<PAGE>
[Logo] OPPENHEIMERFUNDS
OPPENHEIMER STRATEGIC INVESTMENT GRADE BOND FUND
ANNUAL REPORT SEPTEMBER 30, 1994
<PAGE>
FUND FACTS
IN THIS REPORT:
ANSWERS TO TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
- - HOW DID THE FUND RESPOND TO RISING INTEREST RATES IN THE U.S. AND OVERSEAS?
- - WHAT'S THE OUTLOOK FOR INVESTMENT-GRADE CORPORATE BONDS?
- - WHERE ARE YOU FINDING ATTRACTIVE INVESTMENT OPPORTUNITIES TODAY?
FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT
OPPENHEIMER STRATEGIC INVESTMENT GRADE BOND FUND
- --------------------------------------------------------------------------------
1 The Fund seeks high current income, consistent with stability of principal
from investment-grade debt securities. Assets are allocated among U.S.
government bonds, foreign fixed income securities, and investment-grade
corporate bonds.
- --------------------------------------------------------------------------------
2 Standardized yield for the 30 days ended September 30, 1994 was 6.64% for
Class A shares and 6.35% for Class B shares.(1)
- --------------------------------------------------------------------------------
3 Total return at net asset value for the 12 months ended September 30, 1994
was -1.76% for Class A shares and -2.45% for Class B shares.(2)
- --------------------------------------------------------------------------------
4 Average annual total returns for Class A shares for the 1-year period ended
September 30, 1994 and since inception of the Fund on April 22, 1992 were
-6.43% and 2.83%, respectively. For Class B shares, average annual total
returns for the 1-year period ended September 30, 1994 and since inception
of the Class on November 30, 1992 were -7.32% and 1.67%, respectively.(3)
- --------------------------------------------------------------------------------
5 "The Fund's flexibility to shift assets strategically among bond-market
sectors is a major plus for shareholders in the current investment
environment. It has allowed us to capitalize on changing opportunities in
the world's bond markets, capturing attractive yields while limiting the
portfolio's exposure to rising interest rates worldwide."
PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, SEPTEMBER 30, 1994
(1) Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/94, divided by the
maximum offering price at the end of the period, compounded semi-annually and
then annualized. Falling net asset values will tend to artificially raise
yields.
(2) Based on the changes in net asset value per share from 9/30/93 to 9/30/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
(3) Average annual total returns are based on hypothetical investments held
until 9/30/94, after deducting the current maximum initial sales charge of 4.75%
for Class A shares and the contingent deferred sales charge of 5% (1-year) and
4% (since inception) for Class B shares.
The Fund's portfolio is subject to change.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on 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.
2 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
REPORT TO SHAREHOLDERS
Oppenheimer Strategic Investment Grade Bond Fund continued to provide
shareholders with an attractive yield for the 12 months ended September 30,
1994. At that date, the Fund's standardized 30-day yield was 6.64% for Class A
shares and 6.35% for Class B shares.(4)
Your managers' ability to shift assets strategically among three
sectors--U.S. government securities, investment-grade corporate bonds, and
foreign fixed income securities played an important role in the Fund's
performance over the past year. As the Federal Reserve and central banks
worldwide moved aggressively to raise short-term interest rates to fend off
inflation, your managers were able to capture rising yields while limiting the
portfolio's price erosion.
As the economic cycle in the U.S. advanced and interest rates began to
rise, your managers reduced the Fund's overall exposure to Treasury securities,
which tend to lag investment-grade corporate bonds in the mid-to-late stages of
economic expansion. Your managers also adjusted the Fund's holdings within the
investment-grade corporate bond sector. Bonds issued by consumer-durable and
financial services companies, whose earnings are sensitive to interest-rate
changes, were de-emphasized, while more attention was focused on bonds issued by
larger industrial companies.
In addition to increasing positions in the chemicals, mining, metals,
forest products, and telecommunications industries, your managers also
re-established a position in utilities, a sector that offers attractive
investment opportunities.
As interest rates rose offshore and the dollar weakened against major
currencies, your managers emphasized investments in Europe. In addition to
increasing the portfolio's holdings of foreign government bonds, which made up
13% of the portfolio on September 30, your managers focused more attention on
large European industrial companies positioned to benefit from economic growth.
Looking ahead, your managers don't anticipate major changes in the
portfolio's composition in the near term. The Fund's allocations will, of
course, be adjusted should the economic expansion appear to be ending, but all
signs are currently pointing to continued gradual growth--and your Fund is
well-positioned to provide attractive returns.
We appreciate the confidence you have placed in Oppenheimer Strategic
Investment Grade Bond Fund, and we look forward to continuing to help you reach
your investment goals.
James C. Swain
Chairman
Oppenheimer Strategic Investment Grade Bond Fund
October 21, 1994
Jon S. Fossel
President
Oppenheimer Strategic Investment Grade Bond Fund
October 21, 1994
(4) See footnote 1, page 2.
3 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------------
------------------------------------------------------------
STATEMENT OF INVESTMENTS September 30, 1994
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS--36.5%
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM--1.5%
- -------------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria la Federacion:
0%, 12/8/94 $ 125,000 $ 123,404
0%, 1/12/95 500,000 490,089
-----------
613,493
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM--35.0%
- -------------------------------------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds, 7%, 4/6/96(2) 1,000,000 997,500
-------------------------------------------------------------------------------------------------
Denmark (Kingdom Of) Bonds, 9%, 11/15/98 4,500,000(1) 745,895
-------------------------------------------------------------------------------------------------
Empresa Columbiana de Petroleos Nts., 7.25%, 7/8/98(2) 750,000 718,613
-------------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance
Corp. Ltd. Bonds, Series 22, 11.40% 12/15/01 283,680(1) 213,477
-------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 4/24/95 2,000,000,000(1) 843,111
-------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds:
12%, 9/1/97 300,000,000(1) 195,077
Buoni Poliennali del Tes:
12%, 1/1/96 15,000,000(1) 9,736
12%, 5/1/97 500,000,000(1) 324,840
12.50%, 6/16/97 250,000,000(1) 164,119
12.50%, 3/19/98 50,000,000(1) 33,077
12%, 1/17/99 50,000,000(1) 32,381
-------------------------------------------------------------------------------------------------
New Zealand (Government of), 10%, 7/15/97 390,000(1) 240,946
-------------------------------------------------------------------------------------------------
South Australia Government Finance Authority
Bonds, 10%, 1/15/03 250,000(1) 177,500
-------------------------------------------------------------------------------------------------
Spain (Kingdom of) Bonds, 11.45%, 8/30/98 122,500,000(1) 964,660
-------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds:
12%, 10/22/98 250,000(1) 198,688
8.25%, 10/15/03 620,000(1) 394,827
-------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 12.25%, 3/26/99 391,000(1) 693,105
-------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.125%, 2/15/23(5) 1,000,000 909,062
-------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
4.625%, 8/15/95 900,000 890,438
4.375%, 8/15/96 3,000,000 2,888,436
5.125%, 2/28/98 1,000,000 943,437
8.875%, 11/15/19 1,130,000 1,190,738
-------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, 12.50%, 4/1/98 225,000 180,759
-----------
13,950,422
-------------------------------------------------------------------------------------------------
Total Government Obligations (Cost $15,147,238) $14,563,915
4 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
MORTGAGE/ASSET-BACKED OBLIGATIONS--29.0%
- -------------------------------------------------------------------------------------------------------------------------------
CMC Security Corp. I, 10% Collateralized Mtg. Obligation,
Series 1993-D, Cl. D-3, 7/25/23(2) $ 768,431 $ 806,637
-------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-D, 8.70%, 9/25/25(2) 1,000,000 959,531
-------------------------------------------------------------------------------------------------
FDIC Trust, 1994-C1, Class 2-E, 8.70%, 09/25/25(2) 1,000,000 924,844
-------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 7%, Series 1548, Cl. C, 4/15/21 4,000,000 3,501,240
-------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Interest-Only Stripped Mtg.-
Backed Security, Trust 240, Class 2, 7%, 9/25/23(4) 2,731,263 1,032,759
-------------------------------------------------------------------------------------------------
First Boston Corp. Mtg. Securities, 7.06%, Series 1993-AFC-1,
10/25/02 741,071 682,944
-------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
10.50%, 12/15/17 324,386 353,789
10.50%, 7/15/19 253,438 276,534
10.50%, 5/15/21 71,268 77,794
-------------------------------------------------------------------------------------------------
Residential Funding Corp. Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 905,079 896,708
-------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
9%, Series 1991-M5, Cl. A, 3/25/17 746,768 750,269
8.75% Series 1993-C1, Cl. B, 5/25/24 700,000 693,000
10.638%, Series 1992-16, Cl. B3, 5/25/24(3) 600,000 607,875
-------------------------------------------------------------------------------------------------
Total Mortgage/Asset-Backed Obligations (Cost $12,130,633) 11,563,924
- -------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--0.5%
- -------------------------------------------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp. State Service
Contract Taxable Revenue Bonds, Series B, 8.15%, 3/15/02 200,000 199,878
-------------------------------------------------------------------------------------------------
Total Municipal Bonds and Notes (Cost $197,611) 199,878
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CORPORATE BONDS AND NOTES--30.6%
- -------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--4.6%
- -------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.4% Hook-Superx, Inc., 10.125%, 6/1/02 400,000 418,000
-------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 500,000 554,828
-----------
972,828
- -------------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST R.P. Scherer International Corp., 6.75% Sr. Nts., 2/1/04 500,000 445,000
PRODUCTS--2.2% -------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts.,
7/20/15 472,481 434,915
-----------
879,915
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--2.9%
- -------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--0.6%
- -------------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 10.95% Nts., 8/1/17 200,000 222,175
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS AND Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 415,000
SERVICES--1.0%
- -------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT--0.3% Circus Circus Enterprises, Inc., 6.75% Nts., 7/15/03 150,000 131,604
- -------------------------------------------------------------------------------------------------------------------------------
RETAIL--1.0% Sears Canada, Inc., 11.70% Debs., 7/10/00 500,000(1) 403,513
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--3.3%
- -------------------------------------------------------------------------------------------------------------------------------
FOOD--3.3% ConAgra, Inc., 7.40% Sub. Nts., 9/15/04 250,000 232,922
-------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 10.50% Sr. Nts., 4/15/98 1,000,000 1,058,428
-----------
1,291,350
5 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------------
------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY--2.2% McDermott, Inc., 9.375% Nts., 3/15/02 $ 100,000 $ 103,757
-------------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 400,000 415,619
-------------------------------------------------------------------------------------------------
Tenneco, Inc.:
7.875% Nts., 10/1/02 250,000 244,622
10% Debs., 3/15/08 100,000 110,090
-----------
874,088
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--7.7% American Car Line Co., 8.25% Equipment Trust Ctfs.,
Series 1993-A, 4/15/08 270,000 261,900
-------------------------------------------------------------------------------------------------
BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 200,000 201,612
-------------------------------------------------------------------------------------------------
Chemical New York Corp., 9.75% Sub. Cap. Nts., 6/15/99 300,000 322,226
-------------------------------------------------------------------------------------------------
First Chicago, 9% Sub. Cap. Nts., 6/15/99 100,000 104,402
-------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
8% Nts., 10/1/96 100,000 101,332
7.75% Nts., 4/15/97 300,000 300,328
5.50% Nts., 12/15/01 100,000 85,232
-------------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 300,000 303,421
-------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 800,000(1) 520,608
-------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 8.375% Nts., 2/15/99 300,000 303,039
-------------------------------------------------------------------------------------------------
NBD Bancorp, Inc., 7.25% Sub. Debs., 8/15/04 250,000 233,662
-------------------------------------------------------------------------------------------------
PaineWebber Group, Inc.:
7% Nts., 3/1/00 160,000 149,590
7.75% Sub. Nts., 9/1/02 200,000 187,020
-----------
3,074,372
- -------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--0.3%
- -------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.3% Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 107,371
- -------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--5.6%
- -------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.5% AMR Corp., 10% Nts., 4/15/21 200,000 195,822
- -------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--5.1% TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,300,000 1,412,125
-------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 8.375% Nts.,
3/15/23 700,000 613,676
-----------
2,025,801
- -------------------------------------------------------------------------------------------------------------------------------
UTILITIES--4.0% Coastal Corp., 11.75% Sr. Debs., 6/15/06 500,000 548,750
-------------------------------------------------------------------------------------------------
Commonwealth Edison Co.:
6.50% Nts., 7/15/97 225,000 217,551
6.40% Nts., 10/15/05 75,000 60,573
-------------------------------------------------------------------------------------------------
Consumers Power Co., 6.375% Nts., 9/15/03 110,000 94,720
-------------------------------------------------------------------------------------------------
Long Island Lighting Co., 7% Nts., 3/1/04 200,000 160,242
-------------------------------------------------------------------------------------------------
Public Service Company of Colorado, 8.75% Fst. Mtg. Bonds,
3/1/22 250,000 243,826
-------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 275,000 288,996
-----------
1,614,658
-------------------------------------------------------------------------------------------------
Total Long-Term Corporate Bonds and Notes (Cost $12,983,493) $12,208,497
</TABLE>
6 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
DATE/PRICE AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED --0.0% European OTC Deutsche Mark/U.S. Dollar Put Nov.2/1.60 DEM $2,579,158(1) $5,319
-------------------------------------------------------------------------------------------------
European OTC Deutsche Mark/U.S. Dollar Put Nov.4/1.60 DEM 1,289,579(1) 2,909
-------------------------------------------------------------------------------------------------
European OTC Deutsche Mark/U.S. Dollar Put Nov.8/1.60 DEM 1,289,579(1) 3,388
-------------------------------------------------------------------------------------------------
Total Put Options Purchased (Cost $56,204) 11,616
- -------------------------------------------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS--3.4% Citibank, 10.50%--16% CD, 3/17/95--8/17/95 167,876,833(1) 856,102
-------------------------------------------------------------------------------------------------
Goldman Sachs International Limited, 5.10%, 2/28/95 80,000 77,808
-------------------------------------------------------------------------------------------------
Swiss Bank Corporation Investment Banking, Inc.,
10% CD Sterling Rate Linked Nts., 7/3/95 410,000 404,424
-------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $1,340,894) 1,338,334
-------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $41,856,073) 100.0% 39,886,164
-------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.0% 8,902
-------------------------------------------------------------------------------------------------
Net Assets 100.00% $39,895,066
------ -----------
------ -----------
<FN>
1. Face amount is reported in foreign currency.
2. Restricted security--See Note 6 of Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most other
fixed-income securities increase in price when interest
rates decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated.
The price of these securities is typically more sensitive to changes in
prepayment rates than traditional mortgage backed securities
(for example, GNMA pass-throughs).
</TABLE>
5. Securities with an aggregate market value of $139,996 are held in escrow to
cover outstanding call options as follows:
<TABLE>
<CAPTION>
FACE EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
European OTC Deutsche Mark/U.S. Dollar 1,125,584 11/2/94 1.50 DEM $ 5,229 $ 2,968
European OTC Deutsche Mark/U.S. Dollar 505,697 11/2/94 1.60 DEM 13,188 16,854
European OTC Deutsche Mark/U.S. Dollar 582,792 11/4/94 1.50 DEM 2,709 1,662
European OTC Deutsche Mark/U.S. Dollar 252,848 11/4/94 1.60 DEM 6,644 8,351
European OTC Deutsche Mark/U.S. Dollar 562,792 11/8/94 1.54 DEM 6,715 6,919
European OTC Deutsche Mark/U.S. Dollar 252,848 11/8/94 1.60 DEM 6,876 8,651
------- -------
$41,361 $45,405
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1994
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $41,856,073)--see accompanying statement $39,886,164
-------------------------------------------------------------------------------------------------
Receivables:
Interest 763,532
Shares of beneficial interest sold 76,063
Investments sold 20,920
-------------------------------------------------------------------------------------------------
Deferred organization costs 5,700
-------------------------------------------------------------------------------------------------
Other 7,625
-----------
Total assets 40,760,004
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Bank overdraft 353,543
-------------------------------------------------------------------------------------------------
Options written, at value (premium received $41,361) see accompanying statement--Note 4 45,405
-------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 242,246
Investments purchased 63,418
Distribution and service plan fees--Note 5 24,782
Dividends 59,937
Other 75,607
-----------
Total liabilities 864,938
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $39,895,066
-----------
-----------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $42,589,149
NET ASSETS -------------------------------------------------------------------------------------------------
Overdistributed net investment income (360,167)
-------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option
and foreign currency transactions (360,871)
-------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options written and translation of assets
and liabilities denominated in foreign currencies (1,973,045)
-----------
Net assets $39,895,066
-----------
-----------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of $24,955,906
and 5,296,079 shares of beneficial interest outstanding) $4.71
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $4.94
-------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $14,939,160 and 3,173,620 shares of beneficial interest outstanding) $4.71
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended September 30, 1994
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest (net of withholding taxes of $15,989) $ 3,458,069
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 5 319,025
-------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 5 67,190
Class B--Note 5 142,407
-------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 82,169
-------------------------------------------------------------------------------------------------
Shareholder reports 34,016
-------------------------------------------------------------------------------------------------
Custodian fees and expenses 23,204
-------------------------------------------------------------------------------------------------
Legal and auditing fees 11,880
-------------------------------------------------------------------------------------------------
Trustees' fees and expenses 381
-------------------------------------------------------------------------------------------------
Other 17,899
---------
Total expenses 698,171
-------------------------------------------------------------------------------------------------
Less reimbursement from Oppenheimer Management Corporation--Note 5 (19,540)
-------------------------------------------------------------------------------------------------
Net expenses 678,631
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,779,438
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized loss from:
GAIN (LOSS) ON INVESTMENTS, Investments and options written (689,604)
OPTIONS WRITTEN AND Expiration and closing of option contracts written--Note 4 (10,859)
FOREIGN CURRENCY Foreign currency transactions (215,015)
TRANSACTIONS
-----------
Net realized loss (915,478)
-----------
Net change in unrealized appreciation or depreciation on:
Investments and options written (3,112,420)
Translation of assets and liabilities denominated in foreign currencies 383,409
-------------------------------------------------------------------------------------------------
Net change (2,729,011)
-------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments, options written
and foreign currency transactions (3,644,489)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(865,051)
-------------
-------------
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $2,779,438 $2,142,329
-------------------------------------------------------------------------------------------------
Net realized loss on investments, options written and foreign
currency transactions (915,478) (368,788)
-------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies (2,729,011) 659,287
-------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (865,051) 2,432,828
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A ($.240 and $.372 per share, respectively) (1,253,403) (1,890,652)
TO SHAREHOLDERS Class B ($.205 and $.270 per share, respectively) (750,521) (278,604)
-------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.010 per share) (27,359) --
Class B ($.010 per share) (16,382) --
-------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments, options written
and foreign currency transactions:
Class A ($.003 per share) -- (13,770)
Class B ($.003 per share) -- (654)
-------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments, options
written and foreign currency transactions:
Class A ($.016 per share) (83,250) --
Class B ($.016 per share) (49,849) --
-------------------------------------------------------------------------------------------------
Tax return of capital:
Class A ($.079 per share) (420,265) --
Class B ($.079 per share) (251,649) --
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS Class A beneficial interest transactions--Note 2 (3,401,990) 14,546,029
-------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 5,432,516 10,687,971
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase (decrease) (1,687,203) 25,483,148
-------------------------------------------------------------------------------------------------
Beginning of year 41,582,269 16,099,121
----------- -----------
End of year (including overdistributed
net investment income of $360,167 in 1994) $39,895,066 $41,582,269
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPT. 30,
1994 1993 1992(2) 1994 1993(1)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $5.14 $5.16 $5.00 $5.14 $4.95
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .34 .36 .14 .34 .27
Net realized and unrealized gain (loss)
on investments, options written and foreign
currency transactions (.43) (.01) .19 (.46) .19
------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations (.09) .35 .33 (.12) .46
------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.24) (.37) (.14) (.21) (.27)
Dividends in excess of net investment income (.01) -- -- (.01) --
Distributions from net realized gain on
investments, options written and foreign
currency transactions -- -- (.03) -- --
------------------------------------------------------------------------------------------------
Distributions in excess of net realized
gain on investments, options written
and foreign currency transactions (.01) -- -- (.01) --
Tax return of capital (.08) -- -- (.08) --
Total dividends and distributions
to shareholders (.34) (.37) (.17) (.31) (.27)
-------------------------------------------------------------------------------------------------
Net asset value, end of period $4.71 $5.14 $5.16 $4.71 $5.14
----- ----- ----- ----- ------
----- ----- ----- ----- ------
TOTAL RETURN, AT NET ASSET VALUE (3) (1.76)% 7.24% 6.67% (2.45)% 9.54%
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $24,956 $30,783 $16,099 $14,939 $10,800
--------------------------------------------------------------------------------------------------
Average net assets (in thousands) $28,294 $25,972 $4,939 $14,232 $5,310
--------------------------------------------------------------------------------------------------
Number of shares outstanding at end
of period (in thousands) 5,296 5,989 3,117 3,174 2,103
--------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.80% 7.18% 7.28%(4) 6.01% 6.28%(4)
Expenses, before voluntary reimbursement
by the Manager 1.38% 1.46% 2.00%(4) 2.16% 2.20%(4)
Expenses, net of voluntary reimbursement
by the Manager 1.33% 1.12% .29%(4) 2.12% 1.84%(4)
--------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 68.6% 90.3% 30.6% 68.6% 90.3%
<FN>
1. For the period from November 30, 1992 (inception of offering) to September 30, 1993.
2. For the period from April 22, 1992 (commencement of operations) to September 30, 1992.
3. Assumes a hypothetical initial investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
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 year ended September 30, 1994 were $33,753,825 and $26,698,460, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Strategic Investment Grade Bond Fund (the
ACCOUNTING POLICIES Fund) is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management
investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class B shares. Class A
shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales
charge. Both 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 4:00 p.m. (New York time) on each trading day.
Listed and unlisted securities for which such
information is regularly reported are valued at the
last sale price of the day or, in the absence of sales,
at values based on the closing bid or asked price or
the last sale price on the prior trading day. Long-term
debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Long-term
debt securities which cannot be valued by the approved
portfolio pricing service are valued by averaging the
mean between the bid and asked prices obtained from two
active market makers in such securities. Short-term
debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market
value) adjusted for amortization to maturity of any
premium or discount. Securities for which market quotes
are not readily available are valued under procedures
established by the Board of Trustees to determine fair
value in good faith. An option is valued based upon the
last sales 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 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 or asked
price closest to the last reported sale price is used.
Forward foreign currency contracts are valued at the
forward rate on a daily basis.
-------------------------------------------------------
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 Fund generally enters into forward foreign currency
exchange contracts as a hedge, upon the purchase or
sale of a security denominated in a foreign currency.
In addition, the Fund may enter into such contracts as
a hedge against changes in foreign currency exchange
rates on portfolio positions. A forward exchange
contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. Risks
may arise from the potential inability of the
counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
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 results of
operations.
-------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian
to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. 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.
-------------------------------------------------------
OPTIONS WRITTEN. The Fund may write covered call and
put options. When an option is written, the Fund
receives a premium and becomes obligated to sell the
underlying security at a fixed price, upon exercise of
the option. In writing an option, the Fund bears the
market risk of an unfavorable change in the price of
the security underlying the written option. Exercise of
an option written by the Fund could result in the Fund
selling or purchasing a security at a price different
from the current market value. All securities covering
call options written are held in escrow by the
custodian bank and the Fund maintains liquid assets
sufficient to cover written put options in the event of
exercise by the holder.
-------------------------------------------------------
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.
12 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
1. SIGNIFICANT FEDERAL INCOME TAXES. The Fund intends to continue to
ACCOUNTING POLICIES comply with provisions of the Internal Revenue Code
(CONTINUED) 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 tax provision is required. At September 30,
1994, the Fund had available for federal income tax
purposes an unused capital loss carryover of
approximately $24,000 expiring in 2002.
-------------------------------------------------------
ORGANIZATION COSTS. The Manager advanced $15,264 for
organization and start-up costs of the Fund. Such
expenses are being amortized over a five-year period
from the date operations commenced. In the event that
all or part of the Manager's initial investment in
shares of the Fund is withdrawn during the amortization
period, the redemption proceeds will be reduced to
reimburse the Fund for any unamortized expenses, in the
same ratio as the number of shares redeemed bears to
the number of initial shares outstanding at the time of
such redemption.
-------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
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.
-------------------------------------------------------
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS.
Effective October 1, 1993, the Fund adopted Statement
of Position 93-2: Determination, Disclosure, and
Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by Investment
Companies. As a result, the Fund changed the
classification of distributions to shareholders to
better disclose the differences between financial
statement amounts and distributions determined in
accordance with income tax regulations. Accordingly,
subsequent to September 30, 1993, amounts have been
reclassified to reflect a decrease in undistributed net
investment income of $510,955, and a decrease in
undistributed capital loss on investments of $510,955.
During the year ended September 30, 1994, in accordance
with Statement of Position 93-2, paid-in capital was
decreased by $671,914, undistributed net investment
income was increased by $86,885 and undistributed
capital loss was decreased by $585,029.
-------------------------------------------------------
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 options
written and unrealized appreciation and depreciation
are determined on an identified cost basis, which is
the same basis used for federal income tax purposes.
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994 PERIOD ENDED SEPTEMBER 30, 1993(1)
------------------------------ -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,541,101 $7,739,640 5,266,098 $27,442,371
Dividends and distributions reinvested 284,805 1,388,625 248,836 1,263,984
Redeemed (2,518,406) (12,530,255) (2,643,764) (14,160,326)
---------- ------------ ---------- -----------
Net decrease (692,500) $(3,401,990) 2,871,170 $14,546,029
---------- ------------ ---------- -----------
---------- ------------ ---------- -----------
-------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,732,642 $8,472,995 2,252,666 $11,452,295
Dividends and distributions reinvested 74,300 587,645 33,869 173,117
Redeemed (736,073) (3,628,124) (183,784) (937,441)
---------- ------------ ---------- -----------
Net increase 1,070,869 $5,432,516 2,102,751 $10,687,971
---------- ------------ ---------- -----------
---------- ------------ ---------- -----------
<FN>
1. For the year ended September 30, 1993 for Class A shares and for the period
from November 30, 1992 (inception of offering) to September 30, 1993 for Class B
shares.
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3. Unrealized Gains and At September 30, 1994, net unrealized depreciation
Losses on Investments on investments and options written of $1,973,953
was composed of gross appreciation of $295,626,
and gross depreciation of $2,269,579.
13 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- -------------------------------------------------------------------------------
4. OPTION ACTIVITY Option activity for the year ended September 30, 1994
was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
------------ -----------
NUMBER AMOUNT NUMBER AMOUNT
OF OPTIONS OF PREMIUMS OF OPTIONS OF PREMIUMS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1993 100 $14,219 -- $--
------------------------------------------------------------------------------------------------------------------------
Options written 3,262,561 41,361 860 3,359
------------------------------------------------------------------------------------------------------------------------
Options expired prior to exercise (100) (14,219) (860) (3,359)
------------------------------------------------------------------------------------------------------------------------
Options exercised -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Options outstanding at September 30, 1994 3,262,561 $41,361 -- $--
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
5. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER TRANSACTIONS with the investment advisory agreement with the Fund
WITH AFFILIATES which provides for an annual fee of .75% on the first
$200 million of net assets with a reduction of .03% on
each $200 million thereafter to $800 million, .60% on
the next $200 million and .50% on net assets in excess
of $1 billion. The Manager has agreed to reimburse the
Fund if aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory limit
on Fund expenses. A voluntary undertaking to reimburse
Fund expenses to the level needed to maintain a stable
dividend was terminated November 24, 1993.
For the year ended September 30, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $212,013, of which $77,763 was retained
by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and
by an affiliated broker/dealer. During the period ended
September 30, 1994, OFDI received contingent deferred
sales charges of $40,567 upon redemption of Class B
shares, as reimbursement for sales commissions advanced
by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of
the Manager, is the transfer and shareholder servicing
agent for the Fund, and for other registered investment
companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, each class may expend up
to .25% of its net assets annually to reimburse OFDI
for costs incurred in connection with the personal
service and maintenance of accounts that hold shares of
the Fund, including amounts paid to brokers, dealers,
banks and other financial institutions. In addition,
Class B shares are subject to an asset-based sales
charge of .75% of net assets annually, to reimburse
OFDI for sales commissions paid from its own resources
at the time of sale and associated financing costs. In
the event of termination or discontinuance of the Class
B plan, the Board of Trustees may allow the Fund to
continue payment of the asset-based sales charge to
OFDI for distribution expenses incurred on Class B
shares sold prior to termination or discontinuance of
the plan. During the year ended September 30, 1994,
OFDI paid $11,485 and $1,220, respectively, to an
affiliated broker/dealer as reimbursement for Class A
and Class B personal service and maintenance expense
and retained $132,607 as reimbursement for Class B
sales commissions and service fee advances, as well as
financing costs.
14 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
6. RESTRICTED SECURITIES The Fund owns securities purchased in private
placement transactions, without registration under
the Securities Act of 1933 (the Act). The
securities are valued under methods approved by
the Board of Trustees as reflecting fair value.
The Fund intends to invest no more than 10% of its
net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding
securities eligible for resale pursuant to Rule
144A of the Act that are determined to be liquid
by the Board of Trustees or by the Manager under
Board-approved guidelines. Restricted and illiquid
securities, excluding securities eligible for
resale pursuant to Rule 144A of the Act amount to
$1,884,375 or 4.72% of the Fund's net assets, at
September 30, 1994. Illiquid and/or restricted
securities, including those restricted securities
that are transferable under Rule 144A of the Act
are listed below.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT SEPTEMBER 30, 1994
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CMC Security Corp. I, 10% Collateralized
Mtg. Obligation, Series 1993-D, Cl. D-3, 7/25/23(1) 5/17/93 $108.27 $104.97
-------------------------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds, 7%, 4/6/96(1) 3/11/93-5/17/93 $100.05 $99.75
-------------------------------------------------------------------------------------------------------------------
Empresa Columbiana de Petroleos Nts., 7.25%, 7/8/98(1) 6/24/93 $99.63 $95.82
-------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994--C1, Class 2-D, 8.70%, 9/25/25 8/10/94 $98.00 $95.95
-------------------------------------------------------------------------------------------------------------------
FDIC Trust, 1994--C1, Class 2-E, 8.70%, 9/25/25 8/10/94 $94.88 $92.48
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
15 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
-----------------------------------------
Independent Auditors' Report
-----------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Strategic
Investment Grade Bond Fund:
We have audited the accompanying statement of assets and
liabilities, including the statement of investments, of
Oppenheimer Strategic Investment Grade Bond Fund as of September
30, 1994, the related statement of operations for the year then
ended, the statements of changes in net assets for the years
ended September 30, 1994 and 1993 and the financial highlights
for the period April 22, 1992 (commencement of operations) to
September 30, 1994. 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 also includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation
of securities owned at September 30, 1994 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 Strategic Investment Grade Bond
Fund at September 30, 1994, 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
October 21, 1994
16 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
-------------------------------------------
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1995, shareholders will receive information
regarding all dividends and distributions paid to them by
the Fund during calendar year 1994. Regulations of the U.S.
Treasury Department require the Fund to report this
information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal
year ended September 30, 1994 are eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist
shareholders in reporting distributions received from the
Fund to the Internal Revenue Service. Because of the
complexity of the federal regulations which may affect your
individual tax return and the many variations in state and
local tax regulations, we recommend that you consult your
tax advisor for specific guidance.
17 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
-----------------------------------------------
-----------------------------------------------
OPPENHEIMER STRATEGIC INVESTMENT GRADE BOND FUND
- -------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
George C. Bowen, Vice President, Secretary and
Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- -------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
- -------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
- -------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
- -------------------------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche LLP
- -------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
This is a copy of a report to shareholders of
Oppenheimer Strategic Investment Grade Bond Fund. This
report must be preceded or accompanied by a Prospectus
of Oppenheimer Strategic Investment Grade Bond Fund.
For material information concerning the Fund, see the
Prospectus.
18 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
- ------------------------------------------------------------------------------
OPPENHEIMERFUNDS FAMILY
OppenheimerFunds offers over 35 funds designed to fit virtually every investment
goal. Whether you're investing for retirement, your children's education or
tax-free income, we have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable knowing that you
are investing with a respected financial institution with over 30 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 1.8 million shareholder accounts and more than $26
billion under Oppenheimer's management and that of our affiliates.
As an OppenheimerFunds shareholder, you can easily exchange shares of eligible
funds of the same class by mail or by telephone for a small administrative
fee.(1) For more information on OppenheimerFunds, please contact your financial
advisor or call us at 1-800-525-7048 for a prospectus. You may also write us at
the address shown on the back cover. As always, please read the prospectus
carefully before you invest.
- -------------------------------------------------------------------------------
Stock Funds Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Time Fund Value Stock Fund
Target Fund Gold & Special Minerals Fund
Growth Fund(3)
- -------------------------------------------------------------------------------
Stock & Bond Funds
Main Street Income & Growth Fund
Total Return Fund
Global Growth & Income Fund
Equity Income Fund
Asset Allocation Fund
- -------------------------------------------------------------------------------
Bond Funds
High Yield Fund
Champion High Yield Fund
Strategic Income & Growth Fund
Strategic Income Fund
Strategic Diversified Income Fund
Strategic Investment Grade Bond Fund
Strategic Short-Term Income Fund
Investment Grade Bond Fund
Mortgage Income Fund
U.S. Government Trust
Limited-Term Government
- -------------------------------------------------------------------------------
Tax-Exempt Funds
New York Tax-Exempt Fund(4)
California Tax-Exempt Fund(4)
Pennsylvania Tax-Exempt Fund(4)
Florida Tax-Exempt Fund(4)
New Jersey Tax-Exempt Fund(4)
Tax-Free Bond Fund
Insured Tax-Exempt Bond Fund
Intermediate Tax-Exempt Bond Fund
- -------------------------------------------------------------------------------
Money Market Funds Money Market Fund Cash Reserves
1. The fee is waived for PhoneLink exchanges between existing accounts. Exchange
privileges are subject to change or termination.
2. Formerly Oppenheimer Global Bio-Tech Fund and Oppenheimer Global Environment
Fund.
3. Formerly Special Fund.
4. Available only to residents of those states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1994 Oppenheimer Management Corporation. All rights reserved.
19 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
"HOW MAY I HELP YOU?"
GENERAL INFORMATION
1-800-525-7048
Talk to a Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m.
to 2:00 p.m. ET.
TELEPHONE TRANSACTIONS
1-800-852-8457
Make account transactions with a Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
PHONELINK
1-800-533-3310
Get automated information or make automated transactions.
24 hours a day, 7 days a week.
TELECOMMUNICATION PHOTO B. HENNIGAR
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Service for the hearing impaired.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
OPPENHEIMERFUNDS
INFORMATION HOTLINE
1-800-835-3104
Hear timely and insightful messages on the economy and issues that affect your
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"Just as OppenheimerFunds offers over 35 different mutual funds designed to
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offers a variety of services to satisfy your individual needs. Whenever you
require help, we're only a toll-free phone call away.
"For personalized assistance and account information, call our General
Information number to speak with our knowledgeable Customer Service
Representatives and get the help you need.
"When you want to make account transactions, it's easy for you to
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"And for added convenience, OppenheimerFunds' PhoneLink, an automated
voice response system is available 24 hours a day, 7 days a week. PhoneLink
gives you access to a variety of fund, account, and market information. You can
even make purchases, exchanges and redemptions using your touch-tone phone. Of
course, PhoneLink will always give you the option to speak with a Customer
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"When you invest in OppenheimerFunds, you know you'll receive a high
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Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
RA245.1194.N
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