<PAGE>
OPPENHEIMER BOND FUND
Annual Report December 31, 1995
[photo]
[logo] OppenheimerFunds-r-
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YIELD
STANDARDIZED YIELD
For the 30 Days Ended 12/31/95 (3)
Class A
6.14%
Class B
5.69%
Class C
5.70%
This Fund is for people who want solid INCOME.
HOW YOUR FUND IS MANAGED
Oppenheimer Bond Fund's portfolio is made up primarily of corporate bonds and
government securities.
Of these investments, corporate bonds often offer higher yields, but can come in
all different levels of quality. That's why your Fund's manager is careful to
allocate assets to seek high yields with less risk, thereby offering the
potential for high current income.
PERFORMANCE
Total return at net asset value for the 12 months ended 12/31/95
was 16.94% for Class A shares and 16.06% for Class B shares. (1)
Your Fund's average annual total returns at maximum offering price for Class A
shares for the 1- and 5- year periods ended 12/31/95 and since inception of the
Class on 4/15/88 were 11.38%, 8.33% and 8.05%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 12/31/95 and since
inception of the Class on 5/1/93 were 11.06% and 4.40%, respectively. (2)
OUTLOOK
"Our outlook is good. We expect a continuation of the current soft landing
scenario -- a period of slow but steady growth with low inflation, which should
be a good environment for both stocks and bonds. In this type of a market, we
expect to see low interest rate volatility."
David Rosenberg and David Negri
Portfolio Managers
December 31, 1995
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 changes. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 12/31/94,
12/31/90 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 12/31/94 and 5/1/93 (inception of
class), and the deduction of the applicable contingent deferred sales charge of
5% (1-year) and 3% (since inception). Class C cumulative total return since
inception (7/11/95) was 2.76%. 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 12/31/95, 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
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[photo]
James C. Swain
Chairman
Oppenheimer Bond Fund
[photo]
Bridget A. Macaskill
President
Oppenheimer Bond Fund
Dear OppenheimerFunds Shareholder,
The bond market amply rewarded patient investors in 1995.
One year ago, many fixed-income investors had negative returns, as a surging
economy pushed interest rates higher and bond prices lower. But a vigilant
Federal Reserve Board helped slow the economy down by early 1995, lowering the
fear of inflation. And by the summer, after a quarter in which GDP growth was
just 1.3%, the Fed began to lower short-term interest rates.
In the Fall, a balanced federal budget was on the front burner in Washington,
suggesting to foreign investors that the U.S. was finally addressing its debt
burden, which helped stabilize the U.S. dollar, making U.S. fixed-income
investments more attractive to international investors.
Throughout 1995, inflation and economic growth came in at less than 3%. As a
result, the yield on the benchmark 30-year U.S. Treasury bond fell to 6% from
nearly 8% the year before. And patient investors saw the value of their higher
paying bonds appreciate substantially. In 1995, while the stock market was up
35%, bonds rose as much as 20%, depending on the type of security.
Overall, the best performing sector of the bond market was the 30-year U.S.
Treasury bond. This is because when interest rates are falling, bonds with the
longest maturities appreciate the most in price. Another excellent performing
sector in 1995 was high quality corporate bonds. Although a slowing economy
often raises credit worries about Corporate America, the continuation of strong
corporate profits offset these concerns.
After having such a good year, where does the bond market go from here? Unlike
stocks, which have infinite upside potential, bonds have a constraint. For
bonds to do well, interest rates must remain steady or continue to fall. And
when interest rates are low already, there is only so far they can decline. But
if low inflation can be maintained and if a budget accord is reached, a positive
environment can continue to exist.
We believe that the general long-term trend for the U.S. economy is slow growth
and low inflation. Moving into 1996, we're looking for even slower growth than
we saw in 1995, which should be an excellent environment for bond investors.
Your portfolio manager discusses the outlook for your Fund in light of these
broad issues on the following pages.
Thank you for your confidence in OppenheimerFunds, and we look forward to
helping you reach your investment goals in the future.
/s/ James C. Swain
James C. Swain
/s/ Bridget A. Macaskill
Bridget A. Macaskill
January 22, 1996
3 Oppenheimer Bond Fund
<PAGE>
Q + A
[photo][photo]
Q What helped overall performance?
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED OVER THE PERIOD?
The Fund's total return has been very good. The combination of declining
interest rates and low inflation led to an exceptionally strong rally in the
bond market over the past year, which we've benefited from along with other bond
funds. Additionally, our new strategic investment approach during an already
strong market has also helped the overall performance of the Fund.
WHAT INVESTMENTS MADE A POSITIVE CONTRIBUTION TO PERFORMANCE?
This year's declines in interest rates led to a very strong rally in Treasuries.
So, especially in the first half, the Fund's holdings there paid off. Since
July, however, we've reduced our Treasury allocation to slowly rework our assets
toward our new diversification strategy of emphasizing investments in different
categories of U.S. government and corporate bonds. This new strategy allows us
to pursue good income-producing investments while being diversified to help
reduce risk.
Over the course of the year, the Fund's performance was also helped by our
corporate bond holdings, many of which reacted favorably to the successes of
their underlying companies.
WERE THERE ANY INVESTMENTS THAT DIDN'T PERFORM AS WELL AS EXPECTED?
The mortgage-backed sector, an area which we still believe has great long-term
potential, performed relatively poorly over the period. This was primarily due
to investors' fears that lower rates would mean an increase in mortgage
prepayments.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
Our strategy over recent months has been to invest primarily in the U.S. to get
a broad base
[photo]
4 Oppenheimer Bond Fund
<PAGE>
FACING PAGE
Top left: David Negri, Portfolio Manager, with Mark Frank,
Member of Fixed Income Investments Team
Top right: David Rosenberg, Portfolio Manager
Bottom left: 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 Investment Team
[photo]
A Our new strategic investment approach.
of the U.S. market. Thus, we've broadened our investment categories to include
new assets that can help us target the best opportunities in the market. Our aim
is to achieve the following goals -- to provide higher yield and higher total
return potential, to have more flexibility so we can take advantage of a broad
range of investment opportunities, and to decrease volatility by increasing
diversification across asset classes.
One of the areas we've added to is the corporate sector. With an expectation for
continued slower growth in the economy, we're underweighting utilities and
cyclicals such as mining and metals companies. We are currently in favor of
companies that can expect to experience earnings growth in excess of the growth
rate of the economy -- such as cable, telecommunications, broadcasting, and
media firms.
We've also added an allocation to non-agency mortgage-backed securities, which
are mortgage loans underwritten by banks rather than by the government.
Non-agency mortgages, though having a higher risk of issuer default, have an
advantage in that they tend to offer higher yields than government agency
mortgages. Because prepayment risk decreases when interest rates increase,
investors often favor mortgage-backed securities over other types of bonds in
increasing rate environments. Thus, adding to mortgage holdings helps to lower
interest rate risk and the overall volatility of the portfolio.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our outlook is good. We expect a continuation of the current soft landing
scenario -- a period of slow but steady economic growth with low inflation,
which should be a good environment for both stocks and bonds. In this type of a
market, we expect to see low interest rate volatility.
In terms of the Treasury market, where we've seen the best performance over the
past year, we believe most of the gains have already been experienced. With
expectations for limited further appreciation in Treasuries, our new
diversification strategy has come at a good time. As the coming year unfolds, we
expect our reconfigured portfolio to perform well in terms of both yield and
return.//
[photo]
5 Oppenheimer Bond Fund
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<TABLE>
<CAPTION>
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STATEMENT OF INVESTMENTS December 31, 1995
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
====================================================================================================================================
CERTIFICATES OF DEPOSIT - 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Citibank CD, 13%, 5/6/96(2)CLP $ 49,956,445 $ 122,853
-----------------------------------------------------------------------------------------------------------------------------
Indonesia (Republic of) Bank Negara CD, Zero Coupon,
15.914%, 6/17/96(2)(3)IDR 500,000,000 201,253
-------------
Total Certificates of Deposit (Cost $337,372) 324,106
====================================================================================================================================
ASSET-BACKED SECURITIES - 2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTO LOAN - 2.2%
-----------------------------------------------------------------------------------------------------------------------------
Daimler-Benz Vehicle Trust, Series 1994-A, Cl. A, 5.95%,
12/15/00 440,645 441,373
-----------------------------------------------------------------------------------------------------------------------------
Ford Credit Grantor Trust, Series 1994-B, Cl. A, 7.30%,
10/15/99 959,109 977,390
-----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Grantor Trust, Series
1992-E, Cl. A, 4.75%, 8/15/97 192,999 192,154
-----------------------------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Grantor Trust, Series 1994-A,
Cl. A, 6.45%, 9/15/99 1,289,223 1,300,091
-----------------------------------------------------------------------------------------------------------------------------
World Omni Automobile Lease Securitization Trust,
Series 1994-A, Cl. A, 6.45%, 9/25/00 1,705,242 1,716,958
-------------
Total Asset-Backed Securities (Cost $4,581,131) 4,627,966
====================================================================================================================================
MORTGAGE-BACKED OBLIGATIONS - 29.6%
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 22.7%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 12.7%
----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Certificates of Participation, 9%, 3/1/17 684,842 727,563
Certificates of Participation, Series 17-039, 13.50%,
11/1/10 75,372 89,209
Certificates of Participation, Series 17-094, 12.50%,
4/1/14 40,781 47,205
Collateralized Mtg. Obligation Gtd. Multiclass Certificates
of Participation, Series 1322, Cl. G, 7.50%, 2/15/07 2,000,000 2,088,740
Collateralized Mtg. Obligations, Series 1548, Cl. C, 7%,
4/15/21 4,000,000 4,022,480
Multiclass Gtd. Mtg. Participation Certificates, Series
1460, Cl. H, 7%, 5/15/07 1,500,000 1,554,375
----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 6,832,876 7,751,045
Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 884,543 920,624
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1993-175, Cl. PL, 5%, 10/25/02 2,000,000 1,980,000
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1993-191, Cl. PD, 5.40%, 3/25/04 1,500,000 1,486,395
Interest-Only Stripped Mtg.-Backed Security, Trust 240, Cl.
2, 12.095%, 9/1/23(4) 23,117,327 6,330,174
-------------
26,997,810
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 10.0%
----------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
6%, 1/15/26(5) 5,000,000 5,053,125
6%, 7/20/25 1,984,195 2,005,278
7%, 1/15/26(5) 5,000,000 5,059,400
10%, 11/15/09 328,943 361,015
10.50%, 12/15/17-7/15/19 418,560 468,527
12%, 1/15/99-5/15/14 66,291 70,409
12.75%, 6/15/15 43,595 50,461
8%, 6/15/05-7/15/25 7,202,212 7,527,961
9%, 2/15/09-6/15/09 567,867 608,463
-------------
21,204,639
</TABLE>
6 Oppenheimer Bond Fund
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<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 6.9%
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL - 3.4%
----------------------------------------------------------------------------------------------------------------------------
CMC Securities Corp. I, Collateralized Mtg. Obligation,
Series 1993-D, Cl. D-3, 10%, 7/25/23(6) $ 711,456 $ 765,482
----------------------------------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., Sub. Collateralized Mtg.
Obligations, Series X-Q13B, Cl. 3B1, 8.75%, 11/25/24 1,442,350 1,449,112
----------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1, Cl. 2-D,
8.70%, 9/25/25(6) 1,000,000 1,078,125
----------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1, Cl. 2-E,
8.70%, 9/25/25(6) 1,000,000 1,069,687
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1991-M6, Cl. B4, 7.477%, 6/25/21(7) 75,761 75,738
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1992-CHF, Cl. E, 8.25%, 12/25/20 2,004,994 1,967,401
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1993-C1, Cl. B, 8.75%, 5/25/24 700,000 729,312
-------------
7,134,857
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 2.2%
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17 733,176 776,251
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,603,594
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,387,500
-------------
4,767,345
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER - 0.9%
----------------------------------------------------------------------------------------------------------------------------
JHM Mtg. Acceptance Corp., 8.96% Collateralized Mtg.
Obligation Bonds, Series E, Cl. 5, 4/1/19 1,790,105 1,913,175
- ------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 0.4%
----------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through
Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 774,963 800,150
-------------
Total Mortgage-Backed Obligations (Cost $62,473,955) 62,817,976
====================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS - 20.4%
- ------------------------------------------------------------------------------------------------------------------------------------
TREASURY - 20.4%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
11.625%, 11/15/02 5,000,000 6,743,750
8.75%, 5/15/20 6,750,000 9,036,562
8.75%, 8/15/20 3,050,000 4,092,719
8.875%, 8/15/17 13,500,000 18,090,000
----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
8.75%, 8/15/00 550,000 625,109
8.875%, 11/15/97 4,335,000 4,615,418
-------------
Total U.S. Government Obligations (Cost $40,331,251) 43,203,558
</TABLE>
7 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
====================================================================================================================================
FOREIGN GOVERNMENT OBLIGATIONS - 0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development
Bonds, 12.50%, 7/25/97NZD $ 800,000 $ 556,998
----------------------------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97NZD 390,000 262,030
----------------------------------------------------------------------------------------------------------------------------
Norwegian Government Bonds, 5.75%, 11/30/04NOK 540,000 81,686
----------------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01AUD 1,045,000 778,537
-------------
Total Foreign Government Obligations (Cost $1,565,840) 1,679,251
====================================================================================================================================
CORPORATE BONDS AND NOTES - 50.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 4.3%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.8%
----------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 900,000 1,024,144
----------------------------------------------------------------------------------------------------------------------------
Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 602,239
-------------
1,626,383
- ------------------------------------------------------------------------------------------------------------------------------------
METALS/MINING - 1.8%
----------------------------------------------------------------------------------------------------------------------------
AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,138,882
----------------------------------------------------------------------------------------------------------------------------
Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 1,107,358
----------------------------------------------------------------------------------------------------------------------------
Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,663,795
-------------
3,910,035
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Crown Paper Co., 11% Sr. Sub. Nts., 9/1/05 750,000 660,000
----------------------------------------------------------------------------------------------------------------------------
Georgia-Pacific Corp., 9.95% Debs., 6/15/02 1,500,000 1,784,147
----------------------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts.,
2/1/02 500,000 477,500
----------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized
Nts., 7/20/15 454,847 462,280
----------------------------------------------------------------------------------------------------------------------------
Union Camp Corp., 10% Debs., 5/1/19 100,000 116,911
-------------
3,500,838
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 6.2%
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 0.7%
----------------------------------------------------------------------------------------------------------------------------
Tag-Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(6) 550,000 552,063
----------------------------------------------------------------------------------------------------------------------------
Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,067,115
-------------
1,619,178
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO - 1.8%
----------------------------------------------------------------------------------------------------------------------------
American Brands, Inc., 7.875% Debs., 1/15/23 2,000,000 2,253,562
----------------------------------------------------------------------------------------------------------------------------
ConAgra, Inc., 7.40% Sub. Nts., 9/15/04 250,000 264,433
----------------------------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub.
Disc. Nts., 11/1/02(8) 500,000 471,250
----------------------------------------------------------------------------------------------------------------------------
Pulsar Internacional SA de CV, 11.80% Nts., 9/19/96(9) 750,000 755,625
-------------
3,744,870
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 2.5%
----------------------------------------------------------------------------------------------------------------------------
Grace (W.R.) & Co., 7.25% Medium-Term Nts., 7/15/97 2,000,000 2,040,198
----------------------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 536,250
----------------------------------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 494,950
----------------------------------------------------------------------------------------------------------------------------
R.P. Scherer Corp., 6.75% Sr. Nts., 2/1/04 500,000 475,812
----------------------------------------------------------------------------------------------------------------------------
Service Corp. International, 7% Sr. Nts., 6/1/15 1,000,000 1,073,020
----------------------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., 0%/12% Sr. Sub. Disc. Nts.,
8/15/04(8) 649,000 626,285
-------------
5,246,515
</TABLE>
8 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING - 0.6%
----------------------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 $ 750,000 $ 785,625
----------------------------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., 12/15/07(6) 500,000 502,500
-------------
1,288,125
- ------------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.4%
----------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99 835,000 803,688
- ------------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL - 0.2%
----------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 505,204
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 4.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 500,000 531,653
----------------------------------------------------------------------------------------------------------------------------
Enron Corp., 8.10% Nts., 12/15/96 1,500,000 1,536,089
----------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 113,618
----------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 3,000,000 3,584,202
----------------------------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 275,000 321,762
----------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 10% Debs., 3/15/08 100,000 124,414
----------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 7.875% Nts., 10/1/02 250,000 272,987
----------------------------------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 2,061,675
----------------------------------------------------------------------------------------------------------------------------
United Meridian Corp., 10.375% Gtd. Sr. Sub. Nts.,
10/15/05 500,000 531,250
----------------------------------------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., 9% Sr. Sub. Nts., 12/15/05 150,000 151,875
-------------
9,229,525
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 12.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Banco Ganadero SA, Zero Coupon Sr. Unsub. Unsec.
Nts., 9.931%, 6/15/96(3)(6) 250,000 239,520
----------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 200,000 204,724
----------------------------------------------------------------------------------------------------------------------------
Chemical New York Corp., 9.75% Sub. Capital Nts.,
6/15/99 300,000 337,112
----------------------------------------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 100,000 110,118
----------------------------------------------------------------------------------------------------------------------------
First Chicago NBD Bancorp, 7.25% Sub. Debs., 8/15/04 250,000 267,041
----------------------------------------------------------------------------------------------------------------------------
National Westminster Bank PLC, 9.375% Gtd. Capital
Nts., 11/15/03 70,000 83,913
----------------------------------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The) PLC, 10.125% Sub.
Gtd. Capital Nts., 3/1/04 500,000 621,195
----------------------------------------------------------------------------------------------------------------------------
Westpac Banking Corp., 9.125% Sub. Debs., 8/15/01 1,500,000 1,711,150
-------------
3,574,773
</TABLE>
9 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.3%
----------------------------------------------------------------------------------------------------------------------------
American Car Line Co., 8.25% Equipment Trust
Certificates, Series 1993-A, 4/15/08 $ 246,000 $ 258,608
----------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 12.875% Debs., 8/1/13 20,000 24,313
----------------------------------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,780,785
----------------------------------------------------------------------------------------------------------------------------
Enterprise Rent-A-Car USA Finance Co., 7.875% Nts.,
3/15/98(6) 1,500,000 1,554,709
----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 9.90% Medium-Term Nts., 11/6/97 2,000,000 2,080,364
----------------------------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.75% Medium-Term Nts., Series B,
6/10/96(6) 500,000 500,000
----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 8.375% Nts., 2/15/99 300,000 318,942
----------------------------------------------------------------------------------------------------------------------------
Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 2,082,104
----------------------------------------------------------------------------------------------------------------------------
Midland American Capital Corp., 12.75% Gtd. Nts.,
11/15/03 205,000 241,118
----------------------------------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,759,866
----------------------------------------------------------------------------------------------------------------------------
PaineWebber Group, Inc., 7% Sr. Nts., 3/1/00 160,000 163,909
----------------------------------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,500,000 1,583,350
----------------------------------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,600,000 1,703,704
----------------------------------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,485,481
-------------
15,537,253
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 3.6%
----------------------------------------------------------------------------------------------------------------------------
Aetna Life & Casualty Co., 8% Debs., 1/15/17 1,000,000 1,060,133
----------------------------------------------------------------------------------------------------------------------------
Capital Holding Corp., 8.75% Debs., 1/15/17 1,200,000 1,272,654
----------------------------------------------------------------------------------------------------------------------------
CNA Financial Corp., 7.25% Debs., 11/15/23 2,000,000 1,990,074
----------------------------------------------------------------------------------------------------------------------------
Torchmark Corp., 7.875% Nts., 5/15/23 3,000,000 3,243,750
-------------
7,566,611
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.5%
- ------------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.5%
----------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr.
Sec. Nts., Series B, 4/1/02 1,125,000 1,153,125
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 7.3%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/COMPUTERS - 3.2%
----------------------------------------------------------------------------------------------------------------------------
Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,320,236
----------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 8.75% Debs., 5/21/07 1,000,000 1,216,910
----------------------------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp., 9.25% Nts., 4/1/02 1,500,000 1,738,060
----------------------------------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd. Unsec. Unsub.
Nts., 7/29/03 1,000,000 1,046,250
----------------------------------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 500,000 516,250
-------------
6,837,706
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE - 2.1%
----------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 10.40% Nts., 8/1/99 1,000,000 1,069,464
----------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 10.95% Debs., 8/1/17 200,000 224,527
----------------------------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 11.25% Sr. Nts.,
10/1/02 500,000 482,500
----------------------------------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,312,126
----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.50% Nts., 12/15/01 100,000 96,549
----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 7.75% Nts., 4/15/97 300,000 305,708
-------------
4,490,874
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 2.0%
----------------------------------------------------------------------------------------------------------------------------
Caterpillar, Inc., 9.75% Debs., 6/1/19 1,750,000 2,035,827
----------------------------------------------------------------------------------------------------------------------------
Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000 1,125,063
----------------------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,022,800
-------------
4,183,690
</TABLE>
10 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 4.9%
- ------------------------------------------------------------------------------------------------------------------------------------
BROADCASTING - 0.6%
----------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts.,
10/1/02(6) $ 750,000 $ 757,500
----------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec.
Disc. Nts., 12.982%, 11/15/99(3) 750,000 468,750
-------------
1,226,250
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 1.9%
----------------------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Sr. Sec. Second Priority
Debs., 12/1/07 1,000,000 1,067,500
----------------------------------------------------------------------------------------------------------------------------
Tele-Communications, Inc., 5.28% Medium-Term Nts.,
8/20/96 1,000,000 996,207
----------------------------------------------------------------------------------------------------------------------------
TeleWest PLC, 0%/11% Sr. Disc. Debs., 10/1/07(8) 1,280,000 776,000
----------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,176,779
-------------
4,016,486
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs., 2/1/23 3,100,000 3,534,961
- ------------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING - 0.7%
----------------------------------------------------------------------------------------------------------------------------
Valassis Communications, Inc., 9.55% Sr. Nts., 12/1/03 1,500,000 1,543,258
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER - 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES - 0.3%
----------------------------------------------------------------------------------------------------------------------------
Textron, Inc., 9.55% Medium-Term Nts., 3/19/01 500,000 579,296
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 0.2%
----------------------------------------------------------------------------------------------------------------------------
Sears Canada Inc., 11.70% Debs., 7/10/00CAD 500,000 426,186
- ------------------------------------------------------------------------------------------------------------------------------------
DRUG STORES - 0.2%
----------------------------------------------------------------------------------------------------------------------------
Hook-SupeRx, Inc., 10.125% Sr. Nts., 6/1/02 400,000 438,128
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.4%
----------------------------------------------------------------------------------------------------------------------------
May Department Stores Cos., 10.625% Debs., 11/1/10 405,000 564,550
----------------------------------------------------------------------------------------------------------------------------
May Department Stores Cos., 9.875% Debs., 6/1/17 250,000 265,491
-------------
830,041
- ------------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS - 0.4%
----------------------------------------------------------------------------------------------------------------------------
Grand Union Co., 12% Sr. Nts., 9/1/04 500,000 435,000
----------------------------------------------------------------------------------------------------------------------------
Penn Traffic Co., 10.25% Sr. Nts., 2/15/02 500,000 478,750
-------------
913,750
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.0%
- ------------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION - 1.3%
----------------------------------------------------------------------------------------------------------------------------
American Airlines, Inc., 9.73% Pass-Through Certificates,
Series 1991-C2, 9/29/14 1,000,000 1,118,750
----------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 1,000,000 1,025,000
----------------------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., 10.375% Debs., 2/1/11 550,000 707,854
-------------
2,851,604
- ------------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.7%
----------------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,304,000
----------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 113,888
-------------
1,417,888
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.9%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.0%
----------------------------------------------------------------------------------------------------------------------------
Commonwealth Edison Co., 6.50% Nts., 7/15/97 225,000 226,315
----------------------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds,
3/1/22 250,000 284,110
----------------------------------------------------------------------------------------------------------------------------
Tenaga Nasional Berhad, 7.875% Nts., 6/15/04(6) 1,000,000 1,106,039
----------------------------------------------------------------------------------------------------------------------------
Union Gas Ltd., 13% Debs., 6/30/03CAD 572,000 474,450
-------------
2,090,914
</TABLE>
11 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 5.9%
----------------------------------------------------------------------------------------------------------------------------
A+ Network, Inc., 11.875% Sr. Sub. Nts., 11/1/05 $ 1,000,000 $ 1,012,500
----------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 11.44%, 8/15/00(3) 500,000 301,250
----------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., Units (each unit consists
of eight 0%/13.875% sr. disc. nts., 12/15/05 and one
0%/13.875% cv. sr. sub. disc. nt., 12/15/05)(6)(8)(10) 900,000 470,000
----------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(8) 1,250,000 1,068,750
----------------------------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc., 0%/13.50% Sr. Disc. Nts.,
9/15/05(6)(8) 600,000 346,500
----------------------------------------------------------------------------------------------------------------------------
New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,976,547
----------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/11.50% Sr. Disc. Nts.,
9/1/03(8) 1,000,000 618,750
----------------------------------------------------------------------------------------------------------------------------
Pacific Bell, 8.50% Debs., 8/15/31 2,000,000 2,234,214
----------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts.,
11/15/01(8) 1,000,000 880,000
----------------------------------------------------------------------------------------------------------------------------
Southern New England Telephone Co., 8.70% Medium-
Term Nts., 8/15/31 2,000,000 2,203,806
----------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts.,
2/1/04 500,000 497,500
-------------
12,609,817
-------------
Total Corporate Bonds and Notes (Cost $100,700,984) 107,296,972
UNITS
====================================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts.,
Exp. 8/03 500 11,250
----------------------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc. Wts., Exp. 9/05(6) 1,980 7,920
-------------
Total Rights, Warrants and Certificates (Cost $0) 19,170
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $209,990,533) 103.7% 219,968,999
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (3.7) (7,751,705)
--------------- -------------
NET ASSETS 100.0% $212,217,294
=============== =============
<FN>
1. Face amount is reported in U.S. Dollars, except for those denoted
in the following currencies:
AUD - Australian Dollar IDR - Indonesian Rupiah
CAD - Canadian Dollar NOK - Norwegian Krone
CLP - Chilean Peso NZD - New Zealand Dollar
2. Indexed instrument for which the principal amount and/or interest due
at maturity is affected by the relative value of a foreign currency.
3. For zero coupon bonds, the interest rate shown is the effective
yield on the date of purchase.
4. 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.
5. When-issued security to be delivered and settled after December 31,
1995.
6. 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 $8,950,045 or 4.22% of the
Fund's net assets, at December 31, 1995.
7. Represents the current interest rate for a variable rate security.
8. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
9. Identifies issues considered to be illiquid - See Note 6 of Notes
to Financial Statements.
10. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
12 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
<S> <C> <C>
==================================================================================================================================
ASSETS Investments, at value (cost $209,990,533) - see accompanying statement $219,968,999
--------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 3,449,576
Shares of beneficial interest sold 502,558
Receivable from OppenheimerFunds, Inc. 20,522
--------------------------------------------------------------------------------------------------------
Other 25,430
------------
Total assets 223,967,085
==================================================================================================================================
LIABILITIES Bank overdraft 306,908
--------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 10,088,020
Dividends 610,049
Shares of beneficial interest redeemed 545,312
Distribution and service plan fees 110,630
Transfer and shareholder servicing agent fees 9,767
Other 79,105
-------------
Total liabilities 11,749,791
==================================================================================================================================
NET ASSETS $212,217,294
-------------
-------------
==================================================================================================================================
COMPOSITION OF Paid-in capital $206,251,590
NET ASSETS --------------------------------------------------------------------------------------------------------
Undistributed net investment income 116,937
--------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (4,129,345)
--------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 9,978,112
-------------
Net assets $212,217,294
-------------
-------------
==================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $169,059,333 and 15,399,839 shares of beneficial interest outstanding) $10.98
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.53
--------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $39,187,315 and 3,570,470 shares of beneficial interest outstanding) $10.98
--------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $3,970,646 and 361,451 shares of beneficial interest outstanding) $10.99
See accompanying Notes to Financial Statements.
</TABLE>
13 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Year Ended December 31, 1995
<S> <C> <C>
==================================================================================================================================
INVESTMENT INCOME Interest (net of foreign withholding taxes of $13,483) $10,089,605
==================================================================================================================================
EXPENSES Management fees - Note 4 820,507
--------------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 287,716
Class B 127,308
Class C 4,560
--------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 247,878
--------------------------------------------------------------------------------------------------------
Shareholder reports 147,863
--------------------------------------------------------------------------------------------------------
Legal and auditing fees 38,082
--------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 22,344
Class B 10,705
Class C 1,358
--------------------------------------------------------------------------------------------------------
Custodian fees and expenses 32,880
--------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 872
--------------------------------------------------------------------------------------------------------
Other 21,787
------------
Total expenses 1,763,860
------------
Less reimbursement of expenses by OppenheimerFunds, Inc. - Note 4 (20,522)
------------
Net expenses 1,743,338
==================================================================================================================================
NET INVESTMENT INCOME 8,346,267
==================================================================================================================================
REALIZED AND Net realized gain (loss) on:
UNREALIZED GAIN (LOSS) Investments 566,180
Closing of futures contracts - Note 8 (931,937)
Foreign currency transactions 64,980
------------
Net realized loss (300,777)
--------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 12,202,101
Translation of assets and liabilities denominated in foreign currencies (136,201)
------------
Net change 12,065,900
------------
Net realized and unrealized gain 11,765,123
==================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,111,390
------------
------------
See accompanying Notes to Financial Statements.
</TABLE>
14 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
1995 1994
<S> <C> <C> <C>
==================================================================================================================================
OPERATIONS Net investment income $ 8,346,267 $ 6,537,608
--------------------------------------------------------------------------------------------------------
Net realized loss (300,777) (2,274,518)
--------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 12,065,900 (8,559,673)
----------------------------------
Net increase (decrease) in net assets resulting
from operations 20,111,390 (4,296,583)
==================================================================================================================================
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A (7,564,945) (6,381,575)
TO SHAREHOLDERS Class B (751,223) (156,032)
Class C (29,746) --
--------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A -- (298,880)
Class B -- (7,308)
==================================================================================================================================
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 61,827,603 (3,255,547)
Class B 34,622,947 1,918,288
Class C 3,910,520 --
==================================================================================================================================
NET ASSETS Total increase (decrease) 112,126,546 (12,477,637)
--------------------------------------------------------------------------------------------------------
Beginning of period 100,090,748 112,568,385
----------------------------------
End of period [including undistributed (overdistributed)
net investment income of $116,937 and
$(204,894), respectively] $212,217,294 $100,090,748
----------------------------------
----------------------------------
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991(4)
<S> <C> <C> <C> <C> <C>
=====================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.01 $11.12 $10.74 $10.80 $9.86
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .69 .65 .69 .75 .82
Net realized and unrealized gain (loss) .96 (1.08) .40 (.05) .90
- ---------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.65 (.43) 1.09 .70 1.72
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.68) (.65) (.71) (.76) (.78)
Dividends in excess of net investment
income -- (.03) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.68) (.68) (.71) (.76) (.78)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.98 $10.01 $11.12 $10.74 $10.80
=======================================================================
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE (5) 16.94% (3.87)% 10.30% 6.77% 18.28%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $169,059 $96,640 $110,759 $106,290 $90,623
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $116,940 $102,168 $111,702 $98,672 $86,471
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.47% 6.25% 6.20% 7.00% 8.02%
Expenses, before voluntary reimbursement
by the Manager 1.27% 1.06% 1.06% 1.10% 1.23%
Expenses, net of voluntary reimbursement
by the Manager 1.26% N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (7) 175.4% 70.3% 110.1% 116.4% 97.1%
<FN>
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. Operating results prior to April 15, 1988 were achieved by the Fund's
predecessor corporation as a closed-end fund under different investment
objectives and policies. Such results are thus not necessarily representative of
operating results the Fund may achieve under its current investment objectives
and policies.
4. On March 28, 1991, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------------
ELEVEN
MONTHS
ENDED
DEC. 31, YEAR ENDED JANUARY 31,
1990 1989 1988(3) 1988(3) 1987(3) 1986(3)
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.29 $10.12 $10.55 $11.30 $11.16 $10.91
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .88 .92 .93 1.09 1.16 1.22
Net realized and unrealized gain (loss) (.43) .19 (.36) (.55) .22 .35
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .45 1.11 .57 .54 1.38 1.57
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.88) (.94) (1.00) (1.29) (1.24) (1.32)
Dividends in excess of net investment
income -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.88) (.94) (1.00) (1.29) (1.24) (1.32)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.86 $10.29 $10.12 $10.55 $11.30 $11.16
========================================================================================
====================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE (5) 4.74% 11.31% 4.48% N/A N/A N/A
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $87,021 $96,380 $102,293 $118,568 $125,513 $121,979
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $90,065 $100,891 $111,264 $118,724 $123,045 $118,253
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.85% 8.85% 8.75% 10.28% 10.45% 11.26%
Expenses, before voluntary reimbursement
by the Manager 1.26% 1.14% 1.05% 0.98% 0.93% 0.97%
Expenses, net of voluntary reimbursement
1.24% N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (7) 80.4% 41.3% 45.0% 19.5% 59.8% 36.5%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------
CLASS B CLASS C
------------------------------------ -------------
PERIOD ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1993(2) 1995(1)
<S> <C> <C> <C> <C>
=========================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.01 $11.11 $11.10 $10.89
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .63 .58 .40 .28
Net realized and unrealized gain (loss) .94 (1.08) .03 .10
- ---------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.57 (.50) .43 .38
- ---------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.57) (.42) (.28)
Dividends in excess of net investment
income -- (.03) -- --
- ---------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.60) (.60) (.42) (.28)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.98 $10.01 $11.11 $10.99
=============================================================
=========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE (5) 16.06% (4.53)% 3.91% 3.76%
=========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $39,187 $3,451 $1,809 $3,971
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $12,823 $2,747 $922 $979
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.84% 5.53% 4.80%(6) 6.32%(6)
Expenses, before voluntary reimbursement
by the Manager 2.12% 1.78% 1.90%(6) 2.25%(6)
Expenses, net of voluntary reimbursement
by the Manager 2.08% N/A N/A 1.96%(6)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate (7) 175.4% 70.3% 110.1% 175.4%
<FN>
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1995 were $233,752,932 and $211,825,884, respectively.
</FN>
</TABLE>
17 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Bond Fund (the Fund), formerly named Oppenheimer Investment Grade
Bond 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 December 31, 1995,
the Fund had entered into outstanding when-issued or forward commitments of
$10,088,020.
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.
- --------------------------------------------------------------------------------
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. At December 31, 1995, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $6,446,000, which expires between 1997 and 2003.
- --------------------------------------------------------------------------------
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.
18 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
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.
During the year ended December 31, 1995, the Fund changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, during the year ended December 31, 1995,
amounts have been reclassified to reflect a decrease in paid-in capital of
$363,225, an increase in undistributed net investment income of $321,478, and a
decrease in accumulated net realized loss on investments of $41,747.
- --------------------------------------------------------------------------------
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.
19 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995(1) YEAR ENDED DECEMBER 31, 1994
------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Class A:
Sold 3,592,604 $ 37,958,201 1,071,379 $ 11,256,317
Dividends reinvested 401,453 4,283,086 323,100 3,353,309
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 -- --
Redeemed (4,249,502) (45,145,281) (1,704,508) (17,865,173)
------------- ------------- ------------- -------------
Net increase (decrease) 5,746,566 $ 61,827,603 (310,029) $ (3,255,547)
============= ============= ============= =============
---------------------------------------------------------------------------------------------------------
Class B:
Sold 1,038,290 $ 11,014,073 293,817 $ 3,089,618
Dividends reinvested 45,815 494,471 11,974 123,504
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 -- --
Redeemed (569,823) (6,076,871) (123,969) (1,294,834)
------------- ------------- ------------- -------------
Net increase 3,225,810 $ 34,622,947 181,822 $ 1,918,288
============= ============= ============= ============
---------------------------------------------------------------------------------------------------------
Class C:
Sold 47,725 $ 516,952 -- $ --
Dividends reinvested 1,625 17,809 -- --
Issued in connection with
the acquisition of
Quest Investment Quality
Income Fund - Note 7 362,821 3,929,348 -- --
Redeemed (50,720) (553,589) -- --
------------- ------------- ------------- ------------
Net increase 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.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At December 31, 1995, net unrealized appreciation on investments of $9,978,466
was composed of gross appreciation of $11,552,223, and gross depreciation of
$1,573,757.
================================================================================
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. At a meeting held on July 10, 1995,
shareholders of Oppenheimer Bond Fund approved a new investment advisory
agreement. Subsequent to July 10, management fees are as follows: .75% of the
first $200 million of the Fund's average annual net assets, .72% of the next
$200 million, .69% of the next $200 million, .66% of the next $200 million, .60%
of the next $200 million, and .50% of aggregate net assets over $1 billion.
Prior to July 10, 1995, management fees were as follows: .50% on the first $100
million of average annual net assets with a reduction of .05% on each $200
million thereafter, to .35% on net assets in excess of $500 million. The Manager
has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent state regulatory limit on Fund expenses.
The Manager has agreed to reimburse the Fund for SEC fees incurred in connection
with the acquisition of Quest Investment Quality Income Fund.
For the year ended December 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $166,065, of which $59,442 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 $167,546 and $5,007, of which $14,745 was paid to an
affiliated broker/dealer. During the year ended December 31, 1995, OFDI received
contingent deferred sales charges of $33,311 upon redemption of Class B shares
as reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.
20 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
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.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to compensate OFDI 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 institutions. In
addition, Class B and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to compensate OFDI for sales commissions paid
from its own resources at the time of sale and associated financing costs. In
the event of termination or discontinuance of the Class B or Class C plan, the
Board of Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B or Class C
shares sold prior to termination or discontinuance of the plan. At December 31,
1995, OFDI had incurred unreimbursed expenses of $1,004,267 for Class B and
$21,412 for Class C. During the year ended December 31, 1995, OFDI paid $142,856
and $2,033, respectively, to an affiliated broker/dealer as compensation for
Class A and Class B personal service and maintenance expenses, and retained
$106,790 and $1,848, respectively, as compensation for Class B and Class C sales
commissions and service fee advances, as well as financing costs.
================================================================================
5. DEFERRED TRUSTEE COMPENSATION
A former trustee elected to defer receipt of fees earned. These deferred fees
earned interest at a rate determined by the current Board of Trustees at the
beginning of each calendar year, compounded each quarter-end. From January 1,
1995 through May 10, 1995, the Fund was incurring interest at a rate of 7.89%
per annum. The final payment was made on May 10, 1995.
================================================================================
6. ILLIQUID AND RESTRICTED SECURITIES
At December 31, 1995, 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. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid or
restricted securities. The aggregate value of these securities subject to this
limitation at December 31, 1995 was $755,625 which represents .36% of the Fund's
net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
VALUATION PER
COST UNIT AS OF
SECURITY ACQUISITION DATE PER UNIT DECEMBER 31, 1995
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Pulsar Internacional SA de CV, 11.80%
Nts., 9/19/96 9/14/95 $100.00 $100.75
</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.
21 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
7. ACQUISITION OF STRATEGIC INVESTMENT GRADE AND QUEST INVESTMENT QUALITY
INCOME FUND
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 shareholders 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.
================================================================================
8. FUTURES CONTRACTS
The Fund may buy and sell 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. The Fund will segregate
assets to cover its commitments under futures contracts.
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.
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.
22 Oppenheimer Bond Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Bond Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Bond Fund (formerly Oppenheimer
Investment Grade Bond Fund) as of December 31, 1995, the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended December 31, 1995 and 1994, and the financial highlights for the
period January 1, 1991 to December 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights (except for
total return) for the period February 1, 1985 to December 31, 1990 were audited
by other auditors whose report dated February 4, 1991, expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Bond
Fund at December 31, 1995, the results of its operations, the changes in its net
assets, and the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 22, 1996
23 Oppenheimer Bond Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1996, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1995. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended December 31,
1995 are eligible for the corporate dividend- received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in the state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
24 Oppenheimer Bond Fund
<PAGE>
SHAREHOLDER MEETING (Unaudited)
================================================================================
On July 10, 1995, a special shareholder meeting was held at which the proposed
changes in the Fund's investment policies were approved (Proposal No. 1), the
new advisory agreement with the Manager was approved (Proposal No. 2), and the
Fund's amended Class B 12b-1 Distribution and Service Plan was approved by Class
B shareholders (Proposal No. 3), as described in the Fund's proxy statement for
that meeting. The following is a report of the votes cast:
<TABLE>
<CAPTION>
WITHHELD/ BROKER
PROPOSAL FOR AGAINST ABSTAIN NON-VOTES TOTAL
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
Proposal No. 1 4,962,101.683 449,195.254 185,962.536 1,135,744 5,597,259.473
Proposal No. 2 4,892,601.396 492,950.944 211,707.133 1,135,744 5,597,259.473
Proposal No. 3 286,217.802 29,365.485 7,912.259 61,076 323,495.546
</TABLE>
25 Oppenheimer Bond Fund
<PAGE>
OPPENHEIMER BOND FUND
A SERIES OF OPPENHEIMER INTEGRITY FUNDS
================================================================================
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, President
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
David Rosenberg, Vice President
George C. Bowen, Vice President, Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott 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.
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.
26 Oppenheimer Bond Fund
<PAGE>
- -----------------------
OPPENHEIMERFUNDS FAMILY
- -----------------------
================================================================================
OppenheimerFunds offers over 35 funds designed to fit virtually
every investment goal. Whether you're investing for retirement,
your children's education or tax-free income, we have the funds
to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfor-
table knowing that you are investing with a respected financial
institution with over 35 years of experience in helping people
just like you reach their financial goals. And you're investing
with a leader in global, growth stock and flexible fixed-income
investments--with over 2.8 million shareholder accounts and more
than $41 billion under Oppenheimer's management and that of our
affiliates.
At OppenheimerFunds, we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by tele-
phone.(1) For more information on Oppenheimer funds, please con-
tact your financial advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address shown on the
back cover. As always, please read the prospectus carefully
before you invest.
================================================================================
STOCK FUNDS Global Emerging Growth Fund Growth Fund
Enterprise Fund Global Fund
Discovery Fund Quest Global Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Target Fund Quest Value Fund
================================================================================
STOCK & BOND Main Street Income & Growth Fund Global Growth & Income Fund
FUNDS Quest Opportunity Value Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Quest Growth & Income Value Fund Strategic Income & Growth Fund
================================================================================
BOND FUNDS International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
Champion Income Fund
================================================================================
TAX-EXEMPT California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
FUNDS Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
New Jersey Tax-Exempt Fund(2) Insured Tax-Exempt Fund
New York Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
================================================================================
MONEY MARKET Money Market Fund Cash Reserves
FUNDS
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only for shares of the same class of
eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
-c-Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
27 Oppenheimer Bond Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
- --------------
1-800-525-7048
- --------------
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
- --------------
1-800-852-8457
- --------------
PHONELINK
24 hours a day, automated
information and transactions
- --------------
1-800-533-3310
- --------------
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
- --------------
1-800-843-4461
- --------------
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
- --------------
1-800-835-3104
- --------------
RA0285.001.1295 February 28, 1996
- ------------------------------------------------------------------------------
"HOW MAY I HELP YOU?" [PHOTO]
Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
As an Oppenheimer funds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer fund's transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- ------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS-R- --------------
OppenheimerFunds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 314
Farmingdale, NY
--------------
