-----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, TuzR8f12Pn0ysdi4TBmBp0nL05CLYr1yBKQLUyag2yEdkFR/cy2lsza/Ds7iEZTu 0BKCnniFpLN2JLoFkgOJPg== 0001005477-97-002207.txt : 19970912 0001005477-97-002207.hdr.sgml : 19970912 ACCESSION NUMBER: 0001005477-97-002207 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 SROS: NASD 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: 97677059 BUSINESS ADDRESS: STREET 1: 3410 S GALENA CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: 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 SEMI ANNUAL REPORT ------------------------------- Semiannual Report June 30, 1997 ------------------------------- OPPENHEIMER BOND FUND [GRAPHIC OMITTED] [LOGO] OppenheimerFunds(SM) THE RIGHT WAY TO INVEST Contents 3 President's Letter 4 Fund Performance 6 An Interview with the Fund's Managers 10 Statement of Investments 24 Statement of Assets & Liabilities 26 Statement of Operations 27 Statements of Changes in Net Assets 28 Financial Highlights 30 Notes to Financial Statements 39 Officers & Trustees 40 Information & Services Report highlights - -------------------------------------------------------------------------------- o Our mortgage holdings -- especially "private label" mortgages -- outperformed the returns of the overall fixed-income market during the period. o We raised the credit quality of the Fund by shifting some of the assets from corporate bonds to the mortgage market. o Broad diversification across corporate and government bonds helped reduce portfolio volatility. - ------------------------------- Total Returns - ------------------------------- For the Period Ended 6/30/97(1) Class A 6 months 1 year - ------------------------------- 3.70% 9.66% - ------------------------------- Class B 6 months 1 year - ------------------------------- 3.41% 8.84% - ------------------------------- Class C 6 months 1 year - ------------------------------- 3.40% 8.94% - ------------------------------- 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 and rankings, 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. 1. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. Total returns for the six-month period are cumulative and are not annualized. 2 Oppenheimer Bond Fund Dear shareholder, - -------------------------------------------------------------------------------- [PHOTO] James C. Swain Chairman Oppenheimer Bond Fund [PHOTO] Bridget A. Macaskill President Oppenheimer Bond Fund We'd like to welcome you to the premier issue of our newly redesigned shareholder reports. As you can see, we've changed the format to allow easier access to the information you need to monitor your investments. Some notable additions are "at-a-glance" report highlights and charts that let you quickly assess how your Fund has performed. On the following pages, your portfolio team discuss their current investment thinking, your Fund's strategies, and performance. Before these commentaries, we'd like to share a few global observations. As we consider the world's financial markets over the past six months, some global trends emerge. For example, inflation has hit its lowest level in three decades worldwide, which has helped spur many bullish financial markets. The United States has been a beneficiary of this low-inflation environment, as well as of a strong dollar, robust corporate earnings and a healthy economy. However, many financial analysts are now concerned that the United States has reached a point in the business cycle where earnings could decline because companies are unable to further reduce costs. On the other hand, a wave of corporate restructuring throughout Europe has resulted in some exciting changes and opportunities. Because a similar restructuring took place in the United States ten years ago, European companies have been able to enjoy the benefit of hindsight by following our footsteps. Latin America, too, has begun to shift its economies more toward the U.S. capitalist model and has reported positive earnings growth along the way. With major changes occurring in today's economies around the globe, it's more important than ever to maintain a diversified portfolio across different countries and market sectors. Now is the time to speak to your financial adviser to ensure that your assets are allocated properly, so you have the opportunity to benefit from investments in both domestic and international funds. It's important to remember that investing abroad can involve greater risk and expenses--including political and economic uncertainties--and should be undertaken with a long-term approach in mind. To keep in touch with our views on the markets, visit our website, www.oppenheimerfunds.com, where you can access your account information and fund performance data, 24 hours a day. The site also features prospectuses, timely market updates and insightful commentaries. Our new shareholder reports and presence on the Internet are just two examples of our commitment to keeping you well informed. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. We look forward to helping you reach your investment goals in the future. /s/ James C. Swain /s/ Bridget A. Macaskill James C. Swain Bridget A. Macaskill July 22, 1997 3 Oppenheimer Bond Fund Performance update - -------------------------------------------------------------------------------- - ----------------------------- Avg Annual Total Returns - ----------------------------- For the Period Ended 6/30/97(1) Class A Since 1 year 5 year Inception - ----------------------------- 4.45% 5.98% 7.68% - ----------------------------- Class B Since 1 year 5 year Inception - ----------------------------- 3.84% N/A 4.86% - ----------------------------- Class C Since 1 year 5 year Inception - ----------------------------- 7.94% N/A 5.72% - ----------------------------- Oppenheimer Bond Fund has performed well. In fact, as of June 30, 1997 the Fund's Class A shares were ranked #9 out of 123 Corporate Debt A Rated funds ranked by Lipper Analytical Services for the one-year period ended 6/30/97.(2) Growth of $10,000 Over five years (without sales charge)3 [GRAPHIC OMITTED] [THE FOLLOWING TABLE WAS DEPICTED IN THE PRINTED MATERIALS AS A MOUNTAIN CHART] Oppenheimer Lehman Brothers Bond Fund Corporate Bond Date Class A Shares Index ---- -------------- --------------- 6/30/92 $10,000.00 $10,000.00 9/30/92 $10,626.66 $10,472.28 12/31/92 $10,408.39 $10,492.83 3/31/93 $10,915.27 $11,022.82 6/30/93 $11,199.09 $11,391.26 9/30/93 $11,544.43 $11,787.19 12/93 $11,480.82 $11,769.45 3/94 $11,117.85 $11,354.99 6/94 $10,961.71 $11,176.36 9/94 $11,011.73 $11,258.38 12/94 $11,036.87 $11,307.56 3/95 $11,583.90 $11,977.26 6/95 $12,307.01 $12,868.12 9/95 $12,421.31 $13,171.37 12/95 $12,906.01 $13,821.80 3/96 $12,735.34 $13,465.11 6/96 $12,798.34 $13,625.26 9/96 $13,088.35 $13,795.34 12/96 $13,533.96 $14,275.47 3/97 $13,514.42 $14,131.55 6/30/97 $14,034.27 $14,714.48 Past performance does not guarantee future results. 1. 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 2% (since inception on 5/1/93). Class C returns include the contingent deferred sales charge of 1% for the 1-year result. Class C shares were first publicly offered on 7/11/95. An explanation of the different performance calculations is in the Fund's prospectus. Class B and C shares are subject to an annual 0.75% asset-based sales charge. 2. Source: Lipper Analytical Services, Inc., 6/30/97. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions of the Fund's Class A shares reinvested. The Fund's Class A shares were ranked 9 of 123 (1-year), 24 of 53 (5-year) and 21 of 30 (10-year) among Corporate Debt A Rated funds for the period ended 6/30/97. 4 Oppenheimer Bond Fund Portfolio review - -------------------------------------------------------------------------------- Oppenheimer Bond Fund is for investors looking for solid income potential from a fund emphasizing quality securities. What We Look For o Sectors of the market that offer relative value. o Primarily investment-grade securities that may help reduce credit risk. o High income potential from different types of government and corporate securities. U.S. Corporate Bonds Sector Breakdown (Percentage of net assets)(4) ...................................................... Financial Services 12.5% Utilities 3.6% ...................................................... Manufacturing 6.1 Basic Industry 3.0 ...................................................... Technology 5.6 Retail 1.5 ...................................................... Energy 4.7 Transportation 1.5 ...................................................... Consumer Related 4.0 Housing Related 0.9 ...................................................... Media 3.6 Other 0.3 ...................................................... 3. Results of a hypothetical $10,000 investment on June 30, 1992. The Lehman Brothers Corporate Bond Index is a broad-based unmanaged index of publicly issued nonconvertible investment-grade corporate debt of U.S. issuers including reinvestment of income, and cannot be purchased directly by investors. 4. As of 6/30/97. Holdings are subject to change. 5 Oppenheimer Bond Fund An interview with your Fund's managers - -------------------------------------------------------------------------------- - ------------------ "The Fund maintained a large allocation in mortgage-backed securities..." - ------------------ How did the Fund perform? Oppenheimer Bond Fund's Class A shares were ranked 9 out of 123 funds by Lipper Analytical Services for the one-year period ended June 30, 1997.(1) The Fund's Class A shares delivered a six-month cumulative total return of 3.70%, and a one-year average total return of 9.66%, without deducting sales charges for the period ended 6/30/97.(2) What factors have affected the Fund's performance? The Fund has done well because our investments in mortgage-backed securities and corporate bonds have generally outperformed U.S. Treasuries. And, because interest rates rose slightly during the first half of the year, our neutral-to-defensive duration posture resulted in good relative performance of the Fund's Treasury position.(3) In addition, we increased our mortgage holdings--especially "private label" mortgages--which have substantially outperformed the returns of the overall fixed-income market during the period. These "private label" mortgages are secured by real estate collateral, but are not guaranteed by the U.S. government. On the other hand, while the corporate sector reported excellent performance, we reduced its position in the Fund due to deteriorating valuations. How are you positioning the Fund for today's economy? Today, many analysts believe we may be nearing a peak in the economic cycle, which may likely cause a shift in expectations about inflation and economic growth. As this scenario unfolds, the Federal Reserve will most likely respond to maintain its policy of a stable financial environment. Since we do not anticipate a dramatic shift in interest rates in the near term, we are maintaining a large allocation in mortgage-backed securities. That's because these mortgages historically have outperformed U.S. 6 Oppenheimer Bond Fund [PHOTO] Portfolio Management Team (l to r) David Negri (Fund Manager) David Rosenberg Treasuries in spite of modest interest rate moves--either up or down. Eventually in this cycle, we will reposition the Fund by shifting to longer-duration U.S. government securities and by reducing credit risk in the corporate sector of the portfolio. How has the Fund changed recently? In terms of interest rate risk, the Fund is still positioned neutrally. The biggest change has been an even heavier weighting toward private label mortgage securities, which now account for about 15% of the Fund's net assets. These securities continue to have attractive valuations, especially when compared to corporate bonds. In addition to generally being less sensitive to modest changes in interest rates, both private and government-guaranteed mortgages historically offer the benefit of earning higher yields than U.S. Treasuries. What portions of the Fund have been underweighted? Since year end we have further reduced our weighting in corporate bonds to decrease credit risk in the portfolio. We are defensive on corporate bonds for several reasons. First, 1. Source: Lipper Analytical Services, Inc., 6/30/97. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions of the Fund's Class A shares reinvested. The Fund's Class A shares were ranked 9 of 123 (1- year), 24 of 53 (5-year), and 21 of 30 (10-year) among corporate debt funds for the period ended 6/30/97. Past performance does not guarantee future results. 2. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. Total returns for the six-month period are cumulative and are not annualized. Past performance does not guarantee future results. 3. Duration measures interest-rate sensitivity; the longer the duration, the greater the expected volatility as rates change. 7 Oppenheimer Bond Fund An interview with your Fund's managers - -------------------------------------------------------------------------------- valuations are not extremely attractive since corporate bonds currently yield little over U.S. Treasuries. And second, we view the business cycle as fairly mature--possibly peaking in the next year. This means that corporate earnings may not continue to rise as quickly as they have been, which would slow credit improvement at many companies. What is your outlook for the coming months? Because of the reasons we've discussed here, we have positioned the Fund defensively for several quarters. That is because we are waiting for the economy to peak before becoming more aggressive on interest rate exposure. Ultimately, we plan to increase the interest rate risk in the portfolio once the Federal Reserve has adjusted its policy bias toward higher interest rates. However, because wage costs--the harbinger of inflation--have not risen substantially, even with rising employment, we are not looking to position the Fund more aggressively at this time. - ------------------- "...because they historically out perform U.S. Treasuries in spite of modest interest rate moves." - ------------------- 8 Oppenheimer Bond Fund Financials - -------------------------------------------------------------------------------- 9 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments June 30, 1997 (Unaudited) - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 ========================================================================================================== Mortgage-Backed Obligations -- 62.0% - ---------------------------------------------------------------------------------------------------------- Government Agency -- 46.8% - ---------------------------------------------------------------------------------------------------------- FHLMC/FNMA/Sponsored -- 38.3% Federal Home Loan Mortgage Corp.: Certificates of Participation, 9%, 3/1/17 $ 488,886 $ 520,537 Certificates of Participation, Series 17-039, 13.50%, 11/1/10 53,434 62,971 Certificates of Participation, Series 17-094, 12.50%, 4/1/14 28,598 33,255 Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 1,665,437 Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 1,000,000 1,078,338 Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1712, Cl. B, 6%, 3/15/09 1,000,000 934,370 Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1714, Cl. M, 7%, 8/15/23 1,000,000 969,680 Gtd. Multiclass Mtg. Participation Certificates, Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,505,625 Gtd. Multiclass Mtg. Participation Certificates, Series G056, Cl. H, 9%, 7/20/24 2,493,000 2,648,812 Interest-Only Stripped Mtg.-Backed Security, Series 177, Cl. B, 10.279%-11.39%, 7/1/26(2) 21,418,816 7,640,494 - ---------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn.: 11%, 7/1/16 4,759,698 5,437,956 7%, 1/1/09-11/1/25 1,036,168 1,031,655 7%, 7/1/12-7/25/27(3) 6,460,000 6,427,733 7.50%, 2/1/08-3/1/08 655,399 667,685 7.50%, 7/25/12-7/1/27(3) 23,150,000 23,284,809 8%, 7/25/27(3) 9,500,000 9,710,805 Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1992-34, Cl. G, 8%, 3/25/22 540,000 561,427 Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 567,048 580,470 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,592,661 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1992-162, Cl. C, 7%, 10/25/21 8,400,000 8,213,604 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1992-169, Cl. L, 7%, 9/25/22 5,965,000 5,671,246 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1995-4, Cl. PC, 8%, 5/25/25 869,210 909,206 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1997-25, Cl. B, 7%, 12/18/22 510,000 499,373 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1997-27, Cl. J, 7.50%, 4/18/27 848,852 858,591 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Trust 1997-5, Cl. B, 7%, 9/18/17 1,648,000 1,618,168
10 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- FHLMC/FNMA/Sponsored (continued) Federal National Mortgage Assn.: Interest-Only Stripped Mtg.-Backed Security, Trust 272, Cl. 2, 15.691%, 7/1/26(2) $ 1,393,158 $ 479,116 Principal-Only Stripped Mtg.-Backed Security, Series 267, Cl. 1, 5.283%, 10/1/24(4) 2,889,141 2,121,713 ------------ 87,725,737 - ---------------------------------------------------------------------------------------------------------- GNMA/Guaranteed--8.5% Government National Mortgage Assn.: 10%, 11/15/09 281,549 310,769 10.50%, 12/15/17-5/15/21 266,767 296,131 11%, 10/20/19 1,091,834 1,234,111 12%, 1/15/99-5/15/14 16,915 17,712 13%, 12/15/14 27,600 32,560 6%, 7/20/27(3) 5,250,000 5,256,562 6.50%, 7/20/27(3) 3,200,000 3,237,000 7%, 7/15/09-7/20/25 1,975,659 2,023,317 7.50%, 7/1/27(3) 3,600,000 3,610,116 8%, 6/15/05-10/15/06 1,615,788 1,675,025 9%, 2/15/09-6/15/09 446,953 477,764 Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ, 7.493%, 7/16/24 1,200,000 1,211,061 ------------ 19,382,128 - ---------------------------------------------------------------------------------------------------------- Private--15.2% - ---------------------------------------------------------------------------------------------------------- Commercial--10.5% Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1996-D3, Cl. A5, 8.332%, 10/13/26(5)(6) 800,000 832,000 Series 1996-MD6, Cl. A5, 7.225%, 11/13/26(6) 2,000,000 2,005,937 Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 333,000 312,240 Series 1997-D4, Cl. B2, 7.525%, 4/14/29(6) 333,000 304,487 Series 1997-D4, Cl. B3, 7.525%, 4/14/29(6) 334,000 296,582 Series 1997-MD7, Cl. A6, 8.243%, 1/13/30(6) 200,000 204,875 - ---------------------------------------------------------------------------------------------------------- Capital Lease Funding Securitization LP, Interest-Only Stripped Mtg.-Backed Security, Series 1997-CTL1, 5.49%, 6/22/24(2)(5) 14,147,860 645,142 - ---------------------------------------------------------------------------------------------------------- CMC Securities Corp. I, Collateralized Mtg. Obligation, Series 1993-D, Cl. D-3, 10%, 7/25/23(5) 608,745 636,710 - ---------------------------------------------------------------------------------------------------------- Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.- Backed Security, Series 1996-C1, Cl. X-2, 9.808%, 12/25/20(2)(5) 18,624,900 651,871 - ---------------------------------------------------------------------------------------------------------- FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Series 1994-C1, Cl. 2-D, 8.70%, 9/25/25(5) 1,000,000 1,040,937 Series 1994-C1, Cl. 2-E, 8.70%, 9/25/25(5) 1,000,000 1,042,500 - ---------------------------------------------------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates, Series 1996-C1, 7.42%, 4/25/28 1,500,000 1,509,258
11 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (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, 7.51%, 2/15/28(5)(6) $1,000,000 $ 1,007,500 Series 1996-C1, Cl. E, 7.51%, 2/15/28(5)(6) 1,100,000 1,007,875 - ---------------------------------------------------------------------------------------------------------- NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC, Cl. B, 8.562%, 8/12/11(5) 3,000,000 3,058,945 - ---------------------------------------------------------------------------------------------------------- Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates, Cl. D, 7.683%, 12/21/26(5) 1,500,000 1,508,910 - ---------------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1993-C1, Cl. B, 8.75%, 5/25/24 700,000 700,000 Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,533,050 Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,459,375 - ---------------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-C1, Cl. E, 9.18%, 1/20/06 700,000 707,875 - ---------------------------------------------------------------------------------------------------------- Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%, 6/25/30(5) 2,500,000 2,522,656 ------------ 23,988,725 - ---------------------------------------------------------------------------------------------------------- Manufactured Housing--0.1% Green Tree Financial Corp., Series 1994-6, Cl. A3, 7.70%, 1/15/20 250,000 252,732 - ---------------------------------------------------------------------------------------------------------- Multi-Family--1.3% Mortgage Capital Funding, Inc.: Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(5) 254,890 235,933 Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(7) 2,250,000 2,066,484 - ---------------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1991-M5, Cl. A, 9%, 3/25/17 541,983 555,661 Series 1991-M6, Cl. B4, 7.089%, 6/25/21(6) 55,045 54,285 ------------ 2,912,363 - ---------------------------------------------------------------------------------------------------------- Other--0.8% GE Capital Mortgage Services, Inc., Series 1994-14, Cl. A1, 6.50%, 4/25/24 72,468 72,219 - ---------------------------------------------------------------------------------------------------------- JHM Mtg. Acceptance Corp., Collateralized Mtg. Obligation Bonds, Series E, Cl. 5, 8.96%, 4/1/19 1,596,472 1,668,809 - ---------------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VI: Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 12.50%, 10/23/17(2) 123,966 40,173 Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, Zero Coupon, 12.50%, 10/23/17(4) 181,414 124,891 ------------ 1,906,092
12 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Residential--2.5% CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates: Series 1997-C1, Cl. E, 7.50%, 6/20/29 $1,000,000 $ 995,469 Series 1997-C1, Cl. F, 7.50%, 6/20/29 150,000 139,195 Series 1997-C1, Cl. G, 7.50%, 6/20/29 150,000 133,664 Series 1997-C1, Cl. H, 7.50%, 6/20/29 210,000 154,613 - ---------------------------------------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates: Series 1997-CHL1, 8.13%, 2/25/11(6) 750,000 597,188 Series 1997-CHL1, 8.13%, 5/25/08(6) 750,000 722,578 - ---------------------------------------------------------------------------------------------------------- Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-HF1, Cl. F, 6.86%, 7/15/29 225,000 201,656 - ---------------------------------------------------------------------------------------------------------- NationsBank Trust, Lease Pass-Through Certificates, Series 1997A-1, 7.442%, 1/10/11(6) 500,000 503,516 - ---------------------------------------------------------------------------------------------------------- Residential Funding Corp., Mtg. Pass-Through Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 573,504 586,586 - ---------------------------------------------------------------------------------------------------------- Ryland Mortgage Securities Corp. III, Sub. Bonds, Series 1992-A, Cl. 1A, 8.284%, 3/29/30(6) 363,828 364,966 - ---------------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.136%, 4/25/26 1,977,170 1,324,704 ------------ 5,724,135 ------------ Total Mortgage-Backed Obligations (Cost $139,620,843) 141,891,912 ========================================================================================================== U.S. Government Obligations--9.1% - ---------------------------------------------------------------------------------------------------------- U.S. Treasury Bonds: 10.375%, 11/15/09(8) 1,000,000 1,215,626 11.625%, 11/15/04 2,375,000 3,076,368 12.75%, 11/15/10 1,000,000 1,388,126 8.75%, 5/15/20 4,273,000 5,186,358 8.875%, 8/15/17(9) 6,000,000 7,306,878 - ---------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 7.50%, 10/31/99 2,600,000 2,674,752 ------------ Total U.S. Government Obligations (Cost $20,712,691) 20,848,108 ========================================================================================================== Foreign Government Obligations--0.4% - ---------------------------------------------------------------------------------------------------------- International Bank for Reconstruction & Development Bonds, 12.50%, 7/25/97(5)NZD 800,000 544,894 - ---------------------------------------------------------------------------------------------------------- New Zealand (Government of) Bonds, 10%, 7/15/97NZD 390,000 264,515 ------------ Total Foreign Government Obligations (Cost $770,253) 809,409
13 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- ========================================================================================================== Corporate Bonds and Notes--47.3% - ---------------------------------------------------------------------------------------------------------- Basic Industry--3.0% - ---------------------------------------------------------------------------------------------------------- Chemicals--1.1% FMC Corp., 8.75% Sr. Nts., 4/1/99 $ 250,000 $ 259,426 - ---------------------------------------------------------------------------------------------------------- Harris Chemical North America, Inc., 10.75% Gtd. Sr. Sub. Nts., 10/15/03 100,000 102,500 - ---------------------------------------------------------------------------------------------------------- NL Industries, Inc.: 0%/13% Sr. Sec. Disc. Nts., 10/15/05(10) 50,000 47,562 11.75% Sr. Sec. Nts., 10/15/03 112,000 122,500 - ---------------------------------------------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(7) 200,000 198,000 - ---------------------------------------------------------------------------------------------------------- Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 900,000 961,609 - ---------------------------------------------------------------------------------------------------------- Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 560,814 - ---------------------------------------------------------------------------------------------------------- Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 250,000 271,250 ------------ 2,523,661 - ---------------------------------------------------------------------------------------------------------- Containers--0.2% IVEX Holdings Corp., 0%/13% Sr. Disc. Debs., Series B, 3/15/05(10) 200,000 162,000 - ---------------------------------------------------------------------------------------------------------- U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06 250,000 268,125 ------------ 430,125 - ---------------------------------------------------------------------------------------------------------- Metals/Mining--0.8% Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 1,067,173 - ---------------------------------------------------------------------------------------------------------- Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 900,000 864,000 ------------ 1,931,173 - ---------------------------------------------------------------------------------------------------------- Paper--0.7% Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07(7) 50,000 50,125 - ---------------------------------------------------------------------------------------------------------- Repap New Brunswick, Inc., 9.125% First Priority Sr. Sec. Nts., 7/15/00(6) 400,000 398,000 - ---------------------------------------------------------------------------------------------------------- Repap Wisconsin, Inc.: 9.25% First Priority Sr. Sec. Nts., 2/1/02 500,000 506,250 9.875% Second Priority Sr. Nts., 5/1/06 200,000 203,000 - ---------------------------------------------------------------------------------------------------------- Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 425,218 428,093 ------------ 1,585,468 - ---------------------------------------------------------------------------------------------------------- Steel--0.2% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 350,000 361,375 - ---------------------------------------------------------------------------------------------------------- Consumer Related--4.0% - ---------------------------------------------------------------------------------------------------------- Consumer Products--0.6% TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 370,000 425,500 - ---------------------------------------------------------------------------------------------------------- Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,055,000 ------------ 1,480,500
14 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Food/Beverages/Tobacco--0.3% B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(7) $ 250,000 $ 248,892 - ---------------------------------------------------------------------------------------------------------- ConAgra, Inc., 9.75% Sr. Nts., 11/1/97 500,000 506,081 ------------ 754,973 - ---------------------------------------------------------------------------------------------------------- Healthcare--1.3% Grace (W.R.) & Co., 7.25% Medium-Term Nts., 7/15/97 2,000,000 2,001,078 - ---------------------------------------------------------------------------------------------------------- HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 527,500 - ---------------------------------------------------------------------------------------------------------- Imcera Group, Inc., 6% Nts., 10/15/03 500,000 476,565 ------------ 3,005,143 - ---------------------------------------------------------------------------------------------------------- Hotel/Gaming--0.6% Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 100,000 104,750 - ---------------------------------------------------------------------------------------------------------- HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 800,000 820,000 - ---------------------------------------------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(7) 100,000 101,250 - ---------------------------------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02 210,000 276,150 ------------ 1,302,150 - ---------------------------------------------------------------------------------------------------------- Restaurants--0.9% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 160,000 167,600 - ---------------------------------------------------------------------------------------------------------- Foodmaker, Inc.: 9.25% Sr. Nts., 3/1/99 1,000,000 1,030,000 9.75% Sr. Sub. Nts., 6/1/02 750,000 779,062 ------------ 1,976,662 - ---------------------------------------------------------------------------------------------------------- Textile/Apparel--0.3% CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(5) 40,000 40,500 - ---------------------------------------------------------------------------------------------------------- Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 466,289 - ---------------------------------------------------------------------------------------------------------- William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06 200,000 210,500 ------------ 717,289 - ---------------------------------------------------------------------------------------------------------- Energy--4.7% - ---------------------------------------------------------------------------------------------------------- Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(7) 200,000 199,500 - ---------------------------------------------------------------------------------------------------------- Chesapeake Energy Corp., 12% Gtd. Sr. Exchangeable Nts., 3/1/01 675,000 718,875 - ---------------------------------------------------------------------------------------------------------- Coastal Corp., 8.75% Sr. Nts., 5/15/99 325,000 338,341 - ---------------------------------------------------------------------------------------------------------- Eastern Energy Ltd., 6.75% Nts., 12/1/06(7) 2,000,000 1,941,718 - ---------------------------------------------------------------------------------------------------------- J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 850,000 877,625 - ---------------------------------------------------------------------------------------------------------- Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 500,000 522,500 - ---------------------------------------------------------------------------------------------------------- McDermott, Inc., 9.375% Nts., 3/15/02 100,000 104,503 - ---------------------------------------------------------------------------------------------------------- Mesa Operating Co., 10.625% Gtd. Sr. Sub. Nts., 7/1/06 740,000 845,450 - ---------------------------------------------------------------------------------------------------------- Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,266,728 - ---------------------------------------------------------------------------------------------------------- Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 750,000 716,250
15 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Energy (continued) Phillips Petroleum Co., 7.53% Pass-Through Certificates, Series 1994-A1, 9/27/98 $ 269,513 $ 272,095 - ---------------------------------------------------------------------------------------------------------- TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,848,930 - ---------------------------------------------------------------------------------------------------------- Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07(7) 100,000 100,500 ------------ 10,753,015 - ---------------------------------------------------------------------------------------------------------- Financial Services--12.5% - ---------------------------------------------------------------------------------------------------------- Banks & Thrifts--2.6% BankAmerica Institute, 8.07% Gtd. Bonds, Series A, 12/31/26(5) 1,000,000 1,002,165 - ---------------------------------------------------------------------------------------------------------- Banque Nationale de Paris, 9.875% Debs., 5/25/98 205,000 210,946 - ---------------------------------------------------------------------------------------------------------- Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 25,000 25,097 - ---------------------------------------------------------------------------------------------------------- Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 1,000,000 1,000,202 - ---------------------------------------------------------------------------------------------------------- Deutsche Bank Financial, Inc., 6.70% Gtd. Nts., 12/13/06 1,000,000 973,350 - ---------------------------------------------------------------------------------------------------------- First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 325,000 330,471 - ---------------------------------------------------------------------------------------------------------- First Nationwide Holdings, Inc.: 10.625% Sr. Sub. Nts., 10/1/03 500,000 555,000 9.125% Sr. Sub. Nts., 1/15/03 500,000 518,750 - ---------------------------------------------------------------------------------------------------------- National Westminster Bank plc, 9.375% Gtd. Capital Nts., 11/15/03 70,000 78,777 - ---------------------------------------------------------------------------------------------------------- Royal Bank of Scotland Group (The) plc, 10.125% Sub. Gtd. Capital Nts., 3/1/04 500,000 575,936 - ---------------------------------------------------------------------------------------------------------- Shoshone Partners Trust, 8% Sr. Nts., 5/31/02(5)(6) 177,000 177,245 - ---------------------------------------------------------------------------------------------------------- Suntrust Banks, Inc., 8.875% Debs., 2/1/98 500,000 508,429 ------------ 5,956,368 - ---------------------------------------------------------------------------------------------------------- Diversified Financial--8.5% Aames Financial Corp., 9.125% Sr. Nts., 11/1/03 400,000 410,000 - ---------------------------------------------------------------------------------------------------------- Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 305,427 - ---------------------------------------------------------------------------------------------------------- Beneficial Corp., 12.875% Debs., 8/1/13 20,000 22,288 - ---------------------------------------------------------------------------------------------------------- BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,658,836 - ---------------------------------------------------------------------------------------------------------- Cityscape Financial Corp., 12.75% Sr. Nts., 6/1/04(7) 700,000 693,000 - ---------------------------------------------------------------------------------------------------------- Enterprise Rent-A-Car USA Finance Co., 7.875% Nts., 3/15/98(7) 1,500,000 1,517,685 - ---------------------------------------------------------------------------------------------------------- Ford Motor Credit Co.: 6.75% Nts., 8/15/08 1,000,000 966,193 9.90% Medium-Term Nts., 11/6/97 2,000,000 2,028,398 - ---------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., 6.875% Nts., 3/1/03 750,000 752,047 - ---------------------------------------------------------------------------------------------------------- Midland American Capital Corp., 12.75% Gtd. Nts., 11/15/03 205,000 220,874 - ---------------------------------------------------------------------------------------------------------- NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,636,311 - ---------------------------------------------------------------------------------------------------------- Olympic Financial Ltd., Units (each unit consists of $1,000 principal amount of 11.50% sr. nts., 3/15/07 and one warrant to purchase 6.84 shares of common stock)(11) 200,000 206,500 - ---------------------------------------------------------------------------------------------------------- Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,872,410
16 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Diversified Financial (continued) Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 $1,600,000 $ 1,634,221 - ---------------------------------------------------------------------------------------------------------- Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,008,031 - ---------------------------------------------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts., Series B, 4/1/02 1,125,000 1,198,125 - ---------------------------------------------------------------------------------------------------------- Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,306,965 - ---------------------------------------------------------------------------------------------------------- Washington Mutual Capital I, 8.375% Gtd. Bonds, 6/1/27 2,000,000 2,031,834 ------------ 19,469,145 - ---------------------------------------------------------------------------------------------------------- Insurance--1.4% Aetna Services, Inc., 8% Debs., 1/15/17 1,000,000 995,325 - ---------------------------------------------------------------------------------------------------------- Allmerica Capital I, 8.207% Debs., 2/3/27(7) 2,000,000 2,019,166 - ---------------------------------------------------------------------------------------------------------- Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03(7) 200,000 207,000 ------------ 3,221,491 - ---------------------------------------------------------------------------------------------------------- Housing Related--0.9% - ---------------------------------------------------------------------------------------------------------- Building Materials--0.1% Building Materials Corp. of America, 8.625% Sr. Nts., 12/15/06 50,000 51,000 - ---------------------------------------------------------------------------------------------------------- Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07(7) 100,000 100,000 ------------ 151,000 - ---------------------------------------------------------------------------------------------------------- Homebuilders/Real Estate--0.8% Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06 50,000 51,750 - ---------------------------------------------------------------------------------------------------------- Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 50,000 54,250 - ---------------------------------------------------------------------------------------------------------- Standard Pacific Corp., 8.50% Sr. Nts., 6/15/07 235,000 235,588 - ---------------------------------------------------------------------------------------------------------- Trizec Hahn Corp., 7.95% Sr. Unsec. Debs., 6/1/07CAD 2,000,000 1,492,724 - ---------------------------------------------------------------------------------------------------------- U.S. Home Corp., 9.75% Sr. Nts., 6/15/03 100,000 104,500 ------------ 1,938,812 - ---------------------------------------------------------------------------------------------------------- Manufacturing--6.1% - ---------------------------------------------------------------------------------------------------------- Aerospace--2.0% Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02(5) 1,000,000 1,110,000 - ---------------------------------------------------------------------------------------------------------- Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,028,398 - ---------------------------------------------------------------------------------------------------------- Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 1,008,750 - ---------------------------------------------------------------------------------------------------------- Southwest Airlines Co., 9.25% Debs., 2/15/98 500,000 509,620 ------------ 4,656,768 - ---------------------------------------------------------------------------------------------------------- Automotive--1.4% Chrysler Corp., 10.95% Debs., 8/1/17 200,000 212,063 - ---------------------------------------------------------------------------------------------------------- Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,187,136 - ---------------------------------------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 200,000 220,500 - ---------------------------------------------------------------------------------------------------------- Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 522,518 ------------ 3,142,217
17 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Capital Goods--2.7% Caterpillar, Inc., 9.75% Debs., 6/1/19 $1,750,000 $1,898,097 - ---------------------------------------------------------------------------------------------------------- Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06 650,000 695,500 - ---------------------------------------------------------------------------------------------------------- Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 500,000 545,000 - ---------------------------------------------------------------------------------------------------------- Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 500,000 527,500 - ---------------------------------------------------------------------------------------------------------- Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07(7) 50,000 51,250 - ---------------------------------------------------------------------------------------------------------- Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000 1,063,093 - ---------------------------------------------------------------------------------------------------------- Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 250,000 256,250 - ---------------------------------------------------------------------------------------------------------- Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,035,994 ------------ 6,072,684 - ---------------------------------------------------------------------------------------------------------- Media--3.6% - ---------------------------------------------------------------------------------------------------------- Broadcasting--1.5% Allbritton Communications Co., 11.50% Sr. Sub. Debs., 8/15/04 675,000 712,125 - ---------------------------------------------------------------------------------------------------------- American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 700,000 712,250 - ---------------------------------------------------------------------------------------------------------- Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 750,000 787,500 - ---------------------------------------------------------------------------------------------------------- Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 520,000 565,500 - ---------------------------------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc.: 10% Sr. Sub. Nts., 9/30/05 200,000 207,000 9% Sr. Sub. Nts., 7/15/07(7) 100,000 97,125 - ---------------------------------------------------------------------------------------------------------- Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06 400,000 394,000 ------------ 3,475,500 - ---------------------------------------------------------------------------------------------------------- Cable Television--1.6% Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 500,000 539,494 - ---------------------------------------------------------------------------------------------------------- EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(10) 250,000 211,250 - ---------------------------------------------------------------------------------------------------------- EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02(7) 300,000 298,500 - ---------------------------------------------------------------------------------------------------------- Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(10) 1,500,000 1,460,625 - ---------------------------------------------------------------------------------------------------------- TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,100,687 ------------ 3,610,556 - ---------------------------------------------------------------------------------------------------------- Diversified Media--0.4% Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 500,000 517,500 - ---------------------------------------------------------------------------------------------------------- Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 150,000 154,500 - ---------------------------------------------------------------------------------------------------------- Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07(7) 200,000 195,250 ------------ 867,250 - ---------------------------------------------------------------------------------------------------------- Entertainment/Film--0.1% Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 250,000 250,555 - ---------------------------------------------------------------------------------------------------------- Other--0.3% - ---------------------------------------------------------------------------------------------------------- Services--0.3% Archer Daniels Midland Co., 7.125% Debs., 3/1/13 750,000 758,350
18 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Retail--1.5% - ---------------------------------------------------------------------------------------------------------- Department Stores--0.3% Sears Canada, Inc., 11.70% Debs., 7/10/00CAD $ 500,000 $ 420,573 - ---------------------------------------------------------------------------------------------------------- Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 309,921 ------------ 730,494 - ---------------------------------------------------------------------------------------------------------- Specialty Retailing--0.3% May Department Stores Cos., 10.625% Debs., 11/1/10 405,000 520,947 - ---------------------------------------------------------------------------------------------------------- Specialty Retailers, Inc., 9% Gtd. Sr. Sub. Nts., 7/15/07(7) 100,000 101,000 ------------ 621,947 - ---------------------------------------------------------------------------------------------------------- Supermarkets--0.9% Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 100,000 111,875 - ---------------------------------------------------------------------------------------------------------- Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 1,000,000 1,049,586 - ---------------------------------------------------------------------------------------------------------- Ralph's Grocery Co. (New): 11% Sr. Sub. Nts., 6/15/05(7) 200,000 218,000 10.45% Sr. Nts., 6/15/04 200,000 215,750 10.45% Sr. Nts., 6/15/04 300,000 323,625 - ---------------------------------------------------------------------------------------------------------- Randall's Food Markets, 9.375% Sr. Sub. Nts., 7/1/07(7) 200,000 199,000 ------------ 2,117,836 - ---------------------------------------------------------------------------------------------------------- Technology--5.6% - ---------------------------------------------------------------------------------------------------------- Information Technology--3.3% Cellular Communications International, Inc., Zero Coupon Sr. Disc. Nts., 11.23%, 8/15/00(12) 2,150,000 1,650,125 - ---------------------------------------------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(7) 250,000 253,125 - ---------------------------------------------------------------------------------------------------------- General Electric Capital Corp., 8.75% Debs., 5/21/07(9) 1,000,000 1,125,740 - ---------------------------------------------------------------------------------------------------------- Globalstar LP/Globalstar Capital Corp., 11.25% Sr. Nts., 6/15/04(7) 105,000 98,963 - ---------------------------------------------------------------------------------------------------------- Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 100,000 92,000 - ---------------------------------------------------------------------------------------------------------- Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 500,000 482,500 - ---------------------------------------------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 740,000 751,100 - ---------------------------------------------------------------------------------------------------------- PriCellular Wireless Corp.: 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(10) 200,000 189,000 0%/14% Sr. Sub. Disc. Nts., 11/15/01(10) 1,050,000 1,107,750 10.75% Sr. Nts., 11/1/04 125,000 131,875 - ---------------------------------------------------------------------------------------------------------- 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 ordinary shares)(5)(10)(11) 1,000,000 570,000 - ---------------------------------------------------------------------------------------------------------- Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 200,000 202,500 - ---------------------------------------------------------------------------------------------------------- Unisys Corp., 11.75% Sr. Nts., 10/15/04 300,000 325,500 - ---------------------------------------------------------------------------------------------------------- USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 500,000 470,000 ------------ 7,450,178
19 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Telecommunications-Technology--2.3% American Communications Services, Inc., 0%/12.75% Sr. Disc. Nts., 4/1/06(10) $ 260,000 $ 143,000 - ---------------------------------------------------------------------------------------------------------- Bell Cablemedia plc, 0%/11.875% Sr. Disc. Nts., 9/15/05(10) 700,000 588,000 - ---------------------------------------------------------------------------------------------------------- Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06(10) 300,000 196,500 - ---------------------------------------------------------------------------------------------------------- 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 ordinary shares)(10)(11) 300,000 196,500 - ---------------------------------------------------------------------------------------------------------- Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(10) 650,000 442,000 - ---------------------------------------------------------------------------------------------------------- GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(7)(10) 100,000 59,625 - ---------------------------------------------------------------------------------------------------------- GST USA, Inc., 0%/13.875% Bonds, 12/15/05(10) 305,000 189,863 - ---------------------------------------------------------------------------------------------------------- ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(10) 625,000 450,000 - ---------------------------------------------------------------------------------------------------------- McLeod, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(7)(10) 240,000 154,200 - ---------------------------------------------------------------------------------------------------------- MFS Communications Co., Inc.: 0%/8.875% Sr. Disc. Nts., 1/15/06(10) 700,000 556,500 0%/9.375% Sr. Disc. Nts., 1/15/04(10) 100,000 93,500 - ---------------------------------------------------------------------------------------------------------- NTL, Inc., 10% Sr. Nts., 2/15/07(7) 100,000 102,250 - ---------------------------------------------------------------------------------------------------------- Pacific Bell, 8.50% Debs., 8/15/31 1,000,000 1,058,229 - ---------------------------------------------------------------------------------------------------------- Teleport Communications Group, Inc.: 0%/11.125% Sr. Disc. Nts., 7/1/07(10) 150,000 108,563 9.875% Sr. Nts., 7/1/06 700,000 749,000 - ---------------------------------------------------------------------------------------------------------- Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(10) 100,000 72,500 ------------ 5,160,230 - ---------------------------------------------------------------------------------------------------------- Transportation--1.5% - ---------------------------------------------------------------------------------------------------------- Railroads--1.3% Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,182,250 - ---------------------------------------------------------------------------------------------------------- Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 730,101 - ---------------------------------------------------------------------------------------------------------- Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(10) 1,100,000 929,500 - ---------------------------------------------------------------------------------------------------------- Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 107,317 ------------ 2,949,168 - ---------------------------------------------------------------------------------------------------------- Trucking--0.2% Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(7) 300,000 298,500 - ---------------------------------------------------------------------------------------------------------- Western Star Truck Holdings Ltd., 8.75% Sr. Nts., 5/1/07(7) 250,000 257,500 ------------ 556,000
20 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Face Market Value Amount(1) See Note 1 - ---------------------------------------------------------------------------------------------------------- Utilities--3.6% - ---------------------------------------------------------------------------------------------------------- Electric Utilities--1.2% CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 $ 250,000 $ 268,125 - ---------------------------------------------------------------------------------------------------------- California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 600,000 649,500 - ---------------------------------------------------------------------------------------------------------- Calpine Corp., 10.50% Sr. Nts., 5/15/06 400,000 436,000 - ---------------------------------------------------------------------------------------------------------- Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 250,000 253,374 - ---------------------------------------------------------------------------------------------------------- First PV Funding Corp.: 10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 197,000 210,051 10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 3,000 3,000 - ---------------------------------------------------------------------------------------------------------- Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04(7) 175,000 171,500 - ---------------------------------------------------------------------------------------------------------- Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 266,399 - ---------------------------------------------------------------------------------------------------------- South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 561,502 ------------ 2,819,451 - ---------------------------------------------------------------------------------------------------------- Gas Utilities--1.1% Florida Gas Transmission Environmental Corp., 7.75% Sr. Nts., 11/1/97(7) 500,000 502,766 - ---------------------------------------------------------------------------------------------------------- Laclede Gas Co., 8.50% First Mtg. Bonds, 11/15/04 500,000 539,991 - ---------------------------------------------------------------------------------------------------------- National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 516,622 - ---------------------------------------------------------------------------------------------------------- Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 542,011 - ---------------------------------------------------------------------------------------------------------- Union Gas Ltd., 13% Debs., 6/30/03CAD 518,000 404,639 ------------ 2,506,029 - ---------------------------------------------------------------------------------------------------------- Telephone Utilities--1.3% GTE Corp., 8.85% Debs., 3/1/98 300,000 305,437 - ---------------------------------------------------------------------------------------------------------- New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,784,845 ------------ 3,090,282 ------------ Total Corporate Bonds and Notes (Cost $105,724,662) 108,393,845 Shares ========================================================================================================== Preferred Stocks--1.6% - ---------------------------------------------------------------------------------------------------------- Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred Securities, Series A 80,000 2,000,000 - ---------------------------------------------------------------------------------------------------------- CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 23,000 830,875 - ---------------------------------------------------------------------------------------------------------- Fresenius Medical Care Trust, 9% Preferred Securities 605,000 629,200 - ---------------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc., 14% Sr. Exchangeable Preferred(13)(14) 3,157 166,532 ------------ Total Preferred Stocks (Cost $3,339,070) 3,626,607 ========================================================================================================== Other Securities--0.2% - ---------------------------------------------------------------------------------------------------------- WorldCom, Inc., 8% Cv. Depositary Shares each Representing 1/100 Share of Dividend Enhanced Convertible Stock (Cost $348,310) 5,000 563,750
21 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Market Value Units See Note 1 ========================================================================================================== Rights, Warrants and Certificates--0.0% - ---------------------------------------------------------------------------------------------------------- American Communications Services, Inc. Wts., Exp. 11/05(5) 300 $ 15,000 - ---------------------------------------------------------------------------------------------------------- Cellular Communications International, Inc. Wts., Exp. 8/03(5) 500 7,500 - ---------------------------------------------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/05(5) 1,980 15,840 - ---------------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc. Wts., Exp. 2/09(5) 3,050 30 ------------ Total Rights, Warrants and Certificates (Cost $0) 38,370 Face Amount(1) ========================================================================================================== Structured Instruments--0.3% - ---------------------------------------------------------------------------------------------------------- Daiwa Finance Corp. (New York), Daiwa Physical Commodity Excess Return Index Linked Nts., 4.719%, 8/21/97(6) (Cost $700,000) $700,000 612,430 Date Strike Contracts ========================================================================================================== Call Options Purchased--0.0% - ---------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 6.625%, 5/15/07 Call Opt. (Cost $49,971) 9/97 100.56% 4,250 41,836 ========================================================================================================== Put Options Purchased--0.0% - ---------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 30-Yr. Futures, 9/97 Put Opt. (Cost $55,553) 8/97 108.00% 40 14,375 - ---------------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $271,321,353) 120.9% 276,840,642 - ---------------------------------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (20.9) (47,933,664) ----- ------------ Net Assets 100.0% $228,906,978 ===== ============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: CAD--Canadian Dollar NZD--New Zealand Dollar 2. 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. 3. When-issued security to be delivered and settled after June 30, 1997. 4. 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. 5. Identifies issues considered to be illiquid or restricted. See Note 7 of Notes to Financial Statements. 22 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 $12,501,874 or 5.46% of the Fund's net assets, at June 30, 1997. 8. A sufficient amount of securities has been designated to cover outstanding written call options, as follows:
Face Expiration Exercise Premium Market Value Subject to Call Date Price Received See Note 1 - ----------------------------------------------------------------------------------------- Federal National Mortgage Assn., 7.50%, 8/1/27 $7,100,000 9/97 99.70% $49,922 $49,922
9. Securities with an aggregate market value of $1,415,339 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 5 of Notes to Financial Statements. 10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 11. 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. 12. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 13. Non-income producing security. 14. Interest or dividend is paid in kind. See accompanying Notes to Financial Statements. 23 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Assets and Liabilities June 30, 1997 (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ Assets Investments, at value (cost $271,321,353)--see accompanying statement $276,840,642 - -------------------------------------------------------------------------------- Receivables: Investments sold 12,763,772 Interest and principal paydowns 3,453,872 Shares of beneficial interest sold 551,847 Daily variation on futures contracts--Note 5 65,031 - -------------------------------------------------------------------------------- Other 3,599 ------------ Total assets 293,678,763 ================================================================================ Liabilities Bank overdraft 117,631 - -------------------------------------------------------------------------------- Options written, at value (premiums received $49,922)-- see accompanying statement--Note 6 49,922 - -------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $62,650,337 purchased on a when-issued basis)--Note 1 63,125,160 Dividends 601,256 Shares of beneficial interest redeemed 583,054 Distribution and service plan fees 143,155 Transfer and shareholder servicing agent fees 24,879 Daily variation on futures contracts--Note 5 12,375 Other 114,353 ------------ Total liabilities 64,771,785 ================================================================================ Net Assets $228,906,978 ============ ================================================================================ Composition of Net Assets Paid-in capital $227,583,755 - -------------------------------------------------------------------------------- Undistributed net investment income 39,270 - -------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (4,074,517) - -------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 5,358,470 ------------ Net assets $228,906,978 ============ 24 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $183,378,529 and 17,130,577 shares of beneficial interest outstanding) $10.70 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $11.23 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (less applicable contingent deferred sales charge) and offering price per share (based on net assets of $40,138,033 and 3,750,747 shares of beneficial interest outstanding) $10.70 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (less applicable contingent deferred sales charge) and offering price per share (based on net assets of $5,390,416 and 503,300 shares of beneficial interest outstanding) $10.71 See accompanying Notes to Financial Statements. 25 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statement of Operations For the Six Months Ended June 30, 1997 (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ Investment Income Interest (net of foreign withholding taxes of $768) $9,890,862 - ------------------------------------------------------------------------------- Dividends 100,450 ---------- Total income 9,991,312 ================================================================================ Expenses Management fees--Note 4 863,144 - -------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 231,294 Class B 194,036 Class C 24,172 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 186,474 - -------------------------------------------------------------------------------- Shareholder reports 69,254 - -------------------------------------------------------------------------------- Custodian fees and expenses 41,662 - -------------------------------------------------------------------------------- Legal and auditing fees 9,368 - -------------------------------------------------------------------------------- Trustees' fees and expenses 3,233 - -------------------------------------------------------------------------------- Other 7,255 ---------- Total expenses 1,629,892 ================================================================================ Net Investment Income 8,361,420 ================================================================================ Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments 43,347 Closing of futures contracts 38,844 Closing of options written--Note 6 2,001 Foreign currency transactions (12,521) ---------- Net realized gain 71,671 - -------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 83,093 Translation of assets and liabilities denominated in foreign currencies (32,653) ---------- Net change 50,440 ---------- Net realized and unrealized gain 122,111 ================================================================================ Net Increase in Net Assets Resulting From Operations $8,483,531 ========== See accompanying Notes to Financial Statements. 26 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Statements of Changes in Net Assets - --------------------------------------------------------------------------------
Six Months Ended Year Ended June 30, 1997 December 31, (Unaudited) 1996 ================================================================================================ Operations Net investment income $ 8,361,420 $ 15,830,998 - ------------------------------------------------------------------------------------------------ Net realized gain 71,671 313,209 - ------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation 50,440 (5,325,416) ------------ ------------ Net increase in net assets resulting from operations 8,483,531 10,818,791 ================================================================================================ Dividends and Distributions To Shareholders Dividends from net investment income: Class A (6,888,584) (12,577,460) Class B (1,275,135) (2,405,982) Class C (158,431) (214,115) - ------------------------------------------------------------------------------------------------ Tax return of capital distribution: Class A -- (517,955) Class B -- (103,919) Class C -- (11,567) ================================================================================================ Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A (10,274,768) 28,392,776 Class B 1,297,394 659,280 Class C 1,061,183 404,645 ================================================================================================ Net Assets Total increase (decrease) (7,754,810) 24,444,494 - ------------------------------------------------------------------------------------------------ Beginning of period 236,661,788 212,217,294 ------------ ------------ End of period (including undistributed net investment income of $39,270 for the period ended 6/30/97) $228,906,978 $236,661,788 ============ ============
See accompanying Notes to Financial Statements. 27 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Financial Highlights - --------------------------------------------------------------------------------
Class A ----------------------------------------------------------------------- Six Months Ended June 30, 1997 Year Ended December 31, (Unaudited) 1996 1995 1994 1993 1992(2) ===================================================================================================================== Per Share Operating Data: Net asset value, beginning of period $10.70 $10.98 $10.01 $11.12 $10.74 $10.80 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .39 .78 .69 .65 .69 .75 Net realized and unrealized gain (loss) -- (.28) .96 (1.08) .40 (.05) ------ ------ ------ ------ ------ ------ Total income (loss) from investment operations .39 .50 1.65 (.43) 1.09 .70 - --------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.39) (.75) (.68) (.65) (.71) (.76) Dividends in excess of net investment income -- -- -- (.03) -- -- Tax return of capital distribution -- (.03) -- -- -- -- ------ ------ ------ ------ ------ ------ Total dividends and distributions to shareholders (.39) (.78) (.68) (.68) (.71) (.76) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.70 $10.70 $10.98 $10.01 $11.12 $10.74 ====== ====== ====== ====== ====== ====== ===================================================================================================================== Total Return, at Net Asset Value(3) 3.70% 4.87% 16.94% (3.87)% 10.30% 6.77% ===================================================================================================================== Ratios/Supplemental Data: Net assets, end of period (in thousands) $183,379 $193,515 $169,059 $96,640 $110,759 $106,290 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $189,375 $178,130 $116,940 $102,168 $111,702 $98,672 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 7.37%(4) 7.35% 6.47% 6.25% 6.20% 7.00% Expenses, before voluntary reimbursement by the Manager 1.27%(4) 1.30% 1.27% 1.06% 1.06% 1.10% Expenses, net of voluntary reimbursement by the Manager N/A N/A 1.26% N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 23.3% 53.7% 175.4% 70.3% 110.1% 116.4%
1. For the period from July 11, 1995 (inception of offering) to December 31, 1995. 2. For the period from May 1, 1993 (inception of offering) to December 31, 1993. 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. 4. Annualized. 28 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Class B Class C ------------------------------------------------ -------------------------------- Six Months Six Months Ended Ended June 30, June 30, Year Ended 1997 Year Ended December 31, 1997 December 31, (Unaudited) 1996 1995 1994 1993 (Unaudited) 1996 1995(1) ================================================================================================================================ Per Share Operating Data: Net asset value, beginning of period $10.69 $10.98 $10.01 $11.11 $11.10 $10.70 $10.99 $10.89 - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .35 .70 .63 .58 .40 .35 .70 .28 Net realized and unrealized gain (loss) .01 (.29) .94 (1.08) .03 .01 (.29) .10 ------ ------ ------ ------ ------ ------ ------ ------ Total income (loss) from investment operations .36 .41 1.57 (.50) .43 .36 .41 .38 - -------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.35) (.67) (.60) (.57) (.42) (.35) (.67) (.28) Dividends in excess of net investment income -- -- -- (.03) -- -- -- -- Tax return of capital distribution -- (.03) -- -- -- -- (.03) -- ------ ------ ------ ------ ------ ------ ------ ------ Total dividends and distributions to shareholders (.35) (.70) (.60) (.60) (.42) (.35) (.70) (.28) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.70 $10.69 $10.98 $10.01 $11.11 $10.71 $10.70 $10.99 ====== ====== ====== ====== ====== ====== ====== ====== ================================================================================================================================ Total Return, at Net Asset Value(3) 3.41% 3.99% 16.06% (4.53)% 3.91% 3.40% 4.00% 3.76% ================================================================================================================================ Ratios/Supplemental Data: Net assets, end of period (in thousands) $40,138 $38,826 $39,187 $3,451 $1,809 $5,390 $4,322 $3,971 - -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $39,139 $38,068 $12,823 $2,747 $922 $4,881 $3,404 $979 - -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 6.60%(4) 6.59% 5.84% 5.53% 4.80%(4) 6.58%(4) 6.60% 6.32%(4) Expenses, before voluntary reimbursement by the Manager 2.02%(4) 2.05% 2.12% 1.78% 1.90%(4) 2.02%(4) 2.05% 2.25%(4) Expenses, net of voluntary reimbursement by the Manager N/A N/A 2.08% N/A N/A N/A N/A 1.96%(4) - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 23.3% 53.7% 175.4% 70.3% 110.1% 23.3% 53.7% 175.4%
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 June 30, 1997 were $63,083,800 and $59,674,260, respectively. For the year ended December 31, 1995, purchases and sales of investment securities included mortgage "dollar-rolls." See accompanying Notes to Financial Statements. 29 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ 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's investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Investment Valuation. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by 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. 30 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ 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 June 30, 1997, the Fund had entered into outstanding when-issued or forward commitments of $62,650,337. 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, and Gains and Losses. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. 31 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (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. - -------------------------------------------------------------------------------- Distributions to Shareholders. The Fund intends to declare dividends separately for Class A, Class B and Class C shares from net investment income each day the New York Stock Exchange is open for business and pay such dividends monthly. Distributions from net realized gains on investments, if any, will be declared at least once each year. - -------------------------------------------------------------------------------- Classification of Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes 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. - -------------------------------------------------------------------------------- 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. 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. 32 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ 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:
Six Months Ended June 30,1997 Year Ended December 31, 1996 ----------------------------- ---------------------------- Shares Amount Shares Amount - ------------------------------------------------------------------------------------------- Class A: Sold 1,131,530 $ 12,028,795 1,955,093 $ 20,810,615 Dividends reinvested 422,044 4,481,854 815,100 8,651,382 Issued in connection with the acquisition of: Connecticut Mutual Income Account--Note 8 -- -- 3,020,216 31,863,280 Jefferson-Pilot Investment Grade Bond Fund, Inc.--Note 8 -- -- 1,801,334 19,273,967 Redeemed (2,512,838) (26,785,417) (4,901,741) (52,206,468) ---------- ----------- ---------- ----------- Net increase (decrease) (959,264) $(10,274,768) 2,690,002 $ 28,392,776 ========== =========== ========== =========== - ------------------------------------------------------------------------------------------- Class B: Sold 574,859 $ 6,118,425 946,117 $ 10,072,138 Dividends reinvested 81,462 865,093 163,467 1,735,740 Issued in connection with the acquisition of: Connecticut Mutual Income Account--Note 8 -- -- 8,156 86,045 Redeemed (536,072) (5,686,124) (1,057,712) (11,234,643) ---------- ----------- ---------- ----------- Net increase 120,249 $ 1,297,394 60,028 $ 659,280 ========== =========== ========== =========== - ------------------------------------------------------------------------------------------- Class C: Sold 155,245 $ 1,653,407 279,925 $ 2,989,461 Dividends reinvested 10,784 114,615 17,112 181,810 Redeemed (66,474) (706,839) (254,743) (2,766,626) ---------- ----------- ---------- ----------- Net increase 99,555 $ 1,061,183 42,294 $ 404,645 ========== =========== ========== ===========
================================================================================ 3. Unrealized Gains and Losses on Investments At June 30, 1997, net unrealized appreciation on investments of $5,519,289 was composed of gross appreciation of $7,844,231, and gross depreciation of $2,324,942. 33 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) - -------------------------------------------------------------------------------- ================================================================================ 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 aggregate net assets over $1 billion. For the six months ended June 30, 1997, commissions (sales charges paid by investors) on sales of Class A shares totaled $145,865, of which $57,614 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and C shares totaled $206,911 and $14,507, respectively, of which $22,720 was paid to an affiliated broker/dealer for Class B. During the six months ended June 30, 1997, OFDI received contingent deferred sales charges of $91,092, upon redemption of Class B shares as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a portion of its costs incurred in connection with the personal service and maintenance of 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 six months ended June 30, 1997, OFDI paid $77,555 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 34 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ The Fund has adopted Distribution and Service Plans for Class B and Class C shares to compensate OFDI for its services and 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, as compensation for sales commissions paid from its own resources at the time of sale and associated financing costs. OFDI also receives a service fee of 0.25% per year as compensation for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other financial institutions. Both fees are computed on the average annual net assets of Class B and Class C shares, determined as of the close of each regular business day. During the six months ended June 30, 1997, OFDI paid $3,000 to an affiliated broker/dealer as compensation for Class B personal service and maintenance expenses and retained $155,232 and $11,781, 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. At June 30, 1997, OFDI had incurred unreimbursed expenses of $1,004,511 for Class B and $67,542 for Class C. ================================================================================ 5. Futures Contracts The Fund may buy and sell interest rate futures contracts in order to gain exposure to or protect against changes in interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Fund may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. 35 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) - -------------------------------------------------------------------------------- ================================================================================ 5. Futures Contracts (continued) Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable or payable for the daily mark to market for variation margin. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. At June 30, 1997, the Fund had outstanding futures contracts to purchase and sell debt securities as follows:
Expiration Number of Valuation as of Unrealized Contracts to Purchase Date Futures Contracts June 30, 1997 Depreciation - -------------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 30 yr. 9/97 22 $ 2,443,375 $ 7,344 =========== -------- Contracts to Sell - -------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 5 yr. 9/97 190 $20,119,219 $109,297 U.S. Treasury Nts., 10 yr. 9/97 81 8,737,875 43,219 ----------- -------- $28,857,094 152,516 =========== -------- $159,860 ========
================================================================================ 6. Option Activity The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying securities at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a footnote to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. 36 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended June 30, 1997 was as follows: Call Options Put Options ------------------------ ----------------------- Number of Amount of Number of Amount of Options Premiums Options Premiums - -------------------------------------------------------------------------------- Options outstanding at December 31, 1996 -- $ -- -- $ -- Options written 7,100 49,922 9 2,618 Options closed or expired -- -- (9) (2,618) ----- ------- -- ------- Options outstanding at June 30, 1997 7,100 $49,922 -- $ -- ===== ======= == ======= ================================================================================ 7. Illiquid and Restricted Securities At June 30, 1997, 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 at June 30, 1997 was $17,674,153, which represents 7.72% of the Fund's net assets. 37 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) - -------------------------------------------------------------------------------- ================================================================================ 8. Acquisition of Connecticut Mutual Income Account and Jefferson-Pilot Investment Grade Bond Fund, Inc. On April 26, 1996, the Fund acquired all the net assets of Connecticut Mutual Income Account, pursuant to an agreement and plan of reorganization approved by the Connecticut Mutual Income Account shareholders on March 18, 1996. The Fund issued 3,020,216 and 8,156 shares of beneficial interest for Class A and Class B, respectively, valued at $31,863,280 and $86,045, in exchange for the net assets, resulting in combined Class A net assets of $189,629,984 and Class B net assets of $6,106,676 on April 26, 1996. The net assets acquired included net unrealized depreciation of $633,177. The exchange qualifies as a tax-free reorganization for federal income tax purposes. On December 20, 1996, the Fund acquired all the net assets of Jefferson-Pilot Investment Grade Bond Fund, Inc. pursuant to an agreement and plan of reorganization approved by the Jefferson-Pilot Investment Grade Bond Fund shareholders on December 3, 1996. The Fund issued 1,801,334 shares of beneficial interest for Class A, valued at $19,273,967, in exchange for the net assets, resulting in combined Class A net assets of $202,088,473 on December 20, 1996. The net assets acquired included net unrealized appreciation of $1,288,511. The exchange qualifies as a tax-free reorganization for federal income tax purposes. ================================================================================ 9. Subsequent Event Effective July 15, 1997, the Fund's portfolio manager is David P. Negri. He is the individual principally responsible for the day-to-day management of the Fund's portfolio. Mr. Negri is a Vice President of the Manager and of the Fund and has been a portfolio manager of the Fund since July 10, 1995. 38 Oppenheimer Bond Fund - -------------------------------------------------------------------------------- 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 David A. Rosenberg, Vice President Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary ================================================================================ Investment Adviser OppenheimerFunds, Inc. ================================================================================ Distributor OppenheimerFunds Distributor, Inc. ================================================================================ Transfer and Shareholder 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. The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer 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, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 39 Oppenheimer Bond Fund 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. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today, or visit us at our website at www.oppenheimerfunds.com--we're here to help. Internet 24-hr access to account information - ----------------------------------- 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-9pm ET Sat 10am-4pm 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 - ----------------------------------- RS0285.001.0697 August 30, 1997 [LOGO] OppenheimerFundsSM Distributor, Inc. -----END PRIVACY-ENHANCED MESSAGE-----