<PAGE> 1
[PHOTO]
OPPENHEIMER BOND FUND
Annual Report December 31, 1996
"To help pay for extras,
I count on the money
I get from my investments."
[OPPENHEIMERFUNDS LOGO]
<PAGE> 2
THIS FUND IS FOR PEOPLE WHO WANT SOLID INCOME AND FEEL MOST COMFORTABLE GETTING
IT FROM AN INVESTMENT THAT EMPHASIZES QUALITY SECURITIES.
STANDARDIZED YIELDS
For the 30 Days Ended 12/31/96:3
Class A
6.61%
Class B
6.19%
Class C
6.19%
HOW YOUR FUND IS MANAGED
Oppenheimer Bond Fund's portfolio seeks high income by investing primarily in
corporate bonds and government securities. The portfolio managers may invest in
different types of corporate and government securities to seek to reduce
exposure to market volatility. The Fund will, under normal market conditions,
invest at least 65% of its total assets in a diversified portfolio of
investment-grade debt securities, which may help reduce credit risk.
PERFORMANCE
Total returns for the 12 months ended 12/31/96 for Class A, B and C shares were
4.87%, 3.99% and 4.00%, respectively, without deducting sales charges.(1)
Your Fund's average annual total returns for Class A shares for the 1-
and 5-year periods ended 12/31/96 and since inception on 4/15/88 were (0.12)%,
5.75% and 7.68%, respectively. For Class B shares, average annual total returns
for the 1-year period ended 12/31/96 and since inception on 5/1/93 were (0.88)%
and 4.33%, respectively. For Class C shares, average annual total returns for
the 1-year period ended 12/31/96 and since inception on 7/11/95 were 3.03% and
5.31%, respectively.(2)
OUTLOOK
We believe the Fund should continue to do well in 1997. As we move into the new
year, we expect to see continued modest economic growth in the U.S. accompanied
by low inflation, steady interest rates and flat corporate earnings."
David Rosenberg and David Negri
Portfolio Managers
December 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. For more complete
information, please review the prospectus carefully before you invest.
1. Includes change in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
2. Class A returns include 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 results would have been
higher. Class B returns include the applicable contingent deferred sales charge
of 5% (1-year) and 3% (since inception). Class C returns include the applicable
1% contingent deferred sales charge for the 1-year result. An explanation of
the different performance calculations is in the Fund's prospectus. Class B and
Class C shares are subject to an annual .75% asset-based sales charge.
3. Standardized yield is based on net investment income calculated for the
30-day period ended 12/31/96. Falling net asset values will tend to
artificially raise yields.
2 Oppenheimer Bond Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Bond Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Bond Fund
DEAR SHAREHOLDER,
Most likely, 1996 will be remembered as a "year of the stock market." While
several stock indices broke all-time records, the bond market, with the
exception of high-yield bonds, underperformed. The first half of the year was
difficult for most fixed income investors as concerns about inflation led to
rising long-term interest rates. But as we moved through the third and fourth
quarters, interest rates declined, ultimately resulting in a bond market rally.
And, although we anticipate interest-rate fluctuations in the coming months,
our outlook for early 1997 remains positive.
To understand where we're going, let's first look at where we've been. In
1996, many of the forces that pushed the stock market to record levels also
helped strengthen corporate credit fundamentals, leading to the excellent
performance of the high-yield sector. Over the later part of the year, with
robust corporate earnings, low inflation, a healthy economy and falling
Treasury yields, the high-yield market became very appealing to investors
seeking high returns from fixed income securities.
The rest of the bond market, however, didn't partake in the excitement.
During the first six months of 1996, interest rates rose sharply, in response
to investors' fears that the economy was growing too fast. As a result of these
anxieties, we saw the yield on the benchmark 30-year Treasury bond increase to
a high of about 7.0%.
However, some analysts anticipated that an environment of moderate
economic growth and low inflation would return, which would help stabilize, and
even lower, interest rates. And, during the second half of 1996, that's exactly
how events unfolded. So, as fall passed, investors who rode out the uncertainty
of the bond market early in 1996 were rewarded: The yield on the 30-year
Treasury bond progressively retreated to 6.42%, marking the lowest
interest-rate level since April 1996.
Over the last few months, new developments have added to the appeal of
bonds. First, while earlier economic indicators made investors wary,
third-quarter Gross Domestic Product (GDP) results came in at a substantially
lower level than those of the second quarter. Contrary to popular opinion, the
economy had slowed. Second, although higher wages were also blamed for a
seemingly fast-moving economy, the Employment Cost Indicator increased only
marginally, remaining well below the expected figure. Third, the federal
government deficit ended fiscal 1996 lower than what was projected.
For 1997, President Clinton has expressed a desire to balance the federal
budget, rather than to provide broad-based tax cuts. This move should prove
beneficial for the fixed income market. Additionally, with a firm dollar, low
inflation and slow growth, the fear of Federal Reserve tightening has
diminished. Some economists even forecast that the Fed will attempt to
stimulate the economy by reducing the federal funds rate during the first
quarter of 1997, further fueling our optimistic outlook for fixed income.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
January 22, 1997
3 Oppenheimer Bond Fund
<PAGE> 4
Q + A
[PHOTO] [PHOTO]
Q What
areas are
you currently
targeting?
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED?
In spite of a somewhat difficult bond market this past year, Oppenheimer Bond
Fund's performance was relatively strong. While rising interest rates over most
of the year hindered the performance of many other fixed income investments,
the Fund's strategic positioning provided a positive return. In fact, the Fund
was 5 out of 110 corporate debt A-rated funds ranked by Lipper Analytical
Services for the 1-year period ended 12/31/96.(1) What's more, Oppenheimer Bond
Fund continued to provide competitive monthly income over the period.
WHAT INVESTMENTS MADE A POSITIVE CONTRIBUTION TO PERFORMANCE?
The Fund's performance can be attributed to two major factors. First,
during the second half of the year, we focused on both investment-grade and
higher-yielding corporate bonds to capture as much income as possible.
Throughout this period, the Fund maintained a portfolio having an average
credit rating of "A."(2) Specifically, we found the greatest potential in bonds
issued by financial services firms and oil- and gas-related businesses. Within
the financial services industry, corporate restructuring and consolidations
have improved profitability and balance sheets. In the oil and gas sector,
advanced technologies have helped strengthen the profits of many companies.
The second factor that contributed to the Fund's positive performance was
our diversification over a variety of bonds. But, our investments in
mortgage-backed securities were the strongest performers. As is typically the
case, when interest rates rose this year, the prepayment risk of mortgages
decreased because homeowners were
[PHOTO]
1. Source: Lipper Analytical Services, 12/31/96. Oppenheimer Bond Fund is
characterized by Lipper as a corporate debt A-rated fund.Lipper performance is
based on total return and does not take sales charges into account. Oppenheimer
Bond Fund was ranked 22 out of 51 funds in its category for the 5-year period
and 17 out of 26 funds in its category for the 10-year period ended 12/31/96.
2. Average rating is on a dollar-weighted basis and is subject to change.
4 Oppenheimer Bond Fund
<PAGE> 5
FACING PAGE
Top left: David Negri, Portfolio Manager, with Mark Frank, Member of Fixed
Income Investments Team
Top right: David Rosenberg, Portfolio Manager
Bottom: Len Darling, Executive VP, Director of Fixed Income Investments
THIS PAGE
Top: David Negri and Mark Frank
Bottom: David Rosenberg with Leslie Falconio and Gina Palmieri, Members of
Fixed Income Investments Team
A We're currently [PHOTO]
moving the Fund
to a more neutral
interest-rate position.
less likely to refinance. In addition, mortgage-backed securities have needed
to pay very competitive income, which further benefited the portfolio's
performance.(3)
WERE THERE ANY INVESTMENTS THAT DIDN'T PERFORM AS WELL AS EXPECTED?
Our Treasury securities earned only modest returns at best, due to the general
rise in interest rates this year. In turn, these investments brought down the
overall return of the portfolio. Fortunately, Treasuries made up less than
half of our U.S. government securities allocation. And, because we focused on
shorter maturities, the impact on the portfolio was reduced.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We're currently moving the Fund to a more neutral interest-rate position,
reflecting our belief that the economy remains healthy. As such, we're focusing
on mortgage-backed securities. Since these securities historically have tended
to outperform Treasuries, we are building on our existing positions in this
area--carefully varying the durations to keep the portfolio flexible to respond
to opportunities that may arise.
We are also adding to our exposure in the oil and gas sector, which
typically offers some high-quality investments. In addition to maintaining the
high average credit quality of the portfolio, these investments tend to be less
cyclical by nature, making them less vulnerable should the economy begin to
show signs of slowing.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We believe the Fund should continue to do well in 1997. As we move into the new
year, we expect to see continued modest economic growth in the U.S. accompanied
by low inflation, steady interest rates and flat corporate earnings. With this
economic outlook, we will continue to take advantage of income opportunities,
particularly in corporate bonds, and slightly increase the portfolio's
interest rate risk.
[PHOTO]
3. The Fund's portfolio is subject to change.
5 Oppenheimer Bond Fund
<PAGE> 6
FINANCIALS
CONTENTS
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS AND LIABILITIES 17
STATEMENT OF OPERATIONS 18
STATEMENTS OF CHANGES IN NET ASSETS 19
FINANCIAL HIGHLIGHTS 20
NOTES TO FINANCIAL STATEMENTS 21
INDEPENDENT AUDITORS' REPORT 28
FEDERAL INCOME TAX INFORMATION 29
6 Oppenheimer Bond Fund
<PAGE> 7
STATEMENT OF INVESTMENTS December 31, 1996
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--37.8%
- --------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--26.0%
- --------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--20.5%
Federal Home Loan Mortgage Corp.:
Certificates of Participation, 9%, 3/1/17 $ 548,115 $ 583,469
Certificates of Participation, Series 17-039, 13.50%, 11/1/10 55,673 65,754
Certificates of Participation, Series 17-094, 12.50%, 4/1/14 32,178 37,477
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 1,651,488
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1712, Cl. B, 6%, 3/15/09 1,000,000 928,430
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1714, Cl. M, 7%, 8/15/23 1,000,000 949,370
Gtd. Multiclass Mtg. Participation Certificates,
Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,515,000
Interest-Only Stripped Mtg.-Backed Security,
Trust 177, Cl. B, 15.817%--17.495%, 7/15/26(2) 24,454,952 8,536,307
GNMA, Series 56, Cl. H, 9%, 7/20/24 2,493,000 2,654,266
-------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 5,291,965 6,052,685
7%, 1/15/12(3) 10,000,000 9,987,500
7%, 1/1/09--11/1/25 5,424,409 5,328,681
7.50%, 2/1/08--3/1/08 745,610 758,502
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates,
Series 1992-34, Cl. G, 8%, 3/25/22 540,000 557,042
Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 668,880 693,027
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,606,250
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1992-169, Cl. L, 7%, 9/25/22 5,965,000 5,651,838
------------
48,557,086
- --------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--5.5%
Government National Mortgage Assn.:
10%, 11/15/09 287,824 318,673
10.50%, 12/15/17--5/15/21 315,340 352,969
11%, 10/20/19 1,216,705 1,386,655
12%, 1/15/99--5/14/14 29,365 31,379
12.75%, 6/15/15 4,036 4,777
13%, 12/15/14 40,193 47,906
7%, 7/15/09--5/15/26 7,213,287 7,148,974
8%, 6/15/05--10/15/06 1,808,388 1,875,308
9%, 2/15/09--6/15/09 502,915 537,873
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates,
Series 1994-5, Cl. PQ, 7.493%, 7/16/24 1,200,000 1,208,244
------------
12,912,758
- --------------------------------------------------------------------------------------------------------------------------------
PRIVATE--11.8%
- --------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--8.6%
Asset Securitization Corp.:
Commercial Mtg. Pass-Through Certificates,
Series 1996-MD6, Cl. A-5, 6.958%, 11/13/26(4) 2,000,000 2,002,500
Series 1996-D3, Cl. A5, 8.165%, 10/13/26(4)(5) 800,000 828,750
</TABLE>
7 Oppenheimer Bond Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL
(CONTINUED)
CMC Securities Corp. I, Collateralized Mtg. Obligation,
Series 1993-D, Cl. D-3, 10%, 7/25/23(5) $ 643,201 $ 676,166
-------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed Security,
Series 1996-C1, Cl. X-2, 8.649%, 12/25/20(2)(5) 18,624,900 646,051
-------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(5) 1,000,000 1,053,438
Cl. 2-E, 8.70%, 9/25/25(5) 1,000,000 1,049,063
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1996-C1:
Cl. D-1, 7.51%, 2/15/28(4)(5) 1,000,000 983,125
Cl. E, 7.51%, 2/15/28(4)(6) 1,100,000 893,750
-------------------------------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg.
Pass-Through Certificates, Series-DMC, Cl. B, 8.562%, 8/12/11(5) 3,000,000 3,055,781
-------------------------------------------------------------------------------------------------------------------------
Potomac Gurnee Financial Corp., Commercial Mtg.
Pass-Through Certificates, Cl. D, 7.683%, 12/21/26 1,500,000 1,500,469
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. B, 8.75%, 5/25/24 700,000 712,141
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,542,422
Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,356,055
-------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-C1, Cl. E, 9.18%, 1/20/06 700,000 633,500
-------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass
Pass-Through Certificates, Series 1996-C3, Cl. D, 8.02%, 6/1/30(5) 2,500,000 2,459,375
------------
20,392,586
- --------------------------------------------------------------------------------------------------------------------------------
MANUFACTURED HOUSING--0.1%
Green Tree Financial Corp., Series 1994-6, Cl. A3, 7.70%, 1/15/20 250,000 253,905
- --------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--1.1%
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through Certificates,
Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5) 2,250,000 1,823,906
-------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 589,996 607,973
Series 1991-M6, Cl. B4, 7.012%, 6/25/21(4) 63,535 62,612
------------
2,494,491
- --------------------------------------------------------------------------------------------------------------------------------
OTHER--1.1%
GE Capital Mortgage Services, Inc., Series 1994-14, Cl. A1, 6.50%, 4/25/24 99,059 98,749
-------------------------------------------------------------------------------------------------------------------------
JHM Mtg. Acceptance Corp., Collateralized Mtg.
Obligation Bonds, Series E, Cl. 5, 8.96%, 4/1/19 1,633,748 1,718,491
-------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp.,
Series 1994-MD1, Cl. B2, 8.421%, 3/15/18(4)(6) 600,000 526,406
-------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI:
Interest-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B, 2.101%, 10/23/17(2) 132,052 42,752
Principal-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A, Zero Coupon, 8.903%, 10/23/17(7) 195,114 136,153
-----------
2,522,551
</TABLE>
8 Oppenheimer Bond Fund
<PAGE> 9
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RESIDENTIAL--0.9%
Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 $638,879 $ 658,244
-------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds,
Series 1992-A, Cl. 1A, 8.285%, 3/29/30(4) 378,157 378,040
-------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-B, Cl. 1, 7.136%, 4/25/26 1,988,219 1,190,447
------------
2,226,731
------------
Total Mortgage-Backed Obligations (Cost $88,548,291) 89,360,108
================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--10.4%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
10.375%, 11/15/09 1,000,000 1,235,938
11.625%, 11/15/04 4,375,000 5,773,635
12.75%, 11/15/10 1,000,000 1,415,938
8.75%, 5/15/20 4,273,000 5,257,127
8.875%, 8/15/17(8) 7,500,000 9,260,160
STRIPS, Zero Coupon, 6.855%, 8/15/22(9) 7,400,000 1,304,775
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.875%, 4/30/98 500,000 499,688
------------
Total U.S. Government Obligations (Cost $24,545,165) 24,747,261
================================================================================================================================
FOREIGN GOVERNMENT OBLIGATIONS--0.4%
- --------------------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction & Development Bonds,
12.50%, 7/25/97 NZD 800,000 579,713
New Zealand (Government of) Bonds, 10%, 7/15/97 NZD 390,000 279,152
-----------
Total Foreign Government Obligations (Cost $770,253) 858,865
================================================================================================================================
CORPORATE BONDS AND NOTES--52.1%
- --------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--4.1%
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.0%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 500,000 505,375
-------------------------------------------------------------------------------------------------------------------------
FMC Corp., 8.75% Sr. Nts., 4/1/99 250,000 261,030
-------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 900,000 978,153
-------------------------------------------------------------------------------------------------------------------------
Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 566,905
------------
2,311,463
- --------------------------------------------------------------------------------------------------------------------------------
METALS/MINING--2.1%
AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,115,907
-------------------------------------------------------------------------------------------------------------------------
Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 1,077,813
-------------------------------------------------------------------------------------------------------------------------
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 1,000,000 1,020,000
-------------------------------------------------------------------------------------------------------------------------
Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,617,838
------------
4,831,558
- --------------------------------------------------------------------------------------------------------------------------------
PAPER--0.7%
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 300,000 305,263
-------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 450,000 472,500
-------------------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02 500,000 508,750
-------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts., 7/20/15 436,532 437,939
------------
1,724,452
- --------------------------------------------------------------------------------------------------------------------------------
STEEL--0.3%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06(6) 650,000 667,875
</TABLE>
9 Oppenheimer Bond Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER RELATED--4.3%
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.6%
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 $ 370,000 $ 427,350
-------------------------------------------------------------------------------------------------------------------------
Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,063,995
------------
1,491,345
- --------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--0.4%
B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(6) 250,000 249,665
-------------------------------------------------------------------------------------------------------------------------
ConAgra, Inc.:
7.40% Sub. Nts., 9/15/04 250,000 254,148
9.75% Sr. Nts., 11/1/97 500,000 515,370
------------
1,019,183
- --------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--1.3%
Grace (W.R.) & Co., 7.25% Medium-Term Nts., 7/15/97 2,000,000 2,015,042
-------------------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 500,000 532,500
-------------------------------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 477,108
------------
3,024,650
- --------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--0.6%
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 800,000 816,000
-------------------------------------------------------------------------------------------------------------------------
Majestic Star Casino LLC (The), 12.75% Sr. Sec. Nts., 5/15/03 195,000 210,600
-------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02 210,000 278,250
-------------------------------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 95,000 94,525
------------
1,399,375
- --------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--0.8%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 160,000 166,400
-------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 1,000,000 1,020,000
9.75% Sr. Sub. Nts., 6/1/02 750,000 766,875
------------
1,953,275
- --------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--0.6%
Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06 650,000 695,500
-------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 465,622
-------------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06(6) 200,000 208,000
------------
1,369,122
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--5.1%
- --------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts., 5/15/99 325,000 340,842
-------------------------------------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Nts., 12/1/06(5) 2,000,000 1,950,000
-------------------------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 850,000 894,625
-------------------------------------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06(6) 500,000 532,500
-------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 105,351
-------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co.:
0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(10) 400,000 278,000
10.625% Gtd. Sr. Sub. Nts., 7/1/06 740,000 804,750
-------------------------------------------------------------------------------------------------------------------------
NorAm Energy Corp., 9.875% Nts., 4/15/97 505,000 510,554
-------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,307,678
-------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 750,000 731,250
-------------------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co., 7.53% Pass-Through Certificates,
Series 1994-A1, 9/27/98 366,634 370,844
</TABLE>
10 Oppenheimer Bond Fund
<PAGE> 11
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
(CONTINUED)
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 $ 275,000 $ 306,354
-------------------------------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,881,630
-------------------------------------------------------------------------------------------------------------------------
TransTexas Gas Corp., 11.50% Sr. Sec. Gtd. Nts., 6/15/02 1,000,000 1,086,250
------------
12,100,628
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--11.9%
- --------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--2.0%
BankAmerica Institute, 8.07% Gtd. Bonds, Series A, 12/31/26(5) 1,000,000 1,012,300
-------------------------------------------------------------------------------------------------------------------------
Banque Nationale de Paris, 9.875% Debs., 5/25/98 205,000 213,341
-------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 25,000 25,152
-------------------------------------------------------------------------------------------------------------------------
Citicorp Capital Trust I, 7.933% Gtd. Bonds, 2/15/27 1,000,000 1,013,100
-------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 325,000 333,440
-------------------------------------------------------------------------------------------------------------------------
First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts., 10/1/03(6) 500,000 542,500
-------------------------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., 9.125% Sr. Sub. Nts., 1/15/03 500,000 507,500
-------------------------------------------------------------------------------------------------------------------------
National Westminster Bank plc, 9.375% Gtd. Capital Nts., 11/15/03 70,000 79,666
-------------------------------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The) plc,
10.125% Sub. Gtd. Capital Nts., 3/1/04 500,000 583,602
-------------------------------------------------------------------------------------------------------------------------
Suntrust Banks, Inc., 8.875% Debs., 2/1/98 500,000 514,460
------------
4,825,061
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--7.6%
American Car Line Co., 8.25% Equipment Trust Certificates,
Series 1993-A, 4/15/08 228,000 233,292
-------------------------------------------------------------------------------------------------------------------------
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 300,000 311,086
-------------------------------------------------------------------------------------------------------------------------
Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 308,011
-------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 12.875% Debs., 8/1/13 20,000 22,845
-------------------------------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,684,246
-------------------------------------------------------------------------------------------------------------------------
Enterprise Rent-A-Car USA Finance Co., 7.875% Nts., 3/15/98(6) 1,500,000 1,529,736
-------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
6.75% Nts., 8/15/08 1,000,000 967,526
9.90% Medium-Term Nts., 11/6/97 2,000,000 2,000,674
-------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 325,000 337,189
-------------------------------------------------------------------------------------------------------------------------
Household Finance Corp. Ltd., 6% Gtd. Sr. Nts., 6/30/98 250,000 248,845
-------------------------------------------------------------------------------------------------------------------------
Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 1,909,082
-------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.875% Nts., 3/1/03 750,000 750,541
-------------------------------------------------------------------------------------------------------------------------
Midland American Capital Corp., 12.75% Gtd. Nts., 11/15/03 205,000 226,785
-------------------------------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,659,139
-------------------------------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,886,533
-------------------------------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,600,000 1,644,114
-------------------------------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,318,355
-------------------------------------------------------------------------------------------------------------------------
TransAmerica Finance Corp., 7.42% Medium-Term Nts., 2/9/98 500,000 507,617
-------------------------------------------------------------------------------------------------------------------------
U.S. Leasing International, 7% Nts., 11/1/97 500,000 504,421
------------
18,050,037
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.3%
Aetna Services, Inc., 8% Debs., 1/15/17 1,000,000 1,013,727
-------------------------------------------------------------------------------------------------------------------------
Capital Holding Corp., 8.75% Debs., 1/15/17 1,200,000 1,251,593
-------------------------------------------------------------------------------------------------------------------------
Torchmark Corp., 7.875% Nts., 5/15/23 3,000,000 3,014,277
-------------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03(6) 200,000 203,000
-----------
5,482,597
</TABLE>
11 Oppenheimer Bond Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 $ 1,215,000
- ---------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--5.2%
- ---------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/
COMPUTERS--2.5%
Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,052,482
--------------------------------------------------------------------------------------------------------------------------
British Aerospace plc, 8% Debs., 5/27/97 300,000 302,437
--------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 500,000 558,750
--------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 8.75% Debs., 5/21/07(8) 1,000,000 1,135,125
--------------------------------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 1,015,000
--------------------------------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 500,000 533,750
--------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 300,000 321,375
-------------
5,918,919
- ---------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.0%
Chrysler Corp., 10.95% Debs., 8/1/17 200,000 215,352
--------------------------------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,188,164
-------------
2,403,516
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--1.7%
Caterpillar, Inc., 9.75% Debs., 6/1/19 1,750,000 1,914,521
--------------------------------------------------------------------------------------------------------------------------
Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000 1,070,573
--------------------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,029,141
-------------
4,014,235
- ---------------------------------------------------------------------------------------------------------------------------------
MEDIA--3.8%
- ---------------------------------------------------------------------------------------------------------------------------------
BROADCASTING--1.3%
American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 700,000 693,000
--------------------------------------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 750,000 761,250
--------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 750,000 787,500
--------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 200,000 204,750
--------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06 500,000 488,750
-------------
2,935,250
- ---------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--1.5%
Bell Cablemedia plc, 0%/11.875% Sr. Disc. Nts., 9/15/05(10) 700,000 568,750
--------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(10) 550,000 393,938
--------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(10) 200,000 166,500
--------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts.,
Series B, 2/1/06(10) 500,000 342,500
--------------------------------------------------------------------------------------------------------------------------
TeleWest plc, 0%/11% Sr. Disc. Debs., 10/1/07(10) 1,400,000 980,000
--------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,082,025
------------
3,533,713
- ---------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--0.8%
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 500,000 482,500
--------------------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(10) 1,500,000 1,398,750
-------------
1,881,250
- ---------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.1%
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 250,000 250,841
- ---------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.1%
Reed Publishing (USA), Inc., 7.24% Gtd. Medium-Term Nts., 2/10/97 250,000 250,360
</TABLE>
12 Oppenheimer Bond Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT (1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER--1.1%
- ---------------------------------------------------------------------------------------------------------------------------------
SERVICES--1.1%
Archer Daniels Midland Co., 7.125% Debs., 3/1/13 $ 750,000 $ 747,339
--------------------------------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 10.125% Sr. Sub. Nts., 10/1/06 250,000 266,250
--------------------------------------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 526,784
--------------------------------------------------------------------------------------------------------------------------
Laidlaw, Inc., 7.70% Debs., 8/15/02 500,000 519,856
--------------------------------------------------------------------------------------------------------------------------
Philip Morris Cos., 8.25% Debs., 10/15/03 500,000 531,468
-------------
2,591,697
- ---------------------------------------------------------------------------------------------------------------------------------
RETAIL--1.8%
- ---------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES--0.3%
Sears Canada, Inc., 11.70% Debs., 7/10/00 (CAD) 500,000 431,200
--------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 313,408
------------
744,608
- ---------------------------------------------------------------------------------------------------------------------------------
DRUG STORES--0.2%
Hook-SupeRx, Inc., 10.125% Sr. Nts., 6/1/02 400,000 424,853
- ---------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS--0.1%
First Brands Corp., 9.125% Sr. Sub. Nts., 4/1/99 265,000 267,140
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.3%
May Department Stores Cos.:
10.625% Debs., 11/1/10 405,000 525,110
9.875% Debs., 6/1/17 250,000 264,264
------------
789,374
- ---------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--0.9%
Grand Union Co., 12% Sr. Nts., 9/1/04 700,000 745,500
--------------------------------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 1,000,000 1,028,092
--------------------------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04 300,000 320,250
------------
2,093,842
- ---------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.9%
- ---------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.7%
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 1,000,000 1,115,000
--------------------------------------------------------------------------------------------------------------------------
Southwest Airlines Co., 9.25% Debs., 2/15/98 500,000 516,566
------------
1,631,566
- ---------------------------------------------------------------------------------------------------------------------------------
RAILROADS--1.2%
Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 1,196,680
--------------------------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 729,815
--------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(10) 1,100,000 885,500
--------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 109,196
-------------
2,921,191
- ---------------------------------------------------------------------------------------------------------------------------------
UTILITIES--12.4%
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--4.1%
CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06(6) 650,000 674,375
--------------------------------------------------------------------------------------------------------------------------
California Energy, Inc., 0%/10.25% Sr. Disc. Nts., 1/15/04(10) 750,000 796,875
--------------------------------------------------------------------------------------------------------------------------
Centragas Natural Gas Transmission System, 10.65% Sr. Sec. Bonds, 12/1/10(6) 2,413,170 2,714,817
--------------------------------------------------------------------------------------------------------------------------
Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 250,000 255,839
--------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 200,000 213,250
--------------------------------------------------------------------------------------------------------------------------
Florida Gas Transmission Environmental Corp., 7.75% Sr. Nts., 11/1/97(6) 500,000 506,813
--------------------------------------------------------------------------------------------------------------------------
Laclede Gas Co., 8.50% First Mtg. Bonds, 11/15/04 500,000 544,416
--------------------------------------------------------------------------------------------------------------------------
MidAmerican Energy Co., 6.25% Mtg. Nts., 2/1/98 500,000 501,426
</TABLE>
13 Oppenheimer Bond Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES
(CONTINUED)
National Fuel Gas Co., 7.75% Debs., 2/1/04 $ 500,000 $ 520,030
--------------------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 270,247
--------------------------------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 564,941
--------------------------------------------------------------------------------------------------------------------------
Tenaga Nasional Berhad, 7.875% Nts., 6/15/04(6) 1,000,000 1,057,727
--------------------------------------------------------------------------------------------------------------------------
Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 546,702
--------------------------------------------------------------------------------------------------------------------------
Union Gas Ltd., 13% Debs., 6/30/03 (CAD) 518,000 419,274
-------------
9,586,732
- ---------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--8.3%
Allbritton Communications Co., 11.50% Sr. Sub. Debs., 8/15/04 675,000 715,500
--------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(10) 500,000 278,750
0%/13% Sr. Disc. Nts., 11/1/05(10) 300,000 178,500
--------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06(6)(10) 1,200,000 771,000
--------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 11.23%, 8/15/00(9) 2,150,000 1,499,625
--------------------------------------------------------------------------------------------------------------------------
Colt Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant
to purchase 7.8 ordinary shares)(10)(11) 300,000 181,500
--------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(6)(10) 100,000 65,000
--------------------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(10) 800,000 492,000
--------------------------------------------------------------------------------------------------------------------------
GTE Corp., 8.85% Debs., 3/1/98 300,000 309,069
--------------------------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(10) 120,000 78,900
0%/13.50% Sr. Disc. Nts., 9/15/05(10) 475,000 339,625
--------------------------------------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 150,000 128,250
--------------------------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(10) 500,000 370,625
0%/9.375% Sr. Disc. Nts., 1/15/04(10) 350,000 306,250
--------------------------------------------------------------------------------------------------------------------------
New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,830,775
--------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 1,150,000 1,201,750
--------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(6) 740,000 752,950
--------------------------------------------------------------------------------------------------------------------------
Pacific Bell, 8.50% Debs., 8/15/31 1,000,000 1,063,869
--------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(10) 200,000 172,000
0%/14% Sr. Sub. Disc. Nts., 11/15/01(10) 1,050,000 1,026,375
10.75% Sr. Nts., 11/1/04(6) 125,000 130,313
--------------------------------------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each unit consists of $1,000 principal
amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant
to purchase six ordinary shares)(5)(10)(11) 1,000,000 550,000
--------------------------------------------------------------------------------------------------------------------------
Southern New England Telephone Co., 8.70% Medium-Term Nts., 8/15/31 2,000,000 2,135,714
--------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.,
0%/12.50% Sr. Disc. Nts., 8/15/06(10) 200,000 135,500
--------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(10) 750,000 517,500
9.875% Sr. Nts., 7/1/06 700,000 752,500
--------------------------------------------------------------------------------------------------------------------------
United Telephone Co. (Pennsylvania), 7.375% First Mtg. Nts., Series Y, 12/1/02 750,000 767,709
</TABLE>
14 Oppenheimer Bond Fund
<PAGE> 15
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS
(CONTINUED)
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 $ 500,000 $ 477,500
-------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp.:
10.50% Sr. Sub. Nts., 2/1/07(6) 250,000 262,188
10.50% Sr. Sub. Nts., 6/1/06 1,000,000 1,051,250
------------
19,542,487
-----------
Total Corporate Bonds and Notes (Cost $119,269,285) 123,247,195
<CAPTION>
SHARES
================================================================================================================================
<S> <C> <C>
COMMON STOCKS--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc. (Cost $3,595)(12) 73 3,978
================================================================================================================================
PREFERRED STOCKS--1.6%
- --------------------------------------------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred Securities, Series A 80,000 2,000,000
-------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp., 8.375%, Series K 20,300 512,575
-------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 23,000 667,000
-------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 605,000 617,100
------------
Total Preferred Stocks (Cost $3,710,275) 3,796,675
================================================================================================================================
OTHER SECURITIES--0.2%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc., 8% Cv. Depositary Shares
each Representing 1/100 Share of Dividend Enhanced
Convertible Stock (Cost $348,310) 5,000 456,250
<CAPTION>
UNITS
================================================================================================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05 300 27,000
-------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(5) 500 10,000
-------------------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc. Wts., Exp. 9/05 1,980 17,820
-----------
Total Rights, Warrants and Certificates (Cost $0) 54,820
</TABLE>
15 Oppenheimer Bond Fund
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
STRIKE MARKET VALUE
DATE PRICE CONTRACTS SEE NOTE 1
===============================================================================================================================
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED--0.0%
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 10-yr Futures
Call Opt. (Cost $28,750) 2/97 $110 20 $ 13,437
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $237,223,924) 102.5% 242,538,589
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (2.5) (5,876,801)
------------- ------------
NET ASSETS 100.0% $236,661,788
============= ============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in
the following currencies:
CAD--Canadian Dollar NZD--New Zealand Dollar
2. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most
other fixed income securities increase in price when interest rates
decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated. The price of
these securities is typically more sensitive to changes in prepayment
rates than traditional mortgage-backed securities (for example, GNMA
pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future
cash flows.
3. When-issued security to be delivered and settled after December 31,
1996.
4. Represents the current interest rate for a variable rate security.
5. Identifies issues considered to be illiquid--See Note 7 of Notes to
Financial Statements.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines
established by the Board of Trustees. These securities amount to
$12,288,615 or 5.19% of the Fund's net assets, at December 31, 1996.
7. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value of
these securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity.
Interest rates disclosed represent current yields based upon the current
cost basis and estimated timing of future cash flows.
8. Securities with an aggregate market value of $1,431,844 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
9. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
10. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
11. Units may be comprised of several components, such as debt and
equity and/or warrants to purchase equity at some point in the future.
For units which represent debt securities, face amount disclosed
represents total underlying principal.
12. Non-income producing security.
See accompanying Notes to Financial Statements.
16 Oppenheimer Bond Fund
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES December 31, 1996
<TABLE>
================================================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $237,223,924)--see accompanying statement $242,538,589
-------------------------------------------------------------------------------------------------------------------------
Cash 1,407,908
-------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 3,464,975
Shares of beneficial interest sold 969,510
-------------------------------------------------------------------------------------------------------------------------
Other 12,849
------------
Total assets 248,393,831
================================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased on a when-issued basis--Note 1 10,082,292
Dividends 687,837
Shares of beneficial interest redeemed 647,168
Distribution and service plan fees 143,057
Daily variation on futures contracts--Note 5 30,245
Other 141,444
------------
Total liabilities 11,732,043
================================================================================================================================
NET ASSETS $236,661,788
============
================================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $235,499,946
-------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (4,146,188)
-------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 5,308,030
------------
Net assets $236,661,788
============
================================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$193,514,612 and 18,089,841 shares of beneficial interest outstanding) $10.70
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $11.23
-------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$38,825,664 and 3,630,498 shares of beneficial interest outstanding) $10.69
-------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$4,321,512 and 403,745 shares of beneficial interest outstanding) $10.70
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Bond Fund
<PAGE> 18
STATEMENT OF OPERATIONS For the Year Ended December 31, 1996
<TABLE>
================================================================================================================================
<S> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $2,455) $18,905,698
-------------------------------------------------------------------------------------------------------------------------
Dividends 99,649
------------
Total income 19,005,347
================================================================================================================================
EXPENSES
Management fees--Note 4 1,640,483
-------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 439,791
Class B 380,746
Class C 34,043
-------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 376,140
-------------------------------------------------------------------------------------------------------------------------
Shareholder reports 185,565
-------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 43,311
-------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 21,393
-------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 14,020
Class B 1,133
Class C 1,343
-------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 6,559
-------------------------------------------------------------------------------------------------------------------------
Other 29,822
------------
Total expenses 3,174,349
================================================================================================================================
NET INVESTMENT INCOME 15,830,998
================================================================================================================================
REALIZED AND
UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 880,924
Closing of futures contracts--Note 5 (740,870)
Closing of options written--Note 6 198,775
Foreign currency transactions (25,620)
-----------
Net realized gain 313,209
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (5,422,386)
Translation of assets and liabilities denominated in foreign currencies 96,970
-----------
Net change (5,325,416)
-----------
Net realized and unrealized loss (5,012,207)
================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,818,791
===========
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Bond Fund
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
================================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 15,830,998 $ 8,346,267
-------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 313,209 (300,777)
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (5,325,416) 12,065,900
------------- -------------
Net increase in net assets resulting from operations 10,818,791 20,111,390
================================================================================================================================
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS
Dividends from net investment income:
Class A (12,577,460) (7,564,945)
Class B (2,405,982) (751,223)
Class C (214,115) (29,746)
-------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A (517,955) --
Class B (103,919) --
Class C (11,567) --
================================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from beneficial
interest transactions--Note 2:
Class A 28,392,776 61,827,603
Class B 659,280 34,622,947
Class C 404,645 3,910,520
================================================================================================================================
NET ASSETS
Total increase 24,444,494 112,126,546
-------------------------------------------------------------------------------------------------------------------------
Beginning of period 212,217,294 100,090,748
------------- -------------
End of period (including undistributed net investment
income of $116,937 in 1995) $236,661,788 $212,217,294
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Bond Fund
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
==================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.98 $10.01 $11.12 $10.74 $10.80
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .78 .69 .65 .69 .75
Net realized and unrealized
gain (loss) (.28) .96 (1.08) .40 (.05)
-------- -------- -------- -------- --------
Total income (loss) from
investment operations .50 1.65 (.43) 1.09 .70
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.75) (.68) (.65) (.71) (.76)
Dividends in excess of net
investment income -- -- (.03) -- --
Tax return of capital (.03) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.78) (.68) (.68) (.71) (.76)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.70 $10.98 $10.01 $11.12 $10.74
======== ======== ======== ======== ========
==================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 4.87% 16.94% (3.87)% 10.30% 6.77%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $193,515 $169,059 $ 96,640 $110,759 $106,290
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $178,130 $116,940 $102,168 $111,702 $98,672
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.35% 6.47% 6.25% 6.20% 7.00%
Expenses, before voluntary
reimbursement by the Manager 1.30% 1.27% 1.06% 1.06% 1.10%
Expenses, net of voluntary
reimbursement by the Manager N/A 1.26% N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 53.7% 175.4% 70.3% 110.1% 116.4%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- ----------------------
YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993(2) 1996 1995(1)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.98 $10.01 $11.11 $11.10 $10.99 $10.89
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .70 .63 .58 .40 .70 .28
Net realized and unrealized
gain (loss) (.29) .94 (1.08) .03 (.29) .10
-------- -------- -------- -------- -------- --------
Total income (loss) from
investment operations .41 1.57 (.50) .43 .41 .38
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.67) (.60) (.57) (.42) (.67) (.28)
Dividends in excess of net
investment income -- -- (.03) -- -- --
Tax return of capital (.03) -- -- -- (.03) --
-------- -------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.70) (.60) (.60) (.42) (.70) (.28)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.69 $10.98 $10.01 $11.11 $10.70 $10.99
======== ======== ======== ======== ======== ========
==========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 3.99% 16.06% (4.53)% 3.91% 4.00% 3.76%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $38,826 $39,187 $3,451 $1,809 $4,322 $3,971
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $38,068 $12,823 $2,747 $ 922 $3,404 $ 979
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.59% 5.84% 5.53% 4.80%(4) 6.60% 6.32%(4)
Expenses, before voluntary
reimbursement by the Manager 2.05% 2.12% 1.78% 1.90%(4) 2.05% 2.25%(4)
Expenses, net of voluntary
reimbursement by the Manager N/A 2.08% N/A N/A N/A 1.96%(4)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 53.7% 175.4% 70.3% 110.1% 53.7% 175.4%
</TABLE>
1. For the period from July 11, 1995 (inception of offering) to December 31,
1995.
2. For the period from May 1, 1993 (inception of offering) to December 31,
1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended December 31, 1996 were $122,495,689 and $142,134,930,
respectively. For the year ended December 31, 1995, purchases and sales of
investment securities included mortgage "dollar-rolls."
See accompanying Notes to Financial Statements.
20 Oppenheimer Bond Fund
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Bond Fund (the Fund), is a separate fund of Oppenheimer
Integrity Funds, a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek a high level of current income by
investing mainly in debt instruments. The Fund's investment adviser is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B
and Class C shares. Class A shares are sold with a front-end sales
charge. Class B and Class C shares may be subject to a contingent
deferred sales charge. All 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 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. Forward foreign currency contracts are valued
based on the closing prices of the forward currency contract rates in the
London foreign exchange markets on a daily basis as provided by a
reliable bank or dealer. Options are valued based upon the last sale
price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last
sale price on the prior trading date if it is within the spread between
the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid is used.
------------------------------------------------------------------------
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, 1996, the Fund had
entered into outstanding when-issued or forward commitments of
$10,082,292.
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.
21 Oppenheimer Bond Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Continued)
===============================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized
gain on investments not offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision is required. At
December 31, 1996, the Fund had available for federal income tax
purposes an unused capital loss carryover of approximately $11,491,000,
which expires between 1997 and 2004.
------------------------------------------------------------------------
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.
REPURCHASE AGREEMENTS. The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry
System or to have segregated within the custodian's vault, all
securities held as collateral for repurchase agreements. The market
value of the underlying securities is required to be at least 102% of
the resale price at the time of purchase. If the seller of the agreement
defaults and the value of the collateral declines, or if the seller
enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
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, 1996, the Fund adjusted the
classification of distributions to shareholders to reflect the
differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly,
during the year ended December 31, 1996, amounts have been reclassified
to reflect an increase in paid-in capital of $446,989, a decrease in
undistributed net investment income of $116,937, and an increase in
accumulated net realized loss on investments of $330,052.
------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Discount on securities
purchased is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and
losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for
federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
22 Oppenheimer Bond Fund
<PAGE> 23
================================================================================
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, 1996 YEAR ENDED DECEMBER 31, 1995(1)
---------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,955,093 $ 20,810,615 3,592,604 $ 37,958,201
Dividends reinvested 815,100 8,651,382 401,453 4,283,086
Issued in connection with the acquisition of:
Oppenheimer Strategic Investment Grade
Bond Fund--Note 8 -- -- 2,101,654 22,529,733
Quest Investment Quality Income
Fund--Note 8 -- -- 3,900,357 42,201,864
Connecticut Mutual Income Account--Note 8 3,020,216 31,863,280 -- --
Jefferson Pilot Investment Grade
Bond Fund--Note 8 1,801,334 19,273,967 -- --
Redeemed (4,901,741) (52,206,468) (4,249,502) (45,145,281)
------------- ------------- ------------- -------------
Net increase 2,690,002 $ 28,392,776 5,746,566 $ 61,827,603
============= ============= ============= =============
----------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 946,117 $ 10,072,138 1,038,290 $ 11,014,073
Dividends reinvested 163,467 1,735,740 45,815 494,471
Issued in connection with the acquisition of:
Oppenheimer Strategic Investment Grade
Bond Fund--Note 8 -- -- 1,474,533 15,806,991
Quest Investment Quality Income
Fund--Note 8 -- -- 1,236,995 13,384,283
Connecticut Mutual Income Account--Note 8 8,156 86,045 -- --
Redeemed (1,057,712) (11,234,643) (569,823) (6,076,871)
------------- ------------- ------------- -------------
Net increase 60,028 $ 659,280 3,225,810 $ 34,622,947
============= ============= ============= =============
----------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 279,925 $ 2,989,461 47,725 $ 516,952
Dividends reinvested 17,112 181,810 1,625 17,809
Issued in connection with the acquisition of:
Quest Investment Quality Income
Fund--Note 8 -- -- 362,821 3,929,348
Redeemed (254,743) (2,766,626) (50,720) (553,589)
------------- ------------- ------------- -------------
Net increase 42,294 $ 404,645 361,451 $ 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.
23 Oppenheimer Bond Fund
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Continued)
===============================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At December 31, 1996, net unrealized appreciation on investments of
$5,314,665 was composed of gross appreciation of $7,867,829, and gross
depreciation of $2,553,164.
===============================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.75% of the first $200 million of the Fund's average annual net assets,
0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of
the next $200 million, 0.60% of the next $200 million, and 0.50% of
aggregate net assets over $1 billion. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent state regulatory limit on Fund expenses.
For the year ended December 31, 1996, commissions (sales
charges paid by investors) on sales of Class A shares totaled $299,893,
of which $117,612 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 $308,922
and $24,281, of which $18,267 was paid to an affiliated broker/dealer
for Class B. During the year ended December 31, 1996, OFDI received
contingent deferred sales charges of $125,164 and $1,276, respectively,
upon redemption of Class B and Class C shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not
exceed 0.25% of the average annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and
other financial institutions quarterly for providing personal service
and maintenance of accounts of their customers that hold Class A shares.
During the year ended December 31, 1996, OFDI paid $176,747 to an
affiliated broker/dealer as reimbursement for Class A personal service
and maintenance expenses.
The Fund has adopted compensation type Distribution and Service
Plans for Class B and Class C shares to compensate OFDI for its services
and costs in distributing Class B and Class C shares and servicing
accounts. Under the Plans, the Fund pays OFDI an annual asset-based
sales charge of 0.75% per year on Class B and Class C shares, as
compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. OFDI also receives a
service fee of 0.25% per year as compensation for costs incurred in
connection with the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to brokers, dealers,
banks and other financial institutions. Both fees are computed on the
average annual net assets of Class B and Class C shares, determined as
of the close of each regular business day. During the year ended
December 31, 1996, OFDI paid $5,806 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and
retained $309,560 and $20,276, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as
financing costs. If the Plans are terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plans
were terminated. At December 31, 1996, OFDI had incurred unreimbursed
expenses of $964,739 for Class B and $47,483 for Class C.
24 Oppenheimer Bond Fund
<PAGE> 25
===============================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the
value of fixed rate portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in interest rates as it
may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities in an amount (initial margin) equal to
a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract
value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or
expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement
of Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with
changes in the value of the underlying securities.
At December 31, 1996, the Fund had outstanding futures contracts to
purchase and sell debt securities as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACTS TO PURCHASE DATE FUTURES CONTRACTS DEC. 31, 1996 (DEPRECIATION)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 3/97 40 $4,263,750 $(20,000)
U.S. Treasury Nts. 3/97 40 4,365,000 (23,750)
--------
(43,750)
--------
CONTRACTS TO SELL
------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 3/97 40 $4,263,750 $ 36,875
--------
$ (6,875)
========
</TABLE>
25 Oppenheimer Bond Fund
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
===============================================================================
6. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered
call options on portfolio securities in order to produce incremental
earnings or protect against changes in the value of portfolio
securities.
The Fund generally purchases put options or writes covered call
options to hedge against adverse movements in the value of portfolio
holdings. When an option is written, the Fund receives a premium and
becomes obligated to sell or purchase the underlying securities at a
fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized
appreciation or depreciation is recorded. The Fund will realize a gain
or loss upon the expiration or closing of the option transaction. When
an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option, or the cost of the security
for a purchased put or call option is adjusted by the amount of premium
received or paid.
Securities designated to cover outstanding call options are
noted in the Statement of Investments where applicable. Shares subject
to call, expiration date, exercise price, premium received and market
value are detailed in a footnote to the Statement of Investments.
Options written are reported as a liability in the Statement of Assets
and Liabilities. Gains and losses are reported in the Statement of
Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and
the option is exercised. The risk in writing a put option is that the
Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund
pays a premium whether or not the option is exercised. The Fund also has
the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Written option activity for the year ended December 31, 1996 was as
follows:
<TABLE>
<CAPTION>
PUT OPTIONS
----------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1995 -- $ --
------------------------------------------------------------------------------------------------------------------------
Options written 208 279,500
------------------------------------------------------------------------------------------------------------------------
Options closed or expired (208) (279,500)
------------------------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1996 -- $ --
======= ==========
</TABLE>
26 Oppenheimer Bond Fund
<PAGE> 27
===============================================================================
7. ILLIQUID AND RESTRICTED
SECURITIES
At December 31, 1996, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities
Act of 1933, may have contractual restrictions on resale, and are valued
under methods approved by the Board of Trustees as reflecting fair
value. A security may be considered illiquid if it lacks a
readily-available market or if its valuation has not changed for a
certain period of time. The Fund intends to invest no more than 10% of
its net assets (determined at the time of purchase and reviewed from
time to time) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors,
are not subject to that limit. The aggregate value of illiquid or
restricted securities subject to this limitation at December 31, 1996
was $16,097,955 which represents 6.80% of the Fund's net assets.
===============================================================================
8. ACQUISITION OF OPPENHEIMER
STRATEGIC INVESTMENT
GRADE BOND FUND, QUEST
INVESTMENT QUALITY INCOME
FUND, CONNECTICUT
MUTUAL INCOME ACCOUNT
AND JEFFERSON-PILOT
INVESTMENT GRADE BOND
FUND, INC.
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.
On April 26, 1996, the Fund acquired all the net assets of
Connecticut Mutual Income Account, pursuant to an agreement and plan of
reorganization approved by the Connecticut Mutual Income Account
shareholders on March 18, 1996. The Fund issued 3,020,216 and 8,156
shares of beneficial interest for Class A and Class B, respectively,
valued at $31,863,280 and $86,045, in exchange for the net assets,
resulting in combined Class A net assets of $189,629,984 and Class B net
assets of $6,106,676 on April 26, 1996. The net assets acquired included
net unrealized depreciation of $633,177. The exchange qualifies as a
tax-free reorganization for federal income tax purposes.
On December 20, 1996, the Fund acquired all the net assets of
Jefferson-Pilot Investment Grade Bond Fund, Inc. pursuant to an
agreement and plan of reorganization approved by the Jefferson Pilot
Investment Grade Bond Fund shareholders on December 3, 1996. The Fund
issued 1,801,334 shares of beneficial interest for Class A, valued at
$19,273,967, in exchange for the net assets, resulting in combined Class
A net assets of $202,088,473 on December 20, 1996. The net assets
acquired included net unrealized appreciation of $1,288,511. The
exchange qualifies as a tax-free reorganization for federal income tax
purposes.
27 Oppenheimer Bond Fund
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
===============================================================================
The Board of Trustees and Shareholders of Oppenheimer Bond Fund
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Bond Fund as of
December 31, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended
December 31, 1996 and 1995, and the financial highlights for the period
January 1, 1992 to December 31, 1996. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at December 31, 1996 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, 1996, 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, 1997
28 Oppenheimer Bond Fund
<PAGE> 29
FEDERAL INCOME TAX INFORMATION (Unaudited)
===============================================================================
In early 1997, shareholders will receive information regarding all
dividends and distributions paid to them by the Fund during calendar year
1996. Regulations of the U.S. Treasury Department require the Fund to
report this information to the Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended
December 31, 1996 which are not designated as capital gain distributions
should be multiplied by 0.41% to arrive at the net amount eligible for
the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders
in reporting distributions received from the Fund to the Internal
Revenue Service. Because of the complexity of the federal regulations
which may affect your individual tax return and the many variations in
the state and local tax regulations, we recommend that you consult your
tax adviser for specific guidance.
29 Oppenheimer Bond Fund
<PAGE> 30
OPPENHEIMER BOND FUND
A Series of Oppenheimer Integrity Funds
===============================================================================
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
David P. Negri, Vice President
David A. Rosenberg, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
===============================================================================
INVESTMENT ADVISER
OppenheimerFunds, Inc.
===============================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
===============================================================================
TRANSFER AND SHAREHOLDER
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.
30 Oppenheimer Bond Fund
<PAGE> 31
OPPENHEIMERFUNDS FAMILY
===============================================================================
OppenheimerFunds offers over 50 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 comfortable
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 3 million
shareholder accounts and more than $60 billion under OppenheimerFunds'
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 telephone.(1) For more
information on Oppenheimer funds, please contact your financial adviser
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.
<TABLE>
===============================================================================
<S> <C>
STOCK FUNDS
Developing Markets Fund Growth Fund
Global Emerging Growth Fund Global Fund
Enterprise Fund(2) Quest Global Value Fund
International Growth Fund Disciplined Value Fund
Discovery Fund Oppenheimer Fund
Quest Small Cap Value Fund Value Stock Fund
Gold & Special Minerals Fund Quest Value Fund
Capital Appreciation Fund(3)
===============================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Asset Allocation Fund
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
===============================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
===============================================================================
MUNICIPAL FUNDS
California Municipal Fund(4) Insured Municipal Fund
Florida Municipal Fund(4) Intermediate Municipal Fund
New Jersey Municipal Fund(4)
New York Municipal Fund(4) Rochester Division
Pennsylvania Municipal Fund(4) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
===============================================================================
MONEY MARKET FUNDS(5)
Money Market Fund Cash Reserves
===============================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may
be exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. Available only to investors in certain states.
5. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market
fund will be able to maintain a stable net asset value of $1.00 per
share. Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C)
Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer Bond Fund
<PAGE> 32
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
RA0285.001.1296 February 28, 1997
[PHOTO]
Customer Service Representative
OppenheimerFunds Services
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
- -------------------------------------
Bulk Rate
U.S. Postage
PAID
Permit No. 60
Jersey City, NJ
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