<PAGE> 1
OPPENHEIMER STRATEGIC INCOME & GROWTH FUND
Annual Report September 30, 1996
[PHOTO]
"We want
our money to
work hard,
but we're
concerned
about risk."
[OPPENHEIMERFUNDS LOGO]
<PAGE> 2
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 9/30/96:(3)
Class A
4.46%
Class B
3.91%
Class C
3.93%
BEAT THE AVERAGE
Cumulative Total Return for the
1-Year Period Ended 9/30/96:
Oppenheimer Strategic Income
& Growth Fund
Class A (at NAV)(1)
16.53%
Lipper Flexible Portfolio Funds Average for 178 Funds for the 1-Year Period
Ended 9/30/96(4)
12.33%
THIS FUND IS FOR PEOPLE WHO WANT HIGH INCOME WITH THE POTENTIAL FOR GROWTH,
FROM AN INVESTMENT THAT'S STRATEGICALLY DESIGNED TO LOWER RISK.
HOW YOUR FUND IS MANAGED
Oppenheimer Strategic Income & Growth Fund seeks its objectives by
strategically allocating assets among four sectors: U.S. government issues,
foreign fixed-income securities, higher-yielding, lower-rated corporate bonds
and domestic stocks. Strategic investing gives the Fund's managers the
flexibility to shift assets among three fixed-income sectors to capitalize on
worldwide investment opportunities to seek high income. Investing in stocks can
help the Fund seek its growth objective. Combining strategically managed
fixed-income investments with stock investments may reduce the risk of
concentrating investments in any one sector, such as high yield bonds, which
are subject to greater risk that the issuer will default in principal or
interest payments. And the ability to move assets quickly and decisively among
a wide variety of investments and global financial markets is crucial to good
performance and reduced risk.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/96 were 16.53%
for Class A shares and 15.69% for Class B shares. Cumulative total return at
net asset value for Class C shares since inception on 10/2/95 was 15.18%.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-year period ended 9/30/96 and since inception on
6/1/92 were 11.00% and 8.51%, respectively. For Class B shares, average annual
total returns for the 1-year period ended 9/30/96 and since inception on
11/30/92 were 10.69% and 8.67%, respectively. For Class C shares, cumulative
total return since inception on 10/2/95 was 14.18%.(2)
OUTLOOK
"Our outlook is very positive. We will continue to monitor interest rates and
worldwide economic growth and adjust the Fund's portfolio as needed in
accordance to shifts we see in these areas."
Robert Doll, David Negri and Art Steinmetz,
Portfolio Managers
September 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. In reviewing the notes that follow on performance
and rankings, please be aware that past performance does not guarantee future
results. Investment return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 9/30/95 and
6/1/92 (inception of class), after deducting the current maximum initial sales
charge of 4.75%. Class B returns show results of hypothetical investments on
9/30/95 and 11/30/92 (inception of class), after the deduction of the
applicable contingent deferred sales charge of 5% (1-year) and 2% (since
inception). Class C returns show results of a hypothetical investment on
10/2/95, after the deduction of the 1% contingent deferred sales charge. An
explanation of the different total returns is in the Fund's prospectus.
3. Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/96, divided by the
maximum offering price for Class A shares at the end of the period, compounded
semiannually and then annualized. Falling net asset values will tend to
artificially raise yields.
4. Source: Lipper Analytical Services, 9/30/96, an independent mutual fund
monitoring service. The average is shown for comparative purposes only.
Oppenheimer Strategic Income & Growth Fund is characterized by Lipper as a
flexible portfolio fund. Lipper performance does not take sales charges into
consideration.
2 Oppenheimer Strategic Income & Growth Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Strategic Income &
Growth Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Strategic Income &
Growth Fund
DEAR SHAREHOLDER,
While it's true that earlier this year was difficult for most bond investors,
mainly due to rising interest rates and concerns about inflation, we remain
confident that the general long-term trend is for moderate economic growth and
low inflation, which should help to stabilize and even lower interest rates
over time. Though we still anticipate that interest rates will fluctuate over
the near term, our outlook for the rest of the year remains positive.
During the first six months of this year, investors were concerned
that economic growth appeared to be accelerating. Unemployment was at a
six-year low, industrial production was up, and even retail sales showed
unexpected strength. In addition, because the stock market was performing so
well, many investors felt more prosperous, and sales of big-ticket items such
as homes and cars increased. While much of this data seems to indicate that
economic growth is picking up, we believe that in today's world, faster
economic growth may not necessarily mean higher inflation. In fact, we believe
that inflation is likely to remain under control for the following three
reasons: the Federal Reserve's conservative monetary policy over the last few
years; the declining federal government deficit; and higher corporate
productivity that has caused unit labor costs to grow more slowly than they
have in the past.
With the yield on today's 30-year Treasuries hovering just below 7%,
bonds clearly offer a significant value. Typically, the yield on a bond is
compared to the current inflation rate, which is now about 3%. This "spread" of
approximately four percentage points between bond yields and inflation is
considered very generous by historical standards. So, even if interest rates
stay where they are, bonds still would offer significant value for today's
investors. If, on the other hand, interest rates were to fall, as we expect
they will, bond values would appreciate.
Finally, the recent swings in the stock market have captured the
attention of many investors who had their assets invested primarily in stocks
and have given new life to the fixed-income market. The more volatile the stock
market is, the more attractive bonds appear in the portfolios of many
investors, particularly those who are nearing retirement. In addition, because
the prices of bonds are lower, we feel they are a good buy. Given the current
market circumstances, diversifying into other asset classes, rather than
relying solely on equities, may make more sense now than ever before.
Your portfolio managers discuss the outlook for your Fund in the light
of these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
- -------------------------- ------------------------------
James C. Swain Bridget A. Macaskill
October 21, 1996
3 Oppenheimer Strategic Income & Growth Fund
<PAGE> 4
ROBERT DOLL
DAVID NEGRI
ART STEINMETZ
Portfolio Managers
Q + A
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
The Fund performed very well. By diversifying its assets among U.S. government
issues, foreign fixed-income securities, higher-yielding, lower-rated corporate
bonds and a blend of equity stocks, our aim is to capitalize on worldwide
investment opportunities in order to seek high income, while attempting to
reduce risk.
This strategy has been particularly beneficial during the past year as
gains in our credit-oriented investments outperformed our more interest
rate-sensitive holdings. For example, the Fund's strongest performers were the
emerging market bonds, followed by high yield corporate bonds and our equity
holdings. The gains realized in these areas helped to offset disappointments in
our U.S. government bond holdings, where increases in interest rates caused
mortgages and Treasuries to underperform.
WHAT INVESTMENTS OR MARKET CONDITIONS MADE POSITIVE CONTRIBUTIONS TO
PERFORMANCE?
We've seen good performance out of some of the higher-yielding foreign
government bonds, particularly those issued by Italy and Australia. These two
countries were able to avoid the general trend toward lower bond prices that
occurred throughout the developed world this past year. Market gains in these
countries represent a very strong rebound from early 1995 when their economies
were experiencing recessions. Likewise, the Latin American economies have
managed to recover from their recent economic slump, producing strong economic
growth, and as a result we've been able to benefit from our investments there.
Of course, investors in high yield bonds are subject to greater risk that the
issuer will default on principal and interest payments. And foreign investments
entail greater risk and expenses, including adverse currency fluctuations. But
over time, we expect the long-term returns will more than compensate for
temporary risks.(1)
WERE THERE ANY AREAS THAT LIMITED PERFORMANCE DURING THE PAST YEAR?
The rise in interest rates over the past year caused increased volatility in
the bond market and as a result, our mortgage and Treasury bond holdings did
not perform as well as expected. However, we continue to believe that the trend
is for moderate economic growth, both in the U.S. and abroad. In addition, we
have increased our holdings in short-term money market instruments in the local
currencies of several foreign countries. By investing in these short-term
instruments, we are able to earn a higher yield while maintaining the ability
to quickly move out of these investments should interest rate situations
deteriorate.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our outlook is very positive. We will continue to monitor interest rates and
worldwide economic growth and adjust the Fund's portfolio as needed in
accordance with shifts we see in these areas. We feel our strategy of focusing
on yield while seeking lower risk through diversification will allow the Fund
to take advantage of the upcoming market environment.
1. The Fund's portfolio is subject to change.
4 Oppenheimer Strategic Income & Growth Fund
<PAGE> 5
STATEMENT OF INVESTMENTS September 30, 1996
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--18.0%
- --------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--15.7%
- --------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--8.2%
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation Certificates,
Series 176, Cl. F, 8.95%, 3/15/20 $ 59,951 $ 60,139
------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
7.50%, 10/15/26(2) 5,000,000 4,940,650
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Trust 1992-103, Cl. JB, 10.50%, 11/25/20 315,000 351,323
Interest-Only Stripped Mtg.-Backed Security, Trust 257, Cl. 2, 10.955%, 2/1/24(3) 1,712,531 593,766
Series 1994-83, Cl. Z, 7.50%, 6/25/24 378,624 337,801
----------
6,283,679
- --------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--7.5%
Government National Mortgage Assn.:
6%, 3/20/26 1,437,892 1,434,298
7%, 4/15/26 4,460,633 4,296,705
----------
5,731,003
- --------------------------------------------------------------------------------------------------------------------------------
PRIVATE--2.3%
- --------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--1.6%
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. F, 7.51%, 2/1/28(4)(5) 97,137 62,289
------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. D, 8.25%, 12/25/20 267,639 268,936
Series 1993-C1, Cl. D, 9.45%, 5/25/24 252,980 259,621
Series 1994-C2, Cl. E, 8%, 4/25/25 449,792 436,721
Series 1994-C2, Cl. G, 8%, 4/25/25 209,655 180,337
------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1995-C4, Cl. E, 8.849%, 6/25/26(4)(5) 27,688 22,566
----------
1,230,470
- --------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--0.5%
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5) 400,000 302,625
------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1991-M6, Cl. B4, 7.103%, 6/25/21(4) 68,681 67,157
----------
369,782
- --------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.2%
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.136%, 4/25/26 299,020 174,927
----------
Total Mortgage-Backed Obligations (Cost $13,599,896) 13,789,861
================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--0.6%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6%, 2/15/26 (Cost $447,860)(6) 500,000 439,844
</TABLE>
5 Oppenheimer Strategic Income & Growth Fund
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================================
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS--20.0%
- --------------------------------------------------------------------------------------------------------------------------------
ARGENTINA--1.6%
Argentina (Republic of):
Bonds, Bonos de Consolidacion de Deudas, Series I, 5.461%, 4/1/01(4)(7) $ 559,749 $ 510,403
Past Due Interest Bonds, Series L, 6.312%, 3/31/05(4) 834,000 699,517
------------------------------------------------------------------------------------------------------------------------
Banco de Galicia y Buenos Aires SA Sr. Unsec. Nts., 9.387%, 4/15/99(4) 35,000 35,634
----------
1,245,554
- --------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA--2.4%
Australia (Commonwealth of) Bonds:
10%, 2/15/06 AUD 500,000 453,666
9.50%, 8/15/03 AUD 15,000 13,060
------------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp.:
Exchangeable Gtd. Nts., 8%, 8/14/01 AUD 615,000 498,166
Gtd. Nts., 8%, 5/14/03 AUD 300,000 240,793
Gtd. Nts., 10.50%, 5/15/03 AUD 90,000 81,482
------------------------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 10.25%, 11/15/06 AUD 425,000 390,210
------------------------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 10%, 7/15/05 AUD 190,000 170,279
----------
1,847,656
- --------------------------------------------------------------------------------------------------------------------------------
BRAZIL--0.9%
Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 1,001,247 705,567
------------------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA Medium-Term Nts., 11.30%, 12/9/99(4) 10,000 10,288
----------
715,855
- --------------------------------------------------------------------------------------------------------------------------------
BULGARIA--0.6%
Bulgaria (Republic of):
Disc. Bonds, Tranche A, 6.688%, 7/28/24(4) 70,000 35,569
Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.25%, 7/28/12(8) 755,000 248,442
Interest Arrears Bonds, 6.688%, 7/28/11(4) 325,000 149,500
----------
433,511
- --------------------------------------------------------------------------------------------------------------------------------
CANADA--2.9%
Canada (Government of) Bonds:
11.75%, 2/1/03 CAD 220,000 204,386
9.75%, 10/1/97 CAD 250,000 193,333
9.75%, 12/1/01 CAD 260,000 219,637
9.75%, 6/1/01(6) CAD 1,335,000 1,119,586
Series A-33, 11.50%, 9/1/00 CAD 140,000 122,410
Series A-76, 9%, 6/1/25 CAD 465,000 392,682
----------
2,252,034
- --------------------------------------------------------------------------------------------------------------------------------
DENMARK--0.7%
Denmark (Kingdom of) Bonds:
8%, 11/15/01 DKK 1,670,000 312,070
8%, 3/15/06 DKK 1,130,000 206,646
----------
518,716
- --------------------------------------------------------------------------------------------------------------------------------
GERMANY--2.1%
Germany (Republic of) Bonds, Series 94, 6.25%, 1/4/24(6) DEM 2,670,000 1,612,575
- --------------------------------------------------------------------------------------------------------------------------------
GREAT BRITAIN--1.4%
United Kingdom Treasury:
Bonds, 10%, 9/8/03 GBP 355,000 633,054
Debs., 8.50%, 12/7/05 GBP 55,000 91,012
Nts., 12.50%, 11/21/05 GBP 62,000 123,738
Nts., 8%, 6/10/03 GBP 125,000 202,509
----------
1,050,313
- --------------------------------------------------------------------------------------------------------------------------------
IRELAND--0.1%
Ireland (Government of) Bonds, 9.25%, 7/11/03 IEP 60,000 110,024
</TABLE>
6 Oppenheimer Strategic Income & Growth Fund
<PAGE> 7
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY--0.4%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
10.50%, 4/1/00ITL 285,000,000 $ 201,403
10.50%, 7/15/00ITL 170,000,000 121,241
----------
322,644
- --------------------------------------------------------------------------------------------------------------------------------
JAPAN--0.4%
Japan (Government of) Bonds, Series 174, 4.60%, 9/20/04 JPY 27,500,000 279,877
- --------------------------------------------------------------------------------------------------------------------------------
MEXICO--0.7%
Banco Nacional de Comercio Exterior SNC:
International Finance BV Gtd. Bonds, 10.758%, 6/23/97(4)(5) 120,000 123,900
International Finance BV Gtd. Registered Bonds, 11.25%, 5/30/06 135,000 141,581
Nts., 7.25%, 2/2/04 75,000 64,687
------------------------------------------------------------------------------------------------------------------------
United Mexican States Bonds:
10.375%, 1/29/03 DEM 150,000 103,851
16.50%, 9/1/08 GBP 35,000 74,486
----------
508,505
- --------------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--1.3%
New Zealand Government Bonds, 10%, 7/15/97 NZD 1,040,000 733,982
------------------------------------------------------------------------------------------------------------------------
Transpower Finance Ltd. Gtd. Unsec. Unsub. Bonds:
8%, 2/15/01(5) NZD 165,000 113,525
8%, 3/15/02 NZD 165,000 113,459
----------
960,966
- --------------------------------------------------------------------------------------------------------------------------------
PANAMA--0.1%
Panama (Republic of) Interest Reduction Bonds, 3.50%, 7/17/14(8) 130,000 81,738
- --------------------------------------------------------------------------------------------------------------------------------
POLAND--1.1%
Poland (Republic of) Treasury Bills, Zero Coupon:
21.464%, 10/16/96(9) PLZ 2,000,000 706,837
21.656%, 10/2/96(9) PLZ 430,000 152,854
----------
859,691
- --------------------------------------------------------------------------------------------------------------------------------
RUSSIA--0.2%
Russia (Government of) Interest Nts., 6.547%, 12/29/49(2)(4) 260,000 167,294
- --------------------------------------------------------------------------------------------------------------------------------
SPAIN--1.2%
Spain (Kingdom of):
Bonds, Bonos y Obligacion del Estado, 10.15%, 1/31/06 ESP 39,200,000 349,431
Gtd. Bonds, Bonos y Obligacion del Estado, 10.25%, 11/30/98 ESP 25,800,000 212,018
Gtd. Bonds, Bonos y Obligacion del Estado, 10.30%, 6/15/02 ESP 22,500,000 197,305
Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 ESP 17,700,000 157,405
----------
916,159
- --------------------------------------------------------------------------------------------------------------------------------
SWEDEN--1.2%
Sweden (Kingdom of) Bonds:
Series 1030, 13%, 6/15/01 SEK 2,200,000 414,114
Series 1033, 10.25%, 5/5/03 SEK 600,000 105,220
Series 1034, 9%, 4/20/09 SEK 1,400,000 233,811
Series 1035, 6%, 2/9/05 SEK 1,300,000 179,414
----------
932,559
- --------------------------------------------------------------------------------------------------------------------------------
VENEZUELA--0.7%
Venezuela (Republic of):
Disc. Bonds, Series DL, 6.625%, 12/18/07(4) 250,000 207,500
Front-Loaded Interest Reduction Bonds, Series A, 6.375%, 3/31/07(4) 100,000 84,313
New Money Bonds, Series A, 6.75%, 12/18/05(4) 250,000 208,438
----------
500,251
----------
Total Foreign Government Obligations (Cost $14,828,341) 15,315,922
</TABLE>
7 Oppenheimer Strategic Income & Growth Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================================
<S> <C> <C>
LOAN PARTICIPATIONS--1.3%
- --------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan
Facility Bonds, 6.563%, 7/1/01(4)(5) $ 314,320 $ 298,604
------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.437%, 1/1/09(4) 325,000 255,633
------------------------------------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche A, 1.772%, 9/30/00(4)(5) JPY 44,836,363 358,288
------------------------------------------------------------------------------------------------------------------------
United Mexican States, Combined Facility 3,
Loan Participation Agreement, Tranche A, 6.563%, 9/20/97(4)(5) 66,720 59,256
----------
Total Loan Participations (Cost $969,966) 971,781
================================================================================================================================
CORPORATE BONDS AND NOTES--17.6%
- --------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--1.4%
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.3%
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 200,000 211,000
- --------------------------------------------------------------------------------------------------------------------------------
METALS/MINING--0.2%
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05 100,000 114,750
- --------------------------------------------------------------------------------------------------------------------------------
PAPER--0.9%
Repap New Brunswick, Inc., 8.937% First Priority Sr. Sec. Nts., 7/15/00(4) 200,000 200,000
------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.25% Sr. Nts., 4/1/06 300,000 303,000
------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02 200,000 210,500
----------
713,500
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--1.7%
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.1%
Fletcher Challenge Industries Ltd., 10% Cv. Sub. Unsec. Nts., 4/30/05 NZD 70,000 50,290
- --------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--0.3%
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 190,000 247,475
- --------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--0.1%
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 100,000 99,250
- --------------------------------------------------------------------------------------------------------------------------------
LEISURE--0.2%
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02(5) 160,431 167,450
- --------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--1.0%
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.,
36.897%, 10/23/96(9) IDR 1,200,000,000 511,932
------------------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 200,000 217,000
----------
728,932
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--0.5%
- --------------------------------------------------------------------------------------------------------------------------------
Triton Energy Corp., Zero Coupon Sr. Sub. Disc. Nts., 10.394%, 11/1/97(9) 400,000 371,000
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--0.7%
- --------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--0.2%
Banco Bamerindus do Brasil SA, 10.50% Debs., 6/23/97 25,000 24,687
------------------------------------------------------------------------------------------------------------------------
Banco de Colombia, 5.20% Cv. Jr. Sub. Unsec. Nts., 2/1/99 50,000 46,500
------------------------------------------------------------------------------------------------------------------------
Siam City Bank Co. Ltd., Zero Coupon Debs., 11.084%, 10/31/96(2)(9) THB 2,000,000 77,981
----------
149,168
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--0.1%
Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98 50,000 48,875
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE--0.4%
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02(10) 300,000 328,125
- --------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--1.0%
- --------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/
REAL ESTATE--1.0%
Blue Bell Funding, Inc., 11.85% Sec. Extendible Adjustable Rate Nts., 5/1/99 396,000 397,980
------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 500,000 402,500
----------
800,480
</TABLE>
8 Oppenheimer Strategic Income & Growth Fund
<PAGE> 9
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING--0.2%
- --------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--0.2%
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 $ 150,000 $ 146,250
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--3.6%
- --------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--2.1%
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(11) 100,316 75,488
------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., Units (each unit consists of $1,000
principal amount of 0%/14% sr. sub. disc. nts., 5/15/03 and
one warrant to purchase 57.721 ordinary shares)(11)(12) 200,000 121,000
------------------------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04(11) 500,000 383,750
------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.50% Sr. Sub. Debs., 5/15/16 250,000 255,000
------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(11) 200,000 158,500
------------------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Sr. Sec. Second Priority Debs., 12/1/07 300,000 301,500
------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 300,000 333,264
----------
1,628,502
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--0.9%
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(11) 750,000 682,500
- --------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.4%
Imax Corp., 7% Sr. Nts., 3/1/01(8) 320,000 313,600
- --------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.2%
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(11) 250,000 176,250
- --------------------------------------------------------------------------------------------------------------------------------
OTHER--1.1%
- --------------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL--0.3%
EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 200,000 191,000
- --------------------------------------------------------------------------------------------------------------------------------
SERVICES--0.8%
Grupo Elektra SA de CV, 12.75% Sr. Nts., 5/15/01(13) 500,000 525,000
------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., 6.75% Cv. Sr. Sub. Nts., 9/15/03 110,000 108,144
----------
633,144
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL--1.1%
- --------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--1.1%
Grand Union Co., 12% Sr. Nts., 9/1/04 198,000 200,722
------------------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03(7) 564,400 567,222
------------------------------------------------------------------------------------------------------------------------
Penn Traffic Co., 11.50% Sr. Nts., 4/15/06 50,000 44,625
----------
812,569
- --------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.6%
- --------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.1%
American International Group, Inc., 11.70% Unsec. Unsub. Bonds, 12/4/01 ITL 95,000,000 71,778
- --------------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.5%
Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(11) 500,000 378,125
- --------------------------------------------------------------------------------------------------------------------------------
UTILITIE--5.8%
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.3%
CalEnergy Co., Inc., 0%/10.25% Sr. Disc. Nts., 1/15/04(11) 450,000 460,125
------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 250,000 258,750
------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 300,000 317,250
------------------------------------------------------------------------------------------------------------------------
New Zealand Electric Corp., 10% Debs., 10/15/01 NZD 330,000 245,092
------------------------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08 431,034 431,573
9.50% Sr. Sec. Nts., 12/28/0813 86,206 86,315
----------
1,799,105
</TABLE>
9 Oppenheimer Strategic Income & Growth Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS--3.5%
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(11) $ 200,000 $ 156,500
------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(5)(11) 350,000 282,625
------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 12.323%, 8/15/00(9) 600,000 382,500
------------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon Bonds, 11/15/03(11) 300,000 186,000
------------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts., 4/15/03(11)(13) 400,000 246,000
------------------------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(11) 270,000 168,075
0%/13.50% Sr. Disc. Nts., 9/15/05(11) 100,000 67,375
------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06(13) 300,000 314,250
------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Global Capital Corp., 14% Sr. Nts., 8/15/04(13) 155,000 160,037
------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01(11) 500,000 471,250
------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts., 7/1/07(11) 400,000 258,000
----------
2,692,612
----------
Total Corporate Bonds and Notes (Cost $13,013,563) 13,555,730
SHARES
================================================================================================================================
COMMON STOCKS--41.0%
- --------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--2.3%
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.3%
Morton International, Inc. 24,000 954,000
------------------------------------------------------------------------------------------------------------------------
Union Carbide Corp. 18,000 821,250
----------
1,775,250
- --------------------------------------------------------------------------------------------------------------------------------
CONTAINERS--0.0%
Equitable Bag, Inc.(5)(14) 1,861 4,653
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--6.4%
- --------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--3.4%
PepsiCo, Inc. 26,000 734,500
------------------------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 11,000 987,250
------------------------------------------------------------------------------------------------------------------------
UST, Inc. 31,000 918,375
----------
2,640,125
- --------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--1.5%
Johnson & Johnson 22,000 1,127,500
- --------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--1.5%
Russell Corp. 36,000 1,161,000
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.9%
Phillips Petroleum Co. 29,000 1,239,750
------------------------------------------------------------------------------------------------------------------------
Unocal Corp. 35,000 1,260,000
------------------------------------------------------------------------------------------------------------------------
USX-Marathon Group 57,000 1,232,625
----------
3,732,375
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--14.9%
- --------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--3.2%
BankAmerica Corp. 15,000 1,231,875
------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 14,000 1,216,250
----------
2,448,125
</TABLE>
10 Oppenheimer Strategic Income & Growth Fund
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL--8.8%
Dean Witter, Discover & Co. 3,000 $ 165,000
------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 13,000 1,272,375
------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 27,000 941,625
------------------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 36,000 1,413,000
------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 19,000 1,246,875
------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 10,000 497,500
------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 27,000 1,231,875
----------
6,768,250
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.9%
Cigna Corp. 10,000 1,198,750
------------------------------------------------------------------------------------------------------------------------
Loews Corp. 13,000 1,005,875
----------
2,204,625
- --------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--1.7%
- --------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE--1.7%
Capstone Capital Corp. 260 5,460
------------------------------------------------------------------------------------------------------------------------
Fleetwood Enterprises, Inc. 42,000 1,291,500
----------
1,296,960
- --------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--5.3%
- --------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/
COMPUTERS--5.1%
Applied Materials, Inc.(14) 3,000 82,875
------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp.(14) 18,000 1,154,250
------------------------------------------------------------------------------------------------------------------------
Data General Corp.(14) 110,000 1,540,000
------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 9,000 1,120,500
----------
3,897,625
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--0.2%
Dover Corp. 4,000 191,000
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--0.0%
EchoStar Communications Corp., Cl. A(14) 900 24,525
- --------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--5.4%
- --------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--3.8%
AMR Corp.(14) 22,000 1,751,750
------------------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc. 16,000 1,152,000
----------
2,903,750
- --------------------------------------------------------------------------------------------------------------------------------
RAILROADS--1.6%
CSX Corp. 24,000 1,212,000
- --------------------------------------------------------------------------------------------------------------------------------
UTILITIES--0.1%
- --------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.1%
Celcaribe SA(5)(14) 65,040 94,308
----------
Total Common Stocks (Cost $27,693,470) 31,482,071
================================================================================================================================
PREFERRED STOCKS--0.7%
- --------------------------------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 500 55,125
------------------------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 2,000 226,500
------------------------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 12,000 240,000
----------
Total Preferred Stocks (Cost $551,813) 521,625
</TABLE>
11 Oppenheimer Strategic Income & Growth Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
================================================================================================================================
<S> <C> <C>
OTHER SECURITIES--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp., 8.255% Cv. Preferred Redeemable
Increased Dividend Equity Securities (Cost $25,344) 2,400 $ 27,000
<CAPTION>
<S> <C>
UNITS
================================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 2,000 9,000
------------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(5) 300 1,500
------------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(5) 400 4,000
------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02(5) 300 --
----------
Total Rights, Warrants and Certificates (Cost $0) 14,500
<CAPTION>
FACE
AMOUNT(1)
================================================================================================================================
<S> <C>
STRUCTURED INSTRUMENTS--2.7%
- --------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, New York Branch,
7.15% Deutsche Mark Currency Protected Yield Curve CD, 7/25/97 $70,000 69,454
------------------------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch:
14% CD Linked Nts., 11/25/96 (indexed to the cross currency rates of
Greek Drachma and European Currency Unit) 550,000 543,070
16.75% CD Linked Nts., 4/16/97 (indexed to the Federation GKO,
Zero Coupon, 4/9/97) 100,000 99,400
17.30% CD Linked Nts., 2/26/97 (indexed to the Federation GKO,
Zero Coupon, 2/19/97) 200,000 199,200
------------------------------------------------------------------------------------------------------------------------
Internationale Nederlanden Bank NV, Prague Branch,
Zero Coupon Promissory Nts., 10.486%, 4/28/97(9)CZK 4,600,000 160,735
------------------------------------------------------------------------------------------------------------------------
Internationale Nederlanden (U.S.) Capital Holdings Corp.:
Czech Koruna Linked Nts., 11.60%, 12/23/96 70,000 69,165
Zero Coupon Chilean Peso Linked Nts., 11.122%, 12/11/96(9) 130,000 126,386
------------------------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Chilean Peso Indexed
Enhanced Access Nts.:
12.145%, 12/11/96(9) 70,000 68,180
10.853%, 12/18/96(9) 70,000 67,914
------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corp., New York Branch, 6.60% CD Linked Nts.,
1/30/97 (indexed to the closing Nikkei 225 Index on 1/23/97)NZD 256,720 186,629
------------------------------------------------------------------------------------------------------------------------
United Mexican States Linked Nts., 11/27/96 (indexed to the greater of
Cetes Option Amount or USD LIBOR Option Amount, 11/27/96) 380,000 462,808
----------
Total Structured Instruments (Cost $2,010,133) 2,052,941
<CAPTION>
DATE STRIKE CONTRACTS
================================================================================================================================
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Poliennali, 9.50%, 5/1/01 Put Opt. 7/97 $ 102.30 211 1,057
------------------------------------------------------------------------------------------------------------------------
Swiss Franc Put Opt. 10/96 1.22 CHF 885,245 23,628
----------
Total Put Options Purchased (Cost $12,370) 24,685
</TABLE>
12 Oppenheimer Strategic Income & Growth Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT--2.7%
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 5.62%, dated 9/30/96,
to be repurchased at $2,100,328 on 10/1/96, collateralized by
U.S. Treasury Bonds, 6.75%, 8/15/26, with a value of $2,067,056 and
U.S. Treasury Nts., 6.125%, 5/15/98, with a value of $77,236 (Cost $2,100,000) $2,100,000 $ 2,100,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $75,252,756) 104.6% 80,295,960
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (4.6) (3,509,389)
---------- -----------
NET ASSETS 100.0% $76,786,571
========== ===========
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted
in the following currencies:
AUD -- Australian Dollar IDR -- Indonesian Rupiah
CAD -- Canadian Dollar IEP -- Irish Punt
CHF -- Swiss Franc ITL -- Italian Lira
CZK -- Czech Koruna JPY -- Japanese Yen
DEM -- German Deutsche Mark NZD -- New Zealand Dollar
DKK -- Danish Krone PLZ -- Polish Zloty
ESP -- Spanish Peseta SEK -- Swedish Krona
GBP -- British Pound Sterling THB -- Thai Baht
2. When-issued security to be delivered and settled after
September 30, 1996.
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). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future
cash flows.
4. Represents the current interest rate for a variable rate security.
5. Identifies issues considered to be illiquid--See Note 8 of
Notes to Financial Statements.
6. A sufficient amount of securities has been designated to
cover outstanding written call options, as follows:
<TABLE>
<CAPTION>
CONTRACTS/FACE EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian Dollar 461,100 10/96 1.258 AUD $ 3,074 $555
- ----------------------------------------------------------------------------------------------------------------------------
Call Option on New Zealand Dollar 191,675 10/96 1.435 NZD 930 1,131
- ----------------------------------------------------------------------------------------------------------------------------
Call Option on New Zealand Dollar 163,560 10/96 1.437 NZD 816 1,112
- ----------------------------------------------------------------------------------------------------------------------------
Call Option on Swiss Franc 939,130 10/96 1.15 CHF 2,047 94
- ----------------------------------------------------------------------------------------------------------------------------
Call Option on U.S. Treasury Nts., 6%, 2/15/26 500,000 10/96 $90.438 3,711 1,016
------- -----
$10,578 $3,908
======= ======
</TABLE>
7. Interest or dividend is paid in kind.
8. Represents the current interest rate for an increasing rate security.
9. For zero coupon bonds, the interest rate shown is the
effective yield on the date of purchase.
10. Securities with an aggregate market value of $328,125 are
held in collateralized accounts to cover initial margin requirements on
open futures sales contracts. See Note 6 of Notes to Financial
Statements.
11. Denotes a step bond: a zero coupon bond that converts to a
fixed rate of interest at a designated future date.
12. Units may be comprised of several components, such as debt and
equity and/or warrants to purchase equity at some point in the
future. For units which represent debt securities, face amount disclosed
represents total underlying principal.
13. Represents a security sold under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended. This
security has been determined to be liquid under guidelines established
by the Board of Trustees. These securities amount to $1,331,602 or 1.73%
of the Fund's net assets, at September 30, 1996.
14. Non-income producing security.
See accompanying Notes to Financial Statements.
13 Oppenheimer Strategic Income & Growth Fund
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
<TABLE>
================================================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $75,252,756)--see accompanying statement $80,295,960
------------------------------------------------------------------------------------------------------------------------
Cash 611,472
------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 43,919
------------------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 1,717,088
Interest, dividends and principal paydowns 926,291
Shares of beneficial interest sold 387,169
Closed forward foreign currency exchange contracts 59,215
Daily variation on futures contracts--Note 6 6,862
------------------------------------------------------------------------------------------------------------------------
Other 2,864
-----------
Total assets 84,050,840
================================================================================================================================
LIABILITIES
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 4,400
------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $15,908)--
see accompanying statement--Note 7 5,777
------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $5,119,263 purchased on a when-issued basis)--Note 1 6,610,736
Dividends 313,878
Shares of beneficial interest redeemed 115,879
Daily variation on futures contracts--Note 6 1,500
Other 212,099
-----------
Total liabilities 7,264,269
================================================================================================================================
NET ASSETS $76,786,571
===========
================================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $66,681,618
------------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (318,871)
------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 5,349,088
------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 5,074,736
-----------
Net assets $76,786,571
===========
================================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of $46,746,928
and 7,956,397 shares of beneficial interest outstanding) $5.88
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price) $6.17
------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $28,933,298 and 4,932,725 shares of beneficial interest outstanding) $5.87
------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,106,345 and 188,933 shares of beneficial interest outstanding) $5.86
See accompanying Notes to Financial Statements.
</TABLE>
14 Oppenheimer Strategic Income & Growth Fund
<PAGE> 15
STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
<TABLE>
================================================================================================================================
<S> <C>
INVESTMENT INCOME
Interest $4,441,077
------------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $5,550) 457,180
-----------
Total income 4,898,257
================================================================================================================================
EXPENSES
Management fees--Note 4 513,195
------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 105,726
Class B 242,309
Class C 3,963
------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 128,032
------------------------------------------------------------------------------------------------------------------------
Shareholder reports 86,699
------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 51,822
------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 14,158
------------------------------------------------------------------------------------------------------------------------
Insurance expenses 3,974
------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 837
Class B 2,469
Class C 393
------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,002
------------------------------------------------------------------------------------------------------------------------
Other 8,985
-----------
Total expenses 1,165,564
================================================================================================================================
NET INVESTMENT INCOME 3,732,693
================================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss) on:
Investments and options written (including premiums on options exercised) 8,028,979
Closing of futures contracts (14,626)
Closing and expiration of options written (106,455)
Foreign currency transactions 44,109
-----------
Net realized gain 7,952,007
------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (1,417,530)
Translation of assets and liabilities denominated in foreign currencies (45,705)
-----------
Net change (1,463,235)
-----------
Net realized and unrealized gain 6,488,772
================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,221,465
===========
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Strategic Income & Growth Fund
<PAGE> 16
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1996 1995
================================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 3,732,693 $ 3,570,349
------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 7,952,007 (1,642,262)
------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (1,463,235) 6,666,394
------------ ------------
Net increase in net assets resulting from operations 10,221,465 8,594,481
================================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (2,671,884) (2,612,318)
Class B (1,293,779) (977,840)
Class C (20,396) --
================================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net assets resulting from beneficial
interest transactions--Note 2:
Class A 1,764,170 (5,203,387)
Class B 6,853,287 2,275,946
Class C 1,071,210 --
================================================================================================================================
NET ASSETS
Total increase 15,924,073 2,076,882
------------------------------------------------------------------------------------------------------------------------
Beginning of period 60,862,498 58,785,616
------------ ------------
End of period (including overdistributed net investment income
of $318,871 and $129,448, respectively) $ 76,786,571 $ 60,862,498
============ ============
See accompanying Notes to Financial Statements.
</TABLE>
16 Oppenheimer Strategic Income & Growth Fund
<PAGE> 17
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992(3)
===================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $5.36 $4.92 $5.26 $5.03 $5.00
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .32 .32 .21 .22 .07(4)
Net realized and unrealized
gain (loss) .54 .44 (.23) .22 .02
----- ----- ----- ----- -----
Total income (loss) from
investment operations .86 .76 (.02) .44 .09
- -----------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.34) (.32) (.21) (.20) (.06)
Dividends in excess of net
investment income -- -- (.01) -- --
Distributions from net realized gain -- -- -- (.01) --
Distributions in excess of net
realized gain -- -- (.10) -- --
----- ----- ----- ----- -----
Total dividends and distributions
to shareholders (.34) (.32) (.32) (.21) (.06)
- -----------------------------------------------------------------------------------
Net asset value, end of period $5.88 $5.36 $4.92 $5.26 $5.03
===== ===== ===== ===== =====
===================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 16.53% 16.09% (0.23)% 8.84% 1.74%
===================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $46,747 $40,977 $42,733 $55,291 $48,3973
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $43,764 $40,799 $48,360 $59,209 $30,2643
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.75% 6.37% 4.56% 4.33% 4.59%(6)
Expenses 1.43% 1.35% 1.43% 1.36% 1.46%(4)(6)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(7) 147.3% 114.0% 80.0% 122.4% 25.8%
Average brokerage
commission rate(8) $0.0595 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------- --------
PERIOD
ENDED
YEAR ENDED SEPTEMBER 30, SEPT. 30,
1996 1995 1994 1993(2) 1996(1)
====================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $5.35 $4.91 $5.26 $5.10 $5.36
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .29 .28 .19 .14 .28
Net realized and unrealized
gain (loss) .53 .44 (.25) .16 .49
----- ----- ----- ----- -----
Total income (loss) from
investment operations .82 .72 (.06) .30 .77
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.30) (.28) (.18) (.13) (.27)
Dividends in excess of net
investment income -- -- (.01) -- --
Distributions from net realized gain -- -- -- (.01) --
Distributions in excess of net
realized gain -- -- (.10) -- --
----- ----- ----- ----- -----
Total dividends and distributions
to shareholders (.30) (.28) (.29) (.14) (.27)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $5.87 $5.35 $4.91 $5.26 $5.86
===== ===== ===== ===== =====
====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 15.69% 15.26% (1.17)% 5.86% 15.18%
====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $28,93 $19,885 $16,053 $12,386 $1,106
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $24,26 $17,316 $14,986 $ 7,541 $ 400
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.94% 5.61% 3.86% 3.32%(6) 4.58%(6)
Expenses 2.19% 2.10% 2.17% 2.21%(6) 2.28%(6)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 147.3 114.0% 80.0% 122.4% 147.3%
Average brokerage
commission rate(8) $0.0595 -- -- -- $0.0595
</TABLE>
1. For the period from October 2, 1995 (inception of offering)
to September 30, 1996.
2. For the period from November 30, 1992 (inception of offering)
to September 30, 1993.
3. For the period from June 1, 1992 (commencement of operations)
to September 30, 1992.
4. Net investment income would have been $.07 per share absent
the voluntary expense reimbursement, resulting in an expense ratio of
1.74%.
5. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period (or inception of offering),
with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for
a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity
or expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the period ended
September 30, 1996 were $106,528,444 and $95,769,996, respectively.
8. Total brokerage commissions paid on applicable purchases and
sales of portfolio securities for the period divided by the total number
of related shares purchased and sold. See accompanying Notes to
Financial Statements.
17 Oppenheimer Strategic Income & Growth Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
==============================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Strategic Income & Growth Fund (the Fund) is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The Fund's primary investment
objective is to seek a high level of current income and capital
appreciation. The Fund's investment adviser is OppenheimerFunds, Inc.
(the Manager). The Fund offers Class A, Class B and Class C shares.
Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge.
All three classes of shares have identical rights to earnings, assets
and voting privileges, except that each class has its own distribution
and/or service plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to matters affecting a
single class. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary
of significant accounting policies consistently followed by the Fund.
----------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of
the New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued
at the last sale price of the day or, in the absence of sales, at
values based on the closing bid or the last sale price on the prior
trading day. Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service approved by the
Board of Trustees. Such securities which cannot be valued by the
approved portfolio pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that the firm rendering
the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established
by the Board of Trustees to determine fair value in good faith.
Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined
market value) adjusted for amortization to maturity of any premium or
discount. Forward foreign currency exchange contracts are valued based
on the closing prices of the forward currency contract rates in the
London foreign exchange markets on a daily basis as provided by a
reliable bank or dealer. Options are valued based upon the last sale
price on the principal exchange on which the option is traded or, in
the absence of any transactions that day, the value is based upon the
last sale price on the prior trading date if it is within the spread
between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid is used.
----------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment
or when-issued basis can take place a month or more after the
transaction date. During this period, such securities do not earn
interest, are subject to market fluctuation and may increase or
decrease in value prior to their delivery. The Fund maintains, in a
segregated account with its custodian, assets with a market value equal
to the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes
such purchases while remaining substantially fully invested. As of
September 30, 1996, the Fund had entered into outstanding when-issued
or forward commitments of $5,119,263.
In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into
mortgage "dollar-rolls" in which the Fund sells securities for delivery
in the current month and simultaneously contracts with the same
counterparty to repurchase similar (same type coupon and maturity) but
not identical securities on a specified future date. The Fund records
each dollar-roll as a sale and a new purchase transaction.
----------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on
the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from
changes in market values of securities held and reported with all other
foreign currency gains and losses in the Fund's Statement of
Operations.
----------------------------------------------------------------------
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.
18 Oppenheimer Strategic Income & Growth Fund
<PAGE> 19
==============================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating
expenses directly attributable to a specific class are charged against
the operations of that class.
----------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any
net realized gain on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income or excise tax provision is
required.
----------------------------------------------------------------------
ORGANIZATION COSTS. The Manager advanced $20,590 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, Class B and Class C shares from net investment
income each day the New York Stock Exchange is open for business and
pay such dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
----------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes. 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.
During the year ended September 30, 1996, the Fund
adjusted the classification of distributions to shareholders to
reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended September 30, 1996, amounts have been
reclassified to reflect a decrease in paid-in capital of $128,640, a
decrease in overdistributed net investment income of $37,503, and an
increase in accumulated net realized gain on investments of $91,137. In
addition, to properly reflect foreign currency gain in the components of
capital, $26,440 of foreign exchange gain determined according to U.S.
federal income tax rules has been reclassified from net realized gain to
net investment income.
----------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance
with federal income tax requirements. Realized gains and losses on
investments and options written and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes. Dividends-in-kind are
recognized as income on the ex-dividend date, at the current market
value of the underlying security. Interest on payment-in-kind debt
instruments is accrued as income at the coupon rate and a market
adjustment is made on the ex-date.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ
from those estimates.
19 Oppenheimer Strategic Income & Growth Fund
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Continued)
==============================================================================
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996(1) YEAR ENDED SEPTEMBER 30, 1995
-------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 2,387,772 $ 13,431,087 1,075,489 $ 5,403,694
Dividends and distributions reinvested 402,412 2,264,550 452,310 2,248,812
Redeemed (2,477,164) (13,931,467) (2,567,818) (12,855,893)
---------- ------------ ----------- ------------
Net increase (decrease) 313,020 $ 1,764,170 (1,040,019) $ (5,203,387)
========== ============ =========== ============
-----------------------------------------------------------------------------------------------------------------------
Class B:
Sold 2,134,954 $ 12,031,686 1,180,146 $ 5,932,623
Dividends and distributions reinvested 179,351 1,009,405 162,515 808,194
Redeemed (1,096,517) (6,187,804) (894,830) (4,464,871)
---------- ------------ ----------- ------------
Net increase 1,217,788 $ 6,853,287 447,831 $ 2,275,946
========== ============ =========== ============
-----------------------------------------------------------------------------------------------------------------------
Class C:
Sold 253,236 $ 1,433,118 -- $ --
Dividends and distributions reinvested 2,268 12,899 -- --
Redeemed (66,571) (374,807) -- --
---------- ------------ ----------- ------------
Net increase 188,933 $ 1,071,210 -- $ --
========== ============ =========== ============
</TABLE>
1. For the year ended September 30, 1996 for Class A and Class B shares
and for the period from October 2, 1995 (inception of offering) to
September 30, 1996 for Class C shares.
==============================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1996, net unrealized appreciation on investments and
options written of $5,053,335 was composed of gross appreciation of
$5,766,008, and gross depreciation of $712,673.
==============================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.75% on the first $200 million of average annual net assets, 0.72% on
the next $200 million, 0.69% on the next $200 million, 0.66% on the
next $200 million, 0.60% on the next $200 million, and 0.50% on net
assets in excess of $1 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.
For the year ended September 30, 1996, commissions (sales
charges paid by investors) on sales of Class A shares totaled $277,077,
of which $91,918 was retained by OppenheimerFunds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. Sales charges advanced to broker/dealers by
OFDI on sales of the Fund's Class B and Class C shares totaled $415,535
and $13,819, of which $12,807 and $208, respectively, was paid to an
affiliated broker/dealer. During the year ended September 30, 1996,
OFDI received contingent deferred sales charges of $79,826 and $929,
respectively, upon redemption of Class B and Class C shares, as
reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for
other registered investment companies. OFS's total costs of providing
such services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not
exceed 0.25% of the average annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse brokers, dealers, banks
and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares. During the year ended September 30, 1996, OFDI paid $13,004
to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
20 Oppenheimer Strategic Income & Growth Fund
<PAGE> 21
==============================================================================
4. MANAGEMENT FEES AND
OTHER TRANSACTIONS
WITH AFFILIATES
(CONTINUED)
The Fund has adopted a reimbursement type Distribution and Service Plan
for Class B shares to reimburse OFDI for its services and costs in
distributing Class B shares and servicing accounts. Under the Plan, the
Fund pays OFDI an annual asset-based sales charge of 0.75% per year on
Class B shares. OFDI also receives a service fee of 0.25% per year to
reimburse dealers for providing personal services for accounts that
hold Class B shares. Both fees are computed on the average annual net
assets of Class B shares, determined as of the close of each regular
business day. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plan
was terminated. During the year ended September 30, 1996, OFDI paid
$3,237 to an affiliated broker/dealer as reimbursement for Class B
personal service and maintenance expenses and retained $200,117 as
reimbursement for Class B sales commissions and service fee advances,
as well as financing costs. As of September 30, 1996, OFDI had incurred
unreimbursed expenses of $1,292,158 for Class B.
The Fund has adopted a compensation type Distribution and
Service Plan for Class C shares to compensate OFDI for its services and
costs in distributing Class C shares and servicing accounts. Under the
Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75%
per year on Class C shares. OFDI also receives a service fee of 0.25%
per year to compensate dealers for providing personal services for
accounts that hold Class C shares. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. If the Plan is terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to OFDI for certain expenses it incurred
before the Plan was terminated. During the year ended September 30,
1996, OFDI retained $3,838 as compensation for Class C sales
commissions and service fee advances, as well as financing costs. As of
September 30, 1996, OFDI had incurred unreimbursed expenses of $35,740
for Class C.
==============================================================================
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at
a negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio
currency risk. The Fund generally enters into forward contracts as a
hedge upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Fund may enter into such contracts as a
hedge against changes in foreign currency exchange rates on portfolio
positions.
Forward contracts are valued based on the closing prices of the
forward currency contract rates in the London foreign exchange markets
on a daily basis as provided by a reliable bank or dealer. The Fund
will realize a gain or loss upon the closing or settlement of the
forward transaction.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments
where applicable. Unrealized appreciation or depreciation on forward
contracts is reported in the Statement of Assets and Liabilities.
Realized gains and losses are reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to
meet the terms of the contract and unanticipated movements in the value
of a foreign currency relative to the U.S. dollar.
At September 30, 1996, the Fund had outstanding forward contracts to
purchase and sell foreign currencies as follows:
<TABLE>
<CAPTION>
CONTRACT
AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACTS TO PURCHASE EXPIRATION DATE (000S) SEPT. 30, 1996 APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (JPY) 11/5/96 29,536 JPY $ 266,144 $ 6,168 $ --
New Zealand Dollar (NZD) 11/6/96 900 NZD 626,118 -- 4,395
Swedish Krona (SEK) 11/1/96 1,490 SEK 224,826 747 --
Swiss Franc (CHF) 10/21/96--11/4/96 870 CHF 695,969 30,902 --
---------- ------- -------
$1,813,057 37,817 4,395
========== ------- -------
CONTRACTS TO SELL
- ---------------------------------------------------------------------------------------------------------------------------
Australian Dollar (AUD) 11/6/96 795 AUD $629,016 $ 6,102 $ 4
Danish Krone (DKK) 10/1/96 3 DKK 587 -- 1
---------- ------- -------
$629,603 6,102 5
========== ------- -------
Net Unrealized Appreciation and Depreciation $43,919 $ 4,400
======= =======
</TABLE>
21 Oppenheimer Strategic Income & Growth Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Continued)
==============================================================================
6. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the
value of fixed rate portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in interest rates as it
may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities in an amount (initial margin) equal
to a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains and losses. The
Fund recognizes a realized gain or loss when the contract is closed or
expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the
Statement of Investments. The Statement of Assets and Liabilities
reflects a receivable or payable for the daily mark to market for
variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with
changes in the value of the underlying securities.
At September 30, 1996, the Fund had outstanding futures contracts to
purchase and sell debt securities as follows:
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
EXPIRATION FUTURES VALUATION AS OF APPRECIATION
CONTRACTS TO PURCHASE DATE CONTRACTS SEPT. 30, 1996 (DEPRECIATION)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 12/96 12 $ 1,267,125 $ 10,500
------------- ----------
CONTRACTS TO SELL
-----------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds 12/96 5 $ 545,937 $ (8,781)
French Government Bonds 12/96 10 1,209,203 (17,686)
------------- ----------
1,755,140 (26,467)
------------- ----------
$ 3,022,265 $ (15,967)
============= ==========
</TABLE>
==============================================================================
7. OPTIONS ACTIVITY
The Fund may buy and sell put and call options, or write put and
covered call options on portfolio securities in order to produce
incremental earnings or protect against changes in the value of
portfolio securities.
The Fund generally purchases put options or writes covered call
options to hedge against adverse movements in the value of portfolio
holdings. When an option is written, the Fund receives a premium and
becomes obligated to sell or purchase the underlying security at a
fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized
appreciation or depreciation is recorded. The Fund will realize a gain
or loss upon the expiration or closing of the option transaction. When
an option is exercised, the proceeds on sales for a written call
option, the purchase cost for a written put option, or the cost of the
security for a purchased put or call option is adjusted by the amount
of premium received or paid.
22 Oppenheimer Strategic Income & Growth Fund
<PAGE> 23
==============================================================================
7. OPTIONS ACTIVITY
(CONTINUED)
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments. Options written
are reported as a liability in the Statement of Assets and Liabilities.
Gains and losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases
and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market price of the security decreases
and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Written option activity for the year ended September 30, 1996 was as
follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
---------------------------- ------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1995 -- $ -- -- $ --
------------------------------------------------------------------------------------------------------------------------
Options written 5,406,361 78,714 123,388 5,330
------------------------------------------------------------------------------------------------------------------------
Options canceled in closing transactions (943,840) (43,677) -- --
------------------------------------------------------------------------------------------------------------------------
Options expired prior to exercise (1,717,882) (18,500) -- --
------------------------------------------------------------------------------------------------------------------------
Options exercised (988,674) (5,959) -- --
----------- ---------- -------- --------
Options outstanding at September 30, 1996 1,755,965 $ 10,578 123,388 $ 5,330
=========== ========== ======== ========
</TABLE>
==============================================================================
8. ILLIQUID AND
RESTRICTED SECURITIES
At September 30, 1996, investments in securities included issues that
are illiquid or restricted. Restricted securities are often purchased
in private placement transactions, are not registered under the
Securities Act of 1933, may have contractual restrictions on resale,
and are valued under methods approved by the Board of Trustees as
reflecting fair value. A security may be considered illiquid if it
lacks a readily-available market or if its valuation has not changed
for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
from time to time) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional
investors, are not subject to that limit. The aggregate value of
illiquid or restricted securities subject to this limitation at
September 30, 1996 was $2,298,088, which represents 2.99% of the Fund's
net assets. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT SEPT. 30, 1996
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transpower Finance Ltd. Gtd. Unsec. Unsub. Bonds, 8%, 2/15/01 5/17/96 $66.10 $68.80
</TABLE>
23 Oppenheimer Strategic Income & Growth Fund
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
==============================================================================
The Board of Trustees and Shareholders of Oppenheimer Strategic Income
& Growth Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Strategic Income
& Growth Fund as of September 30, 1996, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended September 30, 1996 and 1995 and the
financial highlights for the period June 1, 1992 (commencement of
operations) to September 30, 1996. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.
An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at September 30, 1996 by
correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights present fairly, in all material respects, the financial
position of Oppenheimer Strategic Income & Growth Fund at September 30,
1996, the results of its operations, the changes in its net assets, and
the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1996
24 Oppenheimer Strategic Income & Growth Fund
<PAGE> 25
FEDERAL INCOME TAX INFORMATION (Unaudited)
==============================================================================
In early 1997, shareholders will receive information regarding all
dividends and distributions paid to them by the Fund during calendar
year 1996. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended
September 30, 1996 which are not designated as capital gain
distributions should be multiplied by 11.72% to arrive at the net
amount eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders
in reporting distributions received from the Fund to the Internal
Revenue Service. Because of the complexity of the federal regulations
which may affect your individual tax return and the many variations in
state and local tax regulations, we recommend that you consult your tax
adviser for specific guidance.
25 Oppenheimer Strategic Income & Growth Fund
<PAGE> 26
OPPENHEIMER STRATEGIC INCOME & GROWTH FUND
==============================================================================
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Robert C. Doll, Jr., Senior Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
==============================================================================
INVESTMENT ADVISER
OppenheimerFunds, Inc.
==============================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
==============================================================================
TRANSFER AND SHAREHOLDER
SERVICING AGENT
OppenheimerFunds Services
==============================================================================
CUSTODIAN OF
PORTFOLIO SECURITIES
The Bank of New York
==============================================================================
INDEPENDENT AUDITORS
Deloitte & Touche LLP
==============================================================================
LEGAL COUNSEL
Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Strategic
Income & Growth Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Strategic Income & Growth Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any
bank, are not guaranteed by any bank, and are not insured by the FDIC
or any other agency, and involve investment risks, including possible
loss of the principal amount invested.
26 Oppenheimer Strategic Income & Growth Fund
<PAGE> 27
OPPENHEIMERFUNDS FAMILY
==============================================================================
OppenheimerFunds offers over 50 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your
children's education or tax-free income, we have the funds to help you
seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable
knowing that you are investing with a respected financial institution
with over 35 years of experience in helping people just like you reach
their financial goals. And you're investing with a leader in global,
growth stock and flexible fixed-income investments--with over 3 million
shareholder accounts and more than $55 billion under OppenheimerFunds'
management and that of our affiliates.
At OppenheimerFunds we don't charge a fee to exchange shares.
And you can exchange shares easily by mail or by telephone.1 For more
information on Oppenheimer funds, please contact your financial adviser
or call us at 1-800-525-7048 for a prospectus. You may also write us at
the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
<TABLE>
=============================================================================================
<S> <C>
STOCK FUNDS
Global Emerging Growth Fund Growth Fund
Enterprise Fund(2) Global Fund
International Growth Fund Quest Global Value Fund
Discovery Fund Disciplined Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Target Fund Quest Value Fund
=============================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Asset Allocation Fund
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
=============================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
============================================================================================
MUNICIPAL FUNDS
California Municipal Fund(3) Insured Municipal Fund
Florida Municipal Fund(3) Intermediate Municipal Fund
New Jersey Municipal Fund(3)
New York Municipal Fund(3) Rochester Division
Pennsylvania Municipal Fund(3) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
============================================================================================
MONEY MARKET FUNDS(4)
Money Market Fund Cash Reserves
============================================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only for shares of the same class of eligible
funds.
2.Effective 4/1/96, the Fund is closed to new investors.
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money
market fund will be able to maintain a stable net asset value of $1.00
per share. Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C)
Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
27 Oppenheimer Strategic Income & Growth Fund
<PAGE> 28
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
Information Hotline
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RA0275.001.0996 November 30, 1996
[PHOTO]
Customer Service Representative
OppenheimerFunds Services
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing
simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling
our toll-free Telephone Transactions number. And, by enrolling in AccountLink,
a convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
