1735319
[FRONT COVER]
Oppenheimer Bond Fund
Semiannual Report June 30, 1996
[Picture of Pool Party]
"To help pay
for extras,
I count on the
money
I get from my
investments."
[Oppenheimer Logo]
<PAGE>
Yield
Standardized Yields
For the 30 Days Ended 6/30/96:(3)
Class A
6.57%
Class B
6.15%
Class C
6.15%
This Fund is for people who want solid income
and feel most comfortable getting it from an investment
that emphasizes quality securities.
How your Fund is Managed
Oppenheimer Bond Fund's portfolio seeks high income by investing primarily in
corporate bonds and government securities. The portfolio managers may invest in
different types of corporate and government securities to seek to reduce
exposure to market volatility. The Fund will, under normal market conditions,
invest at least 65% of its total assets in a diversified portfolio of
investment-grade securities, which may help reduce credit risk.
Performance
Total return, without considering sales charges, for the six months ended
6/30/96 for Class A, B and C shares were (0.83)%, (1.21)% and (1.28)%,
respectively.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 6/30/96 and since inception
of the Class on 4/15/88 were (0.95)%, 7.07% and 7.44%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 6/30/96 and
since inception of the Class on 5/1/93 were (1.65)% and 3.60%, respectively. For
Class C shares, cumulative total return since inception on 7/11/95 was 1.46%.(2)
Outlook
"Because of its strategic positioning, we think the Fund will continue to do
well. Currently, we expect that economic growth in the U.S. will continue,
though it may not necessarily accelerate. With this economic outlook, we will
continue to position the portfolio around income opportunities and avoid taking
on unnecessary interest rate risk."
David Rosenberg and David Negri
Portfolio Managers
June 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. 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. For more complete information, please review the
prospectus carefully before you invest.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 6/30/95, 6/30/91
and 4/15/88 (since inception), after deducting the current maximum initial sales
charge of 4.75%. The Fund's maximum sales charge rate for Class A shares was
lower during a portion of some of the periods shown, and actual investment
results will be different as a result of the change. Class B returns show
results of hypothetical investments on 6/30/95 and 5/1/93 (inception of class),
and after the deduction of the applicable contingent deferred sales charge of 5%
(1-year) and 3% (since inception). Class C return is cumulative and shows
results of a hypothetical investment on 7/11/95 after the deduction of the
applicable 1% contingent deferred sales charge. An explanation of the different
performance calculations is in the Fund's prospectus.
3. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 6/30/96, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
2 Oppenheimer Bond Fund
<PAGE>
[Picture of James C. Swain]
[Caption] James C. Swain
Chairman
Oppenheimer
Bond Fund
[Picture of Bridget A. Macaskill]
[Caption] Bridget A. Macaskill
President
Oppenheimer
Bond Fund
Dear Shareholder,
Because of rising interest rates, the bond market has been volatile during the
first half of 1996. But we believe inflation fears have been somewhat overblown
and for this reason the future remains bright for bonds.
Let's review the immediate past. During the first half of the year,
interest rates rose sharply, as investors became concerned about renewed
inflation. Why was inflation a worry? First, economic growth appeared to
accelerate, catching many by surprise. Second, gasoline and food prices
increased sharply. As a result, the yield on the benchmark 30-year U.S. Treasury
bond moved from 6% in January to 7% by mid-year.
Even though an increase of one percentage point may seem modest, to bond
market investors it means a significant reduction in the value of their bonds.
And the longer the bond's maturity, the larger its decline in value. As the
Fund's investment advisor, it's our job to seek to minimize and possibly avoid
the decline in bond values in a rising interest rate environment. We accomplish
this by monitoring interest rates and strategically allocating the Fund's assets
in favorable investments.
Our current outlook is that interest rates will ease by the end of the
year. There are two primary reasons for our forecast. First, the economy appears
to be growing less rapidly than it did in the second half of 1995. Retail sales,
for example, have slowed from their faster first-quarter clip. And, a slower
growing economy also suggests lower inflation and interest rates. Second,
because there is no shortage of crude oil, the rise in gasoline prices appears
to be temporary. Indeed, excluding energy and food prices, inflation is
virtually nonexistent.
With the yield on the 30-year Treasuries over 7%, bonds offer significant
value--providing investors with substantial income. Typically, the yield on a
bond is compared to the current inflation rate, which is currently about 3%.
This "spread" of approximately 4 percentage points between bond yields and
inflation is considered very generous, historically.
In addition to receiving higher income, the value of bonds would appreciate
if interest rates were to fall as we expect. The reason: if you're getting 7%
and other investors have to settle with 6.5% or 6%, then your bond is more
valuable in the marketplace. It's the mirror image of what happened during
the first half of 1996.
Recently, the stock market volatility has captured the attention of
investors and given bonds an even more attractive place in the portfolios of
many investors, particularly those who are nearing retirement. Given the current
circumstances, diversifying into other asset classes, rather than relying solely
on equities, may make more sense now than ever before.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
July 22, 1996
3 Oppenheimer Bond Fund
<PAGE>
[Pictures of David Negri, Portfolio Manager, with Mark Frank, Member of Fixed
Income Investment Team (top left) and of David Rosenberg, Portfolio Manager (top
right)]
Q+A
An interview with your Fund's managers.
Q What
is your
outlook
for the Fund?
How has the Fund performed over the past six months?
The Fund's performance was very strong compared to other domestic bond funds.
During a six month period when many fixed-income investments lost a lot of
ground due to rising interest rates, our performance was among the best of funds
that focus primarily on domestic bonds.(1)
What investments made a positive contribution to performance?
The single biggest factor responsible for the Fund's performance over the period
was keeping the average maturity of the bonds in our portfolio shorter than many
of our competitors. Because shorter average maturities tend to be less sensitive
to interest rate changes, as rates began to rise and bond prices started to
decline, the portfolio was somewhat insulated. This defensive positioning not
only helped our performance overall, but also contributed to the Fund's relative
outperformance.
Beyond our advantageous positioning in short average maturities, the
diversified structure of the portfolio helped the risk-adjusted performance. The
Fund's overweight in high yield corporate bonds--currently about 18% of the
Fund--was also a significant factor driving performance. Over the last six
months high yield bonds--aided by the increase in economic growth- outperformed
all other categories of bonds. As rates began to decline, our holdings in high
yield bonds helped to offset the declines from other bond sector holdings.
The final factor in our strong relative performance was our decision to
overweight mortgage-backed securities, relative to Treasuries in the U.S.
Government sector. In general, mortgages
[Picture of Len Darling]
1. Source: Lipper Analytical Services 6/30/96. This comparison does not take
sales charges into account.
4 Oppenheimer Bond Fund
<PAGE>
[Captions)
Facing page
Top left: David Negri, Portfolio
Manager, with Mark Frank, Member
of Fixed Income Investments Team
Top right: David Rosenberg,
Portfolio Manager
Bottom: Len Darling, Executive VP,
Director of Fixed Income
Investments
This page
Top: David Negri and Mark Frank
Bottom: David Rosenberg with
Leslie Falconio and Gina Palmieri,
Members of Fixed Income
Investments Team
[Picture of David Negri and Mark Frank]
A The Fund
will continue
to do well
because of
its strategic
positioning.
perform well when interest rates rise because the chance of early prepayment
through homeowner refinancing activity diminishes. Over the past six months,
mortgages also paid higher income than Treasuries, thus benefiting the Fund.(2)
Did any investments negatively impact the portfolio?
Not really. The bonds in our portfolio reacted to changes in the fixed-income
market as we expected. The Fund's short average maturity and high degree of
current income helped to offset the negative price performance of the general
bond market.
What areas are you currently targeting?
We think the economy is relatively healthy, which suggests that many high-yield
corporate bonds are worth the increased credit risk. So, we plan to maintain our
allocation in that high growth potential sector of the market.(3) Our focus
continues to be on companies we expect will grow faster than the economy.
Recently, many of the companies that fit this profile have been in the
telecommunications, media and cable businesses.
In investment-grade bonds, we're focusing on financial services firms,
where we expect ongoing consolidations to improve balance sheets and
profitability. We're also concentrating on oil- and gas-related businesses,
where technology is improving profits.
Finally, we continue to favor mortgage-related securities over Treasuries.
In particular, we like private label mortgages, which represent loans
underwritten by banks rather than the federal government and thus tend to offer
higher yields than U.S. government-backed securities. Private label mortgages
are an attractive investment because they are benefiting from the improvement in
the U.S. commercial real estate market.
What is your outlook for the Fund?
Because of its strategic positioning, we think the Fund will continue to do
well. Currently, we expect that economic growth in the U.S. will continue,
though it may not necessarily accelerate. With this economic outlook, we will
continue to position the portfolio around income opportunities and avoid taking
on unnecessary interest rate risk. [solid box]
[Picture of David Rosenberg with Leslie Falconio and Gina Palmieri]
2. The Fund's portfolio is subject to change.
3. Investors in high yield bonds are subject to a greater risk that the issuer
will default in its principal or interest payments.
5 Oppenheimer Bond Fund
<PAGE>
Financials
Contents
Statement of Investments 7
Statement of Assets and Liabilities 15
Statement of Operations 16
Statements of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 19
6 Oppenheimer Bond Fund
<PAGE>
Statement of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Mortgage-Backed Obligations--34.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Government Agency--26.6%
- ----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--20.2% Federal Home Loan Mortgage Corp.:
Certificates of Participation, 9%, 3/1/17 $ 598,020 $ 628,316
Certificates of Participation, Series 17-039, 13.50%, 11/1/10 67,157 79,370
Certificates of Participation, Series 17-094, 12.50%, 4/1/14 35,879 41,587
Collateralized Mtg. Obligations, Series 1548, Cl. C, 7%, 4/15/21 4,000,000 3,787,480
Gtd. Multiclass Mtg. Participation Certificates,
Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,497,180
----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 6,130,048 6,810,101
7%, 1/1/09 388,681 385,358
7%, 11/1/25 4,855,001 4,672,162
7%, 2/1/09 381,802 378,538
7.50%, 2/1/08 308,288 310,811
7.50%, 3/1/08 466,924 470,744
8%, 7/1/26(2) 10,000,000 10,075,000
Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 743,801 763,892
----------------------------------------------------------------------------------------------------
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,604,675
Series 1992-169, Cl. L, 7%, 9/25/22 5,965,000 5,506,411
Interest-Only Stripped Mtg.-Backed Security, Trust 240,
Cl. 2, 10.955%--14.895%, 9/1/23(3) 22,206,099 7,647,225
-----------
45,658,850
- ----------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--6.4% Government National Mortgage Assn.:
6%, 7/15/26(2) 4,000,000 3,967,500
6%, 7/20/25 1,913,494 1,897,948
7%, 7/15/09--5/15/26 5,423,673 5,216,025
8%, 6/15/05--10/15/06 1,995,209 2,051,731
9%, 2/15/09--6/15/09 540,322 573,966
10%, 11/15/09 300,733 330,819
10.50%, 12/15/17--5/15/21 353,122 389,844
12%, 1/15/99 73,389 42,544
12.75%, 6/15/15 4,114 4,839
13%, 12/15/14 40,455 47,573
-----------
14,522,789
- ----------------------------------------------------------------------------------------------------------------------------------
Private--7.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial--5.0% CMC Securities Corp. I, Collateralized Mtg. Obligation,
Series 1993-D, Cl. D-3, 10%, 7/25/23(4) 678,860 708,985
----------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., Sub. Collateralized Mtg.
Obligations, Series X-Q13B, Cl. 3B1, 8.75%, 11/25/24 1,711,948 1,645,075
----------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(4) 1,000,000 1,033,125
Cl. 2-E, 8.70%, 9/25/25(4) 1,000,000 1,024,687
----------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1996-C1:
Cl. D-1, 7.51%, 2/15/06(4)(5) 1,000,000 951,250
Cl. E, 7.51%, 2/1/28(4)(5) 1,100,000 860,063
----------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. B, 8.75%, 5/25/24 700,000 718,375
7 Oppenheimer Bond Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Commercial Series 1994-C1, Cl. C, 8%, 6/25/26 $1,500,000 $ 1,505,625
(continued) Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,271,094
----------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1,
Cl. E, 9.18%, 1/20/06 700,000 597,625
----------
11,315,904
- ----------------------------------------------------------------------------------------------------------------------------------
Manufactured Housing--0.1% Green Tree Financial Corp., Series 1994-6. Cl. A3, 7.70%, 1/15/20 250,000 254,295
- ----------------------------------------------------------------------------------------------------------------------------------
Multi-Family--0.3% Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 668,456 687,675
Series 1991-M6, Cl. B4, 7.145%, 6/25/21(5) 76,002 73,247
----------
760,922
- ----------------------------------------------------------------------------------------------------------------------------------
Other--0.9% GE Capital Mortgage Services, Inc., Series 1994-14,
Cl. A1, 6.50%, 4/25/24 118,225 117,671
----------------------------------------------------------------------------------------------------
JHM Mtg. Acceptance Corp., 8.96% Collateralized Mtg.
Obligation Bonds, Series E, Cl. 5, 4/1/19 1,690,483 1,744,359
----------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI:
Interest-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B, 2.101%, 10/23/17(3) 148,684 38,379
Principal-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A, Zero Coupon, 8.903%, 10/23/17(6) 216,798 143,900
----------
2,044,309
- ----------------------------------------------------------------------------------------------------------------------------------
Residential--1.2% Mortgage Capital Funding, Inc., Multifamily Mortgage
Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%, 6/15/06(2)(4) 2,250,000 1,681,875
----------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 692,214 701,296
----------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds, Series 1992-A,
Cl. 1A, 7.17%, 3/29/30(5) 397,597 394,989
----------
2,778,160
----------
Total Mortgage-Backed Obligations (Cost $77,441,849) 77,335,229
==================================================================================================================================
U.S. Government Obligations--16.5%
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
11.625%, 11/15/02 2,600,000 3,274,375
11.625%, 11/15/04 5,500,000 7,215,313
8.75%, 5/15/20 5,000,000 5,976,559
8.875%, 8/15/17 7,500,000 9,002,339
----------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.75%, 6/30/99 3,350,000 3,390,826
7.375%, 2/15/98 3,400,000 3,461,625
7.75%, 1/31/00 1,800,000 1,877,061
7.75%, 12/31/99 2,950,000 3,075,375
Total U.S. Government Obligations (Cost $38,563,844) 37,273,473
----------
==================================================================================================================================
Foreign Government Obligations--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) Nts.,
Empresa Colombiana de Petroleos, 7.25%, 7/8/98 250,000 249,375
----------------------------------------------------------------------------------------------------
International Bank for Reconstruction & Development Bonds,
12.50%, 7/25/97 NZD 800,000 563,843
----------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 390,000 268,397
----------
Total Foreign Government Obligations (Cost $1,015,978) 1,081,615
8 Oppenheimer Bond Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
==================================================================================================================================
Loan Participation--0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional SA de CV, 11.80% Nts.,
9/19/96 (Cost $750,000)(7) $ 750,000 $ 753,750
==================================================================================================================================
Corporate Bonds and Notes--53.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Basic Industry--3.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.4% Burmah Castrol PLC, 7% Gtd. Medium-Term Nts., 12/15/97 500,000 505,745
----------------------------------------------------------------------------------------------------
FMC Corp., 8.75% Sr. Nts., 4/1/99 250,000 261,305
----------------------------------------------------------------------------------------------------
Lyondell Petrochemical Co., 8.25% Nts., 3/15/97 400,000 405,442
----------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05(8) 500,000 392,500
----------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 900,000 988,248
----------------------------------------------------------------------------------------------------
Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 560,307
----------
3,113,547
- ----------------------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.7% AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,082,838
- ----------------------------------------------------------------------------------------------------------------------------------
Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 1,050,217
----------------------------------------------------------------------------------------------------
Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,603,402
-----------
3,736,457
- ----------------------------------------------------------------------------------------------------------------------------------
Paper--0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 350,000 352,625
----------------------------------------------------------------------------------------------------
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 300,000 309,956
----------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02 500,000 473,750
----------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 443,818 436,660
----------
1,572,991
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer Related--6.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer Products--0.7% TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(4) 550,000 576,125
----------------------------------------------------------------------------------------------------
Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,064,321
----------
1,640,446
- ----------------------------------------------------------------------------------------------------------------------------------
Food/Beverages/Tobacco--0.7% B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(4) 250,000 247,175
----------------------------------------------------------------------------------------------------
ConAgra, Inc.:
7.40% Sub. Nts., 9/15/04 250,000 246,580
9.75% Sr. Nts., 11/1/97 500,000 520,772
----------------------------------------------------------------------------------------------------
Nabisco, Inc., 8% Nts., 1/15/00 325,000 336,484
----------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc., 8.75% Debs., 12/1/96 300,000 303,453
----------
1,654,464
- ----------------------------------------------------------------------------------------------------------------------------------
Healthcare--2.3% Grace (W.R.) & Co., 7.25% Medium-Term Nts., 7/15/97 2,000,000 2,014,772
----------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 518,125
----------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 467,978
----------------------------------------------------------------------------------------------------
R.P. Scherer Corp., 6.75% Sr. Nts., 2/1/04 500,000 478,125
----------------------------------------------------------------------------------------------------
Service Corp. International, 7% Sr. Nts., 6/1/15 1,000,000 1,005,662
----------------------------------------------------------------------------------------------------
Total Renal Care, Inc., 0%/12% Sr. Sub. Disc. Nts., 8/15/04(8) 649,000 636,020
----------
5,120,682
9 Oppenheimer Bond Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Hotel/Gaming--1.0%
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 $ 750,000 $ 776,250
-----------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., 12/15/07 800,000 738,000
-----------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 750,000 757,500
----------
2,271,750
- -----------------------------------------------------------------------------------------------------------------------------------
Restaurants--1.0% Foodmaker, Inc.,
9.25% Sr. Nts., 3/1/99 1,000,000 987,500
9.75% Sr. Sub. Nts., 6/1/02 1,250,000 1,206,250
----------
2,193,750
- -----------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel--0.5% Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06(4) 650,000 666,250
-----------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 449,138
----------
1,115,388
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--4.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts., 5/15/99 325,000 341,797
-----------------------------------------------------------------------------------------------------
Enron Corp., 8.10% Nts., 12/15/96 1,500,000 1,514,541
-----------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,512
-----------------------------------------------------------------------------------------------------
Mesa Operating Co., 10.625% Gtd. Sr. Sub. Nts., 7/1/06(2) 1,240,000 1,259,375
-----------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,305,866
-----------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 750,000 708,750
-----------------------------------------------------------------------------------------------------
Phillips Petroleum Co., 7.53% Pass-Through Certificates,
Series 1994--A1, 9/27/98 388,735 393,517
-----------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 275,000 302,310
-----------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,841,400
-----------------------------------------------------------------------------------------------------
Transcontinental Gas Pipeline Corp., 9% Debs., 11/15/96 150,000 151,703
-----------------------------------------------------------------------------------------------------
United Meridian Corp., 10.375% Sr. Sub. Nts., 10/15/05 500,000 514,375
----------
9,440,146
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services--13.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks & Thrifts--2.6% BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 200,000 202,120
-----------------------------------------------------------------------------------------------------
Banque Nationale de Paris, 9.875% Debs., 5/25/98 205,000 215,260
-----------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 25,000 25,105
-----------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 325,000 335,665
-----------------------------------------------------------------------------------------------------
First Nationwide (Parent) Holdings, Inc., 12.50% Sr. Nts., 4/15/03 900,000 942,750
-----------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., 9.125% Sr. Sub. Nts., 1/15/03 1,000,000 965,000
-----------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 325,000 327,183
-----------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 325,000 326,098
-----------------------------------------------------------------------------------------------------
National Westminster Bank PLC, 9.375% Gtd. Capital Nts., 11/15/03 70,000 78,951
-----------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The) PLC,
10.125% Sub. Gtd. Capital Nts., 3/1/04 500,000 578,500
-----------------------------------------------------------------------------------------------------
Security Pacific Corp., 7.75% Nts., 12/1/96 325,000 327,549
-----------------------------------------------------------------------------------------------------
Westpac Banking Corp., 9.125% Sub. Debs., 8/15/01 1,500,000 1,637,121
----------
5,961,302
10 Oppenheimer Bond Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Diversified Financial--8.3% American Car Line Co., 8.25% Equipment Trust Certificates,
Series 1993-A, 4/15/08 $ 228,000 $ 230,763
-----------------------------------------------------------------------------------------------------
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 300,000 312,419
-----------------------------------------------------------------------------------------------------
Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 306,809
-----------------------------------------------------------------------------------------------------
AVCO Financial Services Asia Ltd., 5.875% Sr. Nts., 10/15/97 500,000 498,162
-----------------------------------------------------------------------------------------------------
Beneficial Corp., 12.875% Debs., 8/1/13 20,000 23,258
----------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,640,089
-----------------------------------------------------------------------------------------------------
Countrywide Funding Corp., 6.57% Gtd. Medium-Term Nts.,
Series A, 8/4/97 300,000 301,281
-----------------------------------------------------------------------------------------------------
Enterprise Rent-A-Car USA Finance Co., 7.875% Nts., 3/15/98(4) 1,500,000 1,535,151
-----------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 9.90% Medium-Term Nts., 11/6/97 2,000,000 2,041,786
-----------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.65% Medium-Term Nts., 12/15/97 500,000 495,788
-----------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 325,000 338,110
-----------------------------------------------------------------------------------------------------
Grand Metropolitan PLC, 8.125% Gtd. Nts., 8/15/96 325,000 325,938
-----------------------------------------------------------------------------------------------------
Household Finance Corp. Ltd., 6% Gtd. Sr. Nts., 6/30/98 250,000 247,286
-----------------------------------------------------------------------------------------------------
Household International, BV, 6% Gtd. Sr. Nts., 3/15/99 250,000 245,352
-----------------------------------------------------------------------------------------------------
Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 1,838,786
-----------------------------------------------------------------------------------------------------
Midland American Capital Corp., 12.75% Gtd. Nts., 11/15/03 205,000 231,069
-----------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,609,695
-----------------------------------------------------------------------------------------------------
Norwest Financial, Inc., 6.50% Sr. Nts., 11/15/97 325,000 326,285
-----------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,882,801
-----------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,600,000 1,656,952
-----------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,301,391
-----------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 370,000 388,468
----------------------------------------------------------------------------------------------------
TransAmerican Financial Corp., 7.42% Medium-Term Nts., 2/9/98 500,000 508,075
-----------------------------------------------------------------------------------------------------
U.S. Leasing International, 7% Nts., 11/1/97 500,000 504,757
-----------
18,790,471
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--2.3% Aetna Life & Casualty Co., 8% Debs., 1/15/17 1,000,000 962,063
-----------------------------------------------------------------------------------------------------
Capital Holding Corp., 8.75% Debs., 1/15/17 1,200,000 1,259,160
-----------------------------------------------------------------------------------------------------
Torchmark Corp., 7.875% Nts., 5/15/23 3,000,000 2,906,418
-----------
5,127,641
- -----------------------------------------------------------------------------------------------------------------------------------
Housing Related--0.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Homebuilders/ Saul (B.F.) Real Estate Investment Trust,
Real Estate--0.5% 11.625% Sr. Sec. Nts., Series B, 4/1/02 1,125,000 1,158,750
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--6.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Electronics/ Boeing Co., 7.50% Debs., 8/15/42 2,000,000 1,966,750
Computers--3.2% -----------------------------------------------------------------------------------------------------
British Aerospace PLC, 8% Debs., 5/27/97 300,000 304,125
-----------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., 8/1/05 500,000 531,250
-----------------------------------------------------------------------------------------------------
General Electric Capital Corp., 8.75% Debs., 5/21/07 1,000,000 1,112,245
-----------------------------------------------------------------------------------------------------
McDonnell Douglas Corp., 9.25% Nts., 4/1/02 1,500,000 1,654,162
-----------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 980,625
-----------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 500,000 535,000
-----------------------------------------------------------------------------------------------------
Xerox Corp., 9.20% Debs., 7/15/99 270,000 270,000
-----------
7,354,157
11 Oppenheimer Bond Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Automotive--1.2% Chrysler Corp., 10.95% Debs., 8/1/17 $ 200,000 $ 219,230
-----------------------------------------------------------------------------------------------------
Ford Motor Co., 6.27% Pass-Through Certificates, 1/2/00 283,890 283,891
-----------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,123,896
-----------
2,627,017
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods--1.9% Caterpillar, Inc., 9.75% Debs., 6/1/19 1,750,000 1,911,189
-----------------------------------------------------------------------------------------------------
Tenneco, Inc., 10% Debs., 8/1/98 375,000 399,502
-----------------------------------------------------------------------------------------------------
Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000 1,040,472
-----------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 991,877
-----------
4,343,040
- -----------------------------------------------------------------------------------------------------------------------------------
Media--5.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcasting--2.1% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 700,000 665,000
-----------------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 750,000 706,875
-----------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 750,000 783,750
-----------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 500,000 487,500
-----------------------------------------------------------------------------------------------------
Tele-Communications, Inc., 5.28% Medium-Term Nts., 8/20/96 1,315,000 1,314,148
-----------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 9% Sr. Sub. Nts., 1/15/06 1,000,000 895,000
-----------
4,852,273
- -----------------------------------------------------------------------------------------------------------------------------------
Cable Television--1.8% EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(8) 1,000,000 730,000
-----------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts.,
Series A, 2/1/06(8) 1,000,000 565,000
-----------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Sr. Sec. Second Priority Debs., 12/1/07 1,000,000 977,500
-----------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,113,348
-----------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
12.434%, 11/15/99(9) 1,000,000 660,000
-----------
4,045,848
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Media--1.0% Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 500,000 467,500
-----------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(8) 1,500,000 1,312,500
-----------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 500,000 503,104
-----------
2,283,104
- -----------------------------------------------------------------------------------------------------------------------------------
Entertainment/Film--0.1% Blockbuster Entertainment Group, 6.625% Sr. Nts., 2/15/98 250,000 249,860
- -----------------------------------------------------------------------------------------------------------------------------------
Publishing/Printing--0.1% Reed Publishing (USA), Inc., 7.24% Gtd. Medium-Term Nts., 2/10/97 250,000 251,820
- -----------------------------------------------------------------------------------------------------------------------------------
Retail--2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Auto Parts Distribution--0.1% First Brands Corp., 9.125% Sr. Sub. Nts., 4/1/99 265,000 267,650
- -----------------------------------------------------------------------------------------------------------------------------------
Department Stores--0.2% Sears Canada, Inc., 11.70% Debs., 7/10/00 CAD 500,000 416,906
- -----------------------------------------------------------------------------------------------------------------------------------
Drug Stores--0.3% Hook-SupeRx, Inc., 10.125% Sr. Nts., 6/1/02 400,000 427,513
-----------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 313,218
-----------
740,731
- -----------------------------------------------------------------------------------------------------------------------------------
Specialty Retailing--0.3% May Department Stores Cos.:
10.625% Debs., 11/1/10 405,000 509,040
9.875% Debs., 6/1/17 250,000 264,163
-----------
773,203
12 Oppenheimer Bond Fund
<PAGE>
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Supermarkets--1.1% Grand Union Co., 12% Sr. Nts., 9/1/04 $ 1,150,000 $ 1,079,562
-----------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 1,000,000 1,010,000
-----------------------------------------------------------------------------------------------------
Penn Traffic Co., 10.25% Sr. Nts., 2/15/02 500,000 457,500
-----------
2,547,062
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--1.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Air Transportation--0.7% Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 1,000,000 1,092,500
-----------------------------------------------------------------------------------------------------
Southwest Airlines Co., 9.25% Debs., 2/15/98 500,000 521,325
-----------
1,613,825
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads--0.9% Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,147,400
-----------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(8) 1,100,000 759,000
-----------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 108,878
-----------
2,015,278
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--10.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--3.4% Arkla, Inc., 9.875% Nts., 4/15/97 505,000 518,646
-----------------------------------------------------------------------------------------------------
Centragas Natural Gas Transmission System,
10.65% Sec. Sr. Bonds, 12/1/10(4) 2,413,170 2,491,599
-----------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.50% Nts., 7/15/97 225,000 224,473
-----------------------------------------------------------------------------------------------------
Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 250,000 256,967
-----------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 1,000,000 997,500
-----------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 500,000 526,250
-----------------------------------------------------------------------------------------------------
Florida Gas Transmission Environmental Corp., 7.75% Sr. Nts., 11/1/97(4) 500,000 508,469
-----------------------------------------------------------------------------------------------------
MidAmerican Energy Co., 6.25% Mtg. Nts., 2/1/98 500,000 499,178
-----------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 264,166
-----------------------------------------------------------------------------------------------------
Tenaga Nasional Berhad, 7.875% Nts., 6/15/04(4) 1,000,000 1,040,875
-----------------------------------------------------------------------------------------------------
Union Gas Ltd., 13% Debs., 6/30/03 CAD 572,000 464,094
-----------
7,792,217
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications--7.2% A+ Network, Inc., 11.875% Sr. Sub. Nts., 11/1/05 1,000,000 1,040,000
-----------------------------------------------------------------------------------------------------
Allbritton Communications Co., 11.50% Sr. Sub. Debs., 8/15/04 875,000 894,687
-----------------------------------------------------------------------------------------------------
American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(8) 500,000 262,500
0%/13% Sr. Disc. Nts., 11/1/05(8) 300,000 168,000
-----------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 11.401%, 8/15/00(9) 1,700,000 1,062,500
-----------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(4)(8) 100,000 99,125
-----------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(8) 800,000 464,000
-----------------------------------------------------------------------------------------------------
GTE Corp., 8.85% Debs., 3/1/98 300,000 311,343
-----------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(8) 1,250,000 1,178,125
-----------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(4)(8) 735,000 402,413
0%/13.50% Sr. Disc. Nts., 9/15/05(8) 600,000 361,500
-----------------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(8) 2,000,000 1,215,000
0%/9.375% Sr. Disc. Nts., 1/15/04(8) 350,000 266,000
13 Oppenheimer Bond Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
Telecommunications New York Telephone Co., 9.375% Debs., 7/15/31 $ 2,500,000 $ 2,767,632
(continued) -----------------------------------------------------------------------------------------------------
Pacific Bell, 8.50% Debs., 8/15/31 2,000,000 2,080,144
-----------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01(8) 1,200,000 1,092,000
-----------------------------------------------------------------------------------------------------
Southern New England Telephone Co., 8.70% Medium-Term Nts., 8/15/31 2,000,000 2,053,304
-----------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(2)(8) 50,000 29,125
-----------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 500,000 465,000
-----------
16,212,398
-----------
Total Corporate Bonds and Notes (Cost $120,558,893) 121,284,174
Shares
===================================================================================================================================
Preferred Stock--0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp., 8.375%, Series K (Cost $528,975) 20,300 517,650
Units
===================================================================================================================================
Rights, Warrants and Certificates--0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(4) 300 30,000
-----------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03 500 7,500
-----------------------------------------------------------------------------------------------------
IntelCom Group, Inc. Wts., Exp. 9/05(4) 1,980 38,115
-----------
Total Rights, Warrants and Certificates (Cost $0) 75,615
Face
Amount(1)
===================================================================================================================================
Repurchase Agreement--0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
5.45%, dated 6/28/96, to be repurchased at $2,100,954 on 7/1/96,
collateralized by U.S. Treasury Bonds, 6.25%--11.25%, 2/15/07--8/15/23,
with a value of $1,407,827, and U.S. Treasury Nts., 4.75%--7.875%,
9/30/97--2/15/05 with a value of $734,685 (Cost $2,100,000) $2,100,000 2,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $240,959,539) 106.1% 240,421,506
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (6.1) (13,828,127)
----------- ------------
Net Assets 100.0% $226,593,379
=========== ============
</TABLE>
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. When-issued security to be delivered and settled after June 30, 1996.
3. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
4. Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended. This security has been determined
to be liquid under guidelines established by the Board of Trustees. These
securities amount to $13,895,282 or 6.13% of the Fund's net assets, at June 30,
1996.
5. Represents the current interest rate for a variable rate security.
6. 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.
7. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial
Statements.
8. Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase. See accompanying Notes to Financial Statements.
14 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities June 30, 1996 (Unaudited)
===================================================================================================================================
<S> <C> <C>
Assets Investments, at value (cost $240,959,539)--see accompanying statement $240,421,506
-----------------------------------------------------------------------------------------------------
Cash 20,059
-----------------------------------------------------------------------------------------------------
Receivables:
Interest, dividends and principal paydowns 3,837,248
Investments sold 838,361
Shares of beneficial interest sold 251,740
-----------------------------------------------------------------------------------------------------
Other 9,406
-----------
Total assets 245,378,320
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities Payables and other liabilities:
Investments purchased (including $16,942,816 purchased on a when-issued basis)--Note 1 17,497,816
Dividends 657,200
Shares of beneficial interest redeemed 407,337
Distribution and service plan fees 136,269
Daily variation on futures contracts--Note 5 46,406
Transfer and shareholder servicing agent fees 10,909
Other 29,004
-----------
Total liabilities 18,784,941
===================================================================================================================================
Net Assets $226,593,379
============
===================================================================================================================================
Composition of Paid-in capital $230,498,809
Net Assets -----------------------------------------------------------------------------------------------------
Undistributed net investment income 116,937
-----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (3,372,204)
-----------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of assets and
liabilities denominated in foreign currencies (650,163)
-----------
Net assets $226,593,379
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$185,953,610 and 17,713,731 shares of beneficial interest outstanding) $10.50
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $11.02
-----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$37,353,716 and 3,559,164 shares of beneficial interest outstanding) $10.50
-----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$3,286,053 and 312,817 shares of beneficial interest outstanding) $10.50
See accompanying Notes to Financial Statements.
15 Oppenheimer Bond Fund
<PAGE>
Statement of Operations For the Six Months Ended June 30, 1996 (Unaudited)
===================================================================================================================================
Investment Income Interest (net of foreign withholding taxes of $1,379) $ 9,065,473
-----------------------------------------------------------------------------------------------------
Dividends 21,251
-----------
Total income 9,086,724
===================================================================================================================================
Expenses Management fees--Note 4 792,003
-----------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 210,922
Class B 190,591
Class C 15,113
-----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 167,434
-----------------------------------------------------------------------------------------------------
Shareholder reports 78,844
-----------------------------------------------------------------------------------------------------
Custodian fees and expenses 28,634
-----------------------------------------------------------------------------------------------------
Legal and auditing fees 8,377
-----------------------------------------------------------------------------------------------------
Insurance expenses 3,724
-----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,146
-----------------------------------------------------------------------------------------------------
Other 10,066
-----------
Total expenses 1,508,854
===================================================================================================================================
Net Investment Income 7,577,870
===================================================================================================================================
Realized and Net realized gain (loss) on:
Unrealized Gain (Loss) Investments 713,084
Closing of futures contracts 69,829
Foreign currency transactions (25,772)
-----------
Net realized gain 757,141
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (10,067,208)
Translation of assets and liabilities denominated in foreign currencies 72,109
-----------
Net change (9,995,099)
-----------
Net realized and unrealized loss (9,237,958)
===================================================================================================================================
Net Decrease in Net Assets Resulting From Operations $(1,660,088)
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Bond Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31
(Unaudited) 1995
===================================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 7,577,870 $ 8,346,267
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) 757,141 (300,777)
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (9,995,099) 12,065,900
----------- -----------
Net increase (decrease) in net assets resulting from operations (1,660,088) 20,111,390
===================================================================================================================================
Dividends and Distributions Dividends from net investment income:
To Shareholders Class A (6,232,922) (7,564,945)
Class B (1,245,326) (751,223)
Class C (99,622) (29,746)
===================================================================================================================================
Beneficial Interest Net increase (decrease) in net assets resulting from beneficial
Transactions interest transactions--Note 2:
Class A 24,280,014 61,827,603
Class B (105,240) 34,622,947
Class C (560,731) 3,910,520
===================================================================================================================================
Net Assets Total increase 14,376,085 112,126,546
-----------------------------------------------------------------------------------------------------
Beginning of period 212,217,294 100,090,748
------------ ------------
End of period (including undistributed net investment
income of $116,937 and $116,937, respectively) $226,593,379 $212,217,294
============ ============
See accompanying Notes to Financial Statements.
</TABLE>
17 Oppenheimer Bond Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Six
Months
Ended
June 30,
1996 Year Ended December 31,
(Unaudited) 1995 1994 1993 1992 1991(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $10.98 $10.01 $11.12 $10.74 $10.80 $ 9.86
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40 .69 .65 .69 .75 .82
Net realized and unrealized gain (loss) (.49) .96 (1.08) .40 (.05) .90
-------- -------- ------- -------- -------- -------
Total income (loss) from
investment operations (.09) 1.65 (.43) 1.09 .70 1.72
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.39) (.68) (.65) (.71) (.76) (.78)
Dividends in excess of net
investment income -- -- (.03) -- -- --
-------- -------- ------- -------- -------- -------
Total dividends and distributions
to shareholders (.39) (.68) (.68) (.71) (.76) (.78)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.50 $10.98 $10.01 $11.12 $10.74 $10.80
======== ======== ======== ======== ======== =======
===================================================================================================================================
Total Return, at Net Asset Value(4) (0.83)% 16.94% (3.87)% 10.30% 6.77% 18.28%
===================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $185,954 $169,059 $ 96,640 $110,759 $106,290 $90,623
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $171,653 $116,940 $102,168 $111,702 $ 98,672 $86,471
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.30%(5) 6.47% 6.25% 6.20% 7.00% 8.02%
Expenses, before voluntary
reimbursement by the Manager 1.28%(5) 1.27% 1.06% 1.06% 1.10% 1.23%
Expenses, net of voluntary
reimbursement by the Manager N/A 1.26% N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 79.2% 175.4% 70.3% 110.1% 116.4% 97.1%
</TABLE>
(re-stub table)
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
------------------------------------------------ -----------------------------
Six Six
Months Months
Ended Ended Period
June 30, June 30, Ended
1996 Year Ended December 31, 1996 Dec. 31,
(Unaudited) 1995 1994 1993(2) (Unaudited) 1995(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $10.98 $10.01 $11.11 $11.10 $10.99 $10.89
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .37 .63 .58 .40 .36 .28
Net realized and unrealized gain (loss) (.50) .94 (1.08) .03 (.50) .10
------- ------- ------ ------ ------ ------
Total income (loss) from
investment operations (.13) 1.57 (.50) .43 (.14) .38
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.35) (.60) (.57) (.42) (.35) (.28)
Dividends in excess of net
investment income -- -- (.03) -- -- --
------- ------- ------ ------ ------ ------
Total dividends and distributions
to shareholders (.35) (.60) (.60) (.42) (.35) (.28)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.50 $10.98 $10.01 $11.11 $10.50 $10.99
======= ======= ====== ==== ====== ====
===================================================================================================================================
Total Return, at Net Asset Value(4) (1.21)% 16.06% (4.53)% 3.91% (1.28)% 3.76%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $37,354 $39,187 $3,451 $1,809 $3,286 $3,971
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $38,304 $12,823 $2,747 $922 $3,024 $979
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.53%(5) 5.84% 5.53% 4.80%(5) 6.59%(5) 6.32%(5)
Expenses, before voluntary
reimbursement by the Manager 2.04%(5) 2.12% 1.78% 1.90%(5) 2.04%(5) 2.25%(5)
Expenses, net of voluntary
reimbursement by the Manager N/A 2.08% N/A N/A N/A 1.96%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 79.2% 175.4% 70.3% 110.1% 79.2% 175.4%
</TABLE>
(end re-stub table)
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. On March 28, 1991, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
4. 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.
5. Annualized.
6. 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, 1996 were $175,519,460 and
$176,129,113, respectively. See accompanying Notes to Financial Statements.
18 Oppenheimer Bond Fund
<PAGE>
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 advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All three classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect to
matters affecting a single class. Class B shares will automatically convert to
Class A shares six years after the date of purchase. The following is a summary
of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term ``non-money market'' debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or 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.
- --------------------------------------------------------------------------------
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, 1996, the
Fund had entered into outstanding when-issued or forward commitments of
$16,942,816.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange.
Amounts related to the purchase and sale of securities and investment
income are translated at the rates of exchange prevailing on the respective
dates of such transactions.
19 Oppenheimer Bond Fund
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
================================================================================
1. Significant
Accounting Policies
(continued)
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.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gain (loss) was recorded by the Fund.
- --------------------------------------------------------------------------------
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996 Year Ended December 31, 1995(1)
------------------------------- -------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 997,446 $10,649,050 3,592,604 $37,958,201
Dividends reinvested 381,025 4,052,825 401,453 4,283,086
Issued in connection with the acquisition of:
Oppenheimer Strategic Investment Grade
Bond Fund--Note 7 -- -- 2,101,654 22,529,733
Quest Investment Quality Income Fund--Note 7 -- -- 3,900,357 42,201,864
Connecticut Mutual Income Account--Note 7 3,020,216 31,863,280
Redeemed (2,084,795) (22,285,141) (4,249,502) (45,145,281)
--------- ----------- ---------- ------------
Net increase 2,313,892 $24,280,014 5,746,566 $61,827,603
========= =========== ========== ============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 574,079 $ 6,136,963 1,038,290 $11,014,073
Dividends reinvested 81,035 862,539 45,815 494,471
Issued in connection with the acquisition of:
Oppenheimer Strategic Investment Grade
Bond Fund--Note 7 -- -- 1,474,533 15,806,991
Quest Investment Quality Income Fund--Note 7 -- -- 1,236,995 13,384,283
Connecticut Mutual Income Account--Note 7 8,156 86,045 -- --
Redeemed (674,576) (7,190,787) (569,823) (6,076,871)
--------- ----------- ---------- -----------
Net increase (decrease) (11,306) $ (105,240) 3,225,810 $34,622,947
========= =========== ========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 136,804 $ 1,474,891 47,725 $516,952
Dividends reinvested 7,678 81,695 1,625 17,809
Issued in connection with the acquisition of:
Quest Investment Quality Income Fund--Note 7 -- -- 362,821 3,929,348
Redeemed (193,116) (2,117,317) (50,720) (553,589)
--------- ----------- ---------- -----------
Net increase (decrease) (48,634) $ (560,731) 361,451 $ 3,910,520
========= =========== ========== ===========
</TABLE>
1. For the year ended December 31, 1995 for Class A and Class B shares and for
the period from July 11, 1995 (inception of offering) to December 31, 1995 for
Class C shares.
20 Oppenheimer Bond Fund
<PAGE>
================================================================================
3. Unrealized Gains and
Losses on Investments
At June 30, 1996, net unrealized depreciation of investments of $538,033 was
composed of gross appreciation of $4,342,060, and gross depreciation of
$4,880,093.
================================================================================
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. The
Manager has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent applicable regulatory limit on Fund
expenses.
For the six months ended June 30, 1996, commissions (sales charges
paid by investors) on sales of Class A shares totaled $171,715, of which $66,376
was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $178,187 and $13,095, of which $11,039 was paid to an
affiliated broker/dealer for Class B shares. During the six months ended June
30, 1996, OFDI received contingent deferred sales charges of $57,931 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 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, 1996, OFDI paid $82,225 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted compensation type 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 shares that are outstanding for 6 years or less and on Class C shares, as
compensation for sales commissions paid from its own resources at the time of
sale and associated financing costs. If the Plans are terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plans were
terminated. 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, 1996,
OFDI paid $2,847 to an affiliated broker/dealer as compensation for Class B
personal service and maintenance expenses and retained $157,177 and $15,133,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. At June 30, 1996, OFDI had
incurred unreimbursed expenses of $1,171,082 for Class B and $41,410 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.
21 Oppenheimer Bond Fund
<PAGE>
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, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
Expiration Number of Valuation as of Unrealized
Contracts to Sell Date Futures Contracts June 30, 1996 Depreciation
- --------------------------------------------------------------------------------
U.S. Treasury Nts. 9/96 90 $9,517,500 $112,500
================================================================================
6. Illiquid and Restricted
Securities
At June 30, 1996, investments in securities included issues that are illiquid or
restricted. The 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 also be considered
illiquid if its valuation has not changed for a certain period of time. The Fund
intends to invest no more than 10% of its net assets (determined at the time of
purchase and reviewed from time to time) in illiquid or restricted securities.
The aggregate value of these securities subject to this limitation at June 30,
1996 was $753,750 which represents 0.33% of the Fund's net assets. Information
concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit June 30, 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pulsar International SA de CV, 11.80% Nts., 9/19/96 9/14/95 $100.00 $100.50
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
================================================================================
7. Acquisition of Oppenheimer
Strategic Investment
Grade Bond Fund, Quest
Investment Quality Income
Fund and Connecticut
Mutual Income Account
On September 22, 1995, the Fund acquired all the net assets of Oppenheimer
Strategic Investment Grade Bond Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Oppenheimer Strategic Investment Grade Bond Fund
shareholders on September 20, 1995. The Fund issued 2,101,654 and 1,474,533
shares of beneficial interest for Class A and Class B, respectively, valued at
$22,529,733 and $15,806,991 in exchange for the net assets, resulting in
combined Class A net assets of $125,283,258 and Class B net assets of
$24,206,043 on September 22, 1995. The net assets acquired included net
unrealized appreciation of $772,151. The exchange qualifies as a tax-free
reorganization for federal income tax purposes.
On November 24, 1995, the Fund acquired all the net assets of Quest
Investment Quality Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Quest Investment Quality Income Fund sharehold
ers on November 16, 1995. The Fund issued 3,900,357, 1,236,995 and 362,821
shares of beneficial interest for Class A, Class B and Class C, respectively,
valued at $42,201,864, $13,384,283 and $3,929,348 in exchange for the net
assets, resulting in combined Class A net assets of $168,776,907, Class B net
assets of $38,281,909 and Class C net assets of $4,265,500 on November 24, 1995.
The net assets acquired included net unrealized appreciation of $2,983,610. The
exchange qualifies as a tax-free reorganization for federal income tax purposes.
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 $633,176. The exchange
qualifies as a tax-free reorganization for federal income tax purposes.
22 Oppenheimer Bond Fund
<PAGE>
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 Rosenberg, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
===============================================================================
Investment Advisor OppenheimerFunds, Inc.
===============================================================================
Distributor OppenheimerFunds Distributor, Inc.
===============================================================================
Transfer and Shareholder
Servicing Agent OppenheimerFunds Services
===============================================================================
Custodian of
Portfolio Securities The Bank of New York
===============================================================================
Independent Auditors Deloitte & Touche LLP
===============================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
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.
23 Oppenheimer Bond Fund
<PAGE>
[BACK COVER]
Information
General Information
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RS0285.001.0696 August 31, 1996
[Picture of Jennifer Leonard]
[Caption] Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
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You can count on us whenever you need assistance. That's why the
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