Oppenheimer Strategic Short-Term Income Fund
Semiannual Report March 31, 1995
[LOGO]
<PAGE>
Yield
- - ---------------------------------
Standardized Yield
- - ---------------------------------
For the 30 Days Ended 3/31/95:(1)
Class A
- - ---------------------------------
6.76%
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Class B
- - ---------------------------------
6.21%
- - ---------------------------------
This Fund is for people who want high income from an investment that's
strategically designed to lower risk.
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How Your Fund Is Managed
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Oppenheimer Strategic Short-Term Income Fund seeks high current income and
stability of principal by strategically allocating its assets among four
sectors: U.S. government issues, foreign fixed income securities, corporate
bonds, and money market instruments. At least 65% of the Fund's portfolio is
invested in securities with a maximum remaining maturity of not more than 3
years because shorter-term securities are less subject to price fluctuations
than longer-term securities.
Strategic investing gives the Fund's managers the flexibility to shift
assets among fixed income sectors to capitalize on worldwide investment
opportunities. At the same time, allocating the Fund's assets among distinct
fixed income sectors provides the diversification necessary to lower risk.
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Performance
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Total returns at net asset value for the 6 months ended 3/31/95 for Class A and
B shares were 3.40% and 3.01%, respectively.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-year period ended 3/31/95 and since inception of the
Class on 8/4/92 were 0.04% and 1.73%, respectively. For Class B shares, average
annual total returns for the 1-year period ended 3/31/95 and since inception of
the Class on 11/30/92 were -1.00% and 3.28%, respectively.(3)
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Outlook
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"The outlook for the bond market is more positive today than it has been in some
time, both in terms of income and potential total returns. The Fund's ability to
shift assets strategically among bond market sectors worldwide remains a major
advantage for shareholders in the current environment. It has allowed us to seek
high yields, while seeking to keep portfolio risks under careful control."
David Negri and Art Steinmetz, Portfolio Managers
March 31, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
1. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
2. Based on the change in net asset value per share from 9/30/94 to 3/31/95,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 4/1/94 and 8/4/92
(inception of class), after deducting the current maximum initial sales charge
of 3.50%. Class B returns show results of hypothetical investments on 4/1/94 and
11/30/92 (inception of class) and the deduction of the applicable contingent
deferred sales charge of 4% (1-year) and 3% (since inception). An explanation of
the different total returns is in the Fund's prospectus.
2 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
James C. Swain
Chairman
Oppenheimer
Strategic Short-Term
Income Fund
Jon S. Fossel
President
Oppenheimer
Strategic Short-Term
Income Fund
Dear OppenheimerFunds Shareholder,
1994 was marked by one of the greatest tests the bond markets faced in more than
six decades. As the U.S. Federal Reserve undertook the most aggressive moves in
its history to raise interest rates, bond prices and bond mutual funds declined
across the board. Changing interest rates are a fact of life and they affect the
short-term performance of all bond markets. That is why we believe the best
measure of any fixed income mutual fund is its performance over the long term.
And we believe the long-term outlook for the bond markets is very positive.
To see how greatly the U.S. bond market has improved since last fall, we
need look no further than the market's reaction to the Fed's most recent
short-term rate increase in February. While the markets had already anticipated
this move, unlike previous rate increases, long-term interest rates continued to
decline and bonds rallied further. Although the Fed could raise rates again, we
believe that this positive environment will prove more than momentary as a
result of several factors.
First, concerns about the effects of inflation on bond prices are fading
fast. By most indicators, economic growth is slowing to a pace that can be
sustained without reigniting inflation or causing a recession. Second, at
current prices, intermediate and long-term bonds are producing some of the best
inflation-adjusted returns in years. With the actual inflation rate running just
over 3 percent today, many fixed income investors are clearly being rewarded.
Attracted by the strong, real returns intermediate and long-term bonds offer,
investors are returning to bonds in a significant way. This rising demand is
providing solid support for bond prices. Third, as the Fed concludes its
tightening efforts--and recent reports suggest that point is near--long-term
interest rates will likely stay within their current range, and could decline
further. Of course, rates could rise later this year if future reports indicate
that the economy isn't slowing as quickly as it seems to be today; however, we
believe that over the longer term, the downward trend of rates will continue.
Two uncertainties affecting the fixed income markets are foreign investors'
attitudes toward U.S. debt and the weakness of the U.S. dollar abroad relative
to other major currencies. But investors' attitudes overseas and the dollar's
decline, in our view, should prove temporary. Both have been driven by the
government's moves to support the Mexican peso, a widening trade deficit, and
Congress's apparent inability to limit the Federal budget deficit.
We believe the trade deficit will narrow with increasing U.S. exports as
European economies come out of recession and emerging world markets stabilize.
Additionally, the need to support the peso has begun to decline as Mexico's
tough domestic economic policy has gained credibility. Finally, we are confident
that Congress will be able to get the budget deficit issue dealt with because
Americans are demanding it.
Of course, no one can predict the future with perfect clarity. The bond
markets are always subject to fluctuations and, as we saw in 1994, the shifts
can sometimes be sharp. Overall, however, we believe the outlook for the bond
markets today appears positive.
Your portfolio manager discusses the outlook for your Fund on the following
pages. We appreciate your trust, and we'll continue to do our best to help you
meet your long-term investment objectives.
James C. Swain Jon S. Fossel
April 24, 1995
3 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
David Negri and Art Steinmetz
Portfolio Managers
Q+A
An interview with your Fund's managers.
Investments in emerging markets historically have played an important role in
the Fund's portfolio. Did the devaluation of the peso affect your strategy?
It certainly did with regard to Mexico itself, where we have drastically reduced
our positions. In other emerging markets, however, we think the perception of
risk has been exaggerated. These markets don't, of course, develop in straight
lines. Foreign investments are always subject to adverse market changes due to
currency fluctuations, and sometimes the shifts can be sharp. But the Fund's
focus on shorter-maturity bonds helps mitigate those risks, as does the Fund's
diversified portfolio.(1)
There also are signs of political and economic uncertainty in some established
markets in Europe. How have these developments affected your approach?
We've taken several steps to adjust our European holdings. For example, we've
redirected our assets in Spain and Italy, which are running large deficits, to
the United Kingdom. Bonds in these countries are beginning to benefit from
strengthening economies, which are pushing up yields, as well as from the
weakness of the U.S. dollar.
Has the recent weakness of the dollar affected the Fund?
It has to some extent. The dollar's decline was driven largely by the U.S.
government's attempt to support Mexico by buying peso-denominated securities. As
our government pumped U.S. dollars into the system, and as the supply of dollars
rose, their value fell. But as investors sought stability, other markets and
currencies, notably Germany and the mark, benefitted--thus, currency declines
affecting one sector of the Fund were largely offset by currency gains in
Europe.
These developments demonstrate the benefit of investing in a
geographically diverse portfolio. Each sector of the bond market is affected
differently by economic events, and setbacks in one area often are offset by
higher performance in others.
What's your outlook for the Fund?
The Fund's flexibility and diversification should continue to help us manage
risk and seek solid returns. And now that prospects for the bond markets in
general are positive, we believe that the Fund is positioned to perform well. //
1. The Fund's portfolio is subject to change.
4 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
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Statement of Investments March 31, 1995 (Unaudited)
Face Market Value
Amount (1) See Note 1
<S> <C> <C> <C>
====================================================================================================================================
Certificates of Deposit -- 3.9%
- - ------------------------------------------------------------------------------------------------------------------------------------
Citibank CD:
10.50%, 7/14/95 (2) ARA $ 150,000 $ 150,037
16%, 5/3/95 (2) CLP 43,000,000 106,554
16%, 8/17/95 (2) CLP 83,003,140 205,682
--------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, Zero Coupon, 4/24/95 IDR 1,500,000,000 663,371
---------------
Total Certificates of Deposit (Cost $1,162,222) 1,125,644
====================================================================================================================================
Mortgage-Backed Obligations -- 19.5%
- - ------------------------------------------------------------------------------------------------------------------------------------
Government Agency -- 15.0%
- - ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored -- 11.8%
--------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Series 1548, Cl. C, 7%, 4/15/21 3,000,000 2,728,230
--------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240, Cl. 2, 7%, 9/25/23 (3) 1,935,879 701,151
---------------
3,429,381
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GNMA/Guaranteed -- 3.2%
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Government National Mortgage Assn., 10.50%, 12/15/17-10/15/21 832,850 919,239
- - ------------------------------------------------------------------------------------------------------------------------------------
Private -- 4.5%
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Commercial -- 2.0%
--------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1993-C1, Cl. B, 8.75%, 5/25/24 600,000 599,438
- - ------------------------------------------------------------------------------------------------------------------------------------
Multi-Family -- 2.5%
--------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 645,065 657,563
Series 1991-M6, Cl. B4, 6.45%, 6/25/21 (4) 66,789 64,431
---------------
721,994
---------------
Total Mortgage-Backed Obligations (Cost $5,869,176) 5,670,052
====================================================================================================================================
U.S. Government Obligations -- 48.8%
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Agency -- 8.1%
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Government Agency/Full Faith -- 8.1%
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Small Business Administration, 9.375%-10.675%, 4/1/95 (5) 2,218,343 2,349,357
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Treasury -- 40.7%
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U.S. Treasury Bonds:
10.375%, 5/15/95 2,070,000 2,080,350
6.25%, 8/15/23 600,000 513,187
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U.S. Treasury Nts.:
10.50%, 8/15/95 800,000 812,500
4.375%, 8/15/96 5,000,000 4,854,684
5.125%, 2/28/98 300,000 285,844
8.50%, 5/15/97 3,200,000 3,304,998
---------------
11,851,563
---------------
Total U.S. Government Obligations (Cost $14,646,617) 14,200,920
====================================================================================================================================
Foreign Government Obligations -- 12.5%
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Corporacion Andina de Fomento Sr. Unsec. Debs., 7.25%, 4/30/98 70,000 64,750
</TABLE>
5 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
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Statement of Investments (Unaudited)(Continued) Face Market Value
Amount (1) See Note 1
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
Foreign Government Obligations -- (Continued)
- - ------------------------------------------------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 22, 11.40%, 12/15/01 AUD $ 391,830 $ 303,211
--------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 580,000 412,023
--------------------------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Exch. Bonds, 12%, 12/1/01 AUD 330,000 265,743
--------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
10%, 7/15/97 NZD 119,000 80,434
8%, 11/15/95 NZD 750,000 487,148
--------------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 921,000 612,894
--------------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
10.25%, 11/30/98 ESP 40,000,000 301,746
--------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts.:
12%, 11/20/98 GBP 195,000 352,951
12.25%, 3/26/99 GBP 200,000 367,193
13%, 7/14/00 GBP 196,000 378,505
---------------
Total Foreign Government Obligations (Cost $3,555,767) 3,626,598
====================================================================================================================================
Municipal Bonds and Notes -- 2.9%
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Connecticut State Taxable General Obligation Bonds, 6.625%,
12/15/97 350,000 344,788
--------------------------------------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp. State Service
Contract Taxable Revenue Bonds, Series B, 7.30%, 3/15/97 500,000 494,897
---------------
Total Municipal Bonds and Notes (Cost $848,937) 839,685
====================================================================================================================================
Corporate Bonds and Notes -- 11.9%
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Basic Industry -- 1.5%
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Chemicals -- 1.5%
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Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 400,000 442,149
- - ------------------------------------------------------------------------------------------------------------------------------------
Consumer Related -- 2.8%
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Food/Beverages/Tobacco -- 0.9%
--------------------------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts.,
11/1/02 (6) 300,000 261,000
- - ------------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming -- 0.9%
--------------------------------------------------------------------------------------------------------------------------
Host Marriott Hospitality, Inc., 10.625% Sr. Nts., Series B, 2/1/00 241,000 247,628
- - ------------------------------------------------------------------------------------------------------------------------------------
Toys -- 1.0%
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Mattel, Inc., 6.875% Sr. Nts., 8/1/97 300,000 296,446
- - ------------------------------------------------------------------------------------------------------------------------------------
Energy -- 0.9%
- - ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 10.375% Nts., 7/15/95 250,000 252,634
- - ------------------------------------------------------------------------------------------------------------------------------------
Financial Services -- 3.5%
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Banks and Thrifts -- 0.8%
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BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 100,000 100,253
--------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 150,000 157,111
---------------
257,364
- - ------------------------------------------------------------------------------------------------------------------------------------
Diversified Financial -- 2.7%
--------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Nts., 10/1/96 200,000 201,962
--------------------------------------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 225,000 226,848
--------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 8.375% Nts., 2/15/99 350,000 349,142
---------------
777,952
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Retail -- 2.4%
- - ------------------------------------------------------------------------------------------------------------------------------------
Department Stores -- 1.3%
--------------------------------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.70% Debs., 7/10/00 CAD 500,000 391,196
</TABLE>
6 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
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Statement of Investments (Unaudited)(Continued) Face Market Value
Amount (1) See Note 1
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
Retail -- (Continued)
- - ------------------------------------------------------------------------------------------------------------------------------------
Specialty Retailing -- 1.1%
--------------------------------------------------------------------------------------------------------------------------
Caldor Corp., 15% Sr. Sub. Nts., 6/1/00 $ 290,000 $ 311,750
- - ------------------------------------------------------------------------------------------------------------------------------------
Utilities -- 0.8%
- - ------------------------------------------------------------------------------------------------------------------------------------
Electric Utilities -- 0.8%
--------------------------------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.50% Nts., 7/15/97 225,000 218,817
---------------
Total Corporate Bonds and Notes (Cost $3,595,027) 3,456,936
- - ------------------------------------------------------------------------------------------------------------------------------------
Structured Instruments -- 1.2%
- - ------------------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc., 10% CD Sterling
Rate Linked Nts., 7/3/95 (Cost $370,000) (2) 370,000 364,080
--------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $30,047,746) 100.7% 29,283,915
--------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.7) (201,667)
---------------- ---------------
Net Assets 100.0% $ 29,082,248
================ ===============
</TABLE>
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
ARA - Argentine Austral ESP - Spanish Peseta
AUD - Australian Dollar GBP - British Pound Sterling
CAD - Canadian Dollar IDR - Indonesian Rupiah
CLP - Chilean Peso NZD - New Zealand Dollar
DEM - German Deutsche Mark USD - U.S. Dollar
2. Indexed instrument for which the principal amount and/or interest
due at maturity is affected by the relative value of a foreign
currency.
3. 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).
4. Represents the current interest rate for a variable rate
security.
5. Floating or variable rate obligation maturing in more than one
year. The interest rate, which is based on specific, or an index
of, market interest rates, is subject to change periodically and
is the effective rate on March 31, 1995. This instrument may also
have a demand feature which allows the recovery of principal at
any time, or at specified intervals not exceeding one year, on up
to 30 days' notice. Maturity date shown represents effective
maturity based on variable rate and, if applicable, demand
feature.
6. Represents a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
7. A sufficient amount of securities is segregated to collateralize
outstanding forward foreign currency exchange contracts. See Note
5 of Notes to Financial Statements.
8. A sufficient amount of liquid assets has been designated to cover
outstanding call and put options, as follows:
<TABLE>
<CAPTION>
Face Subject Expiration Exercise Premium Market Value
to Call/Put Date Price Received See Note 1
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian Dollar 400,000 AUD 4/20/95 0.74 USD/AUD $ 692 $ 1,184
Call Option on New South Wales
Treasury Corp. Gtd. Exch. Bonds,
12%, 12/1/01 50,000 AUD 4/28/95 109.056 AUD 339 440
Call Option on Pound Sterling 325,000 GBP 5/8/95 1.60 USD/DEM 3,210 12,584
Call Option on Spanish Peseta/
Deutsche Mark 10,000,000 ESP 5/4/95 89.00 ESP/DEM 558 328
Put Option on Deutsche Mark 100,000 DEM 6/6/95 1.46 DEM/USD 708 500
----------- -----------
$ 5,507 $ 15,036
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets Investments, at value (cost $30,047,746) -- see accompanying statement $29,283,915
---------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 556,022
Investments sold 59,683
Shares of beneficial interest sold 5,822
Deferred organization costs 3,756
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Other 3,515
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Total assets 29,912,713
- - ------------------------------------------------------------------------------------------------------------------------------------
Liabilities Bank overdraft 605,866
---------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $5,507) -- Note 4 15,036
---------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange
contracts -- Note 5 410
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 107,812
Dividends 52,076
Distribution and service plan fees -- Note 6 17,366
Transfer and shareholder servicing agent fees 4,313
Trustees' fees 1,258
Other 26,328
-------------
Total liabilities 830,465
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $29,082,248
=============
- - ------------------------------------------------------------------------------------------------------------------------------------
Composition of Paid-in capital $30,815,439
Net Assets
---------------------------------------------------------------------------------------------------------
Overdistributed net investment income (288,618)
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investments, written options
and foreign currency transactions (672,939)
---------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options written and
translation of assets and liabilities denominated in foreign currencies (771,634)
-------------
Net assets $29,082,248
=============
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $20,997,783 and 4,604,117 shares of beneficial interest outstanding) $ 4.56
Maximum offering price per share (net asset value plus sales charge of
3.50% of offering price) $ 4.73
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Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $8,084,465 and 1,775,203 shares of beneficial interest outstanding) $ 4.55
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
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Statement of Operations For the Six Months Ended March 31, 1995 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $2,930) $ 1,217,785
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses Management fees -- Note 6 101,024
---------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A -- Note 6 25,488
Class B -- Note 6 40,424
---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees -- Note 6 22,100
---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 20,352
---------------------------------------------------------------------------------------------------------
Shareholder reports 14,815
---------------------------------------------------------------------------------------------------------
Legal and auditing fees 6,494
---------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,740
---------------------------------------------------------------------------------------------------------
Registration and filing fees -- Class B 363
---------------------------------------------------------------------------------------------------------
Other 5,491
-------------
Total expenses 238,291
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 979,494
- - ------------------------------------------------------------------------------------------------------------------------------------
Realized and Net realized gain (loss) from:
Unrealized Gain Investments and options written (410,447)
(Loss) on Closing of option contracts written -- Note 4 (48,046)
Investments, Options Foreign currency transactions 15,205
Written and Foreign -------------
Currency Transactions Net realized loss (443,288)
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written 533,286
Translation of assets and liabilities denominated in foreign
currencies (84,961)
-------------
Net change 448,325
------------
Net realized and unrealized gain on investments, options written
and foreign currency transactions 5,037
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $ 984,531
===========
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
Six Months Ended
March 31, Year Ended
1995 September 30,
(Unaudited) 1994
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
Operations Net investment income $ 979,494 $ 2,056,979
Net realized loss on investments, options written and
foreign currency transactions (443,288) (634,053)
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments, options written and translation of assets
and liabilities denominated in foreign currencies 448,325 (1,362,246)
---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 984,531 60,680
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Dividends from net investment income:
Distributions to Class A ($.151 and $.205 per share, respectively) (773,158) (1,087,188)
Shareholders Class B ($.134 and $.167 per share, respectively) (240,913) (297,053)
---------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.012 per share) -- (73,587)
Class B ($.012 per share) -- (20,106)
---------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on
investments and foreign currency transactions:
Class A ($.005 per share) -- (29,391)
Class B ($.005 per share) -- (8,031)
---------------------------------------------------------------------------------------------------------
Tax return of capital:
Class A ($.088 per share) -- (540,571)
Class B ($.088 per share) -- (147,701)
- - ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase (decrease) in net assets resulting from Class A
Transactions beneficial interest transactions -- Note 2 (6,809,100) 4,289,799
---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions -- Note 2 445,246 4,593,588
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Total increase (decrease) (6,393,394) 6,740,439
---------------------------------------------------------------------------------------------------------
Beginning of period 35,475,642 28,735,203
------------ -----------
End of period (including overdistributed net
investment income of $288,618 and
$254,041, respectively) $29,082,248 $35,475,642
============ ===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Strategic Short-Term Income Fund
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
---------------------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
March 31, 1995 September 30, March 31, 1995 September 30,
(Unaudited) 1994 1993 1992(2) (Unaudited) 1994 1993(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 4.56 $ 4.84 $ 4.93 $ 5.00 $ 4.55 $ 4.84 $ 4.75
Income (loss) from investment operations:
Net investment income .13 .33 .33 .05 .13 .34 .22
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .02 (.30) (.11) (.07) -- (.36) .08
------ ------ ------- ------ ------- ------ -------
Total income (loss) from investment
operations .15 .03 .22 (.02) .13 (.02) .30
------ ------ ------- ------ ------- ------ -------
Dividends and distributions to
shareholders:
Dividends from net investment income (.15) (.20) (.31) (.05) (.13) (.16) (.21)
Dividends in excess of net investment
income -- (.01) -- -- -- (.01) --
Distributions in excess of net realized
gain on investments -- (.01) -- -- -- (.01) --
Tax return of capital -- (.09) -- -- -- (.09) --
------ ------ ------- ------ ------- ------ -------
Total dividends and distributions to
shareholders (.15) (.31) (.31) (.05) (.13) (.27) (.21)
------ ------ ------- ------ ------- ------ -------
Net asset value, end of period $ 4.56 $ 4.56 $ 4.84 $ 4.93 $ 4.55 $ 4.55 $ 4.84
====== ====== ======= ====== ======= ====== =======
Total Return, at Net Asset Value(3) 3.40% .61% 4.58% (.27)% 3.01% (.39)% 6.48%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $20,998 $27,850 $25,314 $12,670 $ 8,084 $7,626 $3,421
Average net assets (in thousands) $23,044 $28,284 $20,663 $ 8,643 $ 8,093 $6,020 $1,428
Number of shares outstanding at end of
period (in thousands) 4,604 6,112 5,231 2,572 1,775 1,675 707
Ratios to average net assets:
Net investment income 6.50%(4) 6.11% 6.83% 6.38%(4) 5.76%(4) 5.46% 5.88%(4)
Expenses, before voluntary reimbursement
by the Manager 1.33%(4) 1.17% 1.38% 1.87%(4) 2.11%(4) 1.97% 2.22%(4)
Expenses, net of voluntary reimbursement
by the Manager N/A N/A 1.21% .92%(4) N/A N/A 2.21%(4)
Portfolio turnover rate(5) 20.9% 57.8% 104.0% 11.2% 20.9% 57.8% 104.0%
</TABLE>
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. Total returns
are not annualized for periods of less than one full year.
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, 1995 were
$5,448,835 and $8,214,825, respectively.
See accompanying Notes to Financial Statements.
11 Oppenheimer Strategic Short-Term Income Fund
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Notes to Financial Statements (Unaudited)
- - -----------------------------------------------------------------------------------------------------------------------------------
1. Significant Oppenheimer Strategic Short-Term Income Fund (the Fund) is registered under the Investment Company Act
Accounting Policies 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.
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Investment Valuation. Portfolio securities are valued at the close of the New York Stock Exchange on
each trading day. Listed and unlisted securities for which such information is regularly reported are
valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid
or asked price or the last sale price on the prior trading day. Long-term and short-term "non-money
market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees.
Such securities which cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or under consistently applied procedures
established by the Board of Trustees to determine fair value in good faith. Short-term "money-market
type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium or discount. Forward
contracts are valued based on the closing prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued
based upon the last sale price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last sale price on the prior trading
date if it is within the spread between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price closest to the last reported sale price is used.
--------------------------------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices
of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is separately identified from
the fluctuations arising from changes in market values of securities held and reported with all other
foreign currency gains and losses in the Fund's 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. 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.
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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.
</TABLE>
12 Oppenheimer Strategic Short-Term Income Fund
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Notes to Financial Statements (Unaudited)(Continued)
- - -----------------------------------------------------------------------------------------------------------------------------------
1. Significant Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code
Accounting Policies applicable to regulated investment companies and to distribute all of its taxable income, including any
(continued) net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal
income or excise tax provision is required.
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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.
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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.
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Classification of Distributions to Shareholders. Net investment income (loss) and net realized gain
(loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses
and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes. The character of the distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gain (loss) was recorded by the Fund. Effective October 1,
1993, the Fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in accordance with income
tax regulations.
--------------------------------------------------------------------------------------------------------
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.
</TABLE>
13 Oppenheimer Strategic Short-Term Income Fund
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Notes to Financial Statements (Unaudited)(Continued)
- - -----------------------------------------------------------------------------------------------------------------------------------
2. Shares of The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class.
Beneficial Interest Transactions in shares of beneficial interest were as follows:
<CAPTION>
Six Months Ended Year Ended
March 31, 1995 September 30, 1994
-------------------------------- -----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 713,060 $ 3,223,200 5,840,432 $27,782,705
Dividends and distributions
reinvested 121,107 546,539 307,224 1,445,537
Redeemed (2,341,623) (10,578,839) (5,266,746) (24,938,443)
----------- ------------- ------------ ------------
Net increase (decrease) (1,507,456) $ (6,809,100) 880,910 $ 4,289,799
=========== ============= ============ ===========
Class B:
Sold 498,663 $ 2,244,304 1,435,285 $ 6,786,147
Dividends and distributions
reinvested 35,691 160,907 55,275 258,470
Redeemed (434,363) (1,959,965) (522,740) (2,451,029)
----------- ------------- ------------ ------------
Net increase 99,991 $ 445,246 967,820 $ 4,593,588
=========== ============= ============ ===========
- - -----------------------------------------------------------------------------------------------------------------------------------
3. Unrealized Gains At March 31, 1995, net unrealized depreciation on investments of $773,360 was composed of gross
And Losses on appreciation of $273,628, and gross depreciation of $1,046,988.
Investments
--------------------------------------------------------------------------------------------------------
4. Option Activity The Fund may buy and sell put and call options, or write covered call options on portfolio securities in
order to produce incremental earnings or protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to hedge against adverse
movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and
becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the principal exchange on which the option is
traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss
upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on
sales for a written call option, the purchase cost for a written put option, or the cost of the security
for a purchased put or call option is adjusted by the amount of premium received or paid.
In this report, securities designated to cover outstanding call options are noted in the Statement of
Investments. Shares subject to call, expiration date, exercise price, premium received and market value
are detailed in a footnote to the Statement of Investments. Options written are reported as a liability
in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of
Operations.
The risk in writing a call option is that the Fund gives up the opportunity for profit if the market
price of the security increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The
Fund also has the additional risk of not being able to enter into a closing transaction if a liquid
secondary market does not exist.
</TABLE>
14 Oppenheimer Strategic Short-Term Income Fund
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Notes to Financial Statements (Unaudited)(Continued)
- - -----------------------------------------------------------------------------------------------------------------------------------
4. Option Activity Written option activity for the six months ended March 31, 1995 was as follows:
(continued)
<CAPTION>
Call Options Put Options
--------------------------- --------------------------
Number Amount Number Amount
of Options of Premiums of Options of Premiums
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1994 2,537,788 $32,173 -- $ --
Options written 1,594 6,980 68,493 708
Options canceled in closing transactions (2,538,404) (34,353) -- --
----------- -------- -------- -----
Options outstanding at March 31, 1995 978 $ 4,800 68,493 $ 708
=========== ======== ======== =====
- - -----------------------------------------------------------------------------------------------------------------------------------
5. Forward Contracts A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to
tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge
upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio
positions.
Forward contracts are valued based on the closing prices of the forward currency contract rates in the
London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will
realize a gain or loss upon the closing or settlement of the forward transaction.
In this report, securities held in segregated accounts to cover net exposure on outstanding forward
contracts are noted in the Statement of Investments where applicable. Gains and losses on outstanding
contracts (unrealized appreciation or depreciation on forward contracts) are reported in the Statement
of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains
and losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to meet the terms of the contract and
unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
At March 31, 1995, the Fund had outstanding forward contracts to purchase and sell foreign currencies as
follows:
<CAPTION>
Valuation Unrealized
Expiration Number of as of Appreciation
Contracts to Purchase Date Contracts March 31, 1995 (Depreciation)
--------------------- ----------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Deutsche Mark 4/10/95-5/16/95 270,014 $ 276,852 $ 6,838
New Zealand Dollar 5/4/95 146,600 146,770 170
---------- ---------- -------
416,614 $ 423,622 $ 7,008
========== ========== =======
Contracts to Sell
-----------------
Australian Dollar 5/4/95 146,600 $ 146,812 $ 212
Spanish Peseta 4/10/95-5/16/95 270,014 277,220 7,206
---------- ---------- -------
416,614 $ 424,032 $ 7,418
========== ========== =======
</TABLE>
15 Oppenheimer Strategic Short-Term Income Fund
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Notes to Financial Statements (Unaudited)(Continued)
- - -----------------------------------------------------------------------------------------------------------------------------------
6. Management Fees Management fees paid to the Manager were in accordance with the investment advisory agreement with the
And Other Fund which provides for an annual fee of .65% on the first $500 million of net assets with a reduction
Transactions With of .03% on each $500 million thereafter to $1.5 billion, and .50% on net assets in excess of $1.5
Affiliates billion. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent state regulatory limit on Fund expenses.
For the six months ended March 31, 1995, commissions (sales charge paid by investors) on sales of Class
A shares totaled $46,588, of which $15,870 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges
advanced to broker/dealers by OFDI on sales of the Fund's Class B shares totaled $30,878, of which
$9,637 was paid to an affiliated broker/dealer. During the six months ended March 31, 1995, OFDI
received contingent deferred sales charges of $8,847 upon redemption of Class B shares, as reimbursement
for sales commissions advanced by OFDI at the time of sales 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, 1995, OFDI paid $5,737 and $202, respectively, to an affiliated broker/dealer
as reimbursement for Class A and Class B personal service and maintenance expenses and retained $35,200
as reimbursement for Class B sales commissions and service fee advances, as well as financing costs.
</TABLE>
16 Oppenheimer Strategic Short-Term Income Fund
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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
Robert J. Bishop, Assistant Treasurer
Scott Farrar, 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 LLP
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records of the Fund without
examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Strategic 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.
</TABLE>
17 Oppenheimer Strategic Short-Term Income Fund
