<PAGE>
Oppenheimer Strategic Investment Grade Bond Fund
Semi-Annual Report March 31, 1994
[Logo]
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
FUND FACTS
- - --------------------------------------------------------------------------------
SIX FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT
OPPENHEIMER STRATEGIC INVESTMENT GRADE BOND FUND
- - --------------------------------------------------------------------------------
1 The Fund's objective is to seek a high level of current income,
consistent with stability of principal, from a portfolio of investment
grade debt securities.
- - --------------------------------------------------------------------------------
2 The Fund's standardized yield for Class A shares was 6.04% for the
30-day period ended 3/31/94. For Class B shares, standardized yield
was 5.54%.(1)
- - --------------------------------------------------------------------------------
3 The Fund's total return at net asset value for Class A shares for the 6-
and 12-month periods ended 3/31/94 was -1.18% and 3.09%, respectively.
For Class B shares, those figures were -1.55% and 2.49%,
respectively.(2)
- - --------------------------------------------------------------------------------
4 The Fund's managers have the ability to shift assets quickly and
decisively among three investment grade fixed income sectors:(3)
U.S. government securities, foreign fixed income securities, and
corporate bonds.
- - --------------------------------------------------------------------------------
5 The Fund's average annual total returns for Class A shares for the
1-year period ended 3/31/94 and since inception of the Fund on 4/27/92
were -1.80% and 3.91%, respectively. For Class B shares, average annual
total returns for the 1-year period ended 3/31/94 and since inception of
the Class on 11/30/92 were -2.51% and 3.02%, respectively.(4)
- - --------------------------------------------------------------------------------
6 "The Fund's diversified investment strategy is well-suited to the
current economic environment, as interest rates have risen in the United
States, but are expected to fall in Europe. Given the possibility of
further increases in U.S. rates, we are emphasizing shorter-term
investments in U.S. government securities. In Europe, we are emphasizing
longer-term, higher-yielding investments, which should increase in value
as rates fall. And we believe that the higher-yielding corporate bond
sector will perform well as the U.S. economic recovery helps companies
increase earnings and strengthen credit quality."
PORTFOLIO MANAGERS DAVID NEGRI AND ART STEINMETZ, MARCH 31, 1994
IN THIS REPORT:
ANSWERS TO THREE QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
/ / HOW HAS THE FUND RESPONDED TO THE RECENT RISE IN U.S. INTEREST RATES?
/ / WHERE CAN THE FUND SEEK INVESTMENT OPPORTUNITIES GIVEN THE RECENT VOLATILITY
IN U.S. GOVERNMENT SECURITIES?
/ / ARE CORPORATE BONDS A GOOD INVESTMENT IN TODAY'S ECONOMIC ENVIRONMENT?
GET THE FACTS ABOUT BONDS AND BOND MUTUAL FUNDS. CALL 1-800-525-7048 TO RECEIVE
YOUR FREE COPY OF OPPENHEIMERFUNDS "FACTS ABOUT BOND FUNDS" BROCHURE.
1. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/94, 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 change in net asset value per share from 9/30/93 and 3/31/93 to
3/31/94, respectively, without considering sales charges.
3. The Fund's Portfolio is subject to change. The risks of investing in foreign
securities, such as currency exchange fluctuation, political developments and
difficulties in trading in foreign markets, can increase the possibility of
share price fluctuation.
4. Average annual total return is based on a hypothetical investment held until
3/31/94, after deducting the maximum initial sales charge of 4.75% for Class A
shares and the contingent deferred sales charge of 5% (for 1 year) and 4% (since
inception) for Class B shares.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
2 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
REPORT TO SHAREHOLDERS
- - --------------------------------------------------------------------------------
Oppenheimer Strategic Investment Grade Bond Fund continued to provide high
current income during the six months ended March 31, 1994. Standardized yield
for the 30 days ended March 31, 1994, was 6.04% for Class A shares and 5.54% for
Class B shares.(5)
In seeking high current income for shareholders, your Fund's managers
allocate assets among three investment sectors: U.S. government securities;
investment grade corporate bonds; and foreign fixed income securities.
Historically, these sectors have tended to react differently to economic events,
with weak performance in one sector often offset by strong performance in
another. As a result, your Fund's managers can seek high yields in different
economic environments, while minimizing the impact of adverse effects in any
one sector.
The U.S. economy strengthened considerably in the last six months,
prompting the Federal Reserve to raise interest rates several times as a
pre-emptive strike against inflation. Because bond prices fall when interest
rates rise, prices of U.S. government securities have correspondingly declined.
Your Fund's managers had already positioned the Fund for a possible
interest rate increase. For example, they reduced the Fund's exposure to long-
term U.S. government bonds. This helped to reduce the impact of rising rates on
the securities in the Fund's portfolio. We do not plan to add to these positions
as long as there are more compelling yield opportunities elsewhere.
"YOUR FUND'S MANAGERS HAD ALREADY POSITIONED THE FUND FOR
A POSSIBLE INTEREST RATE INCREASE."
In the European markets, we believe continued economic weakness and
the German central bank's decision to cut interest rates will cause bond prices
to rise. Accordingly, we are adding to the Fund's position in European
securities. We are also maintaining our positions in select Latin American
markets, which offer attractive investment opportunities.
In addition, we are maintaining our sizable position in corporate
bonds, which we believe will outperform U.S. government securities as the U.S.
economic recovery continues and corporate earnings increase. In particular, we
are focusing on industries that do well in the later stages of a recovery, such
as transportation, forest products, and chemicals.
Thank you for your trust in Oppenheimer Strategic Investment Grade
Bond Fund. We look forward to helping you seek investment goals in the years
ahead.
THE FUND'S PORTFOLIO ALLOCATION(6)
(as of March 31, 1994)
- - ----------------------------------
Investment grade 27.5%
corporate bonds
- - ----------------------------------
Mortgage/Asset- 25.2%
backed obligations
- - ----------------------------------
Foreign fixed 22.7%
income securities
- - ----------------------------------
U.S. government 16.8%
securities
- - ----------------------------------
Money market 4.7%
instruments
- - ----------------------------------
Municipal bonds 3.1%
and notes
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
Chairman President
Oppenheimer Strategic Investment Oppenheimer Strategic Investment
Grade Bond Fund Grade Bond Fund
April 25, 1994
5. See footnote 1, page 2.
6. See footnote 3, page 2.
3 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Statement of Investments March 31, 1994 (Unaudited)
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements - 4.7%
- - ---------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
3.55%, dated 3/31/94, to be repurchased at $2,000,789
on 4/4/94, collateralized by U.S. Treasury Nts., 4.125%-
9.50%, 5/15/94-10/31/96, with a value of
$2,041,260 (Cost $2,000,000) $ 2,000,000 $ 2,000,000
- - ---------------------------------------------------------------------------------------------------------------------------
Government Obligations - 34.1%
- - ---------------------------------------------------------------------------------------------------------------------------
Short-Term - 2.2%
- - ---------------------------------------------------------------------------------------------------------------------------
United Mexican States Treasury Bills, 0%, 4/28/94 3,187,170 (1) 939,115
- - ---------------------------------------------------------------------------------------------------------------------------
Long-Term - 31.9%
- - ---------------------------------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds, 7%, 4/16/96 (2) 1,000,000 1,006,250
----------------------------------------------------------------------------------------------
Empresas Columbiana de Petroleos Nts., 7.25%,
7/8/98 (2) 750,000 745,781
----------------------------------------------------------------------------------------------
European Investment Bank:
12.75% Debs., 2/15/00 500,000,000 (1) 366,015
12.20% Sr. Unsub. Nts., 2/18/03 300,000,000 (1) 222,034
----------------------------------------------------------------------------------------------
Financiera Energetica Nacional Nts., 6.625%, 12/13/96 250,000 242,812
----------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance
Corp. Ltd. Bonds, Series 22, 11.40%, 12/15/01 312,840 (1) 239,150
----------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, 0%, 4/24/95 2,000,000,000 (1) 793,159
----------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds:
12%, 10/1/95 95,000,000 (1) 61,466
Buoni Pollennali del Tes, 12.50%, 3/19/98 50,000,000 (1) 34,379
----------------------------------------------------------------------------------------------
Queensland (Government of) Development Authority
Global Transferable Registered Nts., 10.50%, 5/15/03 200,000 (1) 161,132
----------------------------------------------------------------------------------------------
South Australia Government Finance Authority
Bonds, 10%, 1/15/03 226,000 (1) 171,980
----------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 15,000,000 (1) 121,216
Gtd. Bonds, Bonos y Obligacion del Estado:
11%, 6/15/97 40,000,000 (1) 314,956
12.25%, 3/25/00 132,000,000 (1) 1,120,280
----------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03 1,100,000 (1) 756,441
----------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
7.125%, 2/15/23 1,000,000 989,062
6.25%, 8/15/23 1,400,000 1,254,312
----------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
4.625%, 8/15/95 900,000 898,312
4.375%, 8/15/96 3,000,000 2,933,439
5.125%, 2/28/96 1,000,000 970,000
----------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 10%, 2/26/01 177,000 (1) 295,785
--------------
13,697,961
--------------
Total Government Obligations (Cost $15,101,817) 14,637,076
- - ---------------------------------------------------------------------------------------------------------------------------
Mortgage/Asset-Backed Obligations - 24.6%
- - ---------------------------------------------------------------------------------------------------------------------------
CMC Security Corp. I, 10% Collateralized Mtg.
Obligation, Series 1993-D, Cl. D-3, 7/25/23 (2) 836,620 874,660
----------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 7%, Series 1548,
Cl. C, 4/15/21 4,000,000 3,782,440
</TABLE>
4 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
Mortgage/Asset-Backed Obligations (Continued)
- - ---------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Interest-Only
Stripped Mtg.-Backed Security, Trust 240,
Class 2, 7%, 9/25/23 $ 2,803,665 $ 1,029,902
----------------------------------------------------------------------------------------------
First Boston Corp. Mtg. Securities,
7.06%, Series 1993-AFC-1,
10/25/02 748,558 714,756
----------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
10.50%,12/15/17 404,070 448,801
10.50%, 7/15/19 337,285 374,987
10.50%, 5/15/21 80,383 89,475
----------------------------------------------------------------------------------------------
Residential Funding Corp. Mtg. Pass-Through
Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 1,045,233 1,059,932
----------------------------------------------------------------------------------------------
Resolution Trust Corp. Commercial Mtg. Pass-
Through Certificates:
9%, Series 1991-M5, Cl. A, 3/25/17 807,882 834,643
8.75% Series 1993-C1, Cl. B, 5/25/24 700,000 724,500
10.6323%, Series 1992-16, Cl. B3, 5/24/24 (3) 600,000 636,000
--------------
Total Mortgage/Asset-Backed Bonds and Notes (Cost $10,724,914) 10,570,096
- - ---------------------------------------------------------------------------------------------------------------------------
Municipal Bonds and Notes - 3.0%
- - ---------------------------------------------------------------------------------------------------------------------------
City of New York Taxable General Obligation
Bonds, Series D, 9%, 2/1/13 125,000 134,943
----------------------------------------------------------------------------------------------
New York State Environmental Facilities Corp. State
Service Contract Taxable Revenue Bonds:
Series A, 9.625%, 3/15/21 225,000 251,939
Series B, 7.30%, 3/15/97 300,000 308,694
Series B, 8.15%, 3/15/02 200,000 212,463
----------------------------------------------------------------------------------------------
Pinole, California Redevelopment Agency Tax
Allocation Taxable Bonds, Pinole Vista
Redevelopment, Series B, 8.35%, 8/1/17 350,000 376,225
---------------
Total Municipal Bonds and Notes (Cost $1,215,081) 1,284,264
- - ---------------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes - 31.4%
- - ---------------------------------------------------------------------------------------------------------------------------
Basic Materials - 3.5%
- - ---------------------------------------------------------------------------------------------------------------------------
Chemicals - 1.3% Quantum Chemical Corp., 10.375% Fst. Mtg. Nts.,
6/1/03 500,000 581,688
- - ---------------------------------------------------------------------------------------------------------------------------
Paper and Forest R.P. Scherer International Corp., 6.75% Sr. Nts., 2/1/04 500,000 492,500
----------------------------------------------------------------------------------------------
Products - 2.2% Scotia Pacific Holding Co., 7.95% Timber
Collateralized Nts., 7/20/15 489,550 467,582
---------------
960,082
- - ---------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 3.8%
- - ---------------------------------------------------------------------------------------------------------------------------
Automotive - 0.5% Chrysler Corp., 10.95% Nts., 8/1/17 200,000 232,931
- - ---------------------------------------------------------------------------------------------------------------------------
Consumer Goods and Services Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 452,500
- - - 1.1%
- - ---------------------------------------------------------------------------------------------------------------------------
Entertainment - 0.3% Circus Circus Enterprises, Inc., 6.75% Nts.,
7/15/03 150,000 138,029
</TABLE>
5 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
Retail - 1.9% Sears Canada, Inc., 11.70% Debs., 7/10/00 1,000,000 (1) $ 796,527
- - ---------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals - 3.0%
- - ---------------------------------------------------------------------------------------------------------------------------
Food - 3.0% ConAgra, Inc., 7.40% Sub. Nts., 9/15/04 $ 250,000 245,427
----------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 10.50% Sr. Nts., 4/15/98 1,000,000 1,056,250
--------------
1,301,677
- - ---------------------------------------------------------------------------------------------------------------------------
Energy - 2.1%
- - ---------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,743
----------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr.
Nts., 1/15/02 400,000 425,485
----------------------------------------------------------------------------------------------
Tenneco, Inc.:
7.875% Nts., 10/1/02 250,000 252,588
10% Debs., 3/15/08 100,000 117,261
--------------
902,077
- - ---------------------------------------------------------------------------------------------------------------------------
Financial - 9.3%
- - ---------------------------------------------------------------------------------------------------------------------------
American Car Line Co., 8.25% Equipment Trust
Certificates, Series 1993-A, 4/15/08 300,000 304,500
----------------------------------------------------------------------------------------------
BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 200,000 207,218
----------------------------------------------------------------------------------------------
Bayerische Landesbank, 10.75% Sr. Unsub. Nts.,
3/1/03 300,000,000 (1) 205,155
----------------------------------------------------------------------------------------------
Chemical New York Corp., 9.75% Sub. Cap. Nts.,
6/15/99 300,000 338,192
----------------------------------------------------------------------------------------------
Citibank, 17% CD, 8/10/94 409,400,000 (1) 959,826
----------------------------------------------------------------------------------------------
Epic Properties, Inc., 11.50% Gtd. Fst. Priority
Mtg. Nts., Cl. B-2, 7/15/01 97,647 119,618
----------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 100,000 108,605
----------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
8% Nts., 10/1/96 100,000 104,030
7.75% Nts., 4/15/97 300,000 310,789
5.50% Nts., 12/15/01 100,000 87,622
----------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 300,000 311,908
----------------------------------------------------------------------------------------------
NBD Bancorp, Inc., 7.25% Sub. Debs., 8/15/04 250,000 245,444
----------------------------------------------------------------------------------------------
PaineWebber Group, Inc.:
7% Nts., 3/1/00 160,000 157,610
7.75% Sub. Nts., 9/1/02 200,000 196,897
----------------------------------------------------------------------------------------------
Shearson Lehman Brothers Holdings, Inc., 8.375% Nts.,
2/15/99 300,000 316,185
--------------
3,973,599
- - ---------------------------------------------------------------------------------------------------------------------------
Industrial - 0.3%
- - ---------------------------------------------------------------------------------------------------------------------------
Transportation - 0.3% Union Pacific Corp., 9.65% Medium-Term Nts.,
4/17/00 100,000 112,702
- - ---------------------------------------------------------------------------------------------------------------------------
Technology - 5.5%
- - ---------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense - 0.5% AMR Corp., 10% Nts., 4/15/21 200,000 219,032
- - ---------------------------------------------------------------------------------------------------------------------------
Cable Television - 5.0% Time Warner, Inc./Time Warner Entertainment LP,
8.375% Nts., 3/15/23 700,000 668,500
----------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,300,000 1,475,500
--------------
2,144,000
- - ---------------------------------------------------------------------------------------------------------------------------
Utilities - 3.9%
- - ---------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 500,000 562,500
</TABLE>
6 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
Utilities (Continued)
- - ---------------------------------------------------------------------------------------------------------------------------
Commonwealth Edison Co.:
6.50% Nts., 7/15/97 $ 225,000 $ 223,947
6.40% Nts., 10/15/05 75,000 65,475
----------------------------------------------------------------------------------------------
Consumers Power Co., 6.375% Nts., 9/15/03 110,000 99,130
----------------------------------------------------------------------------------------------
Long Island Lighting Co., 7% Nts., 3/1/04 200,000 183,922
----------------------------------------------------------------------------------------------
Public Service Company of Colorado, 8.75% Fst.
Mtg. Bonds, 3/1/22 250,000 262,661
----------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F,
6/15/02 275,000 291,429
--------------
1,689,064
--------------
Total Corporate Bonds and Notes (Cost $13,935,468) 13,503,908
- - ---------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $42,977,280) 97.8% 41,995,344
- - ---------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 2.2 948,008
-------------- --------------
Net Assets 100.0% $ 42,943,352
-------------- --------------
-------------- --------------
<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.
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES March 31, 1994 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (cost $42,977,280) - see accompanying statement $41,995,344
-----------------------------------------------------------------------------------------------
Cash 114,553
-----------------------------------------------------------------------------------------------
Receivables:
Investments sold 1,436,182
Interest 851,980
Shares of beneficial interest sold 184,420
-----------------------------------------------------------------------------------------------
Deferred organization costs 6,806
-----------------------------------------------------------------------------------------------
Other 9,536
-----------
Total assets 44,598,821
-----------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 1,182,489
Shares of beneficial interest redeemed 358,330
Dividends 59,381
Distribution and service plan fees - Note 5 28,530
Other 26,739
-----------
Total liabilities 1,655,469
- - ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $42,943,352
-----------
-----------
- - ------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $44,690,362
NET ASSETS -----------------------------------------------------------------------------------------------
Undistributed net investment income 96,218
-----------------------------------------------------------------------------------------------
Distributions in excess of net realized gain from investment,
written option and foreign currency transactions (863,661)
-----------------------------------------------------------------------------------------------
Net unrealized depreciation on investments, options
written and translation of assets and liabilities
denominated in foreign currencies (979,567)
-----------
Net assets $42,943,352
-----------
-----------
- - ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share
(based on net assets of $28,174,801 and 5,750,863
shares of beneficial interest outstanding) $4.90
Maximum offering price per share
(net asset value plus sales charge of 4.75% of offering price) $5.14
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $14,768,551
and 3,017,003 shares of beneficial interest outstanding) $4.90
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1994 (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $1,751,460
- - ------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees - Note 5 164,383
-----------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A - Note 5 37,458
Class B - Note 5 69,210
-----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 5 50,960
-----------------------------------------------------------------------------------------------
Shareholder reports 17,108
-----------------------------------------------------------------------------------------------
Custodian fees and expenses 7,826
-----------------------------------------------------------------------------------------------
Legal and auditing fees 5,460
-----------------------------------------------------------------------------------------------
Other 3,494
-----------
Total expenses 355,899
Less reimbursement from Oppenheimer Management Corporation - Note 5 (86,335)
-----------
Net expenses 269,564
- - ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,481,896
- - ------------------------------------------------------------------------------------------------------------------------
REALIZED AND Net realized gain (loss) from:
UNREALIZED GAIN (LOSS) Investments (245,675)
ON INVESTMENTS, Expiration of option contracts written - Note 4 14,219
OPTIONS WRITTEN AND Foreign currency transactions (90,108)
FOREIGN CURRENCY -----------
TRANSACTIONS Net realized loss (321,564)
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written (1,810,417)
Translation of assets and liabilities denominated in foreign
currencies 74,884
-----------
Net change (1,735,533)
-----------
Net realized and unrealized loss on investments, options
written and foreign currency transactions (2,057,097)
- - ------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (575,201)
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30,
(UNAUDITED) 1993
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 1,481,896 $ 2,142,329
------------------------------------------------------------------------------------------------------
Net realized loss on investments, options written
and foreign currency transactions (321,564) (368,788)
Net change in unrealized appreciation or depreciation
on investments, options written and translation of assets
and liabilities denominated in foreign currencies (1,735,533) 659,287
----------- -----------
Net increase (decrease) in net assets resulting from
operations (575,201) 2,432,828
- - -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.168 and $.372 per share, respectively) (990,761) (1,890,652)
SHAREHOLDERS Class B ($.148 and $.270 per share, respectively) (394,917) (278,604)
------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments,
options written and foreign currency transactions:
Class A ($.016 and $.003 per share, respectively) (94,080) (13,770)
Class B ($.016 and $.003 per share, respectively) (43,783) (654)
- - ------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions - Note 2 (1,227,028) 14,546,029
-----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions - Note 2 4,686,853 10,687,971
- - ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 1,361,083 25,483,148
-----------------------------------------------------------------------------------------------------
Beginning of period 41,582,269 16,099,121
----------- -----------
End of period $42,943,352 $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
-------------------------------------------- ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1994 (UNAUDITED) 1993 1992(2) 1994 (UNAUDITED) 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 .18 .36 .14 .14 .27
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions (.24) (.01) .19 (.22) .19
------- ------- ------- ------- -------
Total income (loss) from investment operations (.06) .35 .33 (.08) .46
- - -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.17) (.37) (.14) (.15) (.27)
Distributions from net realized gain on investments,
options written and foreign currency transactions (.01) -- (.03) (.01) --
------- ------- ------- ------- -------
Total dividends and distributions to shareholders (.18) (.37) (.17) (.16) (.27)
- - -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.90 $ 5.14 $ 5.16 $ 4.90 $ 5.14
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- - -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) (1.18)% 7.24% 6.67% (1.55)% 9.76%
- - -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $28,175 $30,783 $16,099 $14,769 $10,800
- - -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $29,781 $25,972 $ 4,939 $13,066 $ 5,310
- - -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end of period
(in thousands) 5,751 5,989 3,117 3,017 2,103
- - -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.10%(4) 7.18% 7.28%(4) 6.56%(4) 6.28%(4)
Expenses, before voluntary reimbursement by the Manager 1.39%(4) 1.46% 2.00%(4) 2.29%(4) 2.20%(4)
Expenses, net of voluntary reimbursement by the Manager .98%(4) 1.12% .29%(4) 1.91%(4) 1.84%(4)
- - -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37.5% 90.3% 30.6% 37.5% 90.3%
<FN>
1. For the period from November 30, 1992 (inception of offering) to September
30, 1993.
2. For the period from April 27, 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 six months ended March 31, 1994 were
$24,298,398 and $14,954,423, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 exchange 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 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.
12 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
------------------------------------------------------
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.
------------------------------------------------------
CALL OPTIONS WRITTEN. The Fund may write covered call
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 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.
------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
------------------------------------------------------
FEDERAL INCOME 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 tax provision is required.
------------------------------------------------------
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.
------------------------------------------------------
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.
13 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- - -------------------------------------------------------------------------------
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>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30, 1993(1)
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,148,063 $ 5,841,018 5,266,098 $27,442,371
Dividends and distributions
reinvested 147,032 747,078 248,836 1,263,984
Redeemed (1,532,811) (7,815,124) (2,643,764) (14,160,326)
----------- ----------- ---------- -----------
Net increase (decrease) (237,716) $(1,227,028) 2,871,170 $14,546,029
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
Class B:
Sold 1,232,071 $ 6,298,200 2,252,666 $11,452,295
Dividends and distributions
reinvested 57,677 293,328 33,869 173,117
Redeemed (375,496) (1,904,675) (183,784) (937,441)
----------- ----------- ---------- -----------
Net increase 914,252 $ 4,686,853 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 At March 31, 1994, net unrealized depreciation of
AND LOSSES ON investments of $981,936 was composed of gross
INVESTMENTS appreciation of $417,943, and gross depreciation of
$1,399,879.
- - -------------------------------------------------------------------------------
4. CALL OPTION ACTIVITY Call option activity for the six months ended
March 31, 1994 was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
--------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at September 30, 1993 100 $ 14,219
--------------------------------------------------------------------------------------
Options expired prior to exercise (100) (14,219)
----- ---------
Options outstanding at March 31, 1994 -- $ --
----- ---------
----- ---------
</TABLE>
- - -------------------------------------------------------------------------------
5. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS WITH which provides for an annual fee of .75% on the first
AFFILIATES $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 six months ended March 31, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $160,467, of which $58,198 was retained
by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and
by an affiliated broker/dealer. During the six months
ended March 31, 1994, OFDI received contingent
deferred sales charges of $15,402 upon redemption of
Class B shares, as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
14 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- - -------------------------------------------------------------------------------
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 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 six months ended March 31, 1994,
OFDI paid $6,160 and $277, respectively, to an
affiliated broker/dealer as reimbursement for Class A
and Class B personal service and maintenance expenses
and retained $66,721 as reimbursement for Class B
sales commissions and service fee advances, as well as
financing costs.
- - -------------------------------------------------------------------------------
6. RESTRICTED The Fund owns securities purchased in private
SECURITIES 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.
<TABLE>
<CAPTION>
VALUATION PER
ACQUISITION COST UNIT AS OF
SECURITY DATE PER UNIT MARCH 31, 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 $104.55
---------------------------------------------------------------------------------------------------
Czechoslovakia National Bank Bonds,
7%, 4/16/96(1) 3/11/93-5/17/93 $100.05 $100.63
---------------------------------------------------------------------------------------------------
Empresas Columbiana de Petroleos
Nts, 7.25%, 7/8/98(1) 6/24/93 $ 99.63 $ 99.44
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
15 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
Lynn M. Coluccy, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- - -------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
- - -------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
- - -------------------------------------------------------------------------------
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER SERVICING
AGENT
- - -------------------------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
- - -------------------------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche
- - -------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer 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.
16 Oppenheimer Strategic Investment Grade Bond Fund
