-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, st6mJnhvMA+nMLskdectjYPZhX25N8uUslHe/oz2PYNfMSXnDiZzS0e5/Xe+gU7V BFjAKCHjT0rYWyRXEtL/2g== 0000912057-94-000838.txt : 19940310 0000912057-94-000838.hdr.sgml : 19940310 ACCESSION NUMBER: 0000912057-94-000838 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 046474411 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: ARS SEC ACT: 34 SEC FILE NUMBER: 811-03420 FILM NUMBER: 94515279 BUSINESS ADDRESS: STREET 1: 3410 S GALENA CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL INTEGRITY FUNDS DATE OF NAME CHANGE: 19910329 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL LIQUID ASSETS TRUST DATE OF NAME CHANGE: 19880403 ARS 1 ARS OPPENHEIMER INVESTMENT GRADE BOND FUND ANNUAL REPORT DECEMBER 31, 1993 OPPENHEIMERFUNDS-R- "We need high income, but we're also safety-conscious about our investments. "We're satisfied with this Fund because of the income it has given us. And the peace of mind we get from the Fund's investment grade portfolio." --------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Five Facts Every Shareholder Should Know About Oppenheimer Investment Grade Bond Fund --------------------------------------------------- 1 The Fund's objective is to seek high current income, consistent with prudent investment risk and stability of capital, from a diversified portfolio of investment grade In this report: fixed income securities. Answers to two timely --------------------------------------------------- questions you should ask 2 Standardized yield for Class A shares for the your Fund's managers. 30-day period ended December 31, 1993, was 6.03%. That figure for Class B shares was My financial advisor says 5.52%.(1) that the value of a bond --------------------------------------------------- investment tends to fall 3 To seek stability of principal, the Fund when interest rates rise. currently has over 58% of its assets in What steps are you taking securities rated "A" or better by Standard & to protect the Fund's net Poor's, including corporate bonds, U.S. asset value in the event of Treasury securities, and mortgage-backed a rise in interest rates? securities. --------------------------------------------------- With the U.S. economy in a 4 On December 31, 1993, the Fund's portfolio gradual growth mode, what allocation was:(2) opportunities do you see for capital appreciation in the U.S. TREASURY NOTES AND BONDS 45.6% Fund's portfolio? U.S. CORPORATE BONDS 26.5% CASH EQUIVALENTS 14.3% MORTGAGE-BACKED AND ASSET-BACKED SECURITIES 11.8% [GRAPHIC] MUNICIPALS (TAXABLE) 0.9% FOREIGN FIXED INCOME SECURITIES 0.9% --------------------------------------------------- 5 "The corporate bond market was a stellar performer through most of 1993. Over the past six months, we took advantage of price increases to sell lower-rated corporate bonds that we felt to be fully valued, realizing substantial profits on many of these transactions. We shifted a large portion of the proceeds of these sales into higher quality, A-rated securities to help maintain stability of principal. With interest rates stabilizing, we are focusing on shorter term securities, which are less likely to fluctuate when interest rates rise." MARY WILSON, MASS. MUTUAL LIFE INSURANCE CO., FUND SUB-ADVISOR, DECEMBER 31, 1993 (1). Standardized yield is net investment income calculated on a yield-to-maturity basis for the 30-day period ended 12/31/93, divided by the maximum offering price at the end of the period, compounded semi-annually and then annualized. (2). The Fund's portfolio is subject to change. (3). Based on the change in net asset value per Class A share from 12/31/92 to 12/31/93. The Fund's average annual total returns for Class A shares after deducting the current maximum sales charge of 4.75% for the 1- and 5-year periods ended 12/31/93 and since inception of the Fund on 4/15/88 were 5.06%, 9.12%, and 8.77%, respectively. Total return for Class B shares from 5/1/93 (inception of the Class) and held until 12/31/93 was -1.09%. This reflects the change in value of a hypothetical investment made on 5/1/93 and held until 12/31/93, with all dividends reinvested and after applying the contingent deferred sales charge of 5%. All figures include reinvestment of dividends. (4). Source of data: Lipper Analytical Services, Inc., an independent monitor of mutual funds, 12/31/93. The Lipper total return average for the 12-month period ended 12/31/93 was for 71 intermediate investment grade bond funds, including reinvestment of dividends. This average is shown for comparative purposes only. Oppenheimer Investment Grade Bond Fund is categorized by Lipper as an intermediate investment grade bond fund. Lipper Performance does not take sales charges into consideration. Past performance is not indicative of future results. An investment in the Fund will fluctuate in value so that an investor's shares, when redeemed, may be worth more or less than the original cost. 2 Oppenheimer Investment Grade Bond Fund
--------------------------------------------------- REPORT TO SHAREHOLDERS - -------------------------------------------------------------------------------- Oppenheimer Investment Grade Bond Fund generated a standardized yield for Class A shares of 6.03% and 5.52% for Class B shares for the 30-day period ended December 31, 1993.(5) The Fund's total return at net asset value for Class A shares for the 12-month period was 10.30%,(6) which was higher than the Lipper average of 9.50% - ----------------------- for intermediate investment grade bond funds.(7) Total return at net asset value SUPERIOR for Class B shares for the period from their inception on May 1 to December 31, INVESTMENT INCOME 1993, was 3.91%.(6) As of December 31, 1993 The U.S. economy continued to grow slowly and interest rates declined - ------------------------- steadily through most of 1993. In this environment, corporate bonds outperformed other sectors, as companies issuing these bonds benefited both from increased Oppenheimer 6.03% demand and from lower interest rates and strengthened their balance sheets. This Investment Grade caused the value of many corporate bonds in the Fund's portfolio to appreciate. Bond Fund A As a result, the Fund's managers have sold a number of bond issues at (standardized yield)(5) substantial profits, including Tele-Communications, Inc. and Time Warner. We - ------------------------- have shifted the proceeds from these sales into investments with higher credit Oppenheimer 5.52% ratings. This strategy helps to protect the Fund's net asset value as highly Investment Grade rated investments tend to hold their value better when interest rates rise. Bond Fund B In the U.S. Treasury market, interest rates declined in September (standardized yield)(5) 1993 to their lowest point in more than 30 years, and have since rebounded - ------------------------- somewhat. The dramatic rate decline caused the value of existing long-term Average rate of 3.04% Treasury bonds to increase in value. However, it appears that rates have now 12-month CD(8) stabilized somewhat, and may move modestly upward in the first half of 1994. - ------------------------- Accordingly, the Fund's managers have emphasized shorter-term Treasuries, which Average money 2.34% are less likely to decline in price than longer-term securities in a rising market fund rate(8) interest rate environment. - ------------------------- Extremely low U.S. interest rates have prompted many U.S. homeowners to refinance their mortgages, and this trend has caused volatility in the mortgage-backed securities market. To insulate the portfolio from this effect, the Fund's managers continue to invest in a combination of very short-term securities, which are at low risk of prepayment, and highly seasoned securities that have already survived several refinancing waves. Going forward, we will continue to monitor interest rates closely, and to seek the best investment opportunities for the Fund. We appreciate your trust in Oppenheimer Investment Grade Bond Fund and look forward to serving your investment needs. "THE FUND'S TOTAL RETURN WAS HIGHER THAN THE LIPPER AVERAGE." /s/ James C. Swain /s/ Jon S. Fossel James C. Swain Jon S. Fossel Chairman, Oppenheimer Integrity Fund President, Oppenheimer Integrity Fund January 21, 1994 (5). See footnote 1, page 2. (6). See footnote 3, page 2. (7). See footnote 4, page 2. (8). Source of CD and money market fund data: BANK RATE MONITOR, 12/31/93. The CD rate is the average of 12-month certificates of deposit available for purchase from 12 regional banks on 12/31/93. CDs are insured by the FDIC and provide a guaranteed return, whereas the Fund's yield and share value may fluctuate and are not insured by the FDIC. The average money market fund yield is the average yield for the 30-day period ended 12/31/93 for 10 selected money market mutual funds. The share value of money market funds generally does not vary whereas the Fund's share value may fluctuate.
3 Oppenheimer Investment Grade Bond Fund
------------------------------------------- STATEMENT OF INVESTMENTS December 31, 1993 FACE MARKET VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM SECURITIES: COMMERCIAL PAPER--15.7% - ----------------------------------------------------------------------------------------------------------------------------------- Caterpillar Financial Services Corp., 3.40%, 1/6/94 $2,500,000 $2,498,819 ----------------------------------------------------------------------------------------------------- ConAgra, Inc., 3.40%, 1/11/94 1,975,000 1,973,135 ----------------------------------------------------------------------------------------------------- Countrywide Funding Corp., 3.50%, 1/3/94 2,500,000 2,499,514 ----------------------------------------------------------------------------------------------------- Ford Motor Credit Co., 3.40%, 1/5/94 160,000 160,000 ----------------------------------------------------------------------------------------------------- General Motors Acceptance Corp., 3.05%, 1/3/94 390,000 390,000 ----------------------------------------------------------------------------------------------------- GTE Northwest, Inc., 3.31%, 1/12/94 1,800,000 1,798,180 ----------------------------------------------------------------------------------------------------- ITT Financial Corp., 3.35%, 1/7/94 665,000 665,000 ----------------------------------------------------------------------------------------------------- Kerr-McGee Credit Corp., 3.45%, 1/4/94 2,500,000 2,499,281 ----------------------------------------------------------------------------------------------------- Maytag Corp., 3.55%, 1/10/94 1,900,000 1,898,314 ----------------------------------------------------------------------------------------------------- Public Service Co. of Colorado, 3.70%, 1/7/94 1,185,000 1,184,269 ----------------------------------------------------------------------------------------------------- Tyson Foods, Inc., 3.45%, 1/5/94 2,100,000 2,099,195 ------------ Total Short-Term Securities: Commercial Paper (Cost $17,665,707) 17,665,707 - ----------------------------------------------------------------------------------------------------------------------------------- GOVERNMENT OBLIGATIONS--64.1% - ----------------------------------------------------------------------------------------------------------------------------------- AGENCY: FULL FAITH Allentown, Pennsylvania, 8.74% U.S. Government Gtd. Nts., Series A, 8/1/01 65,000 75,934 AND CREDIT--1.1% ----------------------------------------------------------------------------------------------------- Fajardo, Puerto Rico, 8.74% U.S. Government Gtd. Nts., Series A, 8/1/01 300,000 350,466 ----------------------------------------------------------------------------------------------------- New Haven, Connecticut, 8.74% U.S. Government Gtd. Nts., Series A, 8/1/01 400,000 467,288 ----------------------------------------------------------------------------------------------------- Trujillo Alto, Puerto Rico, 8.74% U.S. Government Gtd. Nts., Series A, 8/1/01 235,000 274,531 ------------ 1,168,219 - ----------------------------------------------------------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE Federal Home Loan Mortgage Corp., 7.50% Collateralized Mortgage OBLIGATIONS/GOVERNMENT--7.0% Obligation Gtd. Multiclass Mortgage Participation Certificates, 2/15/07 2,000,000 2,083,700 ----------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., 7% Gtd. Multiclass Mortgage Participation Certificates, Series 1460, Cl. 1460-H, 5/15/07 1,500,000 1,543,890 ----------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., 58.60% Collateralized Mortgage Obligation Gtd. Real Estate Mortgage Investment Conduit Pass-Through Certificates, 10/25/22(1) 883,689 636,256 ----------------------------------------------------------------------------------------------------- JHM Acceptance Corp., 8.96% Collateralized Mortgage Obligation, Series E, Cl. E-6, 4/1/19 2,000,000 2,142,880 ----------------------------------------------------------------------------------------------------- Morgan Stanley Mortgage Trust 28, 8% Collateralized Mortgage Obligation, Series 28, Cl. 28-5, 12/1/15 1,437,032 1,459,895 ------------ 7,866,621 - ----------------------------------------------------------------------------------------------------------------------------------- MORTGAGE-BACKED Federal Home Loan Mortgage Corp.: SECURITIES--4.8% 13.50%, 11/1/10 136,564 158,472 12.50%, 4/1/14 66,775 75,804 9% Certificates of Participation, 3/1/17 1,080,848 1,150,963 ----------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., 8% Gtd. Mortgage Pass-Through Certificates, 8/1/17 1,446,631 1,513,060
4 Oppenheimer Investment Grade Bond Fund
------------------------------------ FACE MARKET VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------------ MORTGAGE-BACKED SECURITIES Government National Mortgage Assn.: (CONTINUED) 12%, 1/15/99 $110,981 $123,443 9%, 2/15/09 305,000 328,266 9%, 3/15/09 271,249 291,941 9%, 5/15/09 34,955 37,621 9%, 6/15/09 190,257 204,770 10%, 11/15/09 1,281,866 1,405,797 15%, 2/15/12 26,453 31,364 12%, 5/15/14 3,170 3,706 12.75%, 5/15/15 31,287 36,146 12.75%, 6/15/15 68,024 78,590 ------------ 5,439,943 - ----------------------------------------------------------------------------------------------------------------------------------- TREASURY--50.2% U.S. Treasury Bonds: 7.875%, 2/15/21 900,000 1,048,212 8%, 11/15/21 2,000,000 2,369,360 7.25%, 8/15/22 7,600,000 8,295,855 7.125%, 2/15/23 4,000,000 4,329,960 ----------------------------------------------------------------------------------------------------- U.S. Treasury Nts.: 8.50%, 7/15/97 6,925,000 7,751,637 6.375%, 1/15/99 1,200,000 1,260,744 7%, 4/15/99 12,350,000 13,326,390 8%, 5/15/01 1,900,000 2,174,303 7.875%, 8/15/01 2,600,000 2,959,918 5.57%, 8/15/03 13,000,000 12,959,309 ------------ 56,475,688 - ----------------------------------------------------------------------------------------------------------------------------------- FOREIGN GOVERNMENT Quebec, Canada (Province of), 8.80% Debs., 4/15/03 1,000,000 1,156,200 ------------ BONDS AND NOTES--1.0% Total Government Obligations (Cost $70,668,745) 72,106,671 - ----------------------------------------------------------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--1.2% - ----------------------------------------------------------------------------------------------------------------------------------- AUTO RECEIVABLES--1.2% General Motors Acceptance Corp. Grantor Trust, Series 1992-E, Cl.A, 4.75%, 8/15/97 879,210 884,694 ----------------------------------------------------------------------------------------------------- Select Auto Receivables Trust, 7.65% Asset-Backed Certificates, 1991-2 Cl. A, 7/15/96 499,029 509,963 ------------ Total Asset-Backed Securities (Cost $1,383,949) 1,394,657 - ----------------------------------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--29.1% - ----------------------------------------------------------------------------------------------------------------------------------- AIRLINES--1.5% United Air Lines, Inc., 10.11% 1991 Equipment Trust Certificates, Series B, 2/19/06 1,467,010 1,700,363 - ----------------------------------------------------------------------------------------------------------------------------------- AUTOMOBILES, TRUCKS Ford Motor Co., 7.875% Debs., 10/15/96 3,000,000 3,188,823 AND PARTS--2.9% - ----------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES--1.4% Comdisco, Inc., 6.20% Med.-Term Nts., 3/15/96 1,500,000 1,529,063 - ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL/INSURANCE--3.7% Ford Motor Credit Co., 9.90% Med.-Term Nts., 11/6/97 2,000,000 2,237,206 ----------------------------------------------------------------------------------------------------- Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 1,955,948 ------------ 4,193,154
5 Oppenheimer Investment Grade Bond Fund
------------------------------------- STATEMENT OF INVESTMENTS (Continued) FACE MARKET VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------------ FOOD AND RESTAURANTS--1.0% Wendy's International, Inc., 12.125% Debs., 4/1/95 $1,000,000 $1,077,300 - ----------------------------------------------------------------------------------------------------------------------------------- HEALTHCARE/MEDICAL Baxter International, Inc., 9.25% Nts., 9/15/96 1,000,000 1,102,631 PRODUCTS--1.8% ----------------------------------------------------------------------------------------------------- Imcera Group, Inc., 6% Nts., 10/15/03 1,000,000 967,128 ------------ 2,069,759 - ----------------------------------------------------------------------------------------------------------------------------------- HOTELS/MOTELS--1.3% Marriott International, Inc., 6.75% Sr. Nts., Series A, 12/15/03 1,500,000 1,493,377 - ----------------------------------------------------------------------------------------------------------------------------------- LEISURE/ENTERTAINMENT--0.9% Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,055,000 - ----------------------------------------------------------------------------------------------------------------------------------- MANUFACTURING: Textron, Inc., 9.55% Med.-Term Nts., 3/19/01 500,000 597,940 DIVERSIFIED--0.5% - ----------------------------------------------------------------------------------------------------------------------------------- MEDIA--2.3% News America Holdings, Inc., 7.50% Gtd. Sr. Nts., 3/1/00 2,500,000 2,610,640 - ----------------------------------------------------------------------------------------------------------------------------------- METALS/MINING--3.5% AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,177,383 ----------------------------------------------------------------------------------------------------- Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 1,112,903 ----------------------------------------------------------------------------------------------------- Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,665,801 ------------ 3,956,087 - ----------------------------------------------------------------------------------------------------------------------------------- OIL AND GAS: EXPLORATION Marathon Oil Co., 9.50% Gtd. Nts., 3/1/94 1,500,000 1,508,506 AND PRODUCTION--1.4% - ----------------------------------------------------------------------------------------------------------------------------------- OIL AND GAS: INTEGRATED--2.9% Union Oil Co. of California: 9.625% Gtd. Debs., 5/15/96 1,500,000 1,593,485 8.75% Nts., 8/15/01 1,500,000 1,696,594 ------------ 3,290,079 - ----------------------------------------------------------------------------------------------------------------------------------- PAPER AND FOREST Georgia-Pacific Corp., 9.95% Debs., 6/15/02 1,500,000 1,816,089 PRODUCTS--1.6% - ----------------------------------------------------------------------------------------------------------------------------------- RAILROADS/EQUIPMENT--2.4% CSX Corp., 9.50% Sr. Nts., 11/15/96 2,500,000 2,705,147 ------------ Total Corporate Bonds and Notes (Cost $31,523,837) 32,791,327 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $121,242,238) 110.1% 123,958,362 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (10.1) (11,389,977) --------- ------------ NET ASSETS 100.0% $112,568,385 --------- ------------ --------- ------------ 1. Interest rate resets monthly, based on LIBOR. See accompanying Notes to Financial Statements.
6 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------ STATEMENT OF ASSETS AND LIABILITIES December 31, 1993 - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $121,242,238)--see accompanying statement $123,958,362 ------------------------------------------------------------------------------------------------------- Cash 215,492 ------------------------------------------------------------------------------------------------------- Receivables: Interest 1,737,916 Shares of beneficial interest sold 431,065 Investments sold 188,975 ------------------------------------------------------------------------------------------------------- Other 22,252 ------------ Total assets 126,554,062 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Payables and other liabilities: Investments purchased 12,972,500 Dividends 569,872 Shares of beneficial interest redeemed 239,614 Distribution assistance--Note 4 77,058 Deferred trustee fees--Note 5 34,149 Other 92,484 ------------ Total liabilities 13,985,677 - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS $112,568,385 ------------ ------------ - ----------------------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital $111,376,568 ------------------------------------------------------------------------------------------------------- Overdistributed net investment income (56,074) ------------------------------------------------------------------------------------------------------- Accumulated net realized loss from investment transactions (1,468,233) ------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments--Note 3 2,716,124 ------------ Net assets $112,568,385 ------------ ------------ - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $110,759,490 and 9,963,302 shares of beneficial interest outstanding) $11.12 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $11.67 ------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $1,808,895 and 162,838 shares of beneficial interest outstanding) $11.11
See accompanying Notes to Financial Statements. 7 Oppenheimer Investment Grade Bond Fund
------------------------------------------------------------- STATEMENT OF OPERATIONS For the Year Ended December 31, 1993 - ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $8,145,735 - ------------------------------------------------------------------------------------------------------------------- EXPENSES Management fees--Note 4 555,430 --------------------------------------------------------------------------------------- Distribution assistance: Class A--Note 4 279,190 Class B--Note 4 6,089 --------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 171,164 --------------------------------------------------------------------------------------- Shareholder reports 98,061 --------------------------------------------------------------------------------------- Custodian fees and expenses 26,144 --------------------------------------------------------------------------------------- Legal and auditing fees 13,774 --------------------------------------------------------------------------------------- Trustees' fees and expenses 6,398 --------------------------------------------------------------------------------------- Registration and filing fees: Class A 4,542 Class B 582 --------------------------------------------------------------------------------------- Other 29,281 ----------- Total expenses 1,190,655 - ------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 6,955,080 - ------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED Net realized gain on investments 3,772,429 GAIN ON INVESTMENTS --------------------------------------------------------------------------------------- Net change in unrealized appreciation on investments: Beginning of year 2,693,891 End of year--Note 3 2,716,124 ----------- Net change 22,233 ----------- Net realized and unrealized gain on investments 3,794,662 - ------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,749,742 ----------- -----------
See accompanying Notes to Financial Statements. 8 Oppenheimer Investment Grade Bond Fund
----------------------------------- STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, ------------------------- 1993 1992 - ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income $6,955,080 $6,898,017 ------------------------------------------------------------------------------------------------------ Net realized gain on investments 3,772,429 2,881,367 ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on investments 22,233 (3,303,621) ------------ ------------ Net increase in net assets resulting from operations 10,749,742 6,475,763 - ---------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS Dividends from net investment income: Class A ($.707 and $.763 per share, respectively) (7,067,709) (7,002,468) Class B ($.420 per share) (33,652) -- - ---------------------------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST Net increase in net assets resulting from Class A beneficial interest TRANSACTIONS transactions--Note 2 802,199 16,193,234 ------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from Class B beneficial interest transactions--Note 2 1,828,205 -- - ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS Total increase 6,278,785 15,666,529 ------------------------------------------------------------------------------------------------------ Beginning of year 106,289,600 90,623,071 ------------ ------------ End of year (including (overdistributed) undistributed net investment income of ($56,074) and $90,207, respectively) $112,568,385 $106,289,600 ------------ ------------ ------------ ------------
See accompanying Notes to Financial Statements. 9 Oppenheimer Investment Grade Bond Fund
FINANCIAL HIGHLIGHTS CLASS A --------------------------------------------------------------------------- ELEVEN YEAR MONTHS ENDED ENDED DEC. 31, DEC. 31, 1993 1992 1991(3) 1990 1989 1988(2) - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA: Net asset value, beginning of period $10.74 $10.80 $9.86 $10.29 $10.12 $10.55 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .69 .75 .82 .88(4) .92 .93 Net realized and unrealized gain (loss) on investments .40 (.05) .90 (.43) .19 (.36) ------ ------ ------ ------ ------ ------ Total income from investment operations 1.09 .70 1.72 .45 1.11 .57 - ---------------------------------------------------------------------------------------------------------------------- Dividends from net investment income (.71) (.76) (.78) (.88) (.94) (1.00) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.12 $10.74 $10.80 $9.86 $10.29 $10.12 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(5) 10.30% 6.77% 18.28% 4.74% 11.31% 4.48% - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $110,759 $106,290 $90,623 $87,021 $96,380 $102,293 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $111,702 $98,672 $86,471 $90,065 $100,891 $111,264 - ---------------------------------------------------------------------------------------------------------------------- Number of shares outstanding at end of period (in thousands) 9,963 9,899 8,390 8,829 9,369 10,108 - ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.20% 7.00% 8.02% 8.85% 8.85% 8.75% Expenses 1.06% 1.10% 1.23% 1.24%(4) 1.14% 1.05% - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(7) 110.1% 116.4% 97.1% 80.4% 41.3% 45.0% Class B - -------------------------------------------------------------------------------------------------------- -------- PERIOD ENDED YEAR ENDED JANUARY 31, DEC. 31, 1988(2) 1987(2) 1986(2) 1985(2) 1984(2) 1993(1) - ------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA: Net asset value, beginning of period $11.30 $11.16 $10.91 $11.00 $11.07 $11.10 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 1.09 1.16 1.22 1.27 1.28 .40 Net realized and unrealized gain (loss) on investments (.55) .22 .35 (.04) (.03) .03 -------- -------- -------- -------- -------- -------- Total income from investment operations .54 1.38 1.57 1.23 1.25 .43 - ---------------------------------------------------------------------------------------------------------------------- Dividends from net investment income (1.29) (1.24) (1.32) (1.32) (1.32) (.42) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.55 $11.30 $11.16 $10.91 $11.00 $11.11 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(5) N/A N/A N/A N/A N/A 3.91% - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $118,568 $125,513 $121,979 $117,293 $116,193 $1,809 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $118,724 $123,045 $118,253 $111,235 $115,058 $922 - ---------------------------------------------------------------------------------------------------------------------- Number of shares outstanding at end of period (in thousands) 11,234 11,103 10,930 10,751 10,563 163 - ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 10.28% 10.45% 11.26% 12.21% 11.69% 4.80%(6) Expenses .98% .93% .97% 1.01% .99% 1.90%(6) - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(7) 19.5% 59.8% 36.5% 76.7% 49.9% 110.1% 1. For the period from May 1, 1993 (inception of offering) to December 31, 1993. 2. Operating results prior to April 15, 1988 were achieved by the Fund's predecessor corporation as a closed-end fund under different investment objectives and policies. Such results are thus not necessarily representative of operating results the Fund may achieve under its current investment objectives and policies. 3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the Fund. 4. Net investment income would have been $.87 absent the voluntary expense limitation, resulting in an expense ratio of 1.26%. 5. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. 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 year ended December 31, 1993 were $123,943,358 and $134,301,656, respectively. See accompanying Notes to Financial Statements.
10 Oppenheimer Investment Grade Bond Fund ----------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SIGNIFICANT Oppenheimer Investment Grade Bond Fund (the Fund) is ACCOUNTING POLICIES a separate fund of Oppenheimer Integrity Funds, a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund's investment advisor is Oppenheimer Management Corporation (the Manager). The Fund offers both Class A and Class B shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge. Both classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. ----------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at 4:00 p.m. (New York time) on each trading day. Long-term debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Long-term debt securities which cannot be valued by the approved portfolio pricing service are valued by averaging the mean between the bid and asked prices obtained from two active market makers in such securities. Short-term debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Securities for which market quotes are not readily available are valued under procedures established by the Board of Trustees to determine fair value in good faith. ----------------------------------------------------- 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 INCOME TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income tax provision is required. At December 31, 1993, the Fund had available for federal income tax purposes an unused capital loss carryover of approximately $1,400,000, $442,000 of which will expire in 1997, and $958,000 in 1998. ----------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately for Class A and Class B shares from net investment income each regular business day and pay such dividends monthly. Distributions from net realized gains on investments, if any, will be declared at least once each year. ----------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. 11 Oppenheimer Investment Grade Bond Fund ------------------------------------------ NOTES TO FINANCIAL STATEMENTS (Continued) - -------------------------------------------------------------------------------- 2. SHARES OF The Fund has authorized an unlimited number of no BENEFICIAL INTEREST par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED DECEMBER 31, 1993(1) YEAR ENDED DECEMBER 31, 1992 ------------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------------- Class A: Sold 2,953,788 $33,325,053 2,484,198 $26,675,262 Dividends reinvested 259,953 2,897,712 216,393 2,318,129 Redeemed (3,149,098) (35,420,566) (1,191,950) (12,800,157) ---------- ----------- ---------- ----------- Net increase 64,643 $802,199 1,508,641 $16,193,234 ---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------- Class B: Sold 195,606 $ 2,198,191 -- $ -- Dividends reinvested 2,293 25,726 -- -- Redeemed (35,061) (395,712) -- -- ---------- ----------- ---------- ----------- Net increase 162,838 $ 1,828,205 -- $ -- ---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------- 1. For the year ended December 31, 1993 for Class A shares and for the period from May 1, 1993 (inception of offering) to December 31, 1993 for Class B shares.
- -------------------------------------------------------------------------------- 3. UNREALIZED GAINS AND At December 31, 1993, net unrealized appreciation on LOSSES ON INVESTMENTS investments of $2,716,124 was composed of gross appreciation of $3,957,810, and gross depreciation of $1,241,686. - -------------------------------------------------------------------------------- 4. MANAGEMENT FEES Management fees paid to the Manager were in AND OTHER TRANSACTIONS accordance with the investment advisory agreement WITH AFFILIATES with the Fund which provides for an annual fee of .50% on the first $100 million of net assets with a reduction of .05% on each $200 million thereafter, to .35% on net assets in excess of $500 million. 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 December 31, 1993, commissions (sales charges paid by investors) on sales of Class A shares totaled $269,639, of which $163,271 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. During the year ended December 31, 1993, OFDI received contingent deferred sales charges of $350 upon redemption of Class B shares. Oppenheimer Shareholder Services (OSS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OSS's total costs of providing such services are allocated ratably to these companies. Under separate approved plans of distribution, each class may expend up to .25% of its net assets annually to reimburse OFDI for costs incurred in distributing shares of the Fund, including amounts paid to brokers, dealers, banks and other institutions. In addition, Class B shares are subject to an asset-based sales charge of .75% of net assets annually, to reimburse OFDI for sales commissions paid from its own resources at the time of sale and associated financing costs. In the event of termination or discontinuance of the Class B plan of distribution, the Fund would be contractually obligated to pay OFDI for any expenses not previously reimbursed or recovered through contingent deferred sales charges. During the year ended December 31, 1993, OFDI paid $181,032 to an affiliated broker/dealer as reimbursement for Class A distribution-related expenses and retained $6,089 as reimbursement for Class B distribution-related expenses and sales commissions. - -------------------------------------------------------------------------------- 5. DEFERRED TRUSTEE A former trustee elected to defer receipt of fees COMPENSATION earned. These deferred fees earn interest at a rate determined by the current Board of Trustees at the beginning of each calendar year, compounded each quarter-end. As of December 31, 1993, the Fund was incurring interest at a rate of 6.01% per annum. Deferred fees are payable in annual installments, with accrued interest, each April 1 through 1995. 12 Oppenheimer Investment Grade Bond Fund INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- The Board of Trustees and Shareholders of Oppenheimer Investment Grade Bond Fund: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Investment Grade Bond Fund as of December 31, 1993, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 1993 and 1992 and the financial highlights for the period January 1, 1991 to December 31, 1993. 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. The financial highlights (except for total return) for the period February 1, 1983 to December 31, 1990 were audited by other auditors whose report dated February 4, 1991, expressed an unqualified opinion on those financial highlights. 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 December 31, 1993 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer Investment Grade Bond Fund at December 31, 1993, 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 Denver, Colorado January 21, 1994 13 Oppenheimer Investment Grade Bond Fund ------------------------------------------- FEDERAL INCOME TAX INFORMATION (Unaudited) - -------------------------------------------------------------------------------- In early 1994, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1993. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. None of the dividends paid by the Fund during the fiscal year ended December 31, 1993 are eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 14 Oppenheimer Investment Grade Bond Fund
----------------------------------------------------- OPPENHEIMER INVESTMENT GRADE BOND FUND A Series of Oppenheimer Integrity Funds - -------------------------------------------------------------------------------- OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee and President Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Andrew J. Donohue, Vice President Mary E. Wilson, Vice President George C. Bowen, Vice President, Secretary and Treasurer Lynn M. Coluccy, Assistant Treasurer Robert G. Zack, Assistant Secretary -------------------------------------------------------------------------------- INVESTMENT ADVISOR Oppenheimer Management Corporation -------------------------------------------------------------------------------- SUB-ADVISOR Massachusetts Mutual Life Insurance Company -------------------------------------------------------------------------------- DISTRIBUTOR Oppenheimer Funds Distributor, Inc. -------------------------------------------------------------------------------- TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services SERVICING AGENT -------------------------------------------------------------------------------- CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES -------------------------------------------------------------------------------- INDEPENDENT AUDITORS Deloitte & Touche -------------------------------------------------------------------------------- LEGAL COUNSEL Myer, Swanson & Adams, P.C. This is a copy of a report to shareholders of Oppenheimer Investment Grade Bond Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Investment Grade Bond Fund. For material information concerning the Fund, see the Prospectus. 15 Oppenheimer Investment Grade Bond Fund
"How may I help you?" GENERAL INFORMATION 1-800-525-7048 Talk to a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m. to 2:00 p.m. ET. TELEPHONETRANSACTIONS 1-800-852-8457 Make account transactions with a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m. ET. PHONELINK 1-800-533-3310 Get automated information or make automated transactions. 24 hours a day, 7 days a week. TELECOMMUNICATION Device for the Deaf 1-800-843-4461 Service for the hearing impaired. Monday through Friday from 8:30 a.m. to 8:00 p.m. ET. OPPENHEIMER FUNDS INFORMATION HOTLINE 1-800-835-3104 Hear timely and insightful messages on the economy and issues that affect your finances. 24 hours a day, 7 days a week. "Just as OppenheimerFunds offers over 30 different funds designed to help meet virtually every investment need, Oppenheimer Shareholder Services offers a variety of services to satisfy your individual needs. Whenever you require help, we're only a toll-free phone call away. "For personalized assistance and account information, call our General Information number to speak with our knowledgeable Customer Service Representatives. "We also make it easy for you to redeem shares, exchange shares, or conduct AccountLink transactions, simply by calling our Telephone Transactions number. "And for added convenience, OppenheimerFunds' PhoneLink, an automated voice response system, is available 24 hours a day, 7 days a week. PhoneLink gives you access to variety of fund, account, and market information. You can even make purchases, exchanges and redemptions using your touch-tone phone. Of course, PhoneLink will always give you the option to speak with a Customer Service Representative during regular business hours. "When you invest in OppenheimerFunds, you know you'll receive a high level of customer service. The International Customer Service Association knows it, too, as it recently awarded Oppenheimer Shareholder Services a 1993 Award of Excellence for consistently demonstrating superior customer service. "Whatever your needs, we're ready to assist you." Bulk Rate U.S. Postage PAID Permit No. 314 Farmingdale, NY [LOGO] Oppenheimer Funds Distributor, Inc. P.O. Box 5270 Denver, CO 80217-5270 -----END PRIVACY-ENHANCED MESSAGE-----