<PAGE>
Oppenheimer Strategic Short-Term Income Fund
Semi-Annual Report March 31, 1994
[Logo]
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FUND FACTS
IN THIS REPORT:
ANSWERS TO THREE QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
/ / HOW HAS THE FUND RESPONDED TO THE RECENT RISE IN U.S. INTEREST RATES?
/ / WHERE IS THE FUND SEEKING CURRENT INCOME GIVEN THE VOLATILITY IN THE MARKET
FOR U.S. GOVERNMENT BONDS?
/ / WHAT STEPS HAS THE FUND TAKEN IN RESPONSE TO FALLING INTEREST RATES IN
EUROPE?
GET THE FACTS ABOUT BONDS AND BOND MUTUAL FUNDS. CALL 1-800-525-7048 FOR YOUR
FREE COPY OF OppenheimerFunds "FACTS ABOUT BOND FUNDS" BROCHURE.
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SIX FACTS EVERY SHAREHOLDER SHOULD KNOW
ABOUT OPPENHEIMER STRATEGIC SHORT-TERM INCOME FUND
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1 The Fund's objective is to seek high current income, consistent with
stability of principal, from a portfolio of investment grade debt
securities having a remaining maturity of not more than 3 years.
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2 The Fund's standardized yield was 5.77% for Class A shares and 5.03%
for Class B shares, for the 30 days ended 3/31/94.(1)
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3 For Class A shares, the Fund produced a total return at net asset
value of 0.34% ad 3.10%, respectively, for the 6- and 12-month
periods ended 3/31/94. Those figures for Class B shares were -0.28%
and 2.20%, respectively.(2)
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4 The Fund's managers have the ability to move assets quickly and
decisively among a broad variety of investments and global financial
markets, to pursue high investment returns while managing investment
risk.(3)
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5 The Fund's average annual total returns for Class A shares for the
1-year period ended 3/31/94 and since inception of the Fund on
8/4/92 were -0.51% and 0.54%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 3/31/94 and
since inception of the Class on 11/30/92 were -1.8 and 2.71%,
respectively.(4)
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6 "The Fund's focus on short-term securities has helped to control the
impact of volatility in the U.S. government bond market caused by
increases in U.S. interest rates. We continue to focus on mortgage-
backed securities underwritten by private entities such as banks or
investment companies, which offer higher yields than government
securities. We are emphasizing European markets, where technical
factors recently caused prices to decline and created an attractive
buying opportunity. We also believe that opportunities in emerging
markets remain strong."
PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, MARCH 31, 1994
1. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/94, divided by the maximum offering price
at the end of the period, compounded semi-annually and then annualized. Falling
net asset values will tend to artificially raise yields.
2. Based on the change in net asset value per share from 9/30/93 and 3/31/93
to 3/31/94 respectively, without considering sales charges. All figures assume
reinvestment of dividends and capital gains distributions.
3. The risks of investing in foreign securities, such as currency exchange
fluctuation, political developments and difficulties in trading in foreign
markets, can increase the possibility of share price fluctuation.
4. Average annual total returns are for a hypothetical investment held until
3/31/94, after deducting the maximum initial sales charge of 3.50% for Class A
shares and the contingent deferred sales charge of 4% for Class B shares. All
figures assume reinvestment of dividends and capital gains distributions.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an Investor's shares, when redeemed, may
be worth more or less than their original cost.
2 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
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REPORT TO SHAREHOLDERS
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Oppenheimer Strategic Short-Term Income Fund continued to provide high income
during the six months ended March 31, 1994. Standardized yield for the 30 days
ended March 31, 1994, was 5.77% for Class A shares and 5.03% for Class B
shares.(6)
The Fund's managers allocate assets among four fixed income sectors:
U.S. government securities; investment grade corporate bonds; foreign fixed
income securities; and money market instruments. Historically, these sectors
have tended to react differently to economic events, with weak performance in
one sector often offset by strong performance in another. As a result, the
Fund's managers can seek high yields in different environments, while minimizing
the impact of adverse effects in any one sector.
The U.S. economy strengthened considerably in the last six months,
prompting the Federal Reserve to raise interest rates several times as a
pre-emptive strike against inflation. Because bond prices fall when interest
rates rise, prices of U.S. government securities correspondingly declined.
With its strategic approach to investing, and its focus on short-term
securities, your Fund has been able to reduce the impact of these events on the
portfolio. Before rates rose, your Fund's managers had already positioned the
portfolio for a possible increase. They reduced the Fund's exposure to U.S.
government securities, which are most sensitive to U.S. interest rate changes,
and increased emphasis on mortgage-backed securities, which tend to offer higher
yields.
"WE ARE ADDING TO THE FUND'S POSITION IN EUROPEAN SECURITIES."
In the European markets, we believe that continued economic weakness
and the German central bank's decision to cut interest rates will cause bond
prices to rise. Accordingly, we are adding to the Fund's position in European
securities. We are also maintaining our positions in select Latin American
markets, which offer attractive investment opportunities.
In addition, we are maintaining a sizable position in corporate bonds,
which we believe will add to the Fund's performance as the U.S. economic
recovery continues and corporate earnings increase. In particular, we are
focusing on industries that do well in the later stages of a recovery, such as
transportation, forest products, metals and mining, and chemicals.
Thank you for your trust in Oppenheimer Strategic Short-Term Income
Fund. We look forward to helping you seek your investment goals in years to
come.
THE FUND'S PORTFOLIO ALLOCATION(5)
(as of March 31, 1994)
- - ----------------------------------
U.S. government 35.5%
securities
- - ----------------------------------
Mortgage/Asset- 23.5%
backed obligations
- - ----------------------------------
Foreign fixed 23.0%
income securities
- - ----------------------------------
U.S. corporate bonds 14.3%
and stocks
- - ----------------------------------
Municipal bonds 2.5%
and notes
- - ----------------------------------
Money market 1.2%
instruments
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
Chairman President
Oppenheimer Strategic Short-Term Oppenheimer Strategic Short-Term
Income Fund Income Fund
April 25, 1994
5. The Fund's portfolio is subject to change.
6. See footnote 1, page 2.
3 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Statement of Investments March 31, 1994 (Unaudited)
Face Market Value
Amount See Note 1
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements - 1.1%
- - ---------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with J.P. Morgan Securities, Inc.,
3.53%, dated 3/31/94, to be repurchased at $ 400,157 on 4/4/94,
collateralized by U.S. Treasury Nts., 4.25%-8.875%, 5/15/95-
10/15/96, with a value of $409,624 (Cost $400,000) $ 400,000 $ 400,000
- - ---------------------------------------------------------------------------------------------------------------------------------
Government Obligations - 53.8%
- - ---------------------------------------------------------------------------------------------------------------------------------
Short-Term - 2.7%
- - ---------------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 4/28/94 3,187,170 (1) 939,115
- - ---------------------------------------------------------------------------------------------------------------------------------
Long-Term - 51.1%
- - ---------------------------------------------------------------------------------------------------------------------------------
Corporacion Andina de Formento Nts., 7.25%, 4/30/98 (3) 750,000 739,688
--------------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds, 7%, 4/16/96 (3) 500,000 503,125
--------------------------------------------------------------------------------------------------------
Empresas Columbiana de Petroleos Nts., 7.25%, 7/8/98 (3) 450,000 447,469
--------------------------------------------------------------------------------------------------------
European Investment Bank:
12.75% Debs., 2/15/00 100,000,000 (1) 73,203
12.20% Sr. Unsub. Nts., 2/18/03 100,000,000 (1) 74,011
--------------------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance
Corp. Ltd. Bonds, Series 22, 11.40%, 12/15/01 482,295 368,690
--------------------------------------------------------------------------------------------------------
Financiera Energetica Nacional Nts., 6.625%, 12/13/96 300,000 291,375
--------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 4/24/95 1,500,000,000 (1) 594,869
--------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds:
11%, 6/1/03 800,000,000 (1) 539,968
Buoni Pollennali del Tes, 12.50%, 3/19/98 50,000,000 (1) 34,379
--------------------------------------------------------------------------------------------------------
Small Business Administration, 7.125%-7.875%,
8/25/01-11/25/06 (2) 2,828,238 3,017,864
--------------------------------------------------------------------------------------------------------
South Australia Government Finance
Authority Bonds, 10%, 1/15/03 318,000 (1) 241,990
--------------------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 8%, 5/30/04 25,000,000 (1) 169,390
Bonds, 11.45%, 8/30/98 15,000,000 (1) 121,216
Gtd. Bonds, Bonos y Obligacion del Estado:
11%, 6/15/97 20,000,000 (1) 157,478
12.25%, 3/25/00 105,000,000 (1) 891,132
--------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds:
12%, 9/22/01 450,000 (1) 309,453
8.25%, 10/15/03 300,000 (1) 252,219
--------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.25%, 8/15/23 600,000 537,562
--------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
4.375%, 8/15/96 3,200,000 3,450,998
5.125%, 2/28/96 300,000 291,000
8.50%, 5/15/19 5,000,000 4,889,065
--------------
17,996,144
--------------
Total Government Obligations (Cost $24,758,068) 18,935,259
- - ---------------------------------------------------------------------------------------------------------------------------------
Mortgage/Asset-Backed Obligations - 22.9%
- - ---------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 7%, Series 1548,
Cl. C, 4/15/21 3,000,000 2,836,830
---------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Interest-Only Stripped Mtg.-
Backed Security, Trust 240, Class 2, 7%, 9/25/23 2,030,239 745,791
---------------------------------------------------------------------------------------------------------
First Boston Corp. Mtg. Securities,
7.06%, Series 1993-AFC-1, 10/25/02 750,000 716,133
---------------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
10.50%, 12/15/17 404,070 448,801
10.50%, 7/15/19 22,749 25,292
10.50%, 10/15/20 65,250 72,585
10.50%, 1/15/21 74,667 83,113
10.50%, 3/15/21 40,934 45,565
10.50%, 7/15/21 575,572 640,675
10.50%, 10/15/21 412,800 459,492
---------------------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-
Through Certificates:
9%, Series 1991-M5, Cl. A, 3/25/17 807,882 834,643
8.75%, Series 1993-C1, Cl. B, 5/25/24 600,000 621,000
10.6323%, Series 1992-16, Cl. B3, 5/25/24 (2) 500,000 530,000
--------------
Total Mortgage/Asset-Backed Obligations (Cost $2,740,427) 8,059,920
4 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
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Statement of Investments (Unaudited) (Continued)
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------------
Municipal Bonds and Notes - 2.5%
- - ---------------------------------------------------------------------------------------------------------------------------------
Connecticut State Taxable General Obligation
Bonds, 6.625%, 12/15/97 $ 350,000 $ 356,841
--------------------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp.
State Service Contract Taxable Revenue Bonds,
Series B, 7.30%, 3/15/97 500,000 514,489
--------------
Total Municipal Bonds and Notes (Cost $848,445) 871,330
- - ---------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes - 17.1%
- - ---------------------------------------------------------------------------------------------------------------------------------
Short-Term - 1.0%
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Bayerische Landesbank, 10.75% Sr. Unsub. Nts., 3/1/03 100,000,000 (1) 68,385
--------------------------------------------------------------------------------------------------------
Citibank, 17% CD, 8/10/94 122,820,000 (1) 287,948
--------------
356,333
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Long-Term - 16.1%
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Basic Materials - 1.3%
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Chemicals - 1.3% Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 400,000 465,351
- - ---------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 6.2%
- - ---------------------------------------------------------------------------------------------------------------------------------
Consumer Goods and
Services - 0.9% Mattel, Inc., 6.875% Sr. Nts., 8/1/97 300,000 302,909
- - ---------------------------------------------------------------------------------------------------------------------------------
Hotels/Lodging - 0.8% Host Marriott Hospitality, Inc., 10.625% Sr. Nts., Series B,
2/1/00 285,000 293,550
- - ---------------------------------------------------------------------------------------------------------------------------------
Retail - 4.5% AnnTaylor, Inc., 13.75% Sub. Nts., 7/15/99 750,000 791,250
--------------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.70% Debs., 7/10/00 1,000,000 (1) 796,527
--------------
1,587,777
- - ---------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals - 2.0%
- - ---------------------------------------------------------------------------------------------------------------------------------
Food -2.0% RJR Nabisco, Inc., 10.50% Sr. Nts., 4/15/98 700,000 739,374
- - ---------------------------------------------------------------------------------------------------------------------------------
Energy - 0.8%
- - ---------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 10.375% Nts., 7/15/95 250,000 265,285
- - ---------------------------------------------------------------------------------------------------------------------------------
Financial - 3.1%
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BankAmerica Corp., 7.50% Sr. Nts, 3/15/97 100,000 103,609
--------------------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 150,000 162,907
--------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Nts., 10/1/96 200,000 208,059
--------------------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 225,000 233,931
--------------------------------------------------------------------------------------------------------
Shearson Lehman Brothers Holdings, Inc.,
8.375% Nts., 2/15/99 350,000 368,883
--------------
1,077,389
- - ---------------------------------------------------------------------------------------------------------------------------------
Technology - 1.2%
- - ---------------------------------------------------------------------------------------------------------------------------------
Cable Television - 1.2% Time Warner, Inc., 7.45% Nts., 2/1/98 400,000 403,500
- - ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 1.5%
- - ---------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts., 5/15/99 300,000 316,352
--------------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.50% Nts., 7/15/97 225,000 223,947
--------------
540,299
--------------
5,675,434
--------------
Total Corporate Bonds and Notes (Cost $6,134,893) 6,031,767
Shares
- - ---------------------------------------------------------------------------------------------------------------------------------
Common Stocks - 0.1%
- - ---------------------------------------------------------------------------------------------------------------------------------
Host Marriot Corp. 451 4,510
--------------------------------------------------------------------------------------------------------
Marriott International, Inc. 451 12,684
-------------
Total Common Stocks (Cost $14,996) 17,194
- - ---------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $34,896,829) 97.5% 34,315,470
- - ---------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 2.5 886,081
--------- -------------
Net Assets 100.0% $35,201,551
--------- -------------
<FN>
1. Face amount is reported in foreign currency.
2. Represents the current interest rate for a variable rate security.
3. Restricted security--See Note 5 of Notes to Financial Statements.
</TABLE>
See accompanying Notes to Financial Statements.
5 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES March 31, 1994 (Unaudited)
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $34,896,829) - see accompanying statement $34,315,470
---------------------------------------------------------------------------------------------------
Cash 77,637
---------------------------------------------------------------------------------------------------
Receivables:
Interest 629,345
Shares of beneficial interest sold 381,963
Investments sold 241,824
---------------------------------------------------------------------------------------------------
Deferred organization costs 6,759
---------------------------------------------------------------------------------------------------
Other 6,185
-----------
Total assets 35,659,183
- - ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 243,060
Investments purchased 74,432
Dividends 47,820
Distribution and service plan fees - Note 4 20,271
Other 72,049
-----------
Total liabilities 457,632
- - ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $35,201,551
-----------
-----------
---------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $36,508,968
NET ASSETS ---------------------------------------------------------------------------------------------------
Undistributed net investment income 34,638
---------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain from investment
and foreign currency transactions (761,892)
---------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and
translation of assets and liabilities denominated
in foreign currencies (580,163)
-----------
Net assets $35,201,551
-----------
-----------
- - ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER Class A Shares:
SHARE Net asset value and redemption price per share
(based on net assets of $28,884,276 and 6,152,063
shares of beneficial interest outstanding) $4.70
Maximum offering price per share (net asset value
plus sales charge of 3.50% of offering price) $4.87
---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $6,317,275
and 1,346,639 shares of beneficial interest
outstanding) $4.69
</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1994 (Unaudited)
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $1,108,302
---------------------------------------------------------------------------------------------------
Dividends 63
-----------
Total income 1,108,365
- - ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees - Note 4 103,879
---------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A - Note 4 32,062
Class B - Note 4 23,015
---------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 14,921
---------------------------------------------------------------------------------------------------
Custodian fees and expenses 13,806
---------------------------------------------------------------------------------------------------
Shareholder reports 13,258
---------------------------------------------------------------------------------------------------
Legal and auditing fees 3,822
---------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,715
Class B 934
---------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,221
---------------------------------------------------------------------------------------------------
Other 3,986
-----------
Total expenses 212,619
- - ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 895,746
- - ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND Net realized loss from:
UNREALIZED GAIN (LOSS) Investments (134,868)
ON INVESTMENTS Foreign currency transactions (70,826)
AND FOREIGN CURRENCY -----------
TRANSACTIONS Net realized loss (205,694)
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (776,189)
Translation of assets and liabilities denominated in
foreign currencies 53,739
-----------
Net change (722,450)
-----------
Net realized and unrealized loss on investments and
foreign currency transactions (928,144)
- - ---------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(32,398)
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30,
(UNAUDITED) 1993
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income $ 895,746 $ 1,481,320
---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions (205,694) 80,366
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments and translation of assets and liabilities
denominated in foreign currencies (722,450) 238,294
----------- -----------
Net increase (decrease) in net assets resulting from
operations (32,398) 1,208,515
- - ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.151 and $.305 per share, respectively) (858,024) (1,297,637)
SHAREHOLDERS Class B ($.132 and $.212 per share, respectively) (125,579) (61,188)
---------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments and
foreign currency transactions:
Class A ($.0065 and $.0007 per share, respectively) (36,225) (3,024)
Class B ($.0065 and $.0007 per share, respectively) (6,216) (36)
- - ---------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions - Note 2 4,456,668 12,801,641
---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions - Note 2 3,068,122 3,416,849
- - ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 6,466,348 16,065,120
---------------------------------------------------------------------------------------------------
Beginning of period 28,735,203 12,670,083
----------- -----------
End of period (including undistributed net investment
income of $34,638 and $122,495, respectively) $35,201,551 $28,735,203
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
----------------------------------------- --------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1994 (UNAUDITED) 1993 1992(2) 1994 (UNAUDITED) 1993(1)
<S> <C> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 4.84 $ 4.93 $ 5.00 $ 4.84 $ 4.75
- - -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .14 .33 .05 .12 .22
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.12) (.11) (.07) (.13) .08
------- ------- ------- ------- -------
Total income (loss) from investment operations .02 .22 (.02) (.01) .30
- - -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.31) (.05) (.13) (.21)
Distributions from net realized gain on
investments and foreign currency transactions (.01) -- -- (.01) --
------- ------- ------- ------- -------
Total dividends and distributions to
shareholders (.16) (.31) (.05) (.14) (.21)
- - -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.70 $ 4.84 $ 4.93 $ 4.69 $ 4.84
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- - -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) .34% 4.58% (.27)% (.28)% 6.93%
- - -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $28,884 $25,314 $12,670 $6,317 $3,421
- - -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $26,481 $20,663 $ 8,643 $4,318 $1,428
- - -------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end of period
(in thousands) 6,152 5,231 2,572 1,347 707
- - -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.92%(4) 6.83% 6.38%(4) 5.33%(4) 5.88%(4)
Expenses, before voluntary reimbursement
by the Manager 1.26%(4) 1.38% 1.87%(4) 2.16%(4) 2.22%(4)
Expenses, net of voluntary reimbursement
by the Manager N/A 1.21% .92%(4) N/A 2.21%(4)
- - -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 23.6% 104.0% 11.2% 23.6% 104.0%
<FN>
1. For the period from November 30, 1992 (inception of offering) to
September 30, 1993.
2. For the period from August 4, 1992 (commencement of operations) to
September 30, 1992.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the six months ended March 31, 1994 were
$20,638,711 and $6,551,541, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- - --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Strategic Short-Term Income Fund (the Fund)
ACCOUNTING POLICIES is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management
investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class B shares. Class A
shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical rights to
earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan,
expenses directly attributable to a particular class and
exclusive voting rights with respect to matters affecting
a single class. Class B shares will automatically
convert to Class A shares six years after the date of
purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.
---------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at
4:00 p.m. (New York time) on each trading day. Listed
and unlisted securities for which such information is
regularly reported are valued at the last sale price of
the day or, in the absence of sales, at values based on
the closing bid or asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Long-term debt securities which
cannot be valued by the approved portfolio pricing
service are valued by averaging the mean between the bid
and asked prices obtained from two active market makers
in such securities. Short-term debt securities having a
remaining maturity of 60 days or less are valued at cost
(or last determined market value) adjusted for
amortization to maturity of any premium or discount.
Securities for which market quotes are not readily
available are valued under procedures established by the
Board of Trustees to determine fair value in good faith.
---------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of
the Fund are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rates of exchange prevailing on the respective dates of
such transactions.
The Fund generally enters into forward currency exchange
contracts as a hedge, upon the purchase or sale of a
security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against
changes in foreign currency exchange rates on portfolio
positions. A forward exchange contract is a commitment
to purchase or sell a foreign currency at a future date,
at a negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the
contract and from unanticipated movements in the value of
a foreign currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange rates
on investments is separately identified from the
fluctuations arising from changes in market values of
securities held and reported with all other foreign
currency gains and losses in the Fund's results of
operations.
---------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian
to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. If the seller of
the agreement defaults and the value of the collateral
declines, or if the seller enters an insolvency
proceeding, realization of the value of the collateral by
the Fund may be delayed or limited.
---------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily
to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
10 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- - --------------------------------------------------------------------------------
FEDERAL INCOME 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 tax provision is required.
---------------------------------------------------------
ORGANIZATION COSTS. The Manager advanced $16,395 for
organization and start-up costs of the Fund. Such
expenses are being amortized over a five-year period from
the date operations commenced. In the event that all or
part of the Manager's initial investment in shares of the
Fund is withdrawn during the amortization period, the
redemption proceeds will be reduced to reimburse the Fund
for any unamortized expenses, in the same ratio as the
number of shares redeemed bears to the number of initial
shares outstanding at the time of such redemption.
---------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
shares from net investment income each day the New York
Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains
on investments, if any, will be declared at least once
each year.
---------------------------------------------------------
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date).
Discount on securities purchased is amortized over the
life of the respective securities, in accordance with
federal income tax requirements. Realized gains and
losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis,
which is the same basis used for federal income tax
purposes.
- - --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30, 1993(1)
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Class A:
Sold 3,937,878 $18,981,611 6,914,934 $33,354,845
Dividends and distributions
reinvested 142,198 685,127 164,208 792,992
Redeemed (3,158,676) (15,210,070) (4,420,557) (21,346,196)
---------- ----------- ---------- -----------
Net increase 921,400 $ 4,456,668 2,658,585 $12,801,641
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
-------------------------------------------------------------------------------------------------
Class B:
Sold 846,668 $4,062,179 870,393 $4,204,678
Dividends and distributions
reinvested 19,783 95,155 9,152 44,291
Redeemed (227,204) (1,089,212) (172,153) (832,120)
---------- ----------- ---------- -----------
Net increase 639,247 $3,068,122 707,392 $3,416,849
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
<FN>
1. For the year ended September 30, 1993 for Class A
shares and for the period from November 30, 1992
(inception of offering) to September 30, 1993 for Class B
shares.
</TABLE>
- - --------------------------------------------------------------------------------
3. UNREALIZED GAINS At March 31, 1994, net unrealized depreciation of
AND LOSSES ON investments of $581,359 was composed of gross
INVESTMENTS appreciation of $251,343, and gross depreciation of
$832,702.
- - --------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS WITH which provides for an annual fee of .65% on the first
AFFILIATES $500 million of net assets with a reduction of .03% on
each $500 million thereafter to $1.5 billion, and .50% on
net assets in excess of $1.5 billion. The Manager has
agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses. A
voluntary undertaking to reimburse Fund expenses to the
level needed to maintain a stable dividend was terminated
December 1, 1993.
11 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- - --------------------------------------------------------------------------------
For the six months ended March 31, 1994, commissions
(sales charge paid by investors) on sales of Class A
shares totaled $275,752, of which $98,203 was retained by
Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an
affiliated broker/dealer. During the six months ended
March 31, 1994, OFDI received contingent deferred sales
charges of $7,752 upon redemption of Class B shares, as
reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the
Manager, is the transfer and shareholder servicing agent
for the Fund and for other registered investment
companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, each class may expend up
to .25% of its net assets annually to reimburse OFDI for
costs incurred in connection with the personal service
and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and
other institutions. In addition, Class B shares are
subject to an asset-based sales charge of .75% of net
assets annually, to reimburse OFDI for sales commissions
paid from its own resources at the time of sale and
associated financing costs. In the event of termination
or discontinuance of the Class B plan, the Board of
Trustees may allow the Fund to continue payment of the
asset-based sales charge to OFDI for distribution
expenses incurred on Class B shares sold prior to
termination or discontinuance of the plan. During the
six months ended March 31, 1994, OFDI paid $7,341 and
$37, respectively, to an affiliated broker/dealer as
reimbursement for Class A and Class B personal service
and maintenance expenses and retained $22,669 as
reimbursement for Class B sales commissions and service
fee advances, as well as financing costs.
- - --------------------------------------------------------------------------------
5. RESTRICTED The Fund owns securities purchased in private placement
SECURITIES transactions, without registration under the Securities
Act of 1933 (the Act). The securities are valued under
methods approved by the Board of Trustees as reflecting
fair value. The Fund intends to invest no more than 10%
of its net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Trustees or
by the Manager under Board-approved guidelines.
<TABLE>
<CAPTION>
Valuation Per Unit
Security Acquisition Date Cost Per Unit as of March 31, 1994
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------
Corporacion Andina de
Formento Nts., 7.25%,
4/30/98(1) 4/15/93 $99.38 $ 98.63
----------------------------------------------------------------------------------------------
Czechoslovakia National
Bank Bonds, 7%, 4/16/96(1) 3/11/93 $99.70 $100.63
----------------------------------------------------------------------------------------------
Empresas Columbiana de
Petroleos Nts., 7.25%,
7/8/98(1) 6/24/93 $99.63 $99.44
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
12 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
-----------------------------------------------------------------
OPPENHEIMER STRATEGIC SHORT-TERM INCOME FUND
-----------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief
Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President,
Secretary and Treasurer
Lynn M. Coluccy, Assistant Treasurer
Robert G. Zack, Assistant Secretary
-----------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
-----------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
-----------------------------------------------------------------
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
-----------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
-----------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche
-----------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
The financial statement included herein have been taken from the
records of the Fund without examination by the independent
auditors.
This is a copy of a report to shareholders of Oppenheimer
Strategic Short-Term Income Fund. This report must be preceded
or accompanied by a Prospectus of Oppenheimer Strategic Short-
Term Income Fund. For material information concerning the Fund,
see the Prospectus.
13 Oppenheimer Strategic Short-Term Income Fund
