-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RyIlXb13BgvEIZluyOQ7DfFab0RA+h4JO1RWdGoBlJp9Ehs1lLwwKDrkAF0S03Vh 0EBMM7gNYB64221fvJSSaA== 0000950133-99-000737.txt : 19990308 0000950133-99-000737.hdr.sgml : 19990308 ACCESSION NUMBER: 0000950133-99-000737 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042912220 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03420 FILM NUMBER: 99557662 BUSINESS ADDRESS: STREET 1: 6803 S TUCSON WAY CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 1: 3410 SOUTH GALENA STREET 3RD FL STREET 2: 3410 SOUTH GALENA STREET 3RD FL CITY: DENVER STATE: CO ZIP: 80231 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 N-30D 1 OPPENHEIMER 1998 ANNUAL REPORT 1 ANNUAL REPORT DECEMBER 31, 1998 OPPENHEIMER BOND FUND [PHOTO] [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 CONTENTS 3 President's Letter 4 An Interview with Your Fund's Managers 9 Fund Performance 13 Financial Statements 45 Independent Auditors' Report 46 Federal Income Tax Information 47 Officers and Trustees 48 Information and Services REPORT HIGHLIGHTS - -------------------------------------------------------------------------------- - - ALTHOUGH THE FUND'S PERFORMANCE OVER THE FISCAL YEAR was hurt by declines in most bond sectors, our holdings of U.S. Treasury securities helped cushion the Fund's return. - - WHEN BOND PRICES BEGAN TO SLIDE, we avoided overreacting to market volatility, looking instead for prudent opportunities to reallocate some of the Fund's resources. - - WE GRADUALLY INCREASED THE PORTFOLIO'S AVERAGE DURATION to take advantage of falling interest rates. AVG ANNUAL TOTAL RETURNS For the 1-Year Period Ended 12/31/98 CLASS A Without With Sales Chg.(1) Sales Chg.(2) - ------------------------------- 5.61% 0.59% =============================== CLASS B Without With Sales Chg.(1) Sales Chg.(2) - ------------------------------- 4.81% -0.14% =============================== CLASS C Without With Sales Chg.(1) Sales Chg.(2) - ------------------------------- 4.81% 3.82% =============================== CUMULATIVE TOTAL RETURN For the Period from 4/27/98 to 12/31/98 CLASS Y Without With Sales Chg.(1) Sales Chg.(2) - ------------------------------- 4.40% 4.40% =============================== Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. IN REVIEWING PERFORMANCE, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. THE FUND'S PERFORMANCE MAY FROM TIME TO TIME BE SUBJECT TO SUBSTANTIAL SHORT-TERM CHANGES, PARTICULARLY DURING PERIODS OF MARKET OR INTEREST RATE VOLATILITY. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1-800-525-7048 OR VISIT OUR WEBSITE, WWW.OPPENHEIMERFUNDS.COM. 1. Includes changes in net asset value per share without deducting any sales charges. 2. Class A return includes the current maximum initial sales charge of 4.75%. Class B return includes the applicable contingent deferred sales charge of 5% (1-year). Class C return for the one-year result includes the contingent deferred sales charge of 1%. Class Y shares were first publicly offered on 4/27/98 and are offered only to certain institutional investors under special agreements with the Distributor. Class Y return is not annualized. Class B and C shares are subject to an annual 0.75% asset-based sales charge. An explanation of the different performance calculations is in the Fund's prospectus. 2 Oppenheimer Bond Fund 3 [PHOTO] JAMES C. SWAIN Chairman Oppenheimer Bond Fund [PHOTO] BRIDGET A. MACASKILL President Oppenheimer Bond Fund DEAR SHAREHOLDER, - -------------------------------------------------------------------------------- In retrospect, 1998 has been an unsettling year for the financial markets. Around the world, stock and bond markets experienced considerable instability, with particular tumult being felt in Southeast Asia, Russia and Latin America. The U.S. stock market was not immune from the extreme volatility, as it climbed to record levels through July before correcting sharply in the third quarter and rebounding to new highs in the fourth quarter. In the bond market, yields on U.S. Treasury securities declined to record lows before rising modestly late in the year. Does the swift recovery of the U.S. stock market and the favorable economic environment for the bond market mean that domestic stocks and bonds will continue to prosper? We are optimistic over the long term, but we do expect that concerns about corporate earnings growth in a slow-growth economy will contribute to more stock market volatility in 1999. In the bond market, the Federal Reserve Board's decisions to reduce short-term interest rates should help create a positive climate for fixed income securities. While lower interest rates are generally good for bond prices, it will become more difficult for bond funds to maintain their dividends at current levels if yields decline further. As an Oppenheimer fund shareholder, you may wonder how this potential volatility will affect you. If you maintain a long-term perspective, as we do, short-term volatility over the coming months should have little bearing on your ability to achieve your future financial goals. That's why we continue to suggest that you adhere to your long-term investment plan. In fact, we are very encouraged that most of our shareholders stayed the course during last summer's stock market correction, avoiding the temptation of selling into a temporarily declining market. Finally, I would like to thank those shareholders who contacted us about our revised account statement. Response has been very positive, and we are pleased that many of you find the new format easier to read and more informative. If you have any questions about the new statement or any other matter, please don't hesitate to call us at 1-800-525-7048. In the meantime, thank you for choosing OppenheimerFunds, The Right Way to Invest. /s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL James C. Swain Bridget A. Macaskill January 25, 1999 3 Oppenheimer Bond Fund 4 "...WE EXTENDED THE PORTFOLIO'S DURATION throughout the period, which enabled us to benefit from the Fed's rate cuts and the resulting lower interest rates." AN INTERVIEW WITH YOUR FUND'S MANAGERS - -------------------------------------------------------------------------------- HOW DID THE FUND PERFORM DURING THE PAST ONE-YEAR PERIOD? During one of the most challenging and volatile periods in the history of the fixed income markets, Oppenheimer Bond Fund provided positive performance for the one-year period that ended December 31, 1998. WHAT MADE THIS SUCH A CHALLENGING PERIOD? The Fund's performance was affected by a combination of domestic and global economic forces. During the first half of the year, positive domestic economic conditions provided a generally favorable environment for the Fund's investments. Economic growth in the United States was strong, while inflation remained near historically low levels. Corporate bonds of all types performed especially well because of strong corporate earnings growth. U.S. government securities provided slightly lower returns. However, during the second half of the year, widespread economic difficulties in emerging markets throughout the world sparked fears of a global economic slowdown. Signs began to appear that U.S. corporate profit growth was suffering as a result of weakening global demand for a wide range of products. As investors grew increasingly concerned about the impact of these developments on the U.S. economy, they became reluctant to invest in corporate debt securities of any kind. Instead, they turned for shelter to the relative safety of U.S. Treasury instruments. 4 Oppenheimer Bond Fund 5 [PHOTO] PORTFOLIO MANAGEMENT TEAM (L TO R) David Negri John Kowalik(1) These trends culminated in the remarkable events of October. With investors throughout the world seeking safe, high-quality securities, and with shrinking demand for other debt instruments, Treasuries began to perform much more strongly than other types of bonds. The difference between the relative yield of Treasuries versus all other types of bonds widened to extreme levels. High yield corporate bonds, which had been the top-performing sector during the first half of the year, were hit especially hard. Performance of corporate investment grade securities, as well as commercial and government mortgage-backed securities also suffered relative to Treasuries. Then, in mid-October, the Federal Reserve Board (the Fed) stepped in with a surprise cut in government lending rates. By signaling the Fed's willingness to act decisively in attempting to avoid a recession in the United States, the move bolstered investor confidence. As a result, the various bond sectors in which the Fund invests began to return to their historic relationships to Treasuries. 1. John Kowalik became a Portfolio Manager of the Fund on 7/1/98. 5 Oppenheimer Bond Fund 6 STANDARDIZED YIELDS(2) For the 30 Days Ended 12/31/98 - ------------------------------ CLASS A 5.84% - ------------------------------ CLASS B 5.37 - ------------------------------ CLASS C 5.37 - ------------------------------ CLASS Y 6.72 - ------------------------------ AN INTERVIEW WITH YOUR FUND'S MANAGERS - -------------------------------------------------------------------------------- HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE EVENTS? These economic events offered both challenges and opportunities to the Fund. During the first half of the year, we made some modest changes to our allocations to increase our holdings of higher yielding securities. Specifically, we increased our holdings of high yield bonds and commercial mortgage-backed securities while decreasing our holdings of mortgage-backed securities issued by U.S. government agencies. As the non-U.S. Treasury bond markets began to slide during the second half of the year, we adhered to our disciplined approach to investing and avoided overreacting to the market's volatility. By maintaining our vigilance and keeping transaction costs to a minimum, we prepared the Fund to participate in the corporate bond rally that followed the Fed's October rate cut. As the rally took shape, we shifted some of the Fund's resources out of Treasuries and cash, and added to our investment grade corporate holdings in the financial and industrial sectors. We also increased our holdings of mortgage-backed securities. 2. Standardized yield is based on net investment income for the 30-day period ended December 31, 1998. Falling share prices will tend to artificially raise yields. 6 Oppenheimer Bond Fund 7 AVG ANNUAL TOTAL RETURNS For the Periods Ended 12/31/98(3) CLASS A 1 year 5 year 10 year - ------------------------------- 0.59% 5.48% 7.81% - ------------------------------- CLASS B Since 1 year 5 year Inception - ------------------------------- - -0.14% 5.41% 5.56% - ------------------------------- CLASS C Since 1 year 5 year Inception - ------------------------------- 3.82% N/A 6.32% - ------------------------------- CUMULATIVE TOTAL RETURN For the Period from 4/27/98 to 12/31/98(3) Since Inception - -------------------------------- CLASS Y 4.40% - -------------------------------- DID YOU EMPLOY ANY OTHER STRATEGIES TO ENHANCE THE FUND'S PERFORMANCE? Yes, another strategy we employed was to slightly increase the Fund's average duration throughout the year. Duration is a measure of a bond's sensitivity to changes in interest rates. The longer a portfolio's average duration, the higher the returns investors are likely to receive when interest rates fall. In anticipation of continued low inflation, we extended the portfolio's duration throughout the period, which enabled us to benefit from the Fed's rate cuts and the resulting lower interest rates. WHAT IS YOUR OUTLOOK FOR THE FUTURE? Looking forward, we expect U.S. corporate earnings to continue growing and inflation to remain low, providing a generally favorable environment for bonds in the United States. Although spreads between Treasuries and the other bond sectors in which the Fund invests have narrowed since mid-October, they remain relatively wide by historical measures. Therefore, we see additional opportunities to take advantage of attractive bond prices in the corporate and commercial sectors. 3. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Class A returns include the current maximum initial sales charge of 4.75%. Class A shares were first publicly offered on 4/15/88. The Fund's maximum sales charge for Class A shares was lower prior to 3/29/91, so actual performance may have been higher. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 1% (since inception on 5/3/93). Class C returns for the one-year result include the contingent deferred sales charge of 1%. Class C shares have an inception date of 7/11/95. Class Y shares were first publicly offered on 4/27/98 and are offered only to certain institutional investors under special agreements with the Distributor. Class Y performance is not annualized. Class B and C shares are subject to an annual 0.75% asset-based sales charge. An explanation of the different performance calculations is in the Fund's prospectus. 7 Oppenheimer Bond Fund 8 CREDIT ALLOCATION(4) [PIE CHART] Treasury/Agency 29.5% AAA/AA 12.2 A/BBB 43.4 BB/B 14.2 CCC/C 0.7 Of course, we will continue to monitor the U.S. economy and bond market carefully. We remain dedicated to our strict discipline of investing to deliver solid income potential from a broadly diversified portfolio of quality securities. That's what makes Oppenheimer Bond Fund part of The Right Way to Invest. CORPORATE BONDS & NOTES--TOP 10 SECTORS(5) Financial 11.9% - ------------------------------------------------- Transportation 6.0 - ------------------------------------------------- Utility 5.6 - ------------------------------------------------- Energy 4.0 - ------------------------------------------------- Service 4.0 - ------------------------------------------------- Gaming/Leisure 2.4 - ------------------------------------------------- Aerospace/Defense 2.2 - ------------------------------------------------- Information Technology 2.1 - ------------------------------------------------- Chemicals 1.8 - ------------------------------------------------- Media/Entertainment: Telecommunications 1.6 - ------------------------------------------------- TOP 5 HOLDINGS BY ISSUER(5) - ------------------------------------------------- Government National Mortgage Assn. 12.1% - ------------------------------------------------- Federal National Mortgage Assn. 11.6 - ------------------------------------------------- Federal Home Loan Mortgage Corp. 4.5 - ------------------------------------------------- Repurchase Agreement 4.0 - ------------------------------------------------- U.S. Treasury 3.2 - ------------------------------------------------- 4. Pie chart is based on total market value of investments as of December 31, 1998, and is subject to change. Average credit quality and ratings allocations include rated securities and those not rated by a national rating organization (currently 4.7% of total investments) but to which ratings given above have been assigned by the Manager for internal purposes as being comparable, in the Manager's judgment, to securities rated by a rating agency in the same category. Under normal market conditions, the Fund invests at least 65% of its assets in investment grade securities. Securities rated below investment grade (up to 35% of Fund's assets) carry a greater risk of default. While the Fund has generally invested under 10% of its assets in foreign securities, which are subject to exchange rate and political uncertainties, it is not restricted to any amount by prospectus. 5. Portfolio is subject to change. Percentages are as of December 31, 1998, and are based on net assets. 8 Oppenheimer Bond Fund 9 FUND PERFORMANCE HOW HAS THE FUND PERFORMED? Below is a discussion, by the Manager, of the Fund's performance during its fiscal year ended December 31, 1998, followed by a graphical comparison of the Fund's performance to an appropriate broad-based market index. - MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the past fiscal year that ended December 31, 1998, Oppenheimer Bond Fund delivered positive performance despite a high degree of volatility among the various bond sectors. This volatility arose from uncertainties regarding the impact of the emerging market financial crisis on U.S. corporate earnings growth. The Fund's return to investors was boosted by the relatively strong performance of our U.S. Treasury securities during the months leading up to mid-October. After the Fed's surprise rate cut in mid-October, we took advantage of strengthening investor confidence by shifting some assets from Treasuries and cash to corporate and commercial securities that had become relatively inexpensive. We also increased the Fund's duration throughout the period. The Fund's portfolio holdings, allocations and management strategies are subject to change. - COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of the Fund held until December 31, 1998. In the case of Class A shares, performance is measured over a ten-year period. In the case of Class B shares, performance is measured from the inception of the class on May 3, 1993. In the case of Class C shares, performance is measured from the inception of the class on July 11, 1995. In the case of Class Y shares, performance is measured from the inception of the class on April 27, 1998. The Fund's performance reflects the deduction of the 4.75% maximum initial sales charge on Class A shares, and the applicable contingent deferred sales charge for Class B and Class C shares. The graphs assume that all dividends and capital gains distributions were reinvested in additional shares. The Fund's performance is compared to the performance of Lehman Brothers Corporate Bond Index, a broadly-based unmanaged index of publicly-issued non-convertible investment grade corporate debt of U.S. issuers, widely recognized as a measure of the U.S. fixed-rate corporate bond market. Index performance reflects the reinvestment of dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the index. 9 Oppenheimer Bond Fund 10 FUND PERFORMANCE CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Bond Fund (Class A) and Lehman Brothers Corporate Bond Index [The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman 12/31/88 9,525 10,000 12/31/89 10,602 11,409 12/31/90 11,104 12,213 12/31/91 13,135 14,474 12/31/92 14,025 15,732 12/31/93 15,469 17,644 12/31/94 14,871 16,950 12/31/95 17,389 20,721 12/31/96 18,236 21,402 12/31/97 20,083 23,592 12/31/98 21,209 25,615
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 12/31/98(1) 1 Year 0.59% 5 Year 5.48% 10 Year 7.81% CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Bond Fund (Class B) and Lehman Brothers Corporate Bond Index [The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman 5.3.93 10,000 10,000 12.31.93 10,353 10,596 12.31.94 9,885 10,179 12.31.95 11,471 12,443 12.31.96 11,929 12,852 12.31.97 13,051 14,167 12.31.98 13,581 15,382
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 12/31/98(2) 1 Year -0.14% 5 Year 5.41% 10 Year 5.56% The returns and the ending account values in the graphs show change in share value and include reinvestment of all dividends and capital gains distributions. The performance information for the Lehman Brothers Corporate Bond Index begins on 12/31/88 for Class A, 4/30/93 for Class B, 6/30/95 for Class C and 4/30/98 for Class Y. 1. The average annual total returns are shown net of the applicable 4.75% maximum initial sales charge. 2. Class B shares of the Fund were first publicly offered on 5/3/93. The average annual total returns are shown net of the applicable 5% (1-year) and 1% (since inception) contingent deferred sales charges. The ending account value in the graph is net of the applicable 1% contingent deferred sales charge. 10 Oppenheimer Bond Fund 11 CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Bond Fund (Class C) and Lehman Brothers Corporate Bond Index [The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman 7.11.95 10,000 10,000 12.31.95 10,376 10,742 12.31.96 10,792 11,095 12.31.97 11,805 12,230 12.31.98 12,373 13,279
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 12/31/98(3) 1 Year 3.82% Life 6.32% CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Bond Fund (Class Y) and Lehman Brothers Corporate Bond Index [The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman 4.27.98 10,000 10,000 12.31.98 10,441 10,627
CUMULATIVE TOTAL RETURN OF CLASS Y SHARES OF THE FUND AT 12/31/98(4) Life 4.40% 3. Class C shares of the Fund were first publicly offered on 7/11/95. The average annual total returns are shown net of the applicable 1% contingent deferred sales charge for the one-year period. 4. Class Y shares of the Fund were first publicly offered on 4/27/98, and are offered only to certain institutional investors under special agreements with the Distributor. Class Y performance is not annualized. Past performance is not predictive of future performance. Graphs are not drawn to same scale. 11 Oppenheimer Bond Fund 12 FINANCIALS 12 Oppenheimer Bond Fund 13 STATEMENT OF INVESTMENTS December 31, 1998
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ================================================================================================= ASSET-BACKED SECURITIES--0.6% - ------------------------------------------------------------------------------------------------- CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates, Series 1998-C1, Cl. F, 6%, 5/17/40(2) $2,500,000 $1,685,157 - ------------------------------------------------------------------------------------------------- Dayton Hudson Credit Card Master Trust, Asset-Backed Certificates, Series 1997-1, Cl. A, 6.25%, 8/25/05 125,000 127,695 - ------------------------------------------------------------------------------------------------- IROQUOIS Trust, Asset-Backed Amortizing Nts., Series 1997-2, Cl. A, 6.752%, 6/25/07(2) 175,000 175,820 - ------------------------------------------------------------------------------------------------- Olympic Automobile Receivables Trust, Automobile Receivables-Backed Nts.: Series 1996-A, Cl. A-4, 5.85%, 7/15/01 97,569 97,524 Series 1997-A, Cl. A-5, 6.80%, 2/15/05 150,000 152,250 --------- Total Asset-Backed Securities (Cost $2,565,556) 2,238,446 ================================================================================================= MORTGAGE-BACKED OBLIGATIONS--43.6% - ------------------------------------------------------------------------------------------------- GOVERNMENT AGENCY--28.2% - ------------------------------------------------------------------------------------------------- FHLMC/FNMA/SPONSORED--16.1% Federal Home Loan Mortgage Corp., Certificates of Participation: 9%, 3/1/17 317,939 338,390 Series 17-039, 13.50%, 11/1/10 34,012 39,768 Series 17-094, 12.50%, 4/1/14 19,704 22,784 - ------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Collateralized Mtg Obligations, Gtd. Multiclass Mtg. Participation Certificates: Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 1,719,008 Series 151, Cl. F, 9%, 5/15/21 866,526 912,825 Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,562 Series 1712, Cl. B, 6%, 3/15/09 1,000,000 995,930 Series 1714, Cl. M, 7%, 8/15/23 1,000,000 1,019,060 - ------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg Participation Certificates: 6%, 3/1/09 249,375 250,976 Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,520,625 Series 1843, Cl. VB, 7%, 4/15/03 85,000 86,806 Series 1849, Cl. VA, 6%, 12/15/10 195,514 197,225 Series G056, Cl. H, 9%, 7/20/24 2,493,000 2,679,196 - ------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg Investment Conduit Pass-Through Certificates: Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 3,036,540 Series 2054, Cl. TE, 6.25%, 4/15/24 850,000 858,228 - ------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Series 1583, Cl. IC, 0.312%, 1/15/20(3) 433,807 42,567 Series 1661, Cl. PK, 15.01%, 11/15/06(3) 455,645 29,332 Series 197, Cl. IO, 12.103%, 4/1/28(3) 8,297,692 2,157,400
13 Oppenheimer Bond Fund 14 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- FHLMC/FNMA/SPONSORED (CONTINUED) Federal National Mortgage Assn.: 6%, 12/1/03 $ 162,688 $ 163,203 6.50%, 4/1/26-11/1/28 4,381,601 4,411,667 6.50%, 1/25/28(4) 8,500,000 8,557,120 7%, 1/25/28(4) 8,000,000 8,161,280 7%, 4/1/00-11/1/25 795,613 811,364 7.50%, 2/1/08-3/1/08 438,455 451,167 11%, 7/1/16 3,242,413 3,712,564 - ------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., Collateralized Mtg Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1992-34, Cl. G, 8%, 3/25/22 540,000 566,325 Trust 1993-181, Cl. C, 5.40%, 10/25/02 5,057 5,038 Trust 1993-190, Cl. Z, 5.85%, 7/25/08 153,137 152,850 - ------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 292,656 300,257 - ------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1991-170, Cl. E, 8%, 12/25/06 2,186,008 2,260,464 Trust 1992-162, Cl. C, 7%, 10/25/21 8,400,000 8,583,708 Trust 1995-4, Cl. PC, 8%, 5/25/25 869,210 940,642 Trust 1997-25, Cl. B, 7%, 12/18/22 510,000 517,808 - ------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security: Trust 277-C1, 36.333%, 4/1/27(5) 243,354 213,772 Trust 294, Cl. 1, 10.749%, 2/1/28(5) 1,694,264 1,440,125 ---------- 57,360,576 - ------------------------------------------------------------------------------------------------- GNMA/GUARANTEED--12.1% Government National Mortgage Assn.: 6%, 7/20/27 179,727 181,945 6.50%, 9/15/24 7,814,056 7,902,746 7%, 7/15/09-8/15/28 5,992,611 6,129,286 7%, 1/1/28(4) 8,000,000 8,185,040 7.50%, 1/15/28-9/15/28 13,720,355 14,157,276 8%, 6/15/05-8/15/28 4,812,670 4,999,816 9%, 2/15/09-6/15/09 350,604 375,347 10%, 11/15/09 172,729 189,813 10.50%, 12/15/17-5/15/21 218,905 239,909 11%, 10/20/19 595,709 678,364 12%, 1/15/99-5/15/14 907 1,018 13%, 12/15/14 26,874 30,897 ---------- 43,071,457
14 Oppenheimer Bond Fund 15
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- PRIVATE--15.4% - ------------------------------------------------------------------------------------------------- COMMERCIAL--11.0% AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29(2) $ 150,000 $ 119,766 - ------------------------------------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1996-D3, Cl. A5, 8.142%, 10/13/26(6) 800,000 813,250 Series 1996-MD6, Cl. A5, 7.164%, 11/13/26(6) 2,000,000 2,045,000 Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 333,000 267,024 Series 1997-D4, Cl. B2, 7.525%, 4/14/29 333,000 258,179 Series 1997-D4, Cl. B3, 7.525%, 4/14/29(6) 334,000 235,783 Series 1997-D5, Cl. A6, 7.185%, 2/14/41(6) 1,500,000 1,373,203 Series 1997-D5, Cl. B1, 6.93%, 2/14/41 2,000,000 1,505,937 - ------------------------------------------------------------------------------------------------- Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1997-D5, Cl. PS1, 8.185%, 2/14/41(3) 6,165,761 596,345 - ------------------------------------------------------------------------------------------------- Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed Pass-Through Certificates, Series 1997-CTL1, 9.55%, 6/22/24(2)(3) 13,286,717 547,413 - ------------------------------------------------------------------------------------------------- CBA Mortgage Corp., Mtg. Pass-Through Certificates, Series 1993-C1, Cl. E, 7.76%, 12/25/03(2)(6) 250,000 232,969 - ------------------------------------------------------------------------------------------------- CMC Securities Corp. I, Collateralized Mtg. Obligations, Series 1993-D, Cl. D-3, 10%, 7/25/23 294,615 297,654 - ------------------------------------------------------------------------------------------------- Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 26.592%, 12/25/20(2)(3) 18,624,900 384,139 - ------------------------------------------------------------------------------------------------- FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25 1,000,000 1,020,000 Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25 1,000,000 996,250 - ------------------------------------------------------------------------------------------------- First Union-Lehman Brothers Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 1998-C2, Cl. E, 6.778%, 5/18/13 2,000,000 1,731,250 - ------------------------------------------------------------------------------------------------- First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, 10.019%, 4/18/27(3) 16,359,075 1,136,189 - ------------------------------------------------------------------------------------------------- General Motors Acceptance Corp., Collateralized Mtg. Obligations: Series 1997-C2, Cl. D, 7.192%, 1/15/08 1,500,000 1,486,875 Series 1997-C2, Cl. F, 6.75%, 4/16/29 1,000,000 680,937 Series 1998-C1, Cl. E, 7.086%, 3/15/11(6) 1,500,000 1,508,906 - ------------------------------------------------------------------------------------------------- GS Mortgage Securities Corp. II, Commercial Mtg Pass-Through Certificates: Series 1997-CL1, Cl. F, 7.154%, 7/13/30(6) 1,000,000 1,007,187 Series 1997-CL1, Cl. F, 7.624%, 7/13/30(6) 1,000,000 936,250 - ------------------------------------------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., Mtg Pass-Through Certificates: Series 1996-C1, Cl. D, 7.42%, 4/25/28 1,500,000 1,535,625 Series 1997-C2, Cl. D, 7.072%, 12/10/29(6) 1,000,000 969,375
15 Oppenheimer Bond Fund 16 STATEMENT OF INVESTMENTS (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- COMMERCIAL (CONTINUED) Morgan Stanley Capital I, Inc., Commercial Mtg Pass-Through Certificates: Series 1996-C1, Cl. D-1, 7.436%, 2/15/28(2)(6) $ 1,000,000 $ 1,028,125 Series 1996-C1, Cl. E, 7.436%, 3/15/06(2)(6) 1,100,000 1,029,187 Series 1997-HF1, Cl. F, 6.86%, 2/15/10(2) 225,000 201,938 Series 1997-RR, Cl. E, 7.762%, 4/30/39(2)(6) 400,000 362,500 Series 1997-RR, Cl. F, 7.762%, 4/30/39(2) 400,000 290,500 - ------------------------------------------------------------------------------------------------- NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC, Cl. B, 8.562%, 8/12/11(2) 3,000,000 3,185,625 - ------------------------------------------------------------------------------------------------- PNC Mortgage Securities Corp., Commercial Mtg Pass-Through Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 74,000 74,035 - ------------------------------------------------------------------------------------------------- Potomac Gurnee Financial Corp., Commercial Mtg Pass-Through Certificates, Series 1, Cl. D, 7.68%, 12/21/26(2) 1,500,000 1,504,688 - ------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,505,391 Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,484,961 - ------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-C1, Cl. E, 9.184%, 1/20/06 700,000 715,750 - ------------------------------------------------------------------------------------------------- Structured Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1997-LLI, Cl. D, 7.15%, 4/12/12 2,500,000 2,495,313 - ------------------------------------------------------------------------------------------------- Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%, 6/25/30(2) 2,500,000 2,514,063 ----------- 39,077,582 - ------------------------------------------------------------------------------------------------- MULTI-FAMILY--0.7% Countrywide Funding Corp., Mtg. Pass-Through Certificates, Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 248,358 - ------------------------------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2)` 254,890 211,768 - ------------------------------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(7) 2,250,000 1,854,492 - ------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17(2) 60,453 60,000 ----------- 2,374,618 - ------------------------------------------------------------------------------------------------- OTHER--0.4% JHM Mtg. Acceptance Corp., Collateralized Mtg. Obligation Bonds, Series E, Cl. 5, 8.96%, 4/1/19 1,181,467 1,208,783 - ------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VI, Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 15.68%, 10/23/17(3) 74,645 20,154 - ------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VI, Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, 1.401%, 10/23/17(4)(5) 110,462 95,170 --------- 1,324,107
16 Oppenheimer Bond Fund 17
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- RESIDENTIAL--3.3% CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates: Series 1997-C1, Cl. E, 7.50%, 3/1/11(2) $1,000,000 $ 956,875 Series 1997-C1, Cl. F, 7.50%, 6/20/13(2) 150,000 116,953 Series 1997-C1, Cl. G, 7.50%, 6/20/14(2) 150,000 107,391 Series 1997-C1, Cl. H, 7.50%, 8/20/14(2) 105,000 72,056 - ------------------------------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates: Series 1997-CHL1, 8.098%, 2/25/11(2)(6) 750,000 582,891 Series 1997-CHL1, 8.098%, 5/25/08(2)(6) 750,000 644,297 - ------------------------------------------------------------------------------------------------- GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 198,885 189,997 - ------------------------------------------------------------------------------------------------- NationsBank Trust, Lease Pass-Through Certificates, Series 1997A-1, 7.442%, 1/10/11(6) 500,000 531,328 - ------------------------------------------------------------------------------------------------- Residential Accredit Loans, Inc., Mtg. Asset-Backed Pass-Through Certificates: Series 1997-QS11, 7%, 10/25/12 6,479,342 6,588,681 Series 1997-QS9, Cl. 2, 6.75%, 9/25/27 119,763 119,389 - ------------------------------------------------------------------------------------------------- Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 264,483 272,169 - ------------------------------------------------------------------------------------------------- Ryland Mortgage Securities Corp. III Sub. Bonds, Series 1992-A, Cl. 1A, 8.256%, 3/29/30(6) 310,291 314,073 - ------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.132%, 4/25/26(2) 1,937,218 1,429,910 ------------ 11,926,010 ------------ Total Mortgage-Backed Obligations (Cost $154,585,683) 155,134,350 ================================================================================================= U.S. GOVERNMENT OBLIGATIONS--3.2% - ------------------------------------------------------------------------------------------------- U.S. Treasury Bonds: 6%, 2/15/26 200,000 218,313 7.50%, 11/15/16 1,645,000 2,045,969 - ------------------------------------------------------------------------------------------------- U.S. Treasury Nts.: 5.50%, 5/31/00 4,500,000 4,553,437 5.625%, 2/15/06 550,000 580,250 5.75%, 8/15/03 325,000 339,320 6.50%, 8/15/05 650,000 714,391 7.50%, 11/15/01(8)(9) 2,625,000 2,821,875 ----------- Total U.S. Government Obligations (Cost $10,811,004) 11,273,555
17 Oppenheimer Bond Fund 18 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--51.8% AEROSPACE/DEFENSE--2.2% Amtran, Inc., 9.625% Nts., 12/15/05 $ 200,000 $ 201,000 - ------------------------------------------------------------------------------------------------- Atlas Air, Inc.: 10.75% Sr. Nts., 8/1/05 125,000 131,875 12.25% Pass-Through Certificates, 12/1/02 1,950,000 2,106,000 8.01% Nts., 1/2/10 1,000,000 1,007,444 9.375% Sr. Nts., 11/15/06(7) 1,000,000 1,025,000 - ------------------------------------------------------------------------------------------------- Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,271,774 - ------------------------------------------------------------------------------------------------- Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 1,046,250 - ------------------------------------------------------------------------------------------------- SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 100,000 100,500 ---------- 7,889,843 - ------------------------------------------------------------------------------------------------- CHEMICALS--1.8% FMC Corp., 8.75% Sr. Nts., 4/1/99 250,000 251,379 - ------------------------------------------------------------------------------------------------- IMC Global, Inc., 7.625% Bonds, 11/1/05 5,000,000 5,123,360 - ------------------------------------------------------------------------------------------------- Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 85,000 115,698 - ------------------------------------------------------------------------------------------------- NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 492,000 525,210 - ------------------------------------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 100,000 80,500 - ------------------------------------------------------------------------------------------------- PPG Industries, Inc., 9% Debs., 5/1/21 85,000 108,730 - ------------------------------------------------------------------------------------------------- Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 175,000 178,500 --------- 6,383,377 - ------------------------------------------------------------------------------------------------- CONSUMER DURABLES--0.2% Black & Decker Corp., 6.625% Nts., 11/15/00 145,000 147,479 - ------------------------------------------------------------------------------------------------- Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 250,000 151,250 - ------------------------------------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 370,000 429,574 --------- 728,303 - ------------------------------------------------------------------------------------------------- CONSUMER NON-DURABLES--0.3% Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(7) 125,000 127,500 - ------------------------------------------------------------------------------------------------- Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 450,476 - ------------------------------------------------------------------------------------------------- Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000 94,483 - ------------------------------------------------------------------------------------------------- Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 250,000 251,250 - ------------------------------------------------------------------------------------------------- Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08 145,000 138,475 ---------- 1,062,184 - ------------------------------------------------------------------------------------------------- ENERGY--4.0% Coastal Corp.: 8.125% Sr. Nts., 9/15/02 85,000 91,106 8.75% Sr. Nts., 5/15/99 380,000 383,985 - ------------------------------------------------------------------------------------------------- Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(7) 2,000,000 2,104,710
18 Oppenheimer Bond Fund 19
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- ENERGY (CONTINUED) ENSCO International, Inc.: 6.75% Nts., 11/15/07 $1,000,000 $ 1,019,222 7.20% Debs., 11/15/27 1,000,000 1,015,785 - ------------------------------------------------------------------------------------------------- Enterprise Oil plc, 6.70% Sr. Nts., 9/15/07 1,000,000 995,325 - ------------------------------------------------------------------------------------------------- Global Marine, Inc., 7.125% Nts., 9/1/07 2,000,000 2,032,056 - ------------------------------------------------------------------------------------------------- Gulf Canada Resources Ltd.: 8.25% Sr. Nts., 3/15/17 75,000 67,828 9% Debs., 8/15/99 75,000 75,375 - ------------------------------------------------------------------------------------------------- Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000 108,135 - ------------------------------------------------------------------------------------------------- McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,819 - ------------------------------------------------------------------------------------------------- Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,156,442 - ------------------------------------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 200,000 161,000 - ------------------------------------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 400,000 406,000 - ------------------------------------------------------------------------------------------------- Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 79,910 - ------------------------------------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., 9.375% Sr. Sub. Debs., 2/1/06 750,000 705,000 - ------------------------------------------------------------------------------------------------- Standard Oil, 9% Gtd. Debs., 6/1/19 85,000 85,924 - ------------------------------------------------------------------------------------------------- Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 300,000 291,000 - ------------------------------------------------------------------------------------------------- Talisman Energy, Inc., 7.25% Debs., 10/15/27 500,000 482,251 - ------------------------------------------------------------------------------------------------- TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,923,855 - ------------------------------------------------------------------------------------------------- Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 100,000 102,899 ---------- 14,394,627 - ------------------------------------------------------------------------------------------------- FINANCIAL--11.9% Aetna Services, Inc., 8% Debs., 1/15/17 697,000 718,877 - ------------------------------------------------------------------------------------------------- Allmerica Capital I, 8.207% Debs., 2/3/27 2,000,000 2,241,142 - ------------------------------------------------------------------------------------------------- American General Institutional Capital B, 8.125% Bonds, Series B, 3/15/46(7) 75,000 86,572 - ------------------------------------------------------------------------------------------------- Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 303,149 - ------------------------------------------------------------------------------------------------- BankAmerica Corp. (New), 8.50% Exchangeable Sub. Capital Nts., 3/1/99 (exchangeable for common, perpetual preferred stock or other capital securities) 60,000 60,230 - ------------------------------------------------------------------------------------------------- BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,829,280 - ------------------------------------------------------------------------------------------------- Capital One Financial Corp., 7.25% Nts., 12/1/03 50,000 49,212 - ------------------------------------------------------------------------------------------------- CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 246,250 - ------------------------------------------------------------------------------------------------- Chelsea GCA Realty Partner, Inc., 7.75% Unsec. Nts., 1/26/01 60,000 59,616 - ------------------------------------------------------------------------------------------------- Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 1,000,000 1,096,786 - ------------------------------------------------------------------------------------------------- Citicorp, 5.625% Sr. Nts., 2/15/01 90,000 90,268 - ------------------------------------------------------------------------------------------------- Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000 145,161 - ------------------------------------------------------------------------------------------------- Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 95,931 - ------------------------------------------------------------------------------------------------- Countrywide Home Loans, Inc., 6.05% Medium-Term Nts., Series D, 3/1/01 90,000 90,374 - ------------------------------------------------------------------------------------------------- Farmers Exchange Capital, 7.05% Trust Surplus Nts., 7/15/28(7) 2,000,000 2,018,508
19 Oppenheimer Bond Fund 20 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- FINANCIAL (CONTINUED) Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 $ 145,000 $ 159,017 - ------------------------------------------------------------------------------------------------- Ford Motor Credit Co., 6.75% Nts., 8/15/08 1,000,000 1,064,037 - ------------------------------------------------------------------------------------------------- Franchise Finance Corp. of America, 8.25% Sr. Unsec. Nts., 10/30/03 3,950,000 4,017,450 - ------------------------------------------------------------------------------------------------- General Motors Acceptance Corp., 5.625% Nts., 2/15/01 175,000 175,625 - ------------------------------------------------------------------------------------------------- Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000 146,924 - ------------------------------------------------------------------------------------------------- Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 1,000,000 1,000,076 - ------------------------------------------------------------------------------------------------- Liberty Mutual Insurance Co., 7.697% Unsec. Nts., 10/15/2097(7) 1,000,000 1,009,920 - ------------------------------------------------------------------------------------------------- Long Island Savings Bank, 6.20% Nts., 4/2/01 1,000,000 1,009,648 - ------------------------------------------------------------------------------------------------- Lumbermens Mutual Casualty Co., 8.30% Surplus Nts., 12/1/37(7) 2,000,000 2,242,676 - ------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc.: 6.50% Nts., 4/1/01 150,000 152,784 6.875% Nts., 11/15/18 3,300,000 3,444,289 6.875% Nts., 3/1/03 750,000 781,622 - ------------------------------------------------------------------------------------------------- Metropolitan Life Insurance Co., 6.30% Nts., 11/1/03(7) 1,000,000 1,005,652 - ------------------------------------------------------------------------------------------------- National Westminster Bank plc, 9.375% Gtd. Capital Nts., 11/15/03 70,000 80,300 - ------------------------------------------------------------------------------------------------- NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,761,717 - ------------------------------------------------------------------------------------------------- Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 300,000 241,500 - ------------------------------------------------------------------------------------------------- Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,841,642 - ------------------------------------------------------------------------------------------------- Rank Group Finance plc, 6.75% Gtd. Nts., 11/30/04 1,000,000 1,006,178 - ------------------------------------------------------------------------------------------------- Royal Bank of Scotland Group (The) plc, 10.125% Gtd. Sub. Capital Nts., 3/1/04 500,000 593,841 - ------------------------------------------------------------------------------------------------- Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,447,000 1,508,419 - ------------------------------------------------------------------------------------------------- Salomon Smith Barney Holdings, Inc., 6.25% Bonds, 1/15/05 2,000,000 2,024,712 - ------------------------------------------------------------------------------------------------- Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,044,339 - ------------------------------------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 400,000 374,000 - ------------------------------------------------------------------------------------------------- Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,258,395 - ------------------------------------------------------------------------------------------------- Travelers Group, Inc.: 6.875% Debs., 2/15/2098 1,000,000 1,018,395 7.25% Sr. Unsec. Nts., 5/1/01 1,700,000 1,758,788 - ------------------------------------------------------------------------------------------------- Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 145,000 148,489 - ------------------------------------------------------------------------------------------------- Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 135,000 135,000 - ------------------------------------------------------------------------------------------------- Washington Mutual Capital I, 8.375% Sub. Capital Income Nts., 6/1/27 2,000,000 2,209,340 ---------- 42,346,131 - ------------------------------------------------------------------------------------------------- FOOD & DRUG--0.0% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 160,000 167,600 - ------------------------------------------------------------------------------------------------- FOOD/TOBACCO--0.8% B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(7) 250,000 254,405 - ------------------------------------------------------------------------------------------------- Coca-Cola Enterprises, Inc., 6.95% Debs., 11/15/26 2,000,000 2,134,210 - ------------------------------------------------------------------------------------------------- Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 150,000 151,459
20 Oppenheimer Bond Fund 21
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- FOOD/TOBACCO (CONTINUED) Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 $ 100,000 $ 102,500 - ------------------------------------------------------------------------------------------------- SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 250,000 252,500 --------- 2,895,074 - ------------------------------------------------------------------------------------------------- FOREST PRODUCTS/CONTAINERS--0.2% Mail-Well I Corp., 8.75% Sr. Sub. Nts., 12/15/08(7) 200,000 201,000 - ------------------------------------------------------------------------------------------------- Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 200,000 199,000 - ------------------------------------------------------------------------------------------------- U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 250,000 257,500 --------- 657,500 - ------------------------------------------------------------------------------------------------- GAMING/LEISURE--2.4% Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 150,000 147,000 - ------------------------------------------------------------------------------------------------- Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 235,000 266,725 - ------------------------------------------------------------------------------------------------- Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 200,000 200,000 - ------------------------------------------------------------------------------------------------- Hilton Hotels Corp.: 7.375% Nts., 6/1/02 75,000 75,622 7.95% Sr. Nts., 4/15/07 1,000,000 1,037,716 - ------------------------------------------------------------------------------------------------- HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 900,000 904,500 - ------------------------------------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 100,000 103,750 - ------------------------------------------------------------------------------------------------- Intrawest Corp., 9.75% Sr. Nts., 8/15/08 250,000 257,500 - ------------------------------------------------------------------------------------------------- Marriott International, Inc., 6.875% Nts., 11/15/05(7) 4,500,000 4,522,433 - ------------------------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts., Series B, 11/15/02 310,000 373,550 - ------------------------------------------------------------------------------------------------- Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 12/15/05(7) 150,000 150,938 - ------------------------------------------------------------------------------------------------- Rio Hotel & Casino, Inc.: 10.625% Sr. Sub. Nts., 7/15/05 100,000 109,500 9.50% Sr. Sub. Nts., 4/15/07 50,000 55,500 - ------------------------------------------------------------------------------------------------- Station Casinos, Inc.: 8.875% Sr. Sub. Nts., 12/1/08(7) 100,000 102,000 9.75% Sr. Sub. Nts., 4/15/07 150,000 157,500 --------- 8,464,234 - ------------------------------------------------------------------------------------------------- HEALTHCARE--0.6% Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000 158,855 - ------------------------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 150,000 148,500 - ------------------------------------------------------------------------------------------------- HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 515,000 - ------------------------------------------------------------------------------------------------- ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(7) 140,000 142,100 - ------------------------------------------------------------------------------------------------- Imcera Group, Inc., 6% Nts., 10/15/03 500,000 512,520 - ------------------------------------------------------------------------------------------------- Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 20,000 19,100 - ------------------------------------------------------------------------------------------------- Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(7) 350,000 330,750 - ------------------------------------------------------------------------------------------------- Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07 205,000 167,075 --------- 1,993,900
21 Oppenheimer Bond Fund 22 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- HOUSING--1.6% American Standard Cos., Inc., 10.875% Sr. Nts., 5/15/99 $ 70,000 $ 70,350 - ------------------------------------------------------------------------------------------------- Building Materials Corp. of America, 8% Sr. Nts., 12/1/08(7) 200,000 200,500 - ------------------------------------------------------------------------------------------------- First Industrial LP, 7.15% Bonds, 5/15/27 75,000 75,634 - ------------------------------------------------------------------------------------------------- Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 50,000 53,000 - ------------------------------------------------------------------------------------------------- Nationwide Health Properties, Inc., 7.60% Nts., Series C, 11/20/28 3,450,000 3,467,250 - ------------------------------------------------------------------------------------------------- Nortek, Inc.: 9.125% Sr. Nts., Series B, 9/1/07 250,000 258,750 9.25% Sr. Nts., Series B, 3/15/07 250,000 257,500 - ------------------------------------------------------------------------------------------------- Trizec Hahn Corp., 7.95% Sr. Unsec. Debs., 6/1/07CAD 2,000,000 1,334,195 --------- 5,717,179 - ------------------------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--2.1% Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 200,000 191,000 - ------------------------------------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 250,000 251,250 - ------------------------------------------------------------------------------------------------- General Electric Capital Corp., 8.75% Debs., 5/21/07 1,000,000 1,216,122 - ------------------------------------------------------------------------------------------------- Motorola, Inc., 6.50% Unsec. Debs., 11/15/28 5,000,000 5,092,985 - ------------------------------------------------------------------------------------------------- Unisys Corp., 11.75% Sr. Nts., 10/15/04 300,000 349,500 - ------------------------------------------------------------------------------------------------- WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(11) 400,000 220,000 --------- 7,320,857 - ------------------------------------------------------------------------------------------------- MANUFACTURING--1.2% Caterpillar, Inc., 9.75% Debs., 6/1/19 1,750,000 1,861,003 - ------------------------------------------------------------------------------------------------- Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 500,000 523,750 - ------------------------------------------------------------------------------------------------- Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 200,000 181,000 - ------------------------------------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 325,000 310,375 - ------------------------------------------------------------------------------------------------- Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 150,000 149,250 - ------------------------------------------------------------------------------------------------- Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 200,000 195,000 - ------------------------------------------------------------------------------------------------- Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,065,219 --------- 4,285,597 - ------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: BROADCASTING--1.4% Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 175,000 182,000 - ------------------------------------------------------------------------------------------------- Chancellor Media Corp.: 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 1,200,000 1,236,000 9% Sr. Sub. Nts., 10/1/08(7) 800,000 848,000 - ------------------------------------------------------------------------------------------------- Clear Channel Communications, Inc., 6.625% Nts., 6/15/08 2,000,000 2,030,552 - ------------------------------------------------------------------------------------------------- Young Broadcasting, Inc.: 8.75% Sr. Sub. Debs., 6/15/07 300,000 306,000 Series B, 1/15/06 400,000 406,000 --------- 5,008,552
22 Oppenheimer Bond Fund 23
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: CABLE/WIRELESS VIDEO--0.7% Adelphia Communications Corp., 9.25% Sr. Nts., 10/1/02 $ 150,000 $ 159,000 - ------------------------------------------------------------------------------------------------- CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18 500,000 492,800 - ------------------------------------------------------------------------------------------------- EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(11) 250,000 257,500 - ------------------------------------------------------------------------------------------------- EchoStar DBS Corp., 12.50% Sr. Sec. Nts., 7/1/02 200,000 231,000 - ------------------------------------------------------------------------------------------------- TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,125,000 1,224,896 --------- 2,365,196 - ------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: DIVERSIFIED MEDIA--0.2% Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 100,000 74,250 - ------------------------------------------------------------------------------------------------- Imax Corp., 7.875% Sr. Nts., 12/1/05 400,000 406,000 - ------------------------------------------------------------------------------------------------- SFX Entertainment, Inc.: 9.125% Sr. Sub. Nts., 12/1/08(7) 150,000 150,938 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 125,000 124,375 -------- 755,563 - ------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS--1.6% COLT Telecom Group plc, Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 common shares)(11)(12) 350,000 295,750 - ------------------------------------------------------------------------------------------------- Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 100,000 96,000 - ------------------------------------------------------------------------------------------------- Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(11) 160,000 85,600 - ------------------------------------------------------------------------------------------------- Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 200,000 165,000 - ------------------------------------------------------------------------------------------------- GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(7)(11) 100,000 79,375 - ------------------------------------------------------------------------------------------------- Intermedia Communications, Inc., 8.60% Sr. Unsec. Nts., Series B, 6/1/08 450,000 429,750 - ------------------------------------------------------------------------------------------------- Long Distance International, Inc., 12.25% Sr. Nts., 4/15/08(7) 150,000 125,250 - ------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc.: 0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(11) 230,000 132,250 9.625% Sr. Nts., 10/1/07 900,000 864,000 - ------------------------------------------------------------------------------------------------- NTL, Inc.: 10% Sr. Nts., Series B, 2/15/07 100,000 103,000 11.50% Sr. Nts., 10/1/08(7) 250,000 274,375 - ------------------------------------------------------------------------------------------------- PSINet, Inc.: 10% Sr. Unsec. Nts., Series B, 2/15/05 350,000 348,250 11.50% Sr. Nts., 11/1/08(7) 500,000 526,250 - ------------------------------------------------------------------------------------------------- Qwest Communications International, Inc.: 0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(11) 400,000 304,000 0%/9.47% Sr. Disc. Nts., 10/15/07(11) 340,000 264,350 - ------------------------------------------------------------------------------------------------- TCI Communications, Inc., 6.875% Sr. Unsec. Nts., 2/15/06 1,400,000 1,505,517 - ------------------------------------------------------------------------------------------------- Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 200,000 205,500 --------- 5,804,217
23 Oppenheimer Bond Fund 24 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: WIRELESS COMMUNICATIONS--1.4% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(7) $ 100,000 $ 100,500 - ------------------------------------------------------------------------------------------------- Cellular Communications International, Inc., 0%/9.50% Bonds, 4/1/05(11)XEU 600,000 595,347 - ------------------------------------------------------------------------------------------------- Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(10) 25,000 -- - ------------------------------------------------------------------------------------------------- Nextel Communications, Inc., 0%/10.65% Sr. Disc. Nts., 9/15/07(11) 30,000 19,275 - ------------------------------------------------------------------------------------------------- Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 70,000 49,000 - ------------------------------------------------------------------------------------------------- Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(11) 200,000 126,000 - ------------------------------------------------------------------------------------------------- Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(11) 200,000 117,500 - ------------------------------------------------------------------------------------------------- Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., 12/15/06(7) 500,000 507,500 - ------------------------------------------------------------------------------------------------- Real Time Data, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to purchase six common shares)(7)(11)(12) 1,000,000 465,000 - ------------------------------------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 503,750 - ------------------------------------------------------------------------------------------------- SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(11) 800,000 464,000 - ------------------------------------------------------------------------------------------------- Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(7)(11) 300,000 151,500 - ------------------------------------------------------------------------------------------------- Sprint Spectrum LP/Sprint Spectrum Finance Corp., 0%/12.50% Sr. Disc. Nts., 8/15/06(11) 2,000,000 1,810,000 - ------------------------------------------------------------------------------------------------- USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 100,000 90,500 --------- 4,999,872 - ------------------------------------------------------------------------------------------------- METALS/MINERALS--0.2% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 90,000 94,050 - ------------------------------------------------------------------------------------------------- Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000 176,355 - ------------------------------------------------------------------------------------------------- Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 250,000 253,125 - ------------------------------------------------------------------------------------------------- International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 175,000 165,375 - ------------------------------------------------------------------------------------------------- Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 192,000 --------- 880,905 - ------------------------------------------------------------------------------------------------- RETAIL--1.4% Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(7) 650,000 666,250 - ------------------------------------------------------------------------------------------------- Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(7) 150,000 143,250 - ------------------------------------------------------------------------------------------------- Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 88,500 - ------------------------------------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 200,000 185,000 - ------------------------------------------------------------------------------------------------- Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(7) 400,000 398,000 - ------------------------------------------------------------------------------------------------- May Department Stores Cos., 10.625% Debs., 11/1/10 405,000 567,239 - ------------------------------------------------------------------------------------------------- Neiman Marcus Group, Inc., 6.65% Sr. Nts., 6/1/08 2,000,000 2,009,992 - ------------------------------------------------------------------------------------------------- Price/Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 120,000 129,181 - ------------------------------------------------------------------------------------------------- Sears Canada, Inc., 11.70% Debs., 7/10/00CAD 500,000 356,461 - ------------------------------------------------------------------------------------------------- Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 301,628 --------- 4,845,501
24 Oppenheimer Bond Fund 25
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- SERVICE--4.0% Allied Waste North America, Inc., 7.875% Sr. Nts., 1/1/09(7) $ 165,000 $ 167,888 - ------------------------------------------------------------------------------------------------- Archer Daniels Midland Co., 7.125% Debs., 3/1/13 750,000 849,599 - ------------------------------------------------------------------------------------------------- Arvin Industries, Inc., 6.75% Nts., 3/15/08 500,000 517,127 - ------------------------------------------------------------------------------------------------- Cendant Corp., 7.75% Sr. Unsec. Nts., 12/1/03 5,000,000 5,115,075 - ------------------------------------------------------------------------------------------------- Fisher Scientific International, Inc.: 9% Sr. Sub. Nts., 2/1/08(7) 50,000 50,250 9% Sr. Unsec. Sub. Nts., 2/1/08 275,000 276,375 - ------------------------------------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(7) 150,000 153,000 - ------------------------------------------------------------------------------------------------- Lamar Advertising Co.: 8.625% Sr. Sub. Nts., 9/15/07 400,000 422,000 9.625% Sr. Sub. Nts., 12/1/06 150,000 161,250 - ------------------------------------------------------------------------------------------------- Sun Co., Inc., 7.95% Debs., 12/15/01 75,000 79,153 - ------------------------------------------------------------------------------------------------- Tyco International Group SA, 5.875% Nts., 11/1/04(7) 6,500,000 6,469,366 - ------------------------------------------------------------------------------------------------- USI American Holdings, Inc., 7.25% Sr. Nts., Series B, 12/1/0 680,000 79,273 ---------- 14,340,356 - ------------------------------------------------------------------------------------------------- TRANSPORTATION--6.0% Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 100,000 86,500 - ------------------------------------------------------------------------------------------------- Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,285,440 - ------------------------------------------------------------------------------------------------- Chrysler Corp., 7.40% Debs., 8/1/2097 3,000,000 3,393,558 - ------------------------------------------------------------------------------------------------- Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 40,000 41,000 - ------------------------------------------------------------------------------------------------- CSX Corp.: 6.80% Fixed Nts., 12/1/28 1,300,000 1,298,944 7.05% Debs., 5/1/02 85,000 88,813 7.25% Sr. Unsec. Debs., 5/1/27 2,410,000 2,572,740 - ------------------------------------------------------------------------------------------------- Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,259,324 - ------------------------------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 200,000 223,000 - ------------------------------------------------------------------------------------------------- Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 574,979 - ------------------------------------------------------------------------------------------------- Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 777,202 - ------------------------------------------------------------------------------------------------- Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 200,000 188,000 - ------------------------------------------------------------------------------------------------- Navigator Gas Transport plc: 10.50% First Priority Ship Mtg. Nts., 6/30/07(7) 400,000 354,000 Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(7)(12) 100,000 90,500 - ------------------------------------------------------------------------------------------------- Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 82,769 - ------------------------------------------------------------------------------------------------- Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07 200,000 208,000 - ------------------------------------------------------------------------------------------------- Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 250,000 211,250 - ------------------------------------------------------------------------------------------------- Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(11) 1,100,000 1,061,500
25 Oppenheimer Bond Fund 26 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------- TRANSPORTATION (CONTINUED) Union Pacific Corp.: 6.39% Medium-Term Nts., Series E, 11/1/04 $6,400,000 $ 6,475,187 7% Nts., 6/15/00 150,000 152,883 9.65% Nts., 4/17/00 100,000 104,575 ---------- 21,530,164 - ------------------------------------------------------------------------------------------------- UTILITY--5.6% AES Corp., 8% Sr. Nts., 12/31/08 3,400,000 3,367,938 - ------------------------------------------------------------------------------------------------- Ameritech Capital Funding Corp., 5.65% Unsec. Nts., 1/15/01 100,000 101,227 - ------------------------------------------------------------------------------------------------- California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 300,000 315,375 - ------------------------------------------------------------------------------------------------- Calpine Corp., 8.75% Sr. Nts., 7/15/07 185,000 187,775 - ------------------------------------------------------------------------------------------------- Cincinnati Bell Telephone Co., 6.30% Sr. Unsec. Bonds, 12/1/28 500,000 502,862 - ------------------------------------------------------------------------------------------------- Laclede Gas Co., 8.50% First Mtg. Bonds, 11/15/04 500,000 568,165 - ------------------------------------------------------------------------------------------------- Long Island Lighting Co., 8.20% Debs., 3/15/23 1,700,000 1,841,280 - ------------------------------------------------------------------------------------------------- National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 546,822 - ------------------------------------------------------------------------------------------------- New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,834,295 - ------------------------------------------------------------------------------------------------- Niagara Mohawk Power Corp.: 0%/8.50% Sr. Unsec. Nts., Series H, 7/1/10(11) 3,000,000 2,338,164 7.75% Sr. Unsec. Nts., Series G, 10/1/08 2,000,000 2,197,676 - ------------------------------------------------------------------------------------------------- Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000 223,439 - ------------------------------------------------------------------------------------------------- Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 275,580 - ------------------------------------------------------------------------------------------------- South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 601,390 - ------------------------------------------------------------------------------------------------- Sprint Capital Corp., 6.875% Sr. Unsec. Nts., 11/15/28 3,400,000 3,541,916 - ------------------------------------------------------------------------------------------------- Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 100,000 106,743 - ------------------------------------------------------------------------------------------------- Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 565,720 ----------- 20,116,367 ----------- Total Corporate Bonds and Notes (Cost $180,297,085) 184,953,099 SHARES ================================================================================================= PREFERRED STOCKS--2.2% - ------------------------------------------------------------------------------------------------- Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred Securities, Series A 80,000 2,080,000 - ------------------------------------------------------------------------------------------------- Centaur Funding Corp., 9.08%, Cum. Preferred Shares, 4/21/20(2)(13) 3,400 3,563,625 - ------------------------------------------------------------------------------------------------- CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg. 13,000 182,000
26 Oppenheimer Bond Fund 27
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================= PREFERRED STOCKS (CONTINUED) - ------------------------------------------------------------------------------------------------- EchoStar Communications Corp., 12.125% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(14) 115 $ 133,687 - ------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc., 14% Cum. Exchangeable, Vtg.(14) 2,171 115,606 - ------------------------------------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., Jr. Cv. Preferred Stock(13) 2,530 4,428 - ------------------------------------------------------------------------------------------------- SFX Broadcasting, Inc./Capstar Broadcasting Corp., 12.625% Cum., Series E, Non-Vtg.(14) 213 25,773 - ------------------------------------------------------------------------------------------------- United Dominion Realty Trust, Inc., 8.50% Unsec. Unsub. Preferred Nts. 65,000 1,681,875 - ------------------------------------------------------------------------------------------------- Viatel, Inc., 10% Cv., Series A(14) 99 10,915 --------- Total Preferred Stocks (Cost $7,611,584) 7,797,909 ================================================================================================= COMMON STOCKS--0.0% - ------------------------------------------------------------------------------------------------- Optel, Inc. (13) (Cost $0) 100 -- UNITS ================================================================================================= RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/07 (2) 50 7,445 - ------------------------------------------------------------------------------------------------- Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01(2) 333 93 - ------------------------------------------------------------------------------------------------- e.spire Communications, Inc. Wts., Exp. 11/05 300 7,241 - ------------------------------------------------------------------------------------------------- Globix Corp. Wts., Exp. 5/05 (2) 200 2,000 - ------------------------------------------------------------------------------------------------- Gothic Energy Corp. Wts.: Exp. 1/03(7) 2,621 26 Exp. 9/04(2) 2,800 3,150 - ------------------------------------------------------------------------------------------------- Intermedia Communications, Inc. Wts., Exp. 6/00(2) 50 3,052 - ------------------------------------------------------------------------------------------------- Long Distance International, Inc. Wts., 4/08(2) 150 375 - ------------------------------------------------------------------------------------------------- Price Communications Corp. Wts., Exp. 8/07(2) 258 12,321 - ------------------------------------------------------------------------------------------------- Signature Brands, Inc. Wts., Exp. 12/49(2) 50 1,006 - ------------------------------------------------------------------------------------------------- WAM!NET, Inc. Wts., Exp. 3/05(2) 1,200 9,600 - ------------------------------------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/05(2) 1,980 27,137 - ------------------------------------------------------------------------------------------------- Orion Network Systems, Inc. Wts., Exp. 1/07(2) 200 2,500 -------- Total Rights, Warrants and Certificates (Cost $3,971) 75,946
27 Oppenheimer Bond Fund 28 Statement of Investments (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ================================================================================================= STRUCTURED INSTRUMENTS--1.0% - ------------------------------------------------------------------------------------------------- Bayerische Landesbank Girozentrale (New York Branch), Lehman High Yield Index Nts., 8.50%, 3/8/99 $1,100,000 $ 1,036,750 - ------------------------------------------------------------------------------------------------- Bear Stearns High Yield Composite Index Linked Nts.: 8.50%, 4/9/99 1,000,000 929,380 9%, 2/16/99 900,000 828,594 - ------------------------------------------------------------------------------------------------- Shoshone Partners Loan Trust Sr. Nts., 6.97%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(2)(6) 750,000 672,606 --------- Total Structured Instruments (Cost $3,750,000) 3,467,330 ================================================================================================= REPURCHASE AGREEMENTS--4.0% - ------------------------------------------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98, to be repurchased at $14,407,600 on 1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%, 2/15/99- 7/15/06, with a value of $14,693,818 (Cost $14,400,000) 4,400,000 14,400,000 - ------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $374,024,883) 106.4% 379,340,635 - ------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (6.4) (22,814,936) ------- ------------- NET ASSETS 100.0% $356,525,699 ======== ============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: CAD--Canadian Dollar XEU--European Currency Units 2.Identifies issues considered to be illiquid or restricted--See Note 7 of Notes to Financial Statements. 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. When-issued security to be delivered and settled after December 31, 1998. 5. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. 28 Oppenheimer Bond Fund 29 - -------------------------------------------------------------------------------- 6. Represents the current interest rate for a variable rate security. 7. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $29,100,374 or 8.16% of the Fund's net assets as of December 31, 1998. 8. Securities with an aggregate market value of $537,500 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 9. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See Note 5 of Notes to Financial Statements. 10. Non-income producing--issuer is in default. 11.Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate 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. Non-income producing security. 14. Interest or dividend is paid-in-kind. See accompanying Notes to Financial Statements. 29 Oppenheimer Bond Fund 30 STATEMENT OF ASSETS AND LIABILITIES December 31, 1998
========================================================================================================= ASSETS Investments, at value (cost $374,024,883)--see accompanying statement $379,340,635 - --------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 4,015,982 Shares of beneficial interest sold 758,617 Other 6,524 ----------- Total assets 384,121,758 ========================================================================================================= LIABILITIES Bank overdraft 30,118 - --------------------------------------------------------------------------------------------------------- Unrealized depreciation on forward foreign currency exchange contracts--Note 5 11,075 - --------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased on a when-issued basis--Note 1 24,995,035 Shares of beneficial interest redeemed 1,703,153 Dividends 480,664 Distribution and service plan fees 215,295 Transfer and shareholder servicing agent fees 35,804 Daily variation on futures contracts--Note 6 20,515 Other 104,400 ---------- Total liabilities 27,596,059 ========================================================================================================= NET ASSETS $356,525,699 ============ ========================================================================================================= COMPOSITION OF NET ASSETS Paid-in capital $353,474,626 - --------------------------------------------------------------------------------------------------------- Overdistributed net investment income (4,077) - --------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (2,327,236) - --------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 5,382,386 ------------ Net assets $356,525,699 ============
30 Oppenheimer Bond Fund 31 ========================================================================================================= NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $246,668,278 and 22,711,225 shares of beneficial interest outstanding) $10.86 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $11.40 - --------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $88,060,713 and 8,111,764 shares of beneficial interest outstanding) $10.86 - --------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $21,795,709 and 2,005,876 shares of beneficial interest outstanding) $10.87 - --------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $999 and 92 shares of beneficial interest outstanding) $10.86
See accompanying Notes to Financial Statements. 31 Oppenheimer Bond Fund 32 STATEMENT OF OPERATIONS For the Year Ended December 31, 1998 ========================================================================================================= INVESTMENT INCOME Interest $22,500,912 - --------------------------------------------------------------------------------------------------------- Dividends 313,421 ---------- Total income 22,814,333 ========================================================================================================= EXPENSES Management fees--Note 4 2,199,637 - --------------------------------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 538,337 Class B 642,192 Class C 151,634 - --------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 464,206 - --------------------------------------------------------------------------------------------------------- Shareholder reports 134,503 - --------------------------------------------------------------------------------------------------------- Legal, auditing and other professional fees 19,103 - --------------------------------------------------------------------------------------------------------- Custodian fees and expenses 16,323 - --------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 7,223 - --------------------------------------------------------------------------------------------------------- Other 49,286 --------- Total expenses 4,222,444 ========================================================================================================= NET INVESTMENT INCOME 18,591,889 ========================================================================================================= REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 1,492,426 Closing of futures contracts--Note 6 (1,250,774) Foreign currency transactions 72,639 ---------- Net realized gain 314,291 - --------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments (3,003,865) Translation of assets and liabilities denominated in foreign currencies (72,467) ----------- Net change (3,076,332) ----------- Net realized and unrealized loss (2,762,041) ========================================================================================================= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,829,848 ===========
See accompanying Notes to Financial Statements. 32 Oppenheimer Bond Fund 33 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1998 1997 ========================================================================================================= OPERATIONS Net investment income $ 18,591,889 $ 16,543,377 - --------------------------------------------------------------------------------------------------------- Net realized gain 314,291 2,197,371 - --------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation (3,076,332) 3,665,014 ----------- ---------- Net increase in net assets resulting from operations 15,829,848 22,405,762 ========================================================================================================= DIVIDENDS TO SHAREHOLDERS Dividends from net investment income: Class A (14,076,402) (13,459,796) Class B (3,655,574) (2,655,088) Class C (859,704) (389,245) Class Y (47) --- ========================================================================================================= BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A 57,901,460 (7,491,024) Class B 40,449,784 8,379,500 Class C 12,786,693 4,696,745 Class Y 999 -- ========================================================================================================= NET ASSETS Total increase 108,377,057 11,486,854 - --------------------------------------------------------------------------------------------------------- Beginning of period 248,148,642 236,661,788 ----------- ----------- End of period [including undistributed (overdistributed) net investment income of $(4,077) and $6,579, respectively] $356,525,699 $248,148,642 ============ ============
See accompanying Notes to Financial Statements. 33 Oppenheimer Bond Fund 34 FINANCIAL HIGHLIGHTS
CLASS A -------------------------------------------------- YEAR ENDED DECEMBER 31, 1998 1997 1996 1995 1994 ============================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $10.97 $10.70 $10.98 $10.01 $11.12 - --------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .71 .77 .78 .69 .65 Net realized and unrealized gain (loss) (.11) .27 (.28) .96 (1.08) -------- -------- -------- -------- -------- Total income (loss) from investment operations .60 1.04 .50 1.65 (.43) - ---------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.71) (.77) (.75) (.68) (.65) Dividends in excess of net investment income -- -- -- -- (.03) Tax return of capital -- -- (.03) -- -- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders (.71) (.77) (.78) (.68) (.68) - ---------------------------------------------------------------------------------------------- Net asset value, end of period $10.86 $10.97 $10.70 $10.98 $10.01 ======== ======== ======== ======== ======== ============================================================================================== TOTAL RETURN, AT NET ASSET VALUE(3) 5.61% 10.13% 4.87% 16.94% (3.87)% ============================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $246,668 $190,706 $193,515 $169,059 $ 96,640 - ---------------------------------------------------------------------------------------------- Average net assets (in thousands) $217,944 $187,458 $178,130 $116,940 $102,168 - ---------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.46% 7.20% 7.35% 6.47% 6.25% Expenses, before voluntary reimbursement by the Manager 1.22% 1.27% 1.30% 1.27% 1.06% Expenses, net of voluntary reimbursement by the Manager N/A N/A N/A 1.26% N/A - ---------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 67.3% 50.5% 53.7% 175.4% 70.3%
1. For the period from April 27, 1998 (inception of offering), to December 31, 1998. 2. For the period from July 11, 1995 (inception of offering), to December 31, 1995. 3. 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. 34 Oppenheimer Bond Fund 35
CLASS B CLASS C CLASS Y - ------------------------------------------------- -------------------------------------- --------- PERIOD YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ENDED DEC. 31, 1998 1997 1996 1995 1994 1998 1997 1996 1995(2) 1998(1) ============================================================================================================= $10.97 $10.69 $10.98 $10.01 $11.11 $10.98 $10.70 $10.99 $10.89 $10.88 - ------------------------------------------------------------------------------------------------------------- .62 .69 .70 .63 .58 .62 .69 .70 .28 .49 (.10) .28 (.29) .94 (1.08) (.10) .28 (.29) .10 (.02) --------- -------- --------- -------- -------- -------- --------- -------- -------- --------- .52 .97 .41 1.57 (.50) .52 .97 .41 .38 .47 - ------------------------------------------------------------------------------------------------------------- (.63) (.69) (.67) (.60) (.57) (.63) (.69) (.67) (.28) (.49) -- -- -- -- (.03) -- -- -- -- -- -- -- (.03) -- -- -- -- (.03) -- -- --------- -------- --------- -------- -------- -------- --------- -------- -------- --------- (.63) (.69) (.70) (.60) (.60) (.63) (.69) (.70) (.28) (.49) - ------------------------------------------------------------------------------------------------------------- $10.86 $10.97 $10.69 $10.98 $10.01 $10.87 $10.98 $10.70 $10.99 $10.86 ======= ======== ======== ======= ======= ======== ======== ======== ======== ======= ============================================================================================================= 4.81% 9.41% 3.99% 16.06% (4.53)% 4.81% 9.39% 4.00% 3.76% 4.40% ============================================================================================================= $88,061 $48,255 $38,826 $39,187 $3,451 $21,796 $9,188 $4,322 $3,971 $1 - ------------------------------------------------------------------------------------------------------------- $64,330 $41,439 $38,068 $12,823 $2,747 $15,198 $6,134 $3,404 $ 979 $1 - ------------------------------------------------------------------------------------------------------------- 5.68% 6.42% 6.59% 5.84% 5.53% 5.66% 6.36% 6.60% 6.32%(4) 6.84%(4) 1.97% 2.02% 2.05% 2.12% 1.78% 1.96% 2.02% 2.05% 2.25%(4) 0.74%(4) N/A N/A N/A 2.08% N/A N/A N/A N/A 1.96%(4) N/A - ------------------------------------------------------------------------------------------------------------- 67.3% 50.5% 53.7% 175.4% 70.3% 67.3% 50.5% 53.7% 175.4% 67.3%
4. Annualized. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1998, were $263,925,338 and $208,096,512, respectively. For the period ended December 31, 1995, purchases and sales of investment securities included mortgage dollar-rolls. See accompanying Notes to Financial Statements. 35 Oppenheimer Bond Fund 36 NOTES TO FINANCIAL STATEMENTS =============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Bond Fund (the Fund) is 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 objective is to seek a high level of current income by investing mainly in debt instruments. The Fund will, under normal market conditions, invest at least 65% of its total assets in a diversified portfolio of investment grade debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Class A, B and C have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- 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 an 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 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. 36 Oppenheimer Bond Fund 37 ================================================================================ 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 December 31, 1998, the Fund had entered into outstanding when-issued or forward commitments of $24,995,035. 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 foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. 37 Oppenheimer Bond Fund 38 NOTES TO FINANCIAL STATEMENTS (Continued) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. As of December 31, 1998, the Fund had available for federal income tax purposes an unused capital loss carryover of $6,236,000, which expires between 2002 and 2004. - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately for Class A, Class B, Class C, and Class Y 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 primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its 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 fiscal year in which the income or realized gain was recorded by the Fund. The Fund adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended December 31, 1998, amounts have been reclassified to reflect a decrease in paid-in capital of $166,931, a decrease in undistributed net investment income of $10,818, and a decrease in accumulated net realized loss on investments of $177,749. - -------------------------------------------------------------------------------- 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. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 38 Oppenheimer Bond Fund 39 ================================================================================ 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:
YEAR ENDED DECEMBER 31, 1998(1) YEAR ENDED DECEMBER 31, 1997 -------------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- Class A: Sold 6,327,132 $ 68,506,645 2,678,397 $ 28,887,221 Dividends reinvested 929,158 10,176,270 831,219 8,947,815 Issued in connection with the acquisition of Oppenheimer LifeSpan Income Fund--Note 9 2,792,886 30,889,321 -- -- Redeemed (4,721,024) (51,670,776) (4,216,384) (45,326,060) ----------- ------------ ----------- ------------- Net increase (decrease) 5,328,152 $ 57,901,460 (706,768) $ (7,491,024) =========== ============ =========== ============= - ----------------------------------------------------------------------------------------------- Class B: Sold 5,173,605 $ 56,405,052 1,711,754 $ 18,512,789 Dividends reinvested 235,563 2,578,186 168,332 1,813,048 Issued in connection with the acquisition of Oppenheimer LifeSpan Income Fund--Note 9 85,738 947,405 -- -- Redeemed (1,783,066) (19,480,859) (1,110,660) (11,946,337) ----------- ------------ ----------- ------------ Net increase 3,711,840 $ 40,449,784 769,426 $ 8,379,500 =========== ============ =========== ============ - ----------------------------------------------------------------------------------------------- Class C: Sold 1,595,718 $ 17,436,546 536,735 $ 5,809,737 Dividends reinvested 58,558 641,296 25,947 280,265 Issued in connection with the acquisition of Oppenheimer LifeSpan Income Fund--Note 9 8,740 96,665 -- -- Redeemed (494,157) (5,387,814) (129,410) (1,393,257) ----------- ------------ ----------- ------------ Net increase 1,168,859 $ 12,786,693 433,272 $ 4,696,745 =========== ============ =========== ============ - ----------------------------------------------------------------------------------------------- Class Y: Sold 92 $ 999 -- $ -- Dividends reinvested -- -- -- -- Redeemed -- -- -- -- --------- ------------- ------------ ------------ Net increase 92 $ $999 -- $ -- ========= ============= ============ ============
1. For the year ended December 31, 1998, for Class A, Class B, and Class C shares, and for the period from April 27, 1998 (inception of offering) to December 31, 1998 for Class Y shares. 39 Oppenheimer Bond Fund 40 NOTES TO FINANCIAL STATEMENTS (Continued) ================================================================================ 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS As of December 31, 1998, net unrealized appreciation on investments of $5,315,752 was composed of gross appreciation of $10,177,934, and gross depreciation of $4,862,182. - -------------------------------------------------------------------------------- 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% of the first $200 million of the Fund's average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200 million, and 0.50% of net assets in excess of $1 billion. The Fund's management fee for the year ended December 31, 1998 was 0.74% of the average annual net assets for Class A, Class B, Class C and Class Y shares. For the year ended December 31, 1998, commissions (sales charges paid by investors) on sales of Class A shares totaled $751,085, of which $221,787 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 A, Class B and Class C shares totaled $112,467, $1,420,342 and $117,997, respectively. Amounts paid to an affiliated broker/dealer for Class B and Class C shares were $93,828 and $3,459, respectively. During the year ended December 31, 1998, OFDI received contingent deferred sales charges of $186,638 and $7,397, 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 other Oppenheimer funds. OFS's total costs of providing such services are allocated ratably to these funds. 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 shareholder 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 December 31, 1998, OFDI paid $186,566 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 40 Oppenheimer Bond Fund 41 ================================================================================ The Fund has adopted Distribution and Service Plans for Class B and Class C shares to compensate OFDI for its costs in distributing Class B and Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class B and Class C shares for its services rendered in distributing Class B and 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 B and Class C shares. Each fee is computed on the average annual net assets of Class B or Class C shares, determined as of the close of each regular business day. During the year ended December 31, 1998, OFDI paid $7,125 to an affiliated broker/dealer as compensation for Class B personal service and maintenance expenses and retained $541,252 and $118,222, respectively, as compensation for Class B and Class C sales commissions and service fee advances, as well as financing costs. If either 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 distributing shares before the Plan was terminated. As of December 31, 1998, OFDI had incurred excess distribution and servicing costs of $2,413,027 for Class B and $253,281 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. 41 Oppenheimer Bond Fund 42 NOTES TO FINANCIAL STATEMENTS (Continued) ================================================================================ 5. FORWARD CONTRACTS(CONTINUED) As of December 31, 1998, the Fund had outstanding forward contracts as follows:
EXPIRATION CONTRACT VALUATION AS OF UNREALIZED CONTRACT DESCRIPTION DATE AMOUNT (000s) DECEMBER 31, 1998 DEPRECIATION - --------------------------------------------------------------------------------------------- CONTRACTS TO SELL - ------------------ Canadian Dollar (CAD) 3/15/99 2,970 CAD $1,939,647 $11,075
================================================================================ 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 (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable 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. 42 Oppenheimer Bond Fund 43 ================================================================================ As of December 31, 1998, the Fund had outstanding futures contracts as follows:
UNREALIZED EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION CONTRACT DESCRIPTION DATE CONTRACTS DECEMBER 31, 1998 (DEPRECIATION) - --------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE - ---------------------- U.S. Treasury Nts., 5 yr. 3/99 236 $26,749,125 $71,359 U.S. Treasury Nts., 20 yr. 3/99 77 9,839,156 8,625 -------- 79,984 -------- CONTRACTS TO SELL - ------------------ U.S. Treasury Nts., 10 yr. 3/99 18 2,144,813 (2,313) ------- $77,671 =======
================================================================================ 7. ILLIQUID AND RESTRICTED SECURITIES As of December 31, 1998, 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 periodically) 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 as of December 31, 1998 was $22,178,514, which represents 6.22% of the Fund's net assets. ================================================================================ 8. ACQUISITION OF OPPENHEIMER LIFESPAN INCOME FUND On June 12, 1998, the Fund acquired all the net assets of Oppenheimer LifeSpan Income Fund, pursuant to an agreement and plan of reorganization approved by the Oppenheimer LifeSpan Income Fund shareholders on June 9, 1998. The Fund issued (at an exchange ratio of 0.936419 for Class A, 0.940145 for Class B and 0.939042 for Class C of the Fund to one share of Oppenheimer LifeSpan Income Fund) 2,792,886, 85,738 and 8,740 shares of beneficial interest for Class A, Class B, and Class C, respectively, valued at $30,889,321, $947,405 and $96,665, respectively, in exchange for the net assets, resulting in combined Class A net assets of $230,808,283, Class B net assets of $59,193,669 and Class C net assets of $13,957,428 on June 12, 1998. The net assets acquired included net unrealized appreciation of $514,326. The exchange qualified as a tax-free reorganization for federal income tax purposes. 43 Oppenheimer Bond Fund 44 NOTES TO FINANCIAL STATEMENTS (continued) ================================================================================ 9. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.0575% per annum. The Fund had no borrowings outstanding during the year ended December 31, 1998. 44 Oppenheimer Bond Fund 45 INDEPENDENT AUDITORS' REPORT ================================================================================ The Board of Trustees and Shareholders of Oppenheimer Bond Fund: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Bond Fund as of December 31, 1998, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 1998 and 1997, and the financial highlights for the period January 1, 1994, to December 31, 1998. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1998, 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 Bond Fund as of December 31, 1998, 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 January 25, 1999 45 Oppenheimer Bond Fund 46 FEDERAL INCOME TAX INFORMATION (Unaudited) ================================================================================ In early 1999 shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1998 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 December 31, 1998 which are not designated as capital gain distributions should be multiplied by 1.64% 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 the state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 46 Oppenheimer Bond Fund 47 OPPENHEIMER BOND FUND A Series of Oppenheimer Integrity Funds =============================================================================================== OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer Bridget A. Macaskill, President Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., 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 David P. Negri, Vice President John S. Kowalik, Vice President Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary - ----------------------------------------------------------------------------------------------- INVESTMENT ADVISOR OppenheimerFunds, Inc. - ----------------------------------------------------------------------------------------------- DISTRIBUTOR OppenheimerFunds Distributor, Inc. - ----------------------------------------------------------------------------------------------- TRANSFER AND SHAREHOLDER OppenheimerFunds Services SERVICING AGENT - ----------------------------------------------------------------------------------------------- CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES - ----------------------------------------------------------------------------------------------- INDEPENDENT AUDITORS Deloitte & Touche LLP - ----------------------------------------------------------------------------------------------- LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. This is a copy of a report to shareholders of Oppenheimer Bond Fund. This report must be preceded by a Prospectus of Oppenheimer Bond 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, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
47 Oppenheimer Bond Fund 48 INTERNET 24-hr access to account information. Online transactions now available WWW.OPPENHEIMERFUNDS.COM GENERAL INFORMATION Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-525-7048 ACCOUNT TRANSACTIONS Mon-Fri 8:30am-8pm ET 1-800-852-8457 PHONELINK 24-hr automated information and automated transactions 1-800-533-3310 TELECOMMUNICATION DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-2pm 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 INFORMATION AND SERVICES - -------------------------------------------------------------------------------- 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 or by visiting our website. 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 or website 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, or visit us at our website at www.oppenheimerfunds.com--we're here to help. [OPPENHEIMERFUNDS LOGO] RA0285.001.1298 March 1, 1999 -----END PRIVACY-ENHANCED MESSAGE-----