerging market debt and mortgage-backed securities, which provided attractive
income and some price appreciation. Exposure to European and Japanese markets
proved disappointing, thus having a negative impact on the Fund's performance.
Therefore we reduced those foreign holdings, as weak currencies and low yields
made investors seek opportunities in U.S. markets. The Fund's portfolio
holdings, allocations and strategies are subject to change.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until September 30, 2000. Performance is measured from the inception
of the class, in the case of Class A shares, on October 16, 1989; Class B
shares, November 30, 1992; Class C shares, May 26, 1995; and Class Y shares,
January 26, 1998. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charge on Class B and Class C shares, and reinvestments of all dividends and
capital gains distributions.
The performance of each class of the Fund's shares is compared to two indices
because the Fund invests in a variety of debt securities in domestic and foreign
markets. The Fund's performance is compared to the performance of the Lehman
Brothers Aggregate Bond Index and the Salomon Brothers World Government Bond
Index. The former is a broad-based, unmanaged index of U.S. corporate bond
issues, U.S. Government securities and mortgage-backed securities widely
regarded as a measure of the performance of the domestic debt securities market.
The latter is an unmanaged index of fixed rate bonds having a maturity of one
year or more, widely regarded as a benchmark of fixed income performance on a
world-wide basis.
Index performance reflects the reinvestment of income but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graphs that follow shows the effect of taxes. The Fund's performance reflects
the effects of Fund business and operating expenses. While index comparisons may
be useful to provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the securities in the indices and
include below-investment-grade obligations.
7 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 10
FUND PERFORMANCE
--------------------------------------------------------------------------------
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
-- Oppenheimer Strategic Income Fund (Class A)
-- Lehman Brothers Aggregate **** Salomon Brothers World Government
Bond Index Bond Index
[The following table was originally a line graph in the printed materials.]
<TABLE>
<CAPTION>
OPPENHEIMER LEHMAN SOLOMON BROTHERS
<S> <C> <C> <C>
09/30/90 $ 9,525 $10,000 $10,000
12/31/90 9,620 10,506 10,725
03/31/91 10,274 10,799 10,597
06/30/91 10,515 10,976 10,634
09/30/91 11,142 11,599 11,504
12/31/91 11,568 12,187 12,421
03/31/92 11,719 12,032 12,004
06/30/92 12,255 12,517 12,809
09/30/92 12,541 13,055 13,610
12/31/92 12,463 13,090 13,108
03/31/93 13,262 13,631 13,807
06/30/93 13,813 13,992 14,210
09/30/93 14,245 14,357 14,853
12/31/93 14,894 14,366 14,847
03/31/94 14,399 13,954 14,847
06/30/94 14,327 13,810 14,947
09/30/94 14,515 13,894 15,122
12/31/94 14,230 13,947 15,195
03/31/95 14,454 14,650 16,856
06/30/95 15,288 15,543 17,755
09/30/95 15,766 15,848 17,569
12/31/95 16,419 16,523 18,088
03/31/96 16,717 16,230 17,749
06/30/96 17,159 16,323 17,821
09/30/96 17,825 16,625 18,307
12/31/96 18,507 17,123 18,743
03/31/97 18,443 17,027 17,967
06/30/97 19,190 17,653 18,512
09/30/97 19,837 18,239 18,748
12/31/97 20,031 18,776 18,786
03/31/98 20,566 19,068 18,934
06/30/98 20,701 19,514 19,310
09/30/98 19,995 20,339 20,919
12/31/98 20,366 20,407 21,662
03/31/99 20,474 20,306 20,825
06/30/99 20,542 20,128 20,108
09/30/99 20,578 20,264 21,019
12/31/99 21,188 20,240 20,738
03/31/00 21,523 20,686 20,774
06/30/00 21,642 21,047 20,743
09/30/00 21,849 21,681 20,199
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 9/30/00(1)
1-YEAR 1.13% 5-YEAR 5.71% 10-YEAR 8.13%
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
-- Oppenheimer Strategic Income Fund (Class B)
-- Lehman Brothers Aggregate **** Salomon Brothers World Government
Bond Index Bond Index
[The following table was originally a line graph in the printed materials.]
<TABLE>
<CAPTION>
OPPENHEIMER LEHMAN SOLOMON BROTHERS
<S> <C> <C> <C>
11/30/92 $10,000 $10,000 $10,000
12/31/92 10,226 10,157 10,060
03/31/93 10,747 10,577 10,597
06/30/93 11,191 10,858 10,906
09/30/93 11,516 11,141 11,399
12/31/93 12,016 11,148 11,395
03/31/94 11,570 10,828 11,395
06/30/94 11,515 10,717 11,471
09/30/94 11,643 10,782 11,606
12/31/94 11,394 10,823 11,662
03/31/95 11,525 11,369 12,937
06/30/95 12,194 12,061 13,627
09/30/95 12,551 12,298 13,484
12/31/95 13,045 12,822 13,882
03/31/96 13,257 12,595 13,622
06/30/96 13,581 12,666 13,677
09/30/96 14,081 12,901 14,050
12/31/96 14,588 13,288 14,384
03/31/97 14,513 13,213 13,789
06/30/97 15,071 13,699 14,207
09/30/97 15,549 14,154 14,388
12/31/97 15,671 14,570 14,418
03/31/98 16,059 14,797 14,531
06/30/98 16,134 15,143 14,820
09/30/98 15,589 15,783 16,094
12/31/98 15,834 15,836 16,625
03/31/99 15,918 15,758 15,983
06/30/99 15,971 15,619 15,432
09/30/99 15,999 15,725 16,131
12/31/99 16,473 15,706 15,915
03/31/00 16,734 16,053 15,943
06/30/00 16,826 16,332 15,920
09/30/00 16,987 16,824 15,502
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 9/30/00(1)
1-YEAR 0.54% 5-YEAR 5.65% LIFE 7.00%
THE PERFORMANCE INFORMATION FOR BOTH INDICES IN THE GRAPHS BEGINS ON 9/30/90 FOR
CLASS A, 11/30/92 FOR CLASS B, 5/31/95 FOR CLASS C AND 1/31/98 FOR CLASS Y.
8 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 11
FUND PERFORMANCE
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
-- Oppenheimer Strategic Income Fund (Class C)
-- Lehman Brothers Aggregate **** Salomon Brothers World Government
Bond Index Bond Index
[The following table was originally a line graph in the printed materials.]
<TABLE>
<CAPTION>
OPPENHEIMER LEHMAN SOLOMON BROTHERS
<S> <C> <C> <C>
05/26/95 $10,000 $10,000 $10,000
06/30/95 10,023 10,073 10,059
09/30/95 10,309 10,271 9,954
12/31/95 10,715 10,709 10,247
03/31/96 10,889 10,519 10,055
06/30/96 11,131 10,579 10,096
09/30/96 11,542 10,774 10,371
12/31/96 11,983 11,098 10,618
03/31/97 11,920 11,036 10,179
06/30/97 12,354 11,441 10,488
09/30/97 12,773 11,821 10,621
12/31/97 12,848 12,169 10,643
03/31/98 13,167 12,358 10,727
06/30/98 13,229 12,647 10,940
09/30/98 12,780 13,182 11,851
12/31/98 12,965 13,226 12,272
03/31/99 13,039 13,160 11,798
06/30/99 13,057 13,045 11,392
09/30/99 13,026 13,133 11,908
12/31/99 13,418 13,117 11,748
03/31/00 13,574 13,407 11,769
06/30/00 13,656 13,640 11,752
09/30/00 13,728 14,051 11,443
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 9/30/00(1)
1-YEAR 4.43% 5-YEAR 5.90% LIFE 6.11%
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
-- Oppenheimer Strategic Income Fund (Class Y)
-- Lehman Brothers Aggregate **** Salomon Brothers World Government
Bond Index Bond Index
[The following table was originally a line graph in the printed materials.]
<TABLE>
<CAPTION>
OPPENHEIMER LEHMAN SOLOMON BROTHERS
<S> <C> <C> <C>
01/26/98 $10,000 $10,000 $10,000
03/31/98 10,181 10,027 9,981
06/30/98 10,257 10,261 10,180
09/30/98 9,936 10,695 11,028
12/31/98 10,108 10,731 11,420
03/31/99 10,194 10,678 10,979
06/30/99 10,237 10,584 10,600
09/30/99 10,241 10,656 11,081
12/31/99 10,579 10,643 10,932
03/31/00 10,732 10,878 10,951
06/30/00 10,826 11,067 10,935
09/30/00 10,911 11,401 10,648
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS Y SHARES OF THE FUND AT 9/30/00(1)
1-YEAR 6.55% LIFE 3.31%
1. See page 10 for further details.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. GRAPHS ARE NOT DRAWN
TO THE SAME SCALE.
9 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 12
NOTES
--------------------------------------------------------------------------------
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. BECAUSE OF ONGOING
MARKET VOLATILITY, THE FUND'S RETURNS MAY HAVE CHANGED SUBSTANTIALLY FROM THE
RETURNS SHOWN IN THIS REPORT. FOR QUARTERLY UPDATES ON THE FUND'S PERFORMANCE,
PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1.800.525.7048 OR VISIT OUR
WEBSITE AT WWW.OPPENHEIMERFUNDS.COM.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
CLASS A shares were first publicly offered on 10/16/89. Unless otherwise noted,
Class A returns include the current maximum initial sales charge of 4.75%. The
Fund's maximum sales charge for Class A shares was lower prior to 2/1/93, so
actual performance may have been higher.
CLASS B shares of the Fund were first publicly offered on 11/30/92. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "life-of-class" return for Class B
uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 5/26/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 1/26/98. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 13
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES--2.1%
American Money Management Corp., Commercial Debt Obligations,
Sub. Bonds, Series I, Cl. D1, 13.602% 1/15/12(1) $ 10,000,000 $ 10,140,000
------------------------------------------------------------------------------------------------------------------------------
Ameriquest Finance Trust, Collateralized Mtg. Obligations:
Series 1999-1, Cl. D, 9.75%, 3/25/29(1) 14,463,474 13,884,936
Series 2000-1, 8.50%, 8/17/01 2,943,727 2,895,892
------------------------------------------------------------------------------------------------------------------------------
Block Mortgage Finance, Inc., Asset-Backed Certificates,
Series 1999-1, Cl. A2, 6%, 4/27/20 18,000,000 17,696,250
------------------------------------------------------------------------------------------------------------------------------
Conseco Finance Securitizations Corp., Home Equity Loan Pass-Through
Certificates, Series 1999-F, Cl. A3, 6.97%, 10/15/30 10,000,000 9,921,800
------------------------------------------------------------------------------------------------------------------------------
Conseco Finance Securitizations Corp., Manufactured Housing Contract
Sr. Sub. Pass-Through Certificates, Series 2000-2, Cl. M2, 10.32%, 12/1/30 5,000,000 5,260,938
------------------------------------------------------------------------------------------------------------------------------
DLJ Ltd., Collateralized Bond Obligations, Series 1A, Cl. C2, 11.96%, 4/15/11(1) 15,000,000 12,393,750
------------------------------------------------------------------------------------------------------------------------------
Embarcadero Aircraft Securitization Trust Bonds, Series 2000-A,
Cl. B, 7.72%, 8/15/25(1,2) 2,500,000 2,507,031
------------------------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp., Manufactured Housing Contract Sr. Sub.
Pass-Through Certificates, Series 1997-5, Cl. M1, 6.95%, 5/15/29 5,000,000 4,681,250
------------------------------------------------------------------------------------------------------------------------------
Greenpoint Credit Manufactured Housing Contract Trust, Pass-Through
Certificates, Series 2000-3, Cl. IM1, 9.01%, 6/20/31 5,214,000 5,373,679
------------------------------------------------------------------------------------------------------------------------------
MBNA Master Credit Card Trust, Collateralized Mtg. Obligations,
Series 2000-H, Cl. C, 7.82%, 1/15/13(1,2) 5,000,000 5,000,000
------------------------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I,
Cl. ECFD, 8.75%, 12/25/28 16,581,537 15,462,283
------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, Collateralized Mtg. Obligations,
Series 1999-OAC, Cl. 1, 9.50%, 4/27/29(1) 6,868,443 6,387,652
------------------------------------------------------------------------------------------------------------------------------
Option One Mortgage Trust, Collateralized Mtg. Obligations:
Series 1999-1A, 10.06%, 3/26/29(1) 7,027,118 6,796,541
Series 1999-3, Cl. BB, 10.80%, 12/15/29 10,162,115 10,041,440
------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Commercial Mtg.
Pass-Through Certificates, Series 1998-1A, 5%, 11/25/27(1) 3,650,336 3,491,775
------------------------------------------------------------------------------------------------------------------------------
SB Finance Trust, Mtg. Pass-Through Certificates, Series 1999-1,
Cl. D, 10.50%, 6/25/29(1) 9,069,104 8,677,999
----------------
Total Asset-Backed Securities (Cost $144,175,795) 140,613,216
------------------------------------------------------------------------------------------------------------------------------
CORPORATE LOANS--0.1%
Telergy, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche A, 6.66%,
12/22/01(1,2) (Cost $8,822,384) 9,000,000 9,000,000
------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--30.6%
------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--20.7%
------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--18.6%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
8%,10/15/30(3) 37,500,000 38,039,250
11.50%, 10/1/16 1,918,914 2,091,847
Series 1252, Cl. J, 8%, 5/15/22 7,000,000 7,249,340
Series 1722, Cl. PJ, 6.50%, 7/15/23 8,855,000 8,509,035
</TABLE>
11 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 14
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates: Continued
Series 2132, Cl. GA, 6.15%, 2/15/27 $ 1,717,271 $ 1,651,792
Series 2198, Cl. PG, 7%, 12/15/28 12,000,000 11,700,000
Series 2253, Cl. A, 7%, 9/15/30 25,000,000 24,660,156
Series 2256, Cl. AB, 7.50%, 9/29/30 12,200,000 12,280,062
Series 2256, Cl. BC, 7%, 9/15/30 25,000,000 24,273,437
Series 2257, Cl. B, 7%, 9/15/30 12,000,000 11,628,750
------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass
Mtg. Participation Certificates:
10%, 5/1/20 950,098 1,011,855
10.50%, 5/1/20 2,091,602 2,250,418
12%, 6/1/17 4,004,036 4,443,199
Series 2246, Cl. AJ, 7.50%, 4/15/27 24,193,990 24,397,945
------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate
Mtg. Investment Conduit Pass-Through Certificates:
Series 2250, Cl. A, 7%, 12/15/27 16,632,530 16,434,936
Series 2252, Cl. PE, 7.50%, 4/15/30 20,000,000 19,553,125
Series 2253, Cl. PH, 7.50%, 9/15/30 14,213,800 14,160,498
------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 192, Cl. IO, 9.113%, 2/1/28(4) 211,128,399 63,668,408
Series 194, Cl. IO, 9.212%, 4/1/28(4) 162,435,329 50,126,527
Series 197, Cl. IO, 8.526%, 4/1/28(4) 209,687,368 64,380,575
Series 199, Cl. IO, 13.729%, 8/1/28(4) 356,501,138 112,966,298
Series 202, Cl. IO, 9.216%, 4/1/29(4) 161,045,250 51,383,500
Series 203, Cl. IO, 9.50%, 6/15/29(4) 57,099,209 18,592,930
Series 205, Cl. IO, 10.045%, 9/15/29(4) 23,696,237 7,501,340
Series 206, Cl. IO, 10.489%, 12/15/29(4) 14,409,684 4,577,326
Series 303, Cl. IO, 13.935%, 11/1/29(4) 18,864,160 5,712,303
Series 2030, Cl. PE, 10.83%, 2/15/28(4) 9,336,178 3,425,210
Series 2038, Cl. PM, 11.506%, 3/15/28(4) 22,052,714 9,572,256
Series 2052, Cl. IB, 10.683%, 4/15/28(4) 4,291,000 2,146,841
------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Mtg.-Backed Certificates, 10%, 4/1/20 1,156,161 1,211,553
------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 1/1/29 5,637,080 5,413,908
6.50%, 10/25/13-10/25/28(3) 237,000,000 230,580,770
7%, 10/25/27(3) 155,000,000 151,803,900
7%, 9/25/29-12/25/29 8,755,782 8,577,896
7.50%, 10/1/29(3) 11,500,000 11,471,250
8%, 10/1/29(3) 160,000,000 162,100,800
9.50%, 4/1/20-11/25/27 946,672 971,042
10.50%, 10/1/19 893,809 957,208
11%, 10/15/15-2/1/26 2,461,967 2,701,364
12%, 2/15/16 1,612,642 1,795,565
15%, 4/15/13 1,434,692 1,691,904
------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1994-27, Cl. PH, 6.50%, 9/25/22 4,045,000 3,977,974
------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Trust 2000-31, Cl. PD, 7.50%, 10/25/30 10,000,000 9,971,875
</TABLE>
12 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 15
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Trust 294, Cl. 2, 11.413%, 2/1/28(3,4) $ 76,562,285 $ 23,195,980
Trust G93-15, Cl. JA, 12.683%, 4/25/23(4) 5,184,412 1,390,045
----------------
1,236,202,193
------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--2.1%
Government National Mortgage Assn.:
6.50%, 2/20/29 27,560,384 26,423,794
7%, 1/15/28-8/15/28 34,610,136 34,103,455
8%, 1/15/28-9/15/28 29,834,497 30,382,372
12.50%, 12/15/13-11/15/15 9,065,510 10,180,206
13%, 10/15/15 13,219,087 15,065,529
13.50%, 6/15/15 15,910,840 18,257,689
----------------
134,413,045
------------------------------------------------------------------------------------------------------------------------------
PRIVATE--9.9%
------------------------------------------------------------------------------------------------------------------------------
AGRICULTURAL--0.1%
Prudential Agricultural Credit, Inc., Farmer Mac Agricultural Real Estate
Trust Sr. Sub. Mtg. Pass-Through Certificates, Series 1992-2:
Cl. B2, 9.677%, 1/15/03(1,2) 1,764,485 1,466,728
Cl. B3, 9.406%, 4/15/09(1,2) 5,274,061 3,853,361
----------------
5,320,089
------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--7.2%
AMRESCO Commercial Mortgage Funding I Corp., Multiclass
Mtg. Pass-Through Certificates, Series 1997-C1:
Cl. G, 7%, 6/17/29(1) 1,550,000 1,248,113
Cl. H, 7%, 6/17/29(1) 1,600,000 1,210,688
------------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1995-MD4, Cl. A4, 7.384%, 8/13/29 5,000,000 4,809,766
Series 1995-MD4, Cl. A5, 7.384%, 8/13/29 20,000,000 18,678,125
Series 1996-MD6, Cl. A7, 7.966%, 11/13/26(2) 10,860,000 9,490,622
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(2) 11,875,000 8,979,541
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(2) 24,582,312 17,950,849
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(2) 5,532,925 3,719,595
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 7,700,000 4,749,937
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 21,050,000 10,056,309
Series 1997-MD7, Cl. A1B, 7.41%, 1/13/30 7,000,000 6,939,844
------------------------------------------------------------------------------------------------------------------------------
Bank of America Mortgage Securities, Series 1999-7, Cl. A21, 6.50%, 7/25/29 12,401,000 11,129,897
------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. E, 6.72%, 12/25/03(1,2) 2,609,000 2,404,357
Series 1993-C1, Cl. F, 6.72%, 12/25/03(1,2) 14,300,000 12,454,406
------------------------------------------------------------------------------------------------------------------------------
Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Obligations Sub. Bonds, Series 1997-2, Cl. F, 6.60%, 8/19/12(1) 5,000,000 3,843,750
------------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Collateralized Mtg. Obligations,
Series 1996-C2, Cl. F, 8.237%, 9/15/23(1,2) 2,500,000 2,276,563
------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Sub. Step Asset-Backed Certificates,
Series 2000-1, Cl. BV, 9.77%, 3/25/31(2) 5,033,000 5,088,048
</TABLE>
13 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 16
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL Continued
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1998-C1, Cl. F, 6%, 5/17/40(1) $ 5,500,000 $ 3,403,125
------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates:
Series 1994-C1, Cl. 2D, 8.70%, 9/25/25 2,500,000 2,456,250
Series 1994-C1, Cl. 2E, 8.70%, 9/25/25 2,500,000 2,428,516
Series 1994-C1, Cl. 2G, 8.70%, 9/25/25 4,870,000 4,685,853
------------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates:
Series 1997, Cl. D, 8.104%, 5/25/08(1,2) 8,500,000 7,106,797
Series 1997, Cl. E, 8.104%, 2/25/11(1,2) 14,500,000 10,512,500
------------------------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust, Commercial
Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F, 7.50%, 9/18/15 11,775,000 9,132,984
------------------------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C2, Cl. IO, 9.376%, 5/18/28(4) 116,686,431 4,084,025
------------------------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust, Sub.
Collateralized Mtg. Obligations, Series 1997-C1, Cl. F, 7%, 12/18/14(1) 16,000,000 12,115,000
------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp. Commercial Mortgage Securities, Inc.,
Mtg. Pass-Through Certificates:
Series 1997-C1, Cl. G, 7.414%, 11/15/11 19,440,000 14,494,950
Series 1997-C2, Cl. F, 6.75%, 4/16/29 17,785,500 10,693,532
Series 1998-C2, Cl. D, 6.50%, 7/15/10 14,583,523 13,220,875
------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp. Commercial Mortgage Securities, Inc.,
Mtg. Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, Cl. X, 8.12%, 7/15/27(4) 166,490,785 12,434,781
------------------------------------------------------------------------------------------------------------------------------
Impac Secured Assets Corp., Collateralized Mtg. Obligations Pass-Through
Certificates, Series 2000-1, Cl. A9, 7.90%, 4/25/30 13,500,000 13,521,094
------------------------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg. Pass-Through
Certificates, Series 2000-C3, Cl. A2, 7.95%, 1/15/10 10,000,000 10,425,000
------------------------------------------------------------------------------------------------------------------------------
LB Commercial Mortgage Trust, Commercial Mtg. Pass-Through
Certificates, Series 1999-C2, Cl. C, 7.47%, 10/15/09 8,429,000 8,352,612
------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. D, 7.772%, 6/15/21(2) 2,077,279 2,070,626
------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. E, 7.41%, 3/15/06(1,2) 9,365,000 8,046,584
Series 1996-C1, Cl. F, 7.41%, 2/15/28(2,5) 13,360,980 9,977,938
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(1) 3,475,000 2,865,246
Series 1997-HF1, Cl. G, 6.86%, 5/15/11(1) 4,638,000 3,344,433
Series 1997-RR, Cl. D, 7.771%, 4/30/39(1) 2,950,158 2,257,793
Series 1997-RR, Cl. E, 7.768%, 4/30/39(1,2) 9,200,495 6,321,028
Series 1997-RR, Cl. F, 7.771%, 4/30/39(1) 30,801,658 18,047,847
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(1) 14,358,000 12,159,431
------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Sub. Bonds, Series 1995-GAL1,
Cl. E, 8.25%, 8/15/05(1) 4,500,000 4,083,750
------------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-MC2, Cl. F, 5.75%, 12/21/26 8,500,000 6,672,500
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(1) 2,939,000 2,455,902
------------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through Certificates,
Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5) 11,700,000 9,949,342
</TABLE>
14 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL Continued
Multi-Family Capital Access One, Inc., Series 1, Cl. D, 10.078%, 1/15/24(1,2) $ 3,576,000 $ 3,021,720
------------------------------------------------------------------------------------------------------------------------------
Providian Master Trust Sub. Collateralized Mtg. Obligations,
Series 2000-2, Cl. C, 7.98%, 4/15/09(1) 6,200,000 6,203,875
------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. D, 9.45%, 5/25/24 479,566 477,056
Series 1994-C1, Cl. C, 8%, 6/25/26 1,265,952 1,260,117
Series 1994-C1, Cl. E, 8%, 6/25/26 5,296,311 5,165,145
Series 1994-C2, Cl. E, 8%, 4/25/25 17,369,013 17,127,476
Series 1994-C2, Cl. G, 8%, 4/25/25 5,357,635 5,136,633
Series 1995-C1, Cl. F, 6.90%, 2/25/27 4,535,721 4,191,644
------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Collateralized Mtg. Obligations,
Series 2000-UP1, Cl. A2, 8%, 9/25/30 20,000,000 20,050,000
------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Commercial Mtg.
Pass-Through Certificates:
Series 1996-C1, Cl. E, 8.875%, 1/20/06 4,550,000 4,194,531
Series 1996-C1, Cl. F, 8.875%, 1/20/06(2) 9,632,000 7,290,220
------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates:
Series 1995-C4, Cl. E, 8.897%, 6/25/26(1,2) 9,453,000 9,411,643
Series 1996-CFL, Cl. D, 7.034%, 2/25/28 14,220,000 14,122,238
Series 1999-C3, Cl. G, 8.07%, 3/20/02(2) 18,983,139 19,054,326
------------------------------------------------------------------------------------------------------------------------------
Two Grand Central Tower Trust, Commercial Mtg. Sub. Nts.,
Series 2000-RIG1, 10.378%, 9/3/01(2) 9,000,000 8,853,750
------------------------------------------------------------------------------------------------------------------------------
Vendee Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security:
Series 1992-2, Cl. IO, 10.653%, 9/15/22(4) 92,131,881 2,943,902
Series 1995-2B, Cl. 2IO, 17.238%, 6/15/25(4) 9,519,273 924,503
Series 1995-3, Cl. 1IO, 10.42%, 9/15/25(4) 250,744,739 3,388,972
----------------
484,538,475
------------------------------------------------------------------------------------------------------------------------------
MULTIFAMILY--0.1%
Countrywide Funding Corp., Mtg. Pass-Through Certificates:
Series 1993-11, Cl. B1, 6.25%, 2/25/09 929,226 863,600
Series 1993-11, Cl. B3, 6.25%, 2/25/09(5) 497,813 183,569
------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Asset Management, Sub. Collateralized Bond Obligations,
Series 1A, Cl. D, 12.54%, 6/13/11(1) 6,000,000 5,760,000
----------------
6,807,169
------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--2.5%
Amortizing Residential Collateral Trust, Collateralized Mtg. Obligations,
Trust 2000-BC1, Cl. B, 8.87%, 1/25/30(1,2) 2,767,000 2,744,518
------------------------------------------------------------------------------------------------------------------------------
Chase Mortgage Finance Corp., Sub. Mtg. Pass-Through
Certificates, Series 1993-J, Cl. 2A8, 7%, 8/25/24 10,000,000 9,631,200
------------------------------------------------------------------------------------------------------------------------------
Citicorp Mortgage Securities, Inc., Sub. Collateralized Mtg. Obligations:
Series 1993-5, Cl. B3, 7%, 4/25/23(1) 1,118,664 995,611
Series 1993-5, Cl. B4, 7%, 4/25/23(1) 846,215 529,942
------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,203,405 2,903,087
------------------------------------------------------------------------------------------------------------------------------
Imperial CMB Trust, Collaterized Mtg. Obligations, Trust 1998-1,
Cl. B, 7.25%, 11/25/29 3,186,521 3,088,934
</TABLE>
15 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 18
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RESIDENTIAL Continued
Norwest Asset Securities Corp., Collateralized Mtg. Obligations:
Series 1997-14, Cl. A-10, 7.25%, 10/25/27 $ 12,508,500 $ 11,863,437
Series 1998-33, Cl. A1, 6.25%, 1/25/29 3,973,402 3,798,324
------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mtg. Asset-Backed Pass-Through
Certificates, Series 1997-QS8, Cl. M3, 7.50%, 8/25/27 3,168,341 2,892,094
------------------------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust,
Asset-Backed Pass-Through Certificates:
Series 1996-A1, Cl. A8, 7.35%, 3/25/26 11,830,697 11,264,953
Series 1998-A12, Cl. A12, 6.80%, 11/25/28 10,740,000 9,498,134
------------------------------------------------------------------------------------------------------------------------------
Residential Funding Mortgage Securities I, Inc., Collateralized Mtg.
Pass-Through Certificates, Series 1995-S17, Cl. A8, 7.50%, 12/26/25 18,833,213 18,491,768
------------------------------------------------------------------------------------------------------------------------------
Residential Funding Mortgage Securities I, Inc.,
Mtg. Pass-Through Certificates:
Series 1997-S12, Cl. A18, 6.75%, 8/25/27 11,188,000 10,621,552
Series 1998-S31, Cl. A1, 6.50%, 12/25/28 48,267,456 46,110,384
Series 1998-S9, Cl. 2A4, 6.75%, 4/25/28 16,263,000 15,144,919
------------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. Sub. Bonds, Series 1993-3,
Cl. B2, 6.713%, 8/25/08 808,655 776,373
------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-Through
Certificates, Series 1996-B, Cl. 1, 7.136%, 4/25/26(1) 13,969,156 9,228,374
------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1999-1, 10%, 8/25/28 3,455,770 3,127,473
----------------
162,711,077
----------------
Total Mortgage-Backed Obligations (Cost $2,053,031,943) 2,029,992,048
------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--7.7%
U.S. Treasury Bonds:
6.125%, 11/15/27(6) 66,000,000 66,556,908
6.25%, 5/15/30 126,070,000 132,570,547
11.25%, 2/15/15 10,000,000 14,865,630
STRIPS, 6.169%, 5/15/18(7) 100,600,000 34,365,262
STRIPS, 6.243%, 5/15/05(7) 15,235,000 11,594,155
STRIPS, 6.524%, 2/15/19(7) 175,000,000 57,312,850
STRIPS, 6.553%, 8/15/14(7) 39,500,000 17,004,671
STRIPS, 6.79%, 11/15/21(7) 195,000,000 54,590,835
------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 11/15/04 57,000,000 56,964,375
6%, 8/15/09(8,9) 45,700,000 45,899,938
6.375%, 6/30/02 1,000,000 1,005,313
6.50%, 10/15/06(6) 16,000,000 16,445,008
----------------
Total U.S. Government Obligations (Cost $494,698,462) 509,175,492
</TABLE>
16 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 19
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS--15.9%
------------------------------------------------------------------------------------------------------------------------------
ARGENTINA--1.7%
Argentina (Republic of) Bonds:
9.75%, Series WW, 12/4/05 $ 18,205,000 $ 16,566,550
11.75%, 6/15/15 35,840,000 32,883,200
------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas:
Series PRO1, 2.693%, 4/1/07(2) [ARP] 54,340,261 39,658,658
Series PRO2, 6.62%, 4/1/07(2,10) 6,295,645 5,359,577
------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 6%, 3/31/23(2) 7,420,000 5,045,600
------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09 10,287,000 9,721,215
------------------------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas,
Series BPR01, 2.693%, 4/1/07(2) [ARP] 2,551,395 1,803,248
------------------------------------------------------------------------------------------------------------------------------
City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04 [ARP] 5,490,000 4,820,367
----------------
115,858,415
------------------------------------------------------------------------------------------------------------------------------
BRAZIL--2.3%
Brazil (Federal Republic of) Bonds:
12.25%, 3/6/30 8,456,000 7,694,960
12.75%, 1/15/20 22,955,000 22,036,800
------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debt Capitalization Bonds,
Series 20 yr., 8%, 4/15/14 12,715,539 9,759,177
------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Gtd. Disc. Bonds, 7.375%, 4/15/24(2) 29,005,000 23,095,231
------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Par Bonds, 6%, 4/15/24(2) 15,600,000 10,510,500
------------------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Unsub. Bonds, 11%, 8/17/40 96,628,200 77,205,932
----------------
150,302,600
------------------------------------------------------------------------------------------------------------------------------
BULGARIA--0.3%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 7.75%, 7/28/24(2) 1,832,000 1,406,060
------------------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds,
Tranche A, 3%, 7/28/12(2) 16,555,000 12,064,456
------------------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Interest Arrears Bonds, 7.75%, 7/28/11(2) 12,410,000 9,493,650
----------------
22,964,166
------------------------------------------------------------------------------------------------------------------------------
COLOMBIA--0.3%
Colombia (Republic of) Bonds, 9.75%, 4/23/09 3,755,000 3,022,775
------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) Nts., 8.625%, 4/1/08 8,435,000 6,516,037
------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) Unsec. Unsub. Bonds, 7.625%, 2/15/07 8,950,000 6,869,125
----------------
16,407,937
------------------------------------------------------------------------------------------------------------------------------
ECUADOR--0.2%
Ecuador (Republic of) Bonds, 4%, 8/15/30(2,5) 21,150,000 8,354,250
------------------------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Unsec. Bonds:
4%, 8/15/30(2) 7,580,000 2,994,100
12%, 11/15/12(5) 1,927,000 1,353,717
12%, 11/15/12 1,680,000 1,180,200
----------------
13,882,267
</TABLE>
17 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 20
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FRANCE--1.4%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 4/25/07 [EUR] 104,640,000 $ 93,645,939
------------------------------------------------------------------------------------------------------------------------------
GREAT BRITAIN--0.4%
United Kingdom Treasury Bonds, 8%, 6/10/03 [GBP] 15,390,000 23,937,329
------------------------------------------------------------------------------------------------------------------------------
GREECE--0.2%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08 [GRD] 5,117,900,000 15,341,120
------------------------------------------------------------------------------------------------------------------------------
INDONESIA--0.0%
Perusahaan Listr Nts., 17%, 8/21/01 [IDR] 9,000,000,000 1,032,051
------------------------------------------------------------------------------------------------------------------------------
IVORY COAST--0.0%
Ivory Coast (Government of) Front Loaded Interest Reduction Bonds,
2%, 3/29/18(11) 87,000 16,095
------------------------------------------------------------------------------------------------------------------------------
Ivory Coast (Government of) Past Due Interest Bonds,
Series F, 1.90%, 3/29/18(11) [FRF] 111,406,500 2,735,349
----------------
2,751,444
------------------------------------------------------------------------------------------------------------------------------
JAPAN--1.4%
Japan (Government of) Bonds, Series 187, 3.30%, 6/20/06 [JPY] 8,918,400,000 90,892,411
------------------------------------------------------------------------------------------------------------------------------
JORDAN--0.0%
Hashemite (Kingdom of Jordan) Disc. Bonds, 7.75%, 12/23/23(2) 205,000 171,687
------------------------------------------------------------------------------------------------------------------------------
MEXICO--1.7%
United Mexican States Bonds:
10.375%, 2/17/09 5,565,000 6,068,632
11.375%, 9/15/16 41,688,000 48,566,520
11.50%, 5/15/26(8) 30,635,000 37,267,477
------------------------------------------------------------------------------------------------------------------------------
United Mexican States Nts., 9.875%, 2/1/10 19,004,000 20,248,762
----------------
112,151,391
------------------------------------------------------------------------------------------------------------------------------
NORWAY--0.5%
Norway (Government of) Bonds:
5.50%, 5/15/09 [NOK] 192,180,000 20,065,075
9.50%, 10/31/02 [NOK] 110,780,000 12,730,963
----------------
32,796,038
------------------------------------------------------------------------------------------------------------------------------
PANAMA--0.2%
Panama (Republic of) Bonds, 8.875%, 9/30/27 8,539,000 7,151,412
------------------------------------------------------------------------------------------------------------------------------
Panama (Republic of) Interest Reduction Bonds, 4.50%, 7/17/14(2) 8,945,000 7,156,000
----------------
14,307,412
------------------------------------------------------------------------------------------------------------------------------
PERU--0.8%
Peru (Republic of) Sr. Nts., Zero Coupon, 4.533%, 2/28/16(7) 114,538,313 51,198,626
------------------------------------------------------------------------------------------------------------------------------
PHILIPPINES--0.1%
Philippines (Republic of) Nts., 10.625%, 3/16/25 9,648,000 8,224,920
------------------------------------------------------------------------------------------------------------------------------
RUSSIA--2.8%
Russian Federation Bonds, 8.25%, 3/31/30(1) 16,287,750 10,790,634
------------------------------------------------------------------------------------------------------------------------------
Russian Federation Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 13,960,000 13,384,150
</TABLE>
18 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 21
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RUSSIA Continued
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 $ 28,877,000 $ 22,957,215
10%, 6/26/07 2,515,000 1,930,263
12.75%, 6/24/28 25,590,000 22,295,288
------------------------------------------------------------------------------------------------------------------------------
Russian Federation Unsub. Bonds, 2.50%, 3/31/30(2,3) 287,392,250 111,274,687
----------------
182,632,237
------------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA--0.4%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10 [ZAR] 201,800,000 27,034,725
------------------------------------------------------------------------------------------------------------------------------
SWEDEN--0.1%
Sweden (Kingdom of) Debs., Series 1038, 6.50%, 10/25/06 [SEK] 65,300,000 7,230,113
------------------------------------------------------------------------------------------------------------------------------
TURKEY--0.1%
Turkey (Republic of) Bonds, 11.75%, 6/15/10 6,914,000 6,929,557
------------------------------------------------------------------------------------------------------------------------------
VENEZUELA--1.0%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27(8) 26,885,000 18,268,358
------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Collateralized Par Bonds:
Series W-A, 6.75%, 3/31/20 30,878,000 22,926,915
Series W-B, 6.75%, 3/31/20 3,355,000 2,491,088
------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds, Series DL, 7.875%, 12/18/07(2) 23,106,381 19,856,931
----------------
63,543,292
----------------
Total Foreign Government Obligations (Cost $1,066,283,049) 1,053,235,677
------------------------------------------------------------------------------------------------------------------------------
LOAN PARTICIPATIONS--1.1%
Algeria (Republic of) Trust III Nts., Tranche 3, 2.387%, 3/4/10(1,2,3) [JPY] 3,436,058,000 21,781,415
------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Bank Mandiri Loan:
Series 3C, 8.344%, 6/1/03(1,2) 800,000 584,000
Series 4C, 8.344%, 6/1/04(1,2) 800,000 560,000
Series 5 yr., 8.344%, 6/1/05(1,2) 650,000 442,000
------------------------------------------------------------------------------------------------------------------------------
ING Barings LLC, Bank Mandiri Linked Nts., Series 5C, 8.344%, 6/1/05(1,2) 300,000 226,875
------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 7.75%, 1/1/09(1,2) 10,218,888 9,222,547
------------------------------------------------------------------------------------------------------------------------------
PT Bank Ekspor Impor Indonesia Nts., Series 3 yr., 10.094%, 8/25/01(1,2) 1,350,000 1,248,750
------------------------------------------------------------------------------------------------------------------------------
PT Bank Negara Indonesia Gtd. Nts., Series 3 yr., 10.094%, 8/25/01(1,2) 2,500,000 2,312,500
------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc., Bank Umum Loan:
Series C, 9.844%, 8/25/02(1,2) 400,000 343,500
Series C, 10.094%, 8/25/01(1,2) 1,300,000 1,202,500
------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 8.461%, 4/28/02 (representing a
basket of reference loans and a total return swap between Chase
Manhattan Bank and the Trust)(1,2) 39,790,000 31,612,899
----------------
Total Loan Participations (Cost $78,677,014) 69,536,986
</TABLE>
19 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 22
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS AND NOTES--39.6%
------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.7%
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 $ 5,800,000 $ 5,742,000
------------------------------------------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(1) 7,500,000 7,200,000
------------------------------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 10,350,000 8,435,250
------------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.75% Sr. Nts., Series C, 12/10/01(1) 2,000,000 1,941,250
------------------------------------------------------------------------------------------------------------------------------
Greater Toronto Airports Authority, 5.40% Debs., 12/3/02 [CAD] 10,005,000 6,583,311
------------------------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust Sr. Nts.,
Series 1997-A, Cl. B, 11.76%, 6/15/04(1) 3,468,266 3,551,505
------------------------------------------------------------------------------------------------------------------------------
Pentacon, Inc., 12.25% Sr. Unsec. Nts., Series B, 4/1/09 9,350,000 5,282,750
------------------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07(1) 10,150,000 9,947,000
----------------
48,683,066
------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.2%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 11,300,000 10,565,500
------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.4%
Avecia Group plc, 11% Sr. Unsec. Nts., 7/1/09 7,500,000 7,425,000
------------------------------------------------------------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 1,700,000 442,000
------------------------------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09 6,650,000 6,558,562
10.125% Sr. Unsec. Sub. Nts., 7/1/09 [EUR] 12,500,000 11,062,138
Zero Coupon Sr. Unsec. Disc. Nts., 13.087%, 12/31/09(7) 25,140,000 8,170,500
------------------------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.625% Sr. Sec. Nts., Series A, 5/1/07 1,800,000 1,761,750
9.875% Sec. Nts., Series B, 5/1/07 13,450,000 13,164,187
10.875% Sr. Sub. Nts., 5/1/09 5,375,000 5,220,469
------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 9,090,000 9,226,350
------------------------------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07(1) 4,375,000 2,187,500
------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 5,020,000 2,685,700
------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 7/1/07 4,100,000 3,177,500
------------------------------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Sec. Nts., 6/15/07(1,11) 6,936,090 572,227
------------------------------------------------------------------------------------------------------------------------------
Reliance Industries Ltd.:
10.25% Unsec. Nts., Series B, 1/15/97(5) 2,000,000 1,720,518
10.25% Unsec. Nts., Series B, 1/15/97 8,700,000 7,484,253
------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09 4,500,000 3,487,500
------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 9,565,000 6,743,325
12.375% Sr. Sec. Nts., Series B, 7/15/06 1,700,000 1,725,500
----------------
92,814,979
------------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES--0.1%
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05(1) 12,553,000 8,598,805
</TABLE>
20 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 23
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DURABLES--0.3%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 $ 4,296,000 $ 4,124,160
------------------------------------------------------------------------------------------------------------------------------
Holmes Products Corp.:
9.875% Sr. Sub. Nts., Series C, 11/15/07 2,000,000 1,190,000
9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 6,110,000 3,635,450
------------------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 5,065,000 1,544,825
------------------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(1) 3,596,000 2,337,400
------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(1) 4,705,000 5,019,783
----------------
17,851,618
------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--0.6%
AKI Holdings Corp., 0%/13.50% Sr. Disc. Debs., 7/1/09(1,12) 3,850,000 1,559,250
------------------------------------------------------------------------------------------------------------------------------
AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 3,350,000 2,680,000
------------------------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 9,555,000 9,698,325
------------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(1,11) 1,450,000 152,250
------------------------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08(1,11) 4,550,000 477,750
------------------------------------------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Nts., 3/29/01(1,11,13) 1,850,000 462,500
------------------------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08(1) 3,750,000 3,543,750
------------------------------------------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00(1,11,13) 4,025,000 694,312
------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06 7,575,000 5,529,750
------------------------------------------------------------------------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 10,300,000 10,145,500
------------------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(11) 6,340,000 538,900
------------------------------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 6,300,000 6,079,500
----------------
41,561,787
------------------------------------------------------------------------------------------------------------------------------
ENERGY--2.0%
Chesapeake Energy Corp.:
8.50% Sr. Nts., Series B, 3/15/12 2,000,000 1,820,000
9.125% Sr. Unsec. Nts., 4/15/06 1,491,000 1,457,452
9.625% Sr. Unsec. Nts., Series B, 5/1/05 5,825,000 5,810,437
------------------------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 11,450,000 8,072,250
------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 2,000,000 1,250,000
------------------------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 4,450,000 4,116,250
------------------------------------------------------------------------------------------------------------------------------
Empresa Electrica del Norte Grande SA, 10.50% Sr. Debs., 6/15/05(1) 1,300,000 328,250
------------------------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 9,735,000 9,929,700
------------------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05 13,450,000 14,156,125
------------------------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 5,925,000 3,643,875
------------------------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners LP/Leviathan Finance Corp.,
10.375% Sr. Unsec. Sub. Nts., Series B, 6/1/09 7,000,000 7,420,000
------------------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 12,250,000 11,086,250
------------------------------------------------------------------------------------------------------------------------------
Parker Drilling Co., 9.75% Sr. Unsec. Nts., Series D, 11/15/06 4,600,000 4,611,500
------------------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 9,185,000 8,897,969
------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 8,500,000 9,828,125
------------------------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 20,215,000 15,363,400
</TABLE>
21 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 24
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY Continued
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 $ 7,275,000 $ 8,366,250
------------------------------------------------------------------------------------------------------------------------------
Statia Terminals International NV/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 1,775,000 1,794,969
------------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 9,460,000 9,270,800
------------------------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(12) 8,725,000 6,783,687
----------------
134,007,289
------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--2.1%
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 6,485,000 2,885,825
10% Sr. Sub. Nts., Series 97-A, 3/15/04 7,050,000 3,137,250
------------------------------------------------------------------------------------------------------------------------------
ASAT Finance LLC, Units (each unit consists of $1,000 principal amount
of 12.50% sr. nts., 11/1/06 and one warrant to purchase shares
of common stock)(5,14) 1,515,555 1,814,878
------------------------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 7/10/1998(1,11,13) [IDR] 27,000,000,000 461,538
------------------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 4,167,000 3,437,775
------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 5.625% Unsec. Unsub. Nts., 6/10/03 [GBP] 3,555,000 5,176,470
------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04 [GBP] 15,135,000 22,433,040
------------------------------------------------------------------------------------------------------------------------------
Hanvit Bank:
0%/12.75% Unsec. Sub. Nts., 3/1/10(5,12) 19,440,000 19,780,200
0%/12.75% Unsec. Sub. Nts., 3/1/10(12) 12,400,000 12,617,000
------------------------------------------------------------------------------------------------------------------------------
IBJ Preferred Capital Co. (The) LLC, 8.79% Bonds, 12/29/49(2,5) 6,550,000 5,909,037
------------------------------------------------------------------------------------------------------------------------------
LaBranche & Co., Inc., 12% Sr. Unsec. Sub. Nts., 3/2/07 5,900,000 6,342,500
------------------------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(5) 10,000,000 10,000,000
------------------------------------------------------------------------------------------------------------------------------
Mexican Williams Sr. Nts., 7.671%, 11/15/08(2) 1,500,000 1,410,000
------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 5,350,000 3,076,250
------------------------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03(1) 9,275,000 8,208,375
------------------------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/04(1,11,13) 4,970,000 136,675
------------------------------------------------------------------------------------------------------------------------------
Parametric RE Ltd., 11.341% Nts., 11/19/07(2,5) 2,400,000 2,454,000
------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/18/03(1,11,13) 11,350,000 1,475,500
24% Nts., 6/19/03(11,13) [IDR] 6,484,800,000 96,071
------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 19,755,000 17,038,687
------------------------------------------------------------------------------------------------------------------------------
SBS Agro Finance BV, 10.25% Bonds, 7/21/01(1,11,13) 14,961,000 523,635
------------------------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(1,11,13) 7,580,000 3,600,500
------------------------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 3,525,000 1,771,312
------------------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 5,817,000 5,402,539
----------------
139,189,057
------------------------------------------------------------------------------------------------------------------------------
FOOD & DRUG--0.4%
Family Restaurants, Inc.:
9.75% Sr. Nts., 2/1/02 21,100,000 4,536,500
10.875% Sr. Sub. Disc. Nts., 2/1/04 4,800,000 888,000
------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 15,800,000 12,719,000
</TABLE>
22 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD & DRUG Continued
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 $ 3,450,000 $ 3,346,500
------------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(11,13) 2,500,000 112,500
11.625% Sub. Nts., 6/15/02(11,13) 2,000,000 490,000
12.625% Sub. Nts., 6/15/02(11) 3,000,000 735,000
------------------------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 3,225,000 3,399,553
----------------
26,227,053
------------------------------------------------------------------------------------------------------------------------------
FOOD/TOBACCO--0.6%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 2,750,000 2,117,500
------------------------------------------------------------------------------------------------------------------------------
Canandaigua Brands, Inc., 8.50% Sr. Unsec. Sub. Nts., 3/1/09 1,500,000 1,473,750
------------------------------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc., 10% Sr. Nts., 6/15/09 1,975,000 1,194,875
------------------------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(12) 6,581,000 5,067,370
------------------------------------------------------------------------------------------------------------------------------
Doane Pet Care Co., 9.75% Sr. Unsec. Sub. Nts., 5/15/07 2,197,000 1,878,435
------------------------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 7,560,000 6,615,000
------------------------------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 2,800,000 2,527,000
------------------------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 12,550,000 9,851,750
------------------------------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC/Triac Beverage Holdings Corp.,
10.25% Sr. Sub. Nts., 2/15/09 5,300,000 5,922,750
----------------
36,648,430
------------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS--1.1%
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(1,11,13) 3,462,000 281,287
------------------------------------------------------------------------------------------------------------------------------
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 3,300,000 3,225,750
8.25% Sr. Unsec. Sub. Nts., 8/1/08 3,300,000 3,213,375
------------------------------------------------------------------------------------------------------------------------------
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(1) 5,875,000 2,261,875
------------------------------------------------------------------------------------------------------------------------------
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 11,550,000 7,796,250
------------------------------------------------------------------------------------------------------------------------------
Domtar, Inc., 10.85% Debs., 8/5/17 [CAD] 1,700,000 1,399,139
------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Unsec. Nts., Series B, 6/15/07 2,350,000 1,609,750
------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 4,800,000 4,884,000
------------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
9% First Priority Sr. Sec. Nts., 6/1/04 3,775,000 3,916,562
10.625% Second Priority Sr. Sec. Nts., 4/15/05 3,000,000 3,105,000
------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 11,290,000 11,360,562
10.875% Sr. Sub. Nts., 4/1/08 8,280,000 7,617,600
------------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Unsec. Nts., 12/15/06(10) 16,327,710 18,001,300
------------------------------------------------------------------------------------------------------------------------------
Tembec Finance Corp., 9.875% Sr. Nts., 9/30/05 1,000,000 1,017,500
------------------------------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 3,850,000 3,484,250
----------------
73,174,200
</TABLE>
23 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 26
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GAMING/LEISURE--2.0%
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(1,11,13) $ 33,500 $ --
------------------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 10,475,000 9,898,875
------------------------------------------------------------------------------------------------------------------------------
Coast Hotel & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 3,000,000 2,977,500
------------------------------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 6,800,000 6,596,000
------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 9,425,000 9,000,875
------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 6,000,000 6,255,000
------------------------------------------------------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 8,000,000 8,300,000
------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 13,350,000 13,383,375
------------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 11,875,000 11,934,375
------------------------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 3,600,000 3,366,000
------------------------------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06 7,100,000 6,851,500
------------------------------------------------------------------------------------------------------------------------------
Mandalay Resort Group, 10.25% Sr. Sub. Nts., 8/1/07(5) 7,000,000 7,253,750
------------------------------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 8,000,000 7,540,000
------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06 2,950,000 2,894,687
8.75% Sr. Unsec. Sub. Nts., 1/1/09 12,050,000 11,989,750
------------------------------------------------------------------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(1,11,13) 10,800,000 --
------------------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(12) 6,350,000 4,270,375
9.25% Sr. Nts., 4/1/06 5,355,000 5,020,312
9.75% Sr. Nts., 6/15/07 6,050,000 5,687,000
------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00(1) 100,000 100,500
------------------------------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 5,720,000 5,405,400
------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/1/08 4,500,000 4,359,375
9.875% Sr. Sub. Nts., 7/1/10(5) 2,500,000 2,518,750
----------------
135,603,399
------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--0.7%
Charles River Laboratories, Inc., 13.50% Sr. Sub. Nts., Series B, 10/1/09 3,867,500 4,389,612
------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08(1) 3,550,000 3,363,625
------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08 [DEM] 1,700,000 773,279
------------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(5) 4,100,000 4,110,250
9.75% Sr. Nts., 11/15/08(5) 5,500,000 5,513,750
------------------------------------------------------------------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr. Unsec. Sub. Nts., Series B, 11/1/07(1) 975,000 775,125
------------------------------------------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09 4,750,000 5,035,000
------------------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 6,900,000 4,623,000
------------------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 6,415,000 6,767,825
------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 2,000,000 1,925,000
8.625% Sr. Sub. Nts., 1/15/07 3,550,000 3,532,250
9.25% Sr. Nts., 9/1/10(5) 3,500,000 3,675,000
------------------------------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09 3,900,000 4,231,500
----------------
48,715,216
</TABLE>
24 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 27
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING--0.9%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 $ 4,090,000 $ 2,719,850
------------------------------------------------------------------------------------------------------------------------------
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06(1) 5,000,000 4,556,250
------------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc.:
8% Sr. Nts., 2/1/09 8,500,000 7,841,250
9.75% Sr. Sub. Nts., 9/15/10 5,200,000 5,070,000
------------------------------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 8,000,000 7,600,000
------------------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Unsec. Sub. Nts., Series B, 3/1/09 4,300,000 2,171,500
------------------------------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 13,800,000 13,196,250
------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Unsec. Nts., Series B, 9/1/07 11,450,000 10,877,500
9.25% Sr. Nts., Series B, 3/15/07 5,100,000 4,857,750
----------------
58,890,350
------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--1.5%
Amkor Technologies, Inc.:
9.25% Sr. Unsec. Nts., 5/1/06 3,700,000 3,690,750
10.50% Sr. Unsec. Sub. Nts., 5/1/09 13,500,000 13,753,125
------------------------------------------------------------------------------------------------------------------------------
Chippac International Ltd., 12.75% Sr. Unsec. Sub. Nts., Series B, 8/1/09 3,250,000 3,461,250
------------------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 8,250,000 8,126,250
------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 6,345,000 4,909,444
------------------------------------------------------------------------------------------------------------------------------
EchoStar Broadband Corp., 10.375% Sr. Nts., 10/1/07(5) 28,750,000 28,750,000
------------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 10,500,000 10,670,625
------------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc.:
9% Sr. Unsec. Sub. Nts., 2/1/08 8,760,000 8,124,900
9% Sr. Unsec. Sub. Nts., 2/1/08 1,875,000 1,739,062
------------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 9.875% Sr. Sub. Nts., 7/1/10(5) 6,000,000 6,195,000
------------------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 6.50% Sub. Nts., 9/30/05 14,000,000 11,900,000
----------------
101,320,406
------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--1.0%
Actuant Corp., 13% Sr. Sub. Nts., 5/1/09(5) 4,550,000 4,652,375
------------------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 8,400,000 8,610,000
------------------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 3,475,000 1,164,125
------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 1,050,000 866,250
------------------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 9,600,000 1,176,000
------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 5,800,000 4,408,000
------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 10,550,000 10,484,063
------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 7,835,000 7,913,350
------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 7,750,000 7,323,750
------------------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 2,600,000 676,000
------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 10,400,000 9,568,000
</TABLE>
25 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 28
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING Continued
Terex Corp.:
8.875% Sr. Unsec. Sub. Nts., 4/1/08 $ 1,400,000 $ 1,281,000
8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 5,100,000 4,666,500
------------------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(1) 5,000,000 4,725,000
----------------
67,514,413
------------------------------------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: BROADCASTING--1.0%
Allbritton Communications Co., 8.875% Sr. Sub. Nts., Series B, 2/1/08 2,375,000 2,232,500
------------------------------------------------------------------------------------------------------------------------------
AMFM Operating, Inc., 12.625% Sr. Sub. Debs., Series E, 10/31/06(10) 1,393,500 1,574,655
------------------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B, 12/15/07 5,000,000 5,075,000
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 6,000,000 6,135,000
------------------------------------------------------------------------------------------------------------------------------
Citadel Broadcasting Co., 9.25% Sr. Unsec. Sub. Nts., 11/15/08 1,750,000 1,750,000
------------------------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 2,600,000 2,223,000
------------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 9,225,000 8,809,875
------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 7,205,000 7,385,125
------------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 12% Sr. Sub. Nts., Series B, 5/15/04(2) 3,000,000 3,165,000
------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 4,325,000 4,033,063
9% Sr. Unsec. Sub. Nts., 7/15/07 3,990,000 3,790,500
------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 7,300,000 7,281,750
------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 11,125,000 10,568,750
9% Sr. Sub. Nts., Series B, 1/15/06 825,000 796,125
----------------
64,820,343
------------------------------------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: CABLE/WIRELESS VIDEO--3.4%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 1,400,000 1,177,750
8.125% Sr. Nts., Series B, 7/15/03 4,750,000 4,441,250
8.375% Sr. Nts., Series B, 2/1/08 5,150,000 4,480,500
9.25% Sr. Nts., 10/1/02 7,175,000 7,139,125
9.375% Sr. Nts., 11/15/09 8,000,000 7,290,000
9.875% Sr. Nts., Series B, 3/1/07 2,000,000 1,890,000
10.50% Sr. Unsec. Nts., Series B, 7/15/04 6,040,000 6,077,750
10.875% Sr. Unsec. Nts., 10/1/10 4,250,000 4,186,250
------------------------------------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(12) 25,250,000 14,834,375
8.25% Sr. Unsec. Nts., 4/1/07 10,650,000 9,704,813
10% Sr. Nts., 4/1/09 350,000 344,313
------------------------------------------------------------------------------------------------------------------------------
Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10 2,725,000 2,343,500
------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 2/15/13 2,435,000 2,501,963
9.875% Sr. Sub. Nts., 5/15/06 625,000 642,188
10.50% Sr. Sub. Debs., 5/15/16 7,950,000 8,566,125
------------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(1) 2,050,000 1,875,750
</TABLE>
26 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: CABLE/WIRELESS VIDEO Continued
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 $ 26,105,000 $ 25,713,425
------------------------------------------------------------------------------------------------------------------------------
EchoStar I Bonds, 8.25%, 2/26/01(1) 1,135,738 1,135,739
------------------------------------------------------------------------------------------------------------------------------
EchoStar II Sinking Fund Bonds, 8.25%, 11/9/01(1) 2,396,736 2,396,737
------------------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 4,000,000 4,050,000
------------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp.:
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(12) 14,010,000 8,756,250
9.875% Sr. Nts., 11/15/09(5) [EUR] 10,450,000 8,207,691
11.50% Sr. Unsec. Nts., Series B, 10/1/08 2,850,000 2,764,500
------------------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Nts., Series B, 4/15/09(12) [GBP] 39,800,000 30,304,815
0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(12) [GBP] 7,590,000 6,845,307
10% Sr. Nts., Series B, 2/15/07 7,725,000 7,107,000
------------------------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07(1) 4,350,000 4,567,500
------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07 [CAD] 20,000,000 13,475,342
------------------------------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Disc. Nts., 4/15/09(12) 12,750,000 6,853,125
0%/9.875% Sr. Nts., 4/15/09(5,12) [GBP] 12,000,000 9,004,065
------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(12) 16,095,000 11,105,550
------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875%
Sr. Unsec. Nts., Series B, 8/1/09 9,650,000 8,250,750
----------------
228,033,448
------------------------------------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: DIVERSIFIED MEDIA--1.2%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 13,150,000 6,114,750
------------------------------------------------------------------------------------------------------------------------------
Carmike Cinemas, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 2/1/09(11,13) 1,000,000 280,000
------------------------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(5) 727,589 690,970
------------------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc:
0%/10.75% Bonds, 3/15/08(1,12) [GBP] 3,000,000 2,794,365
9.625% Bonds, 3/15/08 [GBP] 10,525,000 13,849,479
------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 4,250,000 4,212,813
------------------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 1,600,000 1,688,000
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 13,725,000 14,479,875
------------------------------------------------------------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub. Nts., 5/15/07 578,000 583,780
------------------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 8,209,000 8,496,840
------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 2,000,000 2,230,300
------------------------------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Unsec. Sub. Nts., 3/1/09 8,750,000 8,870,313
------------------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 2,500,000 2,334,793
------------------------------------------------------------------------------------------------------------------------------
WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp.,
12.75% Sr. Sub. Nts., 11/15/09 11,500,000 10,536,875
------------------------------------------------------------------------------------------------------------------------------
Ziff Davis Media, Inc., 12% Sr. Sub. Nts., 7/15/10(5) 2,550,000 2,537,250
----------------
79,700,403
</TABLE>
27 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 30
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS--7.1%
360networks, Inc.:
12% Sr. Unsec. Sub. Nts., 8/1/09 $ 4,100,000 $ 3,669,500
13% Sr. Unsec. Nts., 5/1/08 2,150,000 1,967,250
13% Sr. Unsec. Nts., 5/1/08(5) [EUR] 1,900,000 1,604,482
------------------------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 9,025,000 6,091,875
------------------------------------------------------------------------------------------------------------------------------
Allegiance Telecom, Inc., 12.875% Sr. Nts., 5/15/08 2,000,000 2,015,000
------------------------------------------------------------------------------------------------------------------------------
Colo.com, Units (each unit consists of $1,000 principal amount of
13.875% sr. nts., 3/15/10 and one warrant to purchase 19.9718 shares
of common stock at $.01 per share)(5,14) 6,350,000 6,508,750
------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(12) 21,275,000 19,466,625
7.625% Bonds, 7/31/08 [DEM] 10,800,000 4,422,359
8.875% Sr. Nts., 11/30/07 [DEM] 4,450,000 1,957,709
10.125% Sr. Nts., 11/30/07 [GBP] 6,290,000 9,392,763
------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(12) 6,260,000 6,040,900
------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 4,085,000 4,105,425
------------------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc.:
0%/13.50% Sr. Disc. Nts., 3/15/08(12) 5,750,000 2,673,750
12% Sr. Unsec. Nts., Series B, 2/15/10 350,000 264,250
------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(12) 27,875,000 26,341,875
------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc., 13% Sr. Unsec. Nts., 12/1/07 8,100,000 6,510,375
------------------------------------------------------------------------------------------------------------------------------
ESAT Telecom Group plc, 11.875% Sr. Unsec. Unsub. Nts., 11/1/09 [EUR] 2,500,000 2,720,527
------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Unsec. Sub. Nts., 12/15/09 11,300,000 11,017,500
11.25% Sr. Nts., 7/1/08 8,720,000 8,698,200
------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(12) 4,200,000 945,000
------------------------------------------------------------------------------------------------------------------------------
FLAG Telecom Holdings Ltd.:
11.625% Sr. Nts., 3/30/10(1) [EUR] 2,375,000 1,802,506
11.625% Sr. Unsec. Nts., 3/30/10 2,375,000 2,042,500
------------------------------------------------------------------------------------------------------------------------------
Focal Communications Corp.:
0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(12) 3,270,000 1,553,250
11.875% Sr. Unsec. Nts., Series B, 1/15/10 3,850,000 2,945,250
------------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Unsec. Nts., 5/15/08 13,840,000 13,909,200
------------------------------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(5) [EUR] 7,200,000 2,779,875
------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(12) 9,980,000 6,736,500
8.50% Sr. Nts., Series B, 1/15/08 4,800,000 4,620,000
8.60% Sr. Unsec. Nts., Series B, 6/1/08 3,945,000 3,806,925
8.875% Sr. Nts., 11/1/07 7,815,000 7,502,400
------------------------------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(5) [EUR] 10,700,000 7,837,483
------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(12) 24,141,000 9,777,105
13.50% Sr. Unsec. Nts., 5/15/09 4,000,000 2,780,000
------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(12) 17,350,000 10,323,250
9.125% Sr. Unsec. Nts., 5/1/08 8,280,000 7,203,600
</TABLE>
28 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 31
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS Continued
Level 3 Communications, Inc.: Continued
11% Sr. Unsec. Nts., 3/15/08 $ 3,750,000 $ 3,600,000
11.25% Sr. Unsec. Nts., 3/15/10 3,700,000 3,552,000
------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
8.125% Sr. Unsec. Nts., 2/15/09 6,840,000 5,933,700
8.375% Sr. Nts., 3/15/08 5,000,000 4,400,000
9.25% Sr. Nts., 7/15/07 1,725,000 1,617,188
------------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 15,350,000 14,429,000
10% Sr. Unsec. Nts., Series B, 11/15/08 17,200,000 16,168,000
------------------------------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50%
Sr. Unsec. Disc. Nts., 9/30/07(12) 26,139,615 12,154,921
------------------------------------------------------------------------------------------------------------------------------
MGC Communications, Inc./Mpower Holding Corp.:
13% Sr. Nts., 4/1/10(5) 9,225,000 6,226,875
13% Sr. Unsec. Nts., 4/1/10 1,800,000 1,215,000
------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 8,150,000 6,968,250
9.625% Sr. Nts., 10/1/07 12,735,000 11,557,013
10.75% Sr. Unsec. Nts., 11/15/08 7,300,000 6,789,000
10.75% Sr. Unsec. Nts., 6/1/09 2,590,000 2,408,700
------------------------------------------------------------------------------------------------------------------------------
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10 6,400,000 6,432,000
------------------------------------------------------------------------------------------------------------------------------
NTL, Inc., 0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(12) 5,850,000 3,583,125
------------------------------------------------------------------------------------------------------------------------------
OpTel, Inc., 13% Sr. Nts., Series B, 2/15/05(11) 5,675,000 3,603,625
------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 7,325,000 4,797,875
10.50% Sr. Nts., 12/1/06(5) [EUR] 8,150,000 4,675,044
------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(12) 7,220,000 5,946,154
0%/9.47% Sr. Disc. Nts., 10/15/07(12) 8,310,000 7,280,009
------------------------------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 6,000,000 4,290,000
------------------------------------------------------------------------------------------------------------------------------
Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., Series B, 2/15/10 9,000,000 5,985,000
------------------------------------------------------------------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(1,12) [DEM] 4,100,000 175,748
0%/10.125% Sr. Disc. Nts., 3/1/08(12) 5,425,000 840,875
10.50% Sr. Unsec. Nts., 11/5/08 9,000,000 2,205,000
12.875% Sr. Unsec. Nts., 3/1/10(5) 6,500,000 1,950,000
------------------------------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27 [CAD] 14,580,000 9,175,535
------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe BV:
11.875% Sr. Nts., 12/1/09(5) [EUR] 5,300,000 4,431,694
13% Sr. Unsec. Nts., 5/15/09 [EUR] 5,000,000 4,280,125
------------------------------------------------------------------------------------------------------------------------------
Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(12) 10,975,000 10,563,438
------------------------------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 4,835,000 2,199,925
------------------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 4,000,000 3,660,000
------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV:
0%/13.375% Sr. Unsec. Disc. Nts., Series B, 11/1/09(12) 8,700,000 4,154,250
0%/13.75% Sr. Unsec. Disc. Nts., Series B, 2/1/10(12) 15,800,000 7,228,500
10.875% Sr. Nts., 8/1/09 [EUR] 13,250,000 10,026,855
10.875% Sr. Unsec. Nts., Series B, 11/1/07 1,000,000 875,000
</TABLE>
29 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 32
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS Continued
United Pan-Europe Communications NV: Continued
11.25% Sr. Nts., 11/1/09(5) [EUR] $ 9,500,000 $ 7,283,383
11.25% Sr. Unsec. Nts., Series B, 2/1/10 3,000,000 2,640,000
11.50% Sr. Unsec. Nts., Series B, 2/1/10 1,000,000 872,500
------------------------------------------------------------------------------------------------------------------------------
Versatel Telecom International NV:
11.25% Sr. Nts., 3/30/10(5) [EUR] 5,400,000 4,145,985
11.875% Sr. Nts., 7/15/09 [EUR] 6,000,000 4,659,600
------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 9,480,000 4,408,200
------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(12) 16,895,000 7,687,225
------------------------------------------------------------------------------------------------------------------------------
Williams Communications Group, Inc.:
11.70% Sr. Unsec. Nts., 8/1/08(5) 3,000,000 2,880,000
11.875% Sr. Unsec. Nts., 8/1/10(5) 14,000,000 13,370,000
------------------------------------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(5) 3,800,000 2,774,000
----------------
468,134,276
------------------------------------------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT: WIRELESS COMMUNICATIONS--5.1%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 2,125,000 1,476,875
------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04(1) 4,810,000 3,787,875
------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(1,11,12,13) 21,148,000 1,586,100
------------------------------------------------------------------------------------------------------------------------------
CFW Communications Co., Units (each unit consists of $1,000 principal
amount of 13% sr. nts., 8/15/10 and one warrant to purchase 1.8 shares
of common stock at $47.58 per share)(5,14) 8,000,000 7,480,000
------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts., 12/15/05(12) 2,040,000 2,152,200
------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(12) 9,600,000 6,264,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(12) 14,510,000 11,390,350
9% Sr. Nts., 5/15/11 2,850,000 2,721,750
10.75% Sr. Nts., 8/1/11 5,300,000 5,472,250
------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc., 11.25% Sr. Nts., 7/15/10(5) 17,200,000 17,329,000
------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(11,13) 625,000 --
------------------------------------------------------------------------------------------------------------------------------
Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10 12,000,000 8,580,000
------------------------------------------------------------------------------------------------------------------------------
Horizon PCS, Inc., Units (each unit consists of $1,000 principal amount
of 0%/14% sr. disc. nts., 10/1/05 and one warrant to purchase
12.9 shares of Cl. A common stock at $5.88 per share)(5,12,14) 11,000,000 5,665,000
------------------------------------------------------------------------------------------------------------------------------
ICO Global Communications (Holdings) Ltd., Units (each unit consists
of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to
purchase 19.85 shares of common stock)(1,11,13,14) 4,600,000 2,760,000
------------------------------------------------------------------------------------------------------------------------------
IPCS, Inc., Units (each unit consists of $1,000 principal amount of
0%/14% sr. disc. nts., 7/15/10 and one warrant to purchase
2,971,830 shares of common stock)(5,12,14) 6,600,000 3,663,000
------------------------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc., 12.50% Sr. Nts., 4/15/10(5) 6,700,000 5,259,500
------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 4,875,000 3,510,000
------------------------------------------------------------------------------------------------------------------------------
Mail-Well I Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(1) 2,335,000 2,043,125
------------------------------------------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07(1) 7,470,000 4,594,050
------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(12) [CAD] 11,545,000 5,889,132
0%/12% Sr. Unsec. Disc. Nts., 6/1/09(12) 10,000,000 7,225,000
0%/14% Sr. Disc. Nts., Series B, 6/1/06(12) 3,100,000 2,991,500
</TABLE>
30 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 33
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT: WIRELESS COMMUNICATIONS Continued
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(12) $ 8,715,000 $ 7,538,475
------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(12) 3,950,000 3,110,625
0%/9.95% Sr. Disc. Nts., 2/15/08(12) 17,290,000 13,270,075
0%/10.65% Sr. Disc. Nts., 9/15/07(12) 11,915,000 9,800,088
9.375% Sr. Unsec. Nts., 11/15/09 7,000,000 6,860,000
------------------------------------------------------------------------------------------------------------------------------
Nextel Partners, Inc., 11% Sr. Nts., 3/15/10(5) 3,050,000 3,080,500
------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.50% Sr. Nts., 9/15/09(5) 14,950,000 16,744,000
------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(1,11) 15,930,000 2,469,150
------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(1,12) 11,975,000 4,131,375
------------------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(12) 10,985,000 7,964,125
------------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 10,825,000 10,987,375
11.75% Sr. Sub. Nts., 7/15/07(1) 10,240,000 11,008,000
------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 13% Disc. Nts., 5/31/09(5,10) 7,790,504 7,754,901
------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 9,550,000 9,168,000
------------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(12) 28,875,000 21,511,875
------------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/11.25% Sr. Unsec. Disc. Nts., 4/15/09(12) 6,900,000 3,795,000
0%/12% Sr. Disc. Nts., 7/15/08(12) 10,410,000 6,922,650
10.75% Sr. Nts., 3/15/10(5) 2,350,000 2,232,500
------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 0%/12.50%
Sr. Disc. Nts., 8/15/06(12) 610,000 605,776
------------------------------------------------------------------------------------------------------------------------------
Telecorp PCS, Inc.:
0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(12) 1,650,000 1,126,125
10.625% Sr. Sub. Nts., 7/15/10(5) 6,100,000 6,191,500
------------------------------------------------------------------------------------------------------------------------------
Tritel PCS, Inc., 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(12) 4,600,000 3,128,000
------------------------------------------------------------------------------------------------------------------------------
Triton PCS, Inc., 0%/11% Sr. Unsec. Sub. Disc. Nts., 5/1/08(12) 1,700,000 1,283,500
------------------------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(12) 18,600,000 10,044,000
------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 5,885,000 5,119,950
------------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09 44,337,634 48,106,334
----------------
335,794,606
------------------------------------------------------------------------------------------------------------------------------
METALS/MINERALS--1.2%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(5) 5,000,000 325,000
------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 16,425,000 14,782,500
9.125% Sr. Nts., 12/15/06 11,360,000 11,076,000
------------------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 4,400,000 4,026,000
------------------------------------------------------------------------------------------------------------------------------
Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 7,025,000 4,460,875
------------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 7,250,000 5,691,250
------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 2,000,000 1,450,000
------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 4,950,000 4,578,750
------------------------------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 5,700,000 3,591,000
</TABLE>
31 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 34
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
METALS/MINERALS Continued
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(12) $ 18,300,000 $ 3,751,500
------------------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 9,595,000 7,723,975
------------------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 9,600,000 5,712,000
------------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 13,000,000 12,675,000
------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC/RTI Capital Corp.,
13.75% Sr. Sec. Nts., 7/15/09 4,400,000 814,000
----------------
80,657,850
------------------------------------------------------------------------------------------------------------------------------
RETAIL--0.3%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(12) 18,800,000 9,964,000
------------------------------------------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(1,11,13) 6,025,000 798,313
------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08(1) 3,775,000 1,604,375
------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 4,000,000 3,660,000
------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 3,125,000 2,890,625
------------------------------------------------------------------------------------------------------------------------------
Just For Feet, Inc., 11% Sr. Sub. Nts., 5/1/09(1,11,13) 4,300,000 64,500
----------------
18,981,813
------------------------------------------------------------------------------------------------------------------------------
SERVICE--1.6%
Allied Waste North America, Inc.:
7.625% Sr. Nts., Series B, 1/1/06 3,550,000 3,195,000
7.875% Sr. Unsec. Nts., Series B, 1/1/09 6,620,000 5,809,050
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09 11,500,000 10,091,250
------------------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc., 11.625% Sr. Sub. Nts., Series B, 10/15/08 8,500,000 8,521,250
------------------------------------------------------------------------------------------------------------------------------
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(12) 2,150,000 225,750
------------------------------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08(1) 4,875,000 1,803,750
------------------------------------------------------------------------------------------------------------------------------
Brand Scaffold Service, Inc., 10.25% Sr. Unsec. Nts., 2/15/08 2,000,000 1,810,000
------------------------------------------------------------------------------------------------------------------------------
Coinstar, Inc., 13% Sr. Disc. Nts., 10/1/06 2,525,000 2,575,500
------------------------------------------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(1) 2,920,000 1,372,400
------------------------------------------------------------------------------------------------------------------------------
ConProca SA de CV, 12% Sec. Bonds, 6/16/10 2,000,000 2,165,000
------------------------------------------------------------------------------------------------------------------------------
Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., Series B, 2/1/09 2,000,000 1,815,000
------------------------------------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub. Nts., 9/30/09 9,800,000 9,408,000
------------------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 5,000,000 4,400,000
------------------------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 7,050,000 6,556,500
------------------------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 8,575,000 8,821,531
------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Bonds, 9.50%, 9/15/27 6,965,000 7,208,775
------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 7,450,000 5,270,875
------------------------------------------------------------------------------------------------------------------------------
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09(1,11) 13,100,000 474,875
------------------------------------------------------------------------------------------------------------------------------
United Rentals, Inc.:
9% Sr. Unsec. Sub. Nts., Series B, 4/1/09 6,050,000 5,445,000
9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 7,300,000 6,643,000
------------------------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., Series B, 5/1/09 14,375,000 14,806,250
----------------
108,418,756
</TABLE>
32 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 35
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--2.6%
Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04 $ 3,700,000 $ 3,718,500
------------------------------------------------------------------------------------------------------------------------------
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 22,273,000 21,493,445
------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 9.625% Nts., 12/15/05(1) 4,000,000 3,680,000
------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 7,700,000 7,709,625
9.375% Sr. Unsec. Nts., 11/15/06 7,000,000 7,026,250
10.75% Sr. Nts., 8/1/05 8,183,000 8,510,320
------------------------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 12,125,000 8,790,625
------------------------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07(11) 4,775,000 1,002,750
------------------------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 4,875,000 4,704,375
------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp.:
9% Sr. Sub. Nts., Series B, 5/1/09 2,000,000 1,720,000
9% Sr. Sub. Nts., Series B, 5/1/09 [EUR] 8,600,000 6,982,340
------------------------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts., 7/1/10 6,500,000 2,502,500
------------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 6,655,000 6,571,813
------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Unsec. Sub. Nts., Series B, 7/15/07 4,100,000 3,536,250
11% Sr. Sub. Nts., 7/15/06 6,690,000 6,422,400
------------------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05 1,750,000 1,170,313
------------------------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 2,825,000 2,796,750
------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal
amount of 11.675% first priority ship mtg. sr. sec. nts., 7/15/05 and one
warrant to purchase five shares of common stock)(1,2,14) 5,400,000 2,835,000
------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(5) 11,650,000 5,533,750
------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 21,250,000 18,806,250
------------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09 9,350,000 6,030,750
------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc.:
11.50% Sr. Sec. Nts., 12/15/04 12,270,000 8,589,000
14% Lease Equipment Trust, 7/2/08(1) 2,950,601 2,448,999
------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375%
Sr. Disc. Nts., Series B, 12/15/03 27,791,000 28,207,865
----------------
170,789,870
------------------------------------------------------------------------------------------------------------------------------
UTILITY--0.5%
AES Drax Energy Ltd., 11.25% Sr. Sec. Bonds, 8/30/10(5) [GBP] 5,000,000 7,743,644
------------------------------------------------------------------------------------------------------------------------------
Azurix Corp., 10.75% Sr. Nts., 2/15/10(5) 3,850,000 3,561,250
------------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07 4,000,000 3,965,852
------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 9,300,000 9,896,800
------------------------------------------------------------------------------------------------------------------------------
Funding Corp./Beaver Valley Funding Corp.,
9% Second Lease Obligation Bonds, 6/1/17(1) 956,000 1,001,410
------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08(1) 4,760,000 4,331,600
9.50% Sr. Sec. Nts., 12/28/08(1) 4,070,034 3,703,731
----------------
34,204,287
----------------
Total Corporate Bonds and Notes (Cost $3,131,210,064) 2,630,901,220
</TABLE>
33 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 36
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS--2.6%
------------------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(1,10) 261,804 $ 1,112,667
------------------------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Capital Securities, Non-Vtg.(1) 10,050,000 8,140,500
------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(1,10,15) 196,698 4,917,450
------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cv., Non-Vtg.(13) 146,175 8,989,762
------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(10) 9,007 7,138,047
------------------------------------------------------------------------------------------------------------------------------
Contour Energy Co., $2.625 Cum. Cv.(13) 159,100 1,014,262
------------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg.(13) 278,000 5,108,250
------------------------------------------------------------------------------------------------------------------------------
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 49,500 1,905,750
------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 11.125% Cum., Series M(10) 83,086 8,827,887
------------------------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Exchangeable, Non-Vtg.(1,13) 255,000 10,263,750
------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(10) 9,497 8,499,815
13% Sr. Exchangeable, Non-Vtg.(10) 9,576 9,145,080
------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(1,10) 11,005 1,898,362
------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(1,13) 39,000 692,250
------------------------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr., Series C, Non-Vtg.(5,13) 269,508 676,465
------------------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable, Series A, Non-Vtg.(1) 20 305
------------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable(10) 20,000 2,045,000
------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg(10) 5,771 129,848
------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv., Series E, Non-Vtg. 80,000 2,180,000
13.50% Exchangeable, Series B(10) 6,695 6,443,938
------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc.:
13%, Non-Vtg.(5,10) 308 194,810
Units (each unit consists of $1,000 principal amount of 13% sr. exchangeable
preferred stock and one warrant to purchase 30 shares of common stock)(1,10,14) 1,090 765,725
------------------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(10) 96,993 12,124
------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(10) 8,347 8,033,988
------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(10) 344,063 15,224,788
------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(10) 1,064 10,347,400
------------------------------------------------------------------------------------------------------------------------------
Premcor USA, Inc., 11.50% Cum. Sr., Non-Vtg.(10) 3,313 695,730
------------------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 165,600 13,951,800
9.20% Exchangeable, Series F, Non-Vtg. 46,400 4,141,200
------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% Cum., Non-Vtg.(10) 3,413 4,377,173
------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(1,10) 17,533 15,823,533
------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(10) 300 1,207,500
13.75% Exchangeable(5) 90 362,250
------------------------------------------------------------------------------------------------------------------------------
Sovereign Real Estate Investment Trust, 12% Non-Cum, Series A(1) 57,800 5,202,000
------------------------------------------------------------------------------------------------------------------------------
Supermarkets General Holdings Corp., $3.52 Exchangeable(10,13) 200,000 25,000
------------------------------------------------------------------------------------------------------------------------------
World Access, Inc., Cv. Sr., Series D, Non-Vtg.(1,13) 3,010 857,850
----------------
Total Preferred Stocks (Cost $238,768,562) 170,352,259
</TABLE>
34 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 37
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--0.3%
------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5,13) 1,658,520 $ 2,695,095
------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.(1,13) 1,600,000 8,381,011
------------------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI(1,13) 525 460,031
------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(1,13) 68,985 68,985
------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.(1,13) 243,992 6,374,291
------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc.(1,13) 6,475 65
------------------------------------------------------------------------------------------------------------------------------
GMD Resource Corp.(1,13) 6,000 555,000
------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.(1,13) 200,000 6,800
------------------------------------------------------------------------------------------------------------------------------
Ladish Co., Inc.(13) 100,000 1,312,500
------------------------------------------------------------------------------------------------------------------------------
OpTel, Inc., Non-Vtg.(1,13) 11,560 116
------------------------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd.(1,13,15) 799,833 199,958
------------------------------------------------------------------------------------------------------------------------------
Purina Mills, Inc.(13) 41,879 408,320
------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(1,13) 11,100 55,500
------------------------------------------------------------------------------------------------------------------------------
Star Gas Partners LP 7,147 125,966
------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe Holding AB, Sponsored ADR(5,13) 93,961 878,958
------------------------------------------------------------------------------------------------------------------------------
Walter Industries, Inc. 80,000 710,000
------------------------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc.(13) 568,825 782,135
------------------------------------------------------------------------------------------------------------------------------
WRC Media Corp.(1,13) 15,559 156
----------------
Total Common Stocks (Cost $20,971,614) 23,014,887
<CAPTION>
UNITS
------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.3%
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Adelphia Business Solutions, Inc. Wts., Exp. 4/15/01 1,035 74,908
------------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/15/00(1) 262,500 --
------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(5) 13,893 8,683
------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(1,15) 130,000 39,000
------------------------------------------------------------------------------------------------------------------------------
Charles River Laboratories, Inc. Wts., Exp. 10/1/09(1) 5,950 95,200
------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 7,425 248,175
------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc, ADR Wts., Exp. 12/31/06 17,325 14,379,750
------------------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/15/03(1) 8,109 122,649
------------------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08(1) 18,300 224,175
------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05(1) 5,225 18,823
------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc. Wts., Exp. 12/1/07(1) 8,100 1,216,012
------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5) 7,000 118,125
------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(1) 690,000 6,900
------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 48,080 58,597
------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 128,643 --
Exp. 1/23/03(1) 64,350 643
Exp. 9/1/04 189,000 --
Exp. 5/1/05(1) 146,363 --
------------------------------------------------------------------------------------------------------------------------------
Grand Union Co. Wts., Exp. 8/17/03 11,563 347
</TABLE>
35 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 38
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
UNIT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES Continued
------------------------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/09(1) 34,425 $ 3,442
------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 46,860 6,237
------------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 13,050 --
------------------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(1) 7,780 7,780
------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(1) 23,200 47,862
------------------------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc. Wts., Exp. 4/15/10(1) 6,700 17,588
------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(1) 4,160 416
------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(1) 6,250 44,531
------------------------------------------------------------------------------------------------------------------------------
Mexico Value Rts., Exp. 6/30/03 19,571,000 --
------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5) 29,300 1,845,900
------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(1) 5,800 3,265
------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 12/15/07(1) 4,650 2,000,081
------------------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/15/04(1) 21,600 326,700
------------------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc. Wts.:
Exp. 3/31/03(1) 16,650 833
Exp. 3/31/03(1) 1,500 75
Exp. 6/1/06(1) 16,650 833
------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc. Wts.:
Exp. 11/1/03(1) 182,000 318,500
Exp. 6/30/05(1) 13,440 1,344
------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(1) 2,251,489 22,515
------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC Wts., Exp. 7/15/09(1) 4,900 49
------------------------------------------------------------------------------------------------------------------------------
Rocky Mountain Internet, Inc. Wts., Exp. 7/3/03(1) 55,000 68,750
------------------------------------------------------------------------------------------------------------------------------
Telergy, Inc. Wts., Exp. 9/25/10 18,175 182
------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 18,600 --
------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(1) 50,685 595,549
----------------
Total Rights, Warrants and Certificates (Cost $11,120,672) 21,924,419
<CAPTION>
PRINCIPAL
AMOUNT
------------------------------------------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS--2.9%
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alpha Wind 2000-A Ltd. Nts.:
11.25%, 5/23/01(1,2) $ 4,500,000 4,500,000
13.69%, 5/23/01(1,2) 9,200,000 9,200,000
------------------------------------------------------------------------------------------------------------------------------
Citibank NA (Nassau Branch), Mexican Nuevo Peso Linked Nts.:
18.70%, 3/3/03 [MXN] 178,687,000 19,297,212
19.75%, 6/27/02 [MXN] 91,100,000 9,631,867
20.90%, 6/23/03 [MXN] 89,900,000 9,665,868
21.30%, 6/23/03 [MXN] 44,970,000 4,866,988
------------------------------------------------------------------------------------------------------------------------------
Citibank NA, Brazilian Real Linked Nts.:
24.10%, 5/26/03 [BRR] 13,230,000 7,342,829
24.25%, 5/23/03 [BRR] 19,753,208 10,975,075
------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch),
Russian Obligatzii Federal'nogo Zaima Linked Nts.:
Series 25030, Zero Coupon, 2.84%, 12/15/01(1,7) [RUR] 36,963,000 915,627
Series 27001, 20.11%, 2/6/02(1,2) [RUR] 34,503,760 1,043,359
</TABLE>
36 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRUCTURED INSTRUMENTS Continued
------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch),
Russian Obligatzii Federal'nogo Zaima Linked Nts.: Continued
Series 27001, 20.11%, 2/6/02(1,2) [RUR] 10,781,020 $ 326,007
Series 27002, 20.11%, 5/22/02(1,2) [RUR] 42,357,260 1,250,196
Series 27002, 20.11%, 5/22/02(1,2) [RUR] 10,781,020 318,207
Series 27003, 20.11%, 6/5/02(1,2) [RUR] 147,018,280 4,332,441
Series 27003, 20.11%, 6/5/02(1,2) [RUR] 10,781,020 317,703
Series 27003, 20.11%, 6/5/02(1,2) [RUR] 113,828,650 3,354,385
Series 27004, 20.11%, 9/1/02(1,2) [RUR] 10,781,020 313,046
Series 27004, 20.11%, 9/18/02(1,2) [RUR] 116,725,750 3,389,341
Series 27005, 20.11%, 10/9/02(1,2) [RUR] 453,327,520 12,880,885
Series 27005, 20.11%, 10/9/02(1,2) [RUR] 10,781,020 306,333
Series 27006, 20.11%, 1/22/03(1,2) [RUR] 194,251,030 5,405,495
Series 27006, 20.11%, 2/6/02(1,2) [RUR] 10,781,020 300,008
Series 27007, 20.11%, 2/5/03(1,2) [RUR] 213,346,320 5,923,812
Series 27007, 20.11%, 2/5/03(1,2) [RUR] 10,781,020 299,348
Series 27008, 20.11%, 5/21/03(1,2) [RUR] 116,856,260 3,187,027
Series 27008, 20.11%, 5/21/03(1,2) [RUR] 10,781,020 294,031
Series 27009, 20.11%, 6/4/03(1,2) [RUR] 133,795,850 3,644,687
Series 27009, 20.11%, 6/4/03(1,2) [RUR] 10,781,020 293,682
Series 27009, 20.11%, 6/4/03(1,2) [RUR] 95,614,902 2,604,613
Series 27010, 20.11%, 9/17/03(1,2) [RUR] 72,157,470 1,937,567
Series 27010, 20.11%, 9/17/03(1,2) [RUR] 10,781,020 289,491
Series 27011, 20.11%, 10/8/03(1,2) [RUR] 74,752,490 1,958,008
Series 27011, 20.11%, 10/8/03(1,2) [RUR] 10,781,020 282,390
Series 28001, 20.11%, 1/21/04(1,2) [RUR] 10,781,020 276,026
------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Mexican Nuevo Peso Linked Nts., Zero Coupon,
16.383%, 6/20/03(7) [MXN] 214,610,425 14,902,517
------------------------------------------------------------------------------------------------------------------------------
ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts., 4/19/01 88,000 6,650,160
------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., 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, 6.62%, 9/1/02](1) 6,000,000 6,052,500
------------------------------------------------------------------------------------------------------------------------------
Russia (Government of) Federal Loan Bonds, Series 27010, 20.11%,
9/17/03(1,2) [RUR] 134,087,300 3,600,501
------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Brazilian Real Linked Nts., 18.65%,
7/25/02 [BRR] 17,999,999 9,619,200
------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Turkish Lira Linked Nts., 11%, 1/17/01 20,274,000 20,372,532
----------------
Total Structured Instruments (Cost $186,703,761) 192,120,964
</TABLE>
<TABLE>
<CAPTION>
DATE STRIKE CONTRACTS
------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
European Monetary Unit Call 12/5/00 EUR0.937 71,291,062 322,735
------------------------------------------------------------------------------------------------
South Korean Won Call 11/28/00 KRW1,100.00 18,265,000 109,590
------------------------------------------------------------------------------------------------
European Monetary Unit/Japanese
Yen Call(1) 10/24/00 $97.86 56,680,000 249,562
-----------
Total Options Purchased (Cost $1,141,215) 681,887
</TABLE>
37 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 40
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS--4.3%
------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 6.45%,
dated 9/29/00, to be repurchased at $287,121,245 on 10/2/00,
collateralized by U.S. Treasury Bonds, 5.25%-15.75%, 11/15/01-5/15/30,
with a value of $122,346,960, U.S. Treasury Nts., 4.25%-8.50%,
11/15/00-11/15/08, with a value of $170,598,783 and U.S. Treasury
Bills, 11/9/00, with a value of $58,789 (Cost $286,967,000) $ 286,967,000 $ 286,967,000
------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $7,722,571,535) 107.5% 7,137,516,055
------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (7.5) (500,282,503)
----------------------------------
NET ASSETS 100.0% $6,637,233,552
==================================
</TABLE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP Argentine Peso IDR Indonesian Rupiah
BRR Brazilian Real JPY Japanese Yen
CAD Canadian Dollar KRW Korean Won
DEM German Mark MXN Mexican Nuevo Peso
EUR Euro NOK Norwegian Krone
FRF French Franc RUR Russian Ruble
GBP British Pound Sterling SEK Swedish Krona
GRD Greek Drachma ZAR South African Rand
1. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
2. Represents the current interest rate for a variable or increasing rate
security.
3. When-issued security to be delivered and settled after September 30, 2000.
4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
5. 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 $320,417,702 or 4.83% of the Fund's net
assets as of September 30, 2000.
6. Securities with an aggregate market value of $9,815,519 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
PRINCIPAL/
CONTRACTS EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL/PUT DATE PRICE RECEIVEDSEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
European Monetary Unit Put 65,124,938 12/5/00 EUR0.856 $ 677,299 $ 529,596
European Monetary Unit/Japanese Yen Put $56,680,000 10/24/00 $91.00 395,456 168,736
United Mexican States Bonds,
11.50%, 5/15/26 Call 25,395 10/10/00 128.00% 190,463 584
United Mexican States Bonds,
11.50%, 5/15/26 Put 25,395 10/10/00 124.50 901,523 834,226
Venezuela (Republic of)Bonds,
9.25% 9/15/27 Call 14,600 11/13/00 68.80 172,280 119,720
--------------------------------
$ 2,337,021 $1,652,862
================================
</TABLE>
38 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 41
FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
9. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
10. Interest or dividend is paid in kind.
11. Issuer is in default.
12. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
13. Non-income-producing security.
14. 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, principal amount disclosed represents total
underlying principal.
15. 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,
2000. The aggregate fair value of securities of affiliated companies held by the
Fund as of September 30, 2000 amounts to $5,156,408. Transactions during the
period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
SHARES SHARES
SEPT. 30, GROSS GROSS SEPT. 30, DIVIDEND
1999 ADDITIONS REDUCTIONS 2000 INCOME
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CGA Group Ltd., Series A 160,595 36,103 -- 196,698 $ 902,660
----------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07 130,000 -- -- 130,000 --
----------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd. 799,833 -- -- 799,833 --
$ 902,660
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 42
STATEMENT OF ASSETS AND LIABILITIES September 30, 2000
<TABLE>
<S> <C>
=================================================================================================================
ASSETS
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $7,717,653,959) $ 7,132,359,647
Affiliated companies (cost $4,917,576) 5,156,408
-----------------
7,137,516,055
-----------------------------------------------------------------------------------------------------------------
Cash 2,358,024
-----------------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $2,136,259) 2,136,259
-----------------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 1,238,873
-----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $807,448,646 purchased on a when-issued basis) 839,129,760
Interest, dividends and principal paydowns 122,589,614
Shares of beneficial interest sold 9,530,132
Other 6,464
-----------------
Total assets 8,114,505,181
=================================================================================================================
LIABILITIES
Unrealized depreciation on foreign currency contracts 4,676,029
-----------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $2,337,021)--see accompanying statement 1,652,862
-----------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $1,419,093,474 purchased on a when-issued basis) 1,443,583,559
Shares of beneficial interest redeemed 9,303,578
Dividends 8,554,845
Distribution and service plan fees 4,146,889
Transfer and shareholder servicing agent fees 1,927,445
Closed foreign currency contracts 1,411,676
Daily variation on futures contracts 800,065
Trustees' compensation 67,858
Other 1,146,823
-----------------
Total liabilities 1,477,271,629
=================================================================================================================
NET ASSETS $ 6,637,233,552
=================
=================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $ 7,985,858,141
-----------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (5,286,103)
-----------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (750,466,723)
-----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies (592,871,763)
-----------------
NET ASSETS $ 6,637,233,552
=================
</TABLE>
40 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
$3,431,763,103 and 821,291,780 shares of beneficial interest outstanding) $4.18
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $4.39
-----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $2,581,390,631
and 616,089,554 shares of beneficial interest outstanding) $4.19
-----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $548,331,636
and 131,420,056 shares of beneficial interest outstanding) $4.17
-----------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $75,748,182 and 18,153,272 shares of beneficial interest outstanding) $4.17
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 44
STATEMENT OF OPERATIONS For the Year Ended September 30, 2000
<TABLE>
<S> <C>
=================================================================================================================
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $194,213) $ 746,906,649
-----------------------------------------------------------------------------------------------------------------
Dividends
Unaffiliated companies (net of foreign withholding taxes of $1,818) 17,375,588
Affiliated companies 902,660
-----------------
Total income 765,184,897
=================================================================================================================
EXPENSES
Management fees 37,135,552
-----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 8,644,812
Class B 29,118,403
Class C 5,693,277
-----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 4,276,582
Class B 3,554,261
Class C 692,297
Class Y 141,826
-----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 1,681,911
-----------------------------------------------------------------------------------------------------------------
Trustees' compensation 111,215
-----------------------------------------------------------------------------------------------------------------
Other 2,599,770
-----------------
Total expenses 93,649,906
Less expenses paid indirectly (261,993)
-----------------
Net expenses 93,387,913
=================================================================================================================
NET INVESTMENT INCOME 671,796,984
=================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised) (18,653,365)
Closing of futures contracts (43,206,294)
Closing and expiration of option contracts written 3,313,999
Foreign currency transactions (178,061,483)
-----------------
Net realized loss (236,607,143)
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (43,067,233)
Translation of assets and liabilities denominated in foreign currencies 15,040,243
-----------------
Net change (28,026,990)
-----------------
Net realized and unrealized loss (264,634,133)
=================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $407,162,851
=================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 45
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2000 1999
=================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 671,796,984 $ 742,052,321
-----------------------------------------------------------------------------------------------------------------
Net realized loss (236,607,143) (407,642,437)
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (28,026,990) (137,378,304)
----------------------------------
Net increase in net assets resulting from operations 407,162,851 197,031,580
=================================================================================================================
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (334,457,226) (332,524,983)
Class B (253,388,232) (303,784,356)
Class C (49,832,039) (51,672,509)
Class Y (5,639,560) (2,954,830)
=================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A (25,457,910) (145,466,340)
Class B (705,682,563) (434,673,384)
Class C (42,906,192) (832,561)
Class Y 29,388,352 43,909,649
=================================================================================================================
NET ASSETS
Total decrease (980,812,519) (1,030,967,734)
-----------------------------------------------------------------------------------------------------------------
Beginning of period 7,618,046,071 8,649,013,805
----------------------------------
End of period [including undistributed (overdistributed) net
investment income of $(5,286,103) and $19,853,049, respectively] $6,637,233,552 $7,618,046,071
==================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 46
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996
=================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $4.33 $4.59 $4.95 $4.84 $4.68
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 .42 .42 .43 .44
Net realized and unrealized gain (loss) (.17) (.29) (.37) .09 .15
--------------------------------------------------------
Total income from investment operations .26 .13 .05 .52 .59
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.41) (.39) (.41) (.41) (.41)
Tax return of capital distribution -- -- -- -- (.02)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.41) (.39) (.41) (.41) (.43)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.18 $4.33 $4.59 $4.95 $4.84
========================================================
=================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1) 6.18% 2.91% 0.80% 11.29% 13.06%
=================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3,432 $3,578 $3,951 $3,969 $3,526
-----------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,518 $3,798 $4,077 $3,735 $3,340
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.98% 9.34% 8.48% 8.77% 9.09%
Expenses 0.95% 0.94% 0.92%(3) 0.93%(3) 0.97%(3)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 172% 104% 117% 105%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 47
<TABLE>
<CAPTION>
CLASS B YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996
=================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $4.34 $4.61 $4.96 $4.85 $4.69
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39 .39 .37 .39 .40
Net realized and unrealized gain (loss) (.17) (.30) (.35) .10 .15
--------------------------------------------------------
Total income from investment operations .22 .09 .02 .49 .55
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.36) (.37) (.38) (.37)
Tax return of capital distribution -- -- -- -- (.02)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.37) (.36) (.37) (.38) (.39)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.19 $4.34 $4.61 $4.96 $4.85
========================================================
=================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1) 5.37% 1.92% 0.26% 10.43% 12.19%
=================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2,581 $3,381 $4,041 $3,501 $2,590
-----------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,908 $3,838 $3,871 $3,018 $2,250
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.01% 8.55% 7.73% 7.94% 8.30%
Expenses 1.71% 1.69% 1.67%(3) 1.69%(3) 1.72%(3)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 172% 104% 117% 105%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 48
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
CLASS C YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996(1)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $4.32 $4.59 $4.95 $4.83 $4.68
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39 .39 .37 .37 .38
Net realized and unrealized gain (loss) (.17) (.30) (.36) .13 .16
--------------------------------------------------------
Total income from investment operations .22 .09 .01 .50 .54
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.36) (.37) (.38) (.37)
Tax return of capital distribution -- -- -- -- (.02)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.37) (.36) (.37) (.38) (.39)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.17 $4.32 $4.59 $4.95 $4.83
========================================================
=================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(1) 5.39% 1.92% 0.05% 10.67% 11.96%
=================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $548 $611 $651 $417 $175
-----------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $569 $650 $547 $291 $110
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.21% 8.58% 7.73% 7.73% 8.18%
Expenses 1.71% 1.69% 1.67%(3) 1.69%(3) 1.74%(3)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 172% 104% 117% 105%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 49
<TABLE>
<CAPTION>
CLASS Y YEAR ENDED SEPTEMBER 30, 2000 1999 1998(1)
=================================================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $4.32 $4.59 $4.90
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .46 .44 .29
Net realized and unrealized loss (.19) (.30) (.32)
--------------------------------
Total income (loss) from investment operations .27 .14 (.03)
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.42) (.41) (.28)
Tax return of capital distribution -- -- --
--------------------------------
Total dividends and/or distributions
to shareholders (.42) (.41) (.28)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.17 $4.32 $4.59
================================
=================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 6.55% 3.07% (0.64)%
=================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $76 $49 $7
-----------------------------------------------------------------------------------------------------------------
AVERAGE NET ASSETS (IN MILLIONS) $57 $32 $4
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 11.39% 10.16% 8.82%
Expenses 0.83% 0.57% 0.58%(4)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 172% 104%
</TABLE>
1. For the period from January 26, 1998 (inception of offering) to September
30, 1998.
2. Assumes a $1,000 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.
3. Annualized for periods of less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Strategic Income Fund (the Fund) is a separate series of
Oppenheimer Strategic Funds Trust, an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek high current income by investing mainly in debt
securities and by writing covered call options on them. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares
are sold at their offering price, which is normally net asset value plus a
front-end sales charge. Class B and Class C shares are sold without a front-end
sales charge but may be subject to a contingent deferred sales charge (CDSC).
Class Y shares are sold to certain institutional investors without either a
front-end sales charge or a CDSC. All classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has its own
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Classes A, B and C have separate
distribution and/or service plans. No such plan has been adopted for Class Y
shares. 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.
--------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. In the absence of a sale, the security is valued at the last
sale price on the prior trading day, if it is within the spread of the closing
bid and asked prices, and if not, at the closing bid price. Securities
(including restricted securities) for which quotations are not readily
available are valued primarily using dealer-supplied valuations, a portfolio
pricing service authorized by the Board of Trustees, or at their fair value.
Fair value is determined in good faith under consistently applied procedures
under the supervision of the Board of Trustees. Short-term "money market type"
debt securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes are leveraged, which increases the notes'
volatility relative to the principal of the security. Fluctuations in value of
these securities are recorded as unrealized gains and losses in the
accompanying financial statements. As of September 30, 2000, the market value
of these securities comprised 2.9% of the Fund's net assets and resulted in
unrealized gains of $5,417,203 at September 30, 2000. The Fund also hedges a
portion of the foreign currency exposure generated by these securities, as
discussed in Note 5.
--------------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities that have been purchased by the Fund on a when-issued basis can take
place a month or more after the trade date. Normally the settlement date occurs
within six months after
48 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 51
the trade date; however, the Fund may, from time to time, purchase securities
whose settlement date extends beyond six months and possibly as long as two
years or more beyond trade 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 segregated assets with a
market value equal to or greater than 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, 2000, the Fund had entered into net outstanding when-issued or
forward commitments of $611,644,828.
In connection with its ability to purchase securities on a when-issued
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. As of September 30, 2000,
securities with an aggregate market value of $26,601,402, representing 0.40% 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 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.
49 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES Continued
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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.
As of September 30, 2000, the Fund had available for federal tax purposes
unused capital loss carryovers as follows:
<TABLE>
<CAPTION>
EXPIRING
------------------------------------
<S> <C>
2004 $114,650,580
2007 16,381,920
2008 358,683,799
</TABLE>
--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
--------------------------------------------------------------------------------
CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes. The character of dividends and distributions made
during the fiscal 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 dividends and 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, 2000, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $53,619,079. Accumulated net
realized loss on investments was decreased by the same amount. Net assets of
the Fund were unaffected by the reclassifications.
--------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
--------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
accreted over the life of the respective securities, in accordance with federal
income tax requirements.
50 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 53
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends-in-kind are
recognized as income on the ex-dividend date, at the current market value of
the underlying security. Interest on payment-in-kind debt instruments is
accrued as income at the coupon rate and a market adjustment is made
periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
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, 2000 YEAR ENDED SEPTEMBER 30, 1999
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C>
Sold 214,443,146 $ 921,078,449 210,357,994 $ 943,636,992
Dividends and/or
distributions reinvested 49,690,817 212,687,097 49,300,561 220,865,642
Redeemed (269,779,508) (1,159,223,456) (292,545,647) (1,309,968,974)
--------------------------------------------------------------------
Net decrease (5,645,545) $ (25,457,910) (32,887,092) $ (145,466,340)
====================================================================
-----------------------------------------------------------------------------------------------------------------
CLASS B
Sold 81,787,488 $ 351,599,230 138,220,468 $ 623,572,586
Dividends and/or
distributions reinvested 33,184,932 142,497,147 39,440,826 177,208,187
Redeemed (278,194,920) (1,199,778,940) (275,663,259) (1,235,454,157)
--------------------------------------------------------------------
Net decrease (163,222,500) $(705,682,563) (98,001,965) $ (434,673,384)
====================================================================
-----------------------------------------------------------------------------------------------------------------
CLASS C
Sold 30,754,642 $ 131,667,319 45,604,390 $ 205,068,929
Dividends and/or
distributions reinvested 7,186,761 30,731,677 7,740,800 34,637,921
Redeemed (47,828,394) (205,305,188) (53,776,931) (240,539,411)
--------------------------------------------------------------------
Net decrease (9,886,991) $ (42,906,192) (431,741) $ (832,561)
====================================================================
-----------------------------------------------------------------------------------------------------------------
CLASS Y
Sold 9,737,970 $ 41,515,951 11,772,141 $ 52,994,761
Dividends and/or
distributions reinvested 1,281,695 5,468,384 655,519 2,909,707
Redeemed (4,102,670) (17,595,983) (2,696,663) (11,994,819)
--------------------------------------------------------------------
Net increase 6,916,995 $ 29,388,352 9,730,997 $ 43,909,649
====================================================================
</TABLE>
51 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 54
NOTES TO FINANCIAL STATEMENT Continued
================================================================================
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended September 30, 2000, were
$9,795,817,763 and $10,363,751,752, respectively.
As of September 30, 2000, unrealized appreciation (depreciation) based on cost
of securities for federal income tax purposes of $7,749,071,172 was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 138,831,891
Gross unrealized depreciation (750,387,008)
--------------
Net unrealized depreciation $ (611,555,117)
==============
</TABLE>
================================================================================
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. 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 average annual net assets of the Fund, 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. The Fund's management fee for the year ended
September 30, 2000, was an annualized rate of 0.53%, before any waiver by the
Manager if applicable.
--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund on
an "at-cost" basis. OFS also acts as the transfer and shareholder servicing
agent for the other Oppenheimer funds.
--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C
SALES CHARGES SALES CHARGES SHARES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 2000 $6,173,003 $1,819,326 $552,196 $12,335,300 $1,143,559
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES
YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
September 30, 2000 $43,938 $9,806,665 $152,556
</TABLE>
52 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 55
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
Company Act. Under those plans the Fund pays the Distributor for all or a
portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
--------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements
to the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares purchased. The Distributor makes payments to plan recipients
quarterly at an annual rate not to exceed 0.25% of the average annual net
assets consisting of Class A shares of the Fund. For the year ended September
30, 2000, payments under the Class A plan totaled $8,644,812 prior to Manager
waiver if applicable, all of which were paid by the Distributor to recipients,
and included $593,262 paid to an affiliate of the Manager. Any unreimbursed
expenses the Distributor incurs with respect to Class A shares in any fiscal
year cannot be recovered in subsequent years.
--------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan,
service fees and distribution fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The Class B and Class C plans provide
for the Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and asset-based sales charges from the
Fund under the plans. If any plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the plan was
terminated. The plans allow for the carry-forward of distribution expenses, to
be recovered from asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended September 30,
2000, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $29,118,403 $22,962,372 $115,225,276 4.46%
Class C Plan 5,693,277 1,249,999 12,233,391 2.23
</TABLE>
53 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 56
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency contracts for operational purposes and to seek to protect
against adverse exchange rate fluctuations. Risks to the Fund include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided
by a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of
Investments where applicable.
As of September 30, 2000, the Fund had outstanding foreign currency contracts
as follows:
<TABLE>
<CAPTION>
CONTRACT
EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATE (000s) SEPT. 30, 2000 APPRECIATION DEPRECIATION
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
Japanese Yen (JPY) 10/5/00-10/26/00 JPY6,531,361 $ 60,706,441 $ -- $ 294,631
----------------------------
CONTRACTS TO SELL
Brazilian Real (BRR) 10/4/00 BRR52,692 28,527,355 -- 335,006
British Pound Sterling (GBP) 11/13/00-11/27/00 GBP72,645 107,491,263 -- 3,765,534
Canadian Dollar (CAD) 10/18/00-10/31/00 CAD58,190 38,700,174 144,192 --
Euro (EUR) 10/26/00 EUR56,680 50,084,946 -- 130,028
Japanese Yen (JPY) 9/10/01 JPY2,360,100 22,523,799 923,711 --
South African Rand (ZAR) 10/19/00 ZAR194,193 26,841,479 170,970 --
Mexican Nuevo Peso (MXN) 10/4/00 MXN560,798 59,308,670 -- 150,830
----------------------------
1,238,873 4,381,398
----------------------------
Total Unrealized Appreciation and Depreciation $1,238,873 $4,676,029
============================
</TABLE>
================================================================================
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to
broadly-based securities indices "financial futures" or debt securities
"interest rate futures" in order to gain exposure to or to seek to protect
against changes in market value of stock and bonds or interest rates. The Fund
may also buy or write put or call options on these futures contracts.
54 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 57
The Fund generally sells futures contracts to hedge against increases in
interest rates and decreases in market value of 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
and/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.
As of September 30, 2000, the Fund had outstanding futures contracts as
follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE CONTRACTS SEPT. 30, 2000 DEPRECIATION
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
U.S. Long Bond 12/19/00 1,071 $105,660,844 $ 1,762,604
--------------
CONTRACTS TO SELL
United Kingdom Long Gilt 12/27/00 183 30,646,955 143,400
U.S. Treasury Nts., 10 yr. 12/19/00 1,401 140,406,469 326,411
U.S. Treasury Nts., 2 yr. 12/28/00 45 9,000,703 33,750
U.S. Treasury Nts., 5 yr. 12/19/00 4,919 494,590,078 2,683,410
--------------
3,186,971
--------------
$4,949,575
==============
</TABLE>
================================================================================
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.
55 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 58
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
7. OPTION ACTIVITY Continued
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 note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized 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, 2000, was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
--------------------------------------------------------------------------------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding as of
September 30, 1999 -- $ -- 497,640,000 $ 1,385,040
Options written 3,872,105,082 4,059,478 233,278,906 3,619,143
Options closed or expired (3,872,000,000) (400,911) (609,088,573) (3,029,905)
Options exercised (65,087) (3,295,824) -- --
--------------------------------------------------------------------
Options outstanding as of
September 30, 2000 39,995 $ 362,743 121,830,333 $ 1,974,278
====================================================================
</TABLE>
================================================================================
8. ILLIQUID OR RESTRICTED SECURITIES
As of September 30, 2000, 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 also
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
56 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 59
to qualified institutional investors, are not subject to that limitation. The
aggregate value of illiquid or restricted securities subject to this limitation
as of September 30, 2000, was $618,276,877, which represents 9.32% of the
Fund's net assets, of which $29,075,995 is considered restricted. Information
concerning restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATES COST PER UNIT SEPT. 30, 2000
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS
TAG Heuer International SA, 12% Sr. Sub.
Nts., 12/15/05 12/8/95-8/13/96 101.60% 106.69%
-----------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 14% Lease Equipment
Trust, 7/2/08 3/19/98 101.00 83.00
STOCKS AND WARRANTS
Becker Gaming, Inc. Wts., Exp. 11/15/00 11/18/93-12/9/93 $ 2.10 $ --
-----------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. 6/27/00 5.83 5.24
-----------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A 6/17/97-6/28/00 25.00 25.00
-----------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 -- 0.30
-----------------------------------------------------------------------------------------------------------
ECM Fund, LPI 4/14/92 1,000.00 876.25
-----------------------------------------------------------------------------------------------------------
Forcenergy, Inc. 4/18/00 15.25 26.13
-----------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. 4/6/00 -- 0.01
-----------------------------------------------------------------------------------------------------------
GMD Resource Corp. 5/23/00 92.50 92.50
-----------------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
-----------------------------------------------------------------------------------------------------------
World Access, Inc., Cv. Sr., Series D, Non-Vtg. 2/14/00 1,382.06 285.00
</TABLE>
================================================================================
9. 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 Oppenheimer funds 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 0.45%. 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
0.08% per annum.
The Fund had no borrowings outstanding during the year ended September 30,
2000.
57 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 60
INDEPENDENT AUDITORS' REPORT
================================================================================
THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF OPPENHEIMER STRATEGIC INCOME FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Strategic Income Fund, including the statement of investments, as
of September 30, 2000, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. 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 auditing standards generally
accepted in the United States of America. 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 as of September 30, 2000, 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, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Strategic Income Fund as of September 30, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 20, 2000
58 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 61
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2000. 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, 2000
which are not designated as capital gain distributions should be multiplied by
2.958% 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.
59 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 62
OPPENHEIMER STRATEGIC INCOME FUND
A Series of Oppenheimer Strategic Funds Trust
================================================================================
OFFICERS AND TRUSTEES James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, President
William L. Armstrong, Trustee
Robert G. Avis, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Andrew J. Donohue, Vice President and Secretary
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND 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
For more complete information about Oppenheimer
Strategic Income Fund, please refer to the
Prospectus. To obtain a copy, call your financial
advisor, or call OppenheimerFunds Distributor,
Inc. at 1.800.525.7048, or visit the
OppenheimerFunds Internet website, at
WWW.OPPENHEIMERFUNDS.COM.
SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY
ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY
OTHER AGENCY, AND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
OPPENHEIMER FUNDS ARE DISTRIBUTED BY
OPPENHEIMERFUNDS DISTRIBUTOR, INC., TWO WORLD
TRADE CENTER, NEW YORK, NY 10048-0203.
(C)Copyright 2000 OppenheimerFunds, Inc. All
rights reserved.
60 OPPENHEIMER STRATEGIC INCOME FUND
<PAGE> 63
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to
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RA0230.001.0900 November 29, 2000
