- --------------------------------------------------------------------------------
Oppenheimer Strategic Investment Grade Bond Fund
Semiannual Report March 31, 1995
- --------------------------------------------------------------------------------
"We want
our money to
photo work hard,
but we're
concerned
about risk."
[Logo] OppenheimerFunds
<PAGE>
Yield
- ---------------------------------
Standardized Yield
- ---------------------------------
For the 30 Days Ended 3/31/95:(1)
Class A
- ---------------------------------
6.95%
- ---------------------------------
Class B
- ---------------------------------
6.55%
- ---------------------------------
This Fund is for people who want high income from
an investment that's
strategically designed to lower risk.
- --------------------------------------------------------------------------------
How Your Fund Is Managed
- --------------------------------------------------------------------------------
Oppenheimer Strategic Investment Grade Bond Fund seeks high current income by
strategically allocating its assets among three sectors: U.S. government issues,
foreign fixed income securities and investment grade corporate bonds. Strategic
investing gives the Fund's managers the flexibility to shift assets among three
fixed income sectors to capitalize on worldwide investment opportunities. At the
same time, allocating the Fund's assets among three distinct fixed income
sectors provides the diversification necessary to lower risk.
- --------------------------------------------------------------------------------
Performance
- --------------------------------------------------------------------------------
Total returns at net asset value for the 6 months ended 3/31/95 for Class A and
B shares were 3.93% and 3.31%, respectively.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-year period ended 3/31/95 and since inception of the
Class on 4/22/92 were -1.61% and 3.71%, respectively.
For Class B shares, average annual total returns for the 1-year period
ended 3/31/95 and since inception of the Class on 11/30/92 were -2.47% and
3.26%, respectively.(3)
- --------------------------------------------------------------------------------
Outlook
- --------------------------------------------------------------------------------
"The outlook for the bond market is more positive today than it has been in some
time, both in terms of income and potential total returns. The Fund's ability to
shift assets strategically among bond market sectors worldwide remains a major
advantage for shareholders in the current environment. It has allowed us to seek
high yields, while seeking to keep portfolio risks under careful control."
David Negri and Art Steinmetz, Portfolio Managers
March 31, 1995
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.
1. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
2. Based on the change in net asset value per share from 9/30/94 to 3/31/95,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 4/1/94 and
4/22/92 (inception of class), after deducting the current maximum initial sales
charge of 4.75%. Class B returns show results of hypothetical investments on
4/1/94 and 11/30/92 (inception of class), and the deduction of the applicable
contingent deferred sales charge of 5% (1-year) and 4% (since inception). An
explanation of the different total returns is in the Fund's prospectus.
2 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
[PHOTOGRAPH]
James C. Swain
Chairman
Oppenheimer Strategic Investment Grade
Bond Fund
[PHOTOGRAPH]
Jon S. Fossel
President
Oppenheimer Strategic Investment Grade
Bond Fund
Dear OppenheimerFunds Shareholder,
1994 was marked by one of the greatest tests the bond markets faced in more than
six decades. As the U.S. Federal Reserve undertook the most aggressive moves in
its history to raise interest rates, bond prices and bond mutual funds declined
across the board. Changing interest rates are a fact of life and they affect the
short-term performance of all bond markets. That is why we believe the best
measure of any fixed income mutual fund is its performance over the long term.
And we believe the long-term outlook for the bond markets is very positive.
To see how greatly the U.S. bond market has improved since last fall, we
need look no further than the market's reaction to the Fed's most recent
short-term rate increase in February. While the markets had already anticipated
this move, unlike previous rate increases, long-term interest rates continued to
decline and bonds rallied further. Although the Fed could raise rates again, we
believe that this positive environment will prove more than momentary as a
result of several factors.
First, concerns about the effects of inflation on bond prices are fading
fast. By most indicators, economic growth is slowing to a pace that can be
sustained without reigniting inflation or causing a recession. Second, at
current prices, intermediate and long-term bonds are producing some of the best
inflation-adjusted returns in years. With the actual inflation rate running just
over 3 percent today, many fixed income investors are clearly being rewarded.
Attracted by the strong, real returns intermediate and long-term bonds offer,
investors are returning to bonds in a significant way. This rising demand is
providing solid support for bond prices. Third, as the Fed concludes its
tightening efforts--and recent reports suggest that point is near--long-term
interest rates will likely stay within their current range, and could decline
further. Of course, rates could rise later this year if future reports indicate
that the economy isn't slowing as quickly as it seems to be today; however, we
believe that over the longer term, the downward trend of rates will continue.
Two uncertainties affecting the fixed income markets are foreign investors'
attitudes toward U.S. debt and the weakness of the U.S. dollar abroad relative
to other major currencies. But investors' attitudes overseas and the dollar's
decline, in our view, should prove temporary. Both have been driven by the
government's moves to support the Mexican peso, a widening trade deficit, and
Congress's apparent inability to limit the Federal budget deficit.
We believe the trade deficit will narrow with increasing U.S. exports as
European economies come out of recession and emerging world markets stabilize.
Additionally, the need to support the peso has begun to decline as Mexico's
tough domestic economic policy has gained credibility. Finally, we are confident
that Congress will be able to get the budget deficit issue dealt with because
Americans are demanding it.
Of course, no one can predict the future with perfect clarity. The bond
markets are always subject to fluctuations and, as we saw in 1994, the shifts
can sometimes be sharp. Overall, however, we believe the outlook for the bond
markets today appears positive.
Your portfolio manager discusses the outlook for your Fund on the following
pages. We appreciate your trust, and we'll continue to do our best to help you
meet your long-term investment objectives.
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
April 24, 1995
3 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
David Negri and Art Steinmetz
Portfolio Managers
Q+A
An interview with your Fund's managers.
Last year was a difficult period for bond investors. Have changes in interest
rates and the economy affected your allocations?
While where we allocate the Fund's assets among fixed income sectors is critical
to producing good returns, how we allocate assets within each sector is just as
important to meeting the Fund's objectives. For example, last year, when
interest rates were rising and the economy was gaining strength, our strategy
was to avoid interest-rate risk by shortening Treasury maturities.
That strategy worked well for us, but today, as the economic expansion and
interest rates approach what we believe will be their peak, we're reversing that
strategy. With interest rates poised to fall and the economy slowing, we're
extending Treasury maturities.
There are signs of political and economic uncertainty in some established
markets in Europe. How have these developments affected your approach?
We've taken several steps to adjust our European holdings. For example, we've
redirected our assets in Spain and Italy, which are running large deficits, to
the United Kingdom. Bonds in these countries are beginning to benefit from
strengthening economies, which are pushing up yields, as well as from the
weakness of the U.S. dollar.(1)
Has the recent weakness of the dollar affected the Fund?
It has to some extent. The dollar's decline was driven largely by the U.S.
government's attempt to support Mexico by buying peso-denominated securities. As
our government pumped U.S. dollars into the system, and as the supply of dollars
rose, their value fell. But as investors sought stability, other markets and
currencies, notably Germany and the mark, benefitted--thus, currency declines
affecting one sector of the Fund were largely offset by currency gains in
Europe.
These developments demonstrate the benefit of investing in a
geographically diverse portfolio. While foreign investments are subject to
adverse market changes as a result of currency fluctuations, each sector of the
bond market is affected differently by economic events, and setbacks in one area
often are offset by higher performance in others. The dollar's recent weakness
is a good example of that dynamic.
What's your outlook for the Fund?
The Fund's flexibility and diversification should continue to help us manage
risk and seek solid returns. And now that the prospects for the bond markets in
general are positive, we believe that the Fund is positioned for good
performance in 1995. / /
(1) The Fund's portfolio is subject to change.
4 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Statement of Investments March 31, 1995 (Unaudited)
----------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
Certificates of Deposit -- 4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank CD:
10.50%, 7/14/95 (2) ARA $ 450,000 $ 450,111
16%, 5/3/95 (2) CLP 43,000,000 106,554
16%, 8/17/95 (2) CLP 83,003,140 205,682
----------------------------------------------------------------------------------------------------------
Indonesia (Republic of) CD, Bank Negara, Zero Coupon, 4/24/95 IDR 2,000,000,000 884,495
------------
Total Certificates of Deposit (Cost $1,700,121) 1,646,842
===================================================================================================================================
Mortgage-Backed Obligations -- 26.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency -- 13.4%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/ Federal Home Loan Mortgage Corp., Collateralized Mtg
Sponsored -- 11.9% Obligations, Series 1548, Cl. C, 7%, 4/15/21 4,000,000 3,637,640
----------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240, Cl. 2, 7%, 9/25/23 (3) 2,673,358 968,257
------------
4,605,897
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/ Government National Mortgage Assn.:
Guaranteed -- 1.5% 10.50%, 12/15/17-5/15/21 512,414 565,387
- -----------------------------------------------------------------------------------------------------------------------------------
Private -- 13.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial -- 8.8% CMC Security Corp. I, Collateralized Mtg
Obligation, Series 1993-D, Cl. D-3, 10%, 7/25/23 (4) 736,140 774,779
----------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25 (5) 1,000,000 980,938
Cl. 2-E, 8.70%, 9/25/25 (5) 1,000,000 946,563
----------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates, Series 1993-C1, Cl. B, 8.75%, 5/25/24 700,000 699,344
------------
3,401,624
- -----------------------------------------------------------------------------------------------------------------------------------
Multi-Family -- 1.9% Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 645,065 657,563
Series 1991-M6, Cl. B4, 6.450%, 6/25/21 (6) 89,052 85,907
------------
743,470
- -----------------------------------------------------------------------------------------------------------------------------------
Residential -- 2.3% Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 879,004 876,701
------------
Total Mortgage-Backed Obligations (Cost $10,494,915) 10,193,079
===================================================================================================================================
U.S. Government Obligations -- 29.3%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
11.625%, 11/15/02 5,000,000 6,287,500
8.75%, 8/15/00 2,700,000 2,896,592
----------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.125%, 2/28/98 1,000,000 952,812
8.875%, 11/15/97 1,130,000 1,182,968
------------
Total U.S. Government Obligations (Cost $11,217,967) 11,319,872
</TABLE>
5 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Statement of Investments (Unaudited)(Continued)
----------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
Foreign Government Corporacion Andina de Fomento Sr. Unsec. Debs., 7.25%, 4/30/98 $ 100,000 $ 92,500
Obligations -- 11.0% ----------------------------------------------------------------------------------------------------------
First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 22, 11.40%, 12/15/01 AUD 254,160 196,678
----------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 NZD 800,000 568,308
----------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Exch. Bonds, 12%, 12/1/01 AUD 240,000 193,268
----------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds:
10%, 7/15/97 NZD 390,000 263,609
8%, 11/15/95 NZD 750,000 487,148
----------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 1,045,000 695,412
----------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
10.25%, 11/30/98 ESP 66,000,000 497,881
----------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts.:
12.25%, 3/26/99 GBP 391,000 717,861
13%, 7/14/00 GBP 276,000 532,996
------------
Total Foreign Government Obligations (Cost $4,146,559) 4,245,661
===================================================================================================================================
Municipal Bonds and New York State Environmental Facilities Corp. State Service Contract
Notes -- 0.5% Taxable Revenue Bonds, Series B, 8.15%, 3/15/02 (Cost $197,771) 200,000 197,187
===================================================================================================================================
Corporate Bonds and Notes -- 27.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Industry -- 2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemical -- 1.4% Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 500,000 552,686
- -----------------------------------------------------------------------------------------------------------------------------------
Paper -- 1.1% Scotia Pacific Holding Co., 7.95% Timber Collateralized Nts , 7/20/15 461,786 437,292
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Related -- 4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Food/Beverages ConAgra, Inc., 7.40% Sub. Nts., 9/15/04 250,000 241,592
/Tobacco -- 1.7% ----------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(7) 500,000 435,000
-----------
676,592
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare -- 1.1% R.P. Scherer International Corp., 6.75% Sr. Nts., 2/1/04 500,000 442,500
- -----------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming -- 0.4% Circus Circus Enterprises, Inc., 6.75% Nts., 7/15/03 150,000 135,619
- -----------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel -- 1.1% Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 437,551
- -----------------------------------------------------------------------------------------------------------------------------------
Energy -- 4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 500,000 540,571
----------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,561
----------------------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 400,000 423,724
----------------------------------------------------------------------------------------------------------
Southwest Gas Corp., 9.75% Debs., Series F, 6/15/02 275,000 296,511
----------------------------------------------------------------------------------------------------------
Tenneco, Inc.:
10% Debs., 3/15/08 100,000 113,491
7.875% Nts., 10/1/02 250,000 249,517
------------
1,730,375
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services -- 5.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks and Thrifts--2.2% BankAmerica Corp., 7.50% Sr. Nts., 3/15/97 200,000 200,505
----------------------------------------------------------------------------------------------------------
Chemical New York Corp., 9.75% Sub. Cap. Nts., 6/15/99 300,000 321,094
----------------------------------------------------------------------------------------------------------
First Chicago Corp., 9% Sub. Nts., 6/15/99 100,000 104,741
----------------------------------------------------------------------------------------------------------
NBD Bancorp, Inc., 7.25% Sub. Debs., 8/15/04 250,000 238,731
------------
865,071
</TABLE>
6 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
----------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified American Car Line Co., 8.25% Equipment Trust Certificates,
Financial -- 3.4% Series 1993-A, 4/15/08 $ 270,000 $ 262,620
----------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Nts., 10/1/96 100,000 100,981
----------------------------------------------------------------------------------------------------------
Heller Financial, Inc., 7.75% Nts., 5/15/97 300,000 302,464
----------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 8.375% Nts., 2/15/99 300,000 299,264
----------------------------------------------------------------------------------------------------------
PaineWebber Group, Inc.:
7% Nts., 3/1/00 160,000 150,324
7.75% Sub. Nts., 9/1/02 200,000 188,079
------------
1,303,732
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing -- 1.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Automotive -- 1.6% Chrysler Corp., 10.95% Debs., 8/1/17 200,000 222,037
----------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.50% Nts., 12/15/01 100,000 87,519
7.75% Nts., 4/15/97 300,000 299,384
------------
608,940
- -----------------------------------------------------------------------------------------------------------------------------------
Media -- 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Cable Time Warner, Inc., 9.15% Debs., 2/1/23 100,000 95,211
Television -- 3.9% ----------------------------------------------------------------------------------------------------------
Time Warner, Inc./Time Warner Entertainment LP, 8.375% Sr. Debs., 3/15/23 400,000 359,905
----------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,065,000
------------
1,520,116
- -----------------------------------------------------------------------------------------------------------------------------------
Retail -- 2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Department Sears Canada, Inc., 11.70% Debs., 7/10/00 CAD 500,000 391,196
Stores -- 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Drug Stores -- 1.1% Hook-Superx Inc., 10.125% Sr. Nts., 6/1/02 400,000 421,000
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation -- 0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Air AMR Corp., 10% Nts., 4/15/21 200,000 205,680
Transportation -- 0.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads -- 0.3% Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 108,308
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities -- 2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Commonwealth Edison Co.:
Utilities -- 2.1% 6.40% Nts., 10/15/05 75,000 62,910
6.50% Nts., 7/15/97 225,000 218,817
----------------------------------------------------------------------------------------------------------
Consumers Power Co., 6.375% Nts., 9/15/03 110,000 97,694
----------------------------------------------------------------------------------------------------------
Long Island Lighting Co., 7% Nts., 3/1/04 200,000 166,615
----------------------------------------------------------------------------------------------------------
Public Service Company of Colorado, 8.75% Fst. Mtg. Bonds, 3/1/22 250,000 253,389
------------
799,425
------------
Total Corporate Bonds and Notes (Cost $11,206,004) $ 10,636,083
</TABLE>
7 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
----------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
Structured Instruments -- 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corp. Investment Banking, Inc., 10% CD Sterling Rate Linked
Nts., 7/3/95 (Cost $410,000)(2) $ 410,000 $ 403,440
===================================================================================================================================
Total Investments, at Value (Cost $39,373,337) 99.9% $ 38,642,164
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.1 28,273
------------- ------------
Net Assets 100.00% $ 38,670,437
============= ============
1. Face amount is reported in local currency. Foreign currency abbreviations are as follows:
ARA -- Argentine Austral ESP -- Spanish Peseta
AUD -- Australian Dollar GBP -- British Pound Sterling
CAD -- Canadian Dollar IDR -- Indonesian Rupiah
CLP -- Chilean Peso NZD -- New Zealand Dollar
DEM -- German Deutsche Mark USD -- U.S. Dollar
2. Indexed instrument for which the principal amount and/or interest due at maturity is affected by the
relative value of a foreign currency.
3. 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).
4. Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act
of 1933, as amended. This security has been determined to be liquid under guidelines established by the
Board of Trustees. These securities amount to $774,779 or 2% of the Fund's net assets, at March 31, 1995.
5. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial Statements.
6. Represents the current interest rate for a variable rate security.
7. Represents a zero coupon bond that converts to a fixed rate of interest at a designated future date.
8. A sufficient amount of securities is segregated to collateralize outstanding forward foreign currency
exchange contracts. See Note 5 of Notes to Financial Statements.
9. A sufficient amount of liquid assets has been designated to cover outstanding call and put options, as
follows:
</TABLE>
<TABLE>
<CAPTION>
Face Subject Expiration Exercise Premium Market Value
to Call/Put Date Price Received See Note 1
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian
Dollar 368 AUD 4/20/95 0.74 USD/AUD $ 637 $1,089
Call Option on New South
Wales Treasury
Corp. Gtd. Exch. Bonds,
12%, 12/1/01 50 AUD 4/28/95 109.06 AUD 339 440
Call Option on Spanish
Peseta/Deutsche Mark 16,000 ESP 5/4/95 89.00 ESP/DEM 892 526
Put Option on
Deutsche Mark 150,000 DEM 6/6/95 1.46 DEM/USD 1,062 750
------ ------
$2,930 $2,805
====== ======
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
====================================================================================================================================
Assets Investments, at value (cost $39,373,337)--see accompanying statement $ 38,642,164
-----------------------------------------------------------------------------------------------------------
Receivables:
Interest 790,651
Shares of beneficial interest sold 44,378
-----------------------------------------------------------------------------------------------------------
Other 8,745
------------
Total assets 39,485,938
====================================================================================================================================
Liabilities Bank overdraft 504,780
-----------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $2,930) -- see accompanying statement -- Note 4 2,805
-----------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts -- Note 5 627
-----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 119,306
Dividends 81,395
Distribution and service plan fees -- Note 6 23,349
Transfer and shareholder servicing agent fees -- Note 6 4,571
Trustees' fees 3,421
Other 75,247
------------
Total liabilities 815,501
====================================================================================================================================
Net Assets $ 38,670,437
============
====================================================================================================================================
Composition of Paid-in capital 41,261,601
Net Assets -----------------------------------------------------------------------------------------------------------
Overdistributed net investment income (301,654)
-----------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and written option transactions (1,560,198)
-----------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of assets and
liabilities denominated in foreign currencies (729,312)
------------
Net assets $ 38,670,437
============
====================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of $23,190,699 and
4,906,735 shares of beneficial interest outstanding) $4.73
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering $4.97
price)
-----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $15,479,738 and 3,278,697 shares of beneficial interest outstanding) $4.72
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C>
Investment Income Interest (net of foreign withholding taxes of $3,709) $1,663,843
====================================================================================================================================
Expenses Management fees -- Note 6 144,908
-----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A -- Note 6 28,682
Class B -- Note 6 74,856
-----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees -- Note 6 24,800
-----------------------------------------------------------------------------------------------------------
Shareholder reports 24,303
-----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 16,757
-----------------------------------------------------------------------------------------------------------
Legal and auditing fees 9,866
-----------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 5,559
-----------------------------------------------------------------------------------------------------------
Registration and filing fees -- Class B 408
-----------------------------------------------------------------------------------------------------------
Other 2,319
----------
Total expenses 332,458
====================================================================================================================================
Net Investment Income 1,331,385
====================================================================================================================================
Realized and Unrealized Net realized loss on:
Gain (Loss) on Investments (939,617)
Investments, Options Expiration of option contracts written -- Note 4 (62,173)
Written and Foreign Foreign currency transactions (197,537)
Currency Transactions ----------
Net realized loss (1,199,327)
-----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written 1,316,562
Translation of assets and liabilities denominated in foreign currencies (72,829)
----------
Net change 1,243,733
----------
Net realized and unrealized gain on investments, options written
and foreign currency transactions 44,406
====================================================================================================================================
Net Increase in Net Assets Resulting From Operations $1,375,791
==========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
-----------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
March 31, 1995 Sept. 30, 1994
(Unaudited)
====================================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 1,331,385 $ 2,779,438
-----------------------------------------------------------------------------------------------------------
Net realized loss on investments, options written and foreign
currency transactions (1,199,327) (915,478)
-----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on investments and translation of
assets and liabilities denominated in foreign
currencies 1,243,733 (2,729,011)
----------- -----------
Net increase (decrease) in net assets resulting from operations 1,375,791 (865,051)
====================================================================================================================================
Dividends and Dividends from net investment income:
Distributions Class A ($.160 and $.240 per share, respectively) (815,734) (1,253,403)
To Shareholders Class B ($.142 and $.205 per share, respectively) (457,138) (750,521)
-----------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.01 per share) -- (27,359)
Class B ($.01 per share) -- (16,382)
-----------------------------------------------------------------------------------------------------------
Distributions in excess of gain on investments,
options written and foreign currency
transactions:
Class A ($.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 Net decrease in net assets resulting from Class A
Interest beneficial interest transactions--Note 2 (1,816,295) (3,401,990)
Transactions -----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2
488,747 5,432,516
====================================================================================================================================
Net Assets Total decrease (1,224,629) (1,687,203)
-----------------------------------------------------------------------------------------------------------
Beginning of period 39,895,066 41,582,269
----------- -----------
End of period (including overdistributed net investment income
of $301,654 and $360,167, respectively) $38,670,437 $39,895,066
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Financial Highlights
-----------------------------------------------------------------------------------------------------------
Class A Class B
-----------------------------------------------------------------------------------------
Six Months Ended Six Months Ended Year Ended
March 31, 1995 Year Ended September 30, March 31, 1995 September 30,
(Unaudited) 1994 1993 1992(2) (Unaudited) 1994 1993(1)
==========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $ 4.71 $ 5.14 $ 5.16 $ 5.00 $ 4.71 $ 5.14 $ 4.95
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .16 .34 .36 .14 .14 .34 .27
Net realized and unrealized
gain (loss) on investments,
options written and foreign
currency transactions .01 (.43) (.01) .19 .01 (.46) .19
------- ------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations .17 (.09) .35 .33 .15 (.12) .46
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.15) (.24) (.37) (.14) (.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 (.15) (.34) (.37) (.17) (.14) (.31) (.27)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.73 $ 4.71 $ 5.14 $ 5.16 $ 4.72 $ 4.71 $ 5.14
======= ======= ======= ======= ======= ======= =======
====================================================================================================================================
Total Return, at
Net Asset Value(3) 3.93% (1.76)% 7.24% 6.67% 3.31% (2.45)% 9.54%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $23,191 $24,956 $30,783 $16,099 $15,480 $14,939 $10,800
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $23,726 $28,294 $25,972 $4,939 $15,018 $14,232 $5,310
- ------------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period
(in thousands) 4,907 5,296 5,989 3,117 3,279 3,174 2,103
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.18%(4) 6.80% 7.18% 7.28%(4) 6.44%(4) 6.01% 6.28%(4)
Expenses, before voluntary
reimbursement by the Manager 1.43%(4) 1.38% 1.46% 2.00%(4) 2.18%(4) 2.16% 2.20%(4)
Expenses, net of voluntary
reimbursement by the Manager N/A 1.33% 1.12% .29%(4) N/A 2.12% 1.84%(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 42.6% 68.6% 90.3% 30.6% 42.6% 68.6% 90.3%
</TABLE>
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. Total returns are not annualized for
periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the six
months ended March 31, 1995 were $15,559,339 and $14,921,706, respectively.
See accompanying Notes to Financial Statements.
12 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
--------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C>
1. Significant Oppenheimer Strategic Investment Grade Bond Fund (the Fund) is registered under the Investment Company
Accounting Policies 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 the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which such information is regularly reported are valued
at the last sale price of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and short-term "non-money market"
debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such
securities which cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or under consistently applied procedures
established by the Board of Trustees to determine fair value in good faith. Short-term "money market
type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium or discount. Forward
contracts are valued based on the closing prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued
based upon the last sale price on the principal exchange on which the option is traded or, in the absence
of any transactions that day, the value is based upon the last sale price on the prior trading date if it
is within the spread between the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid or asked price closest to the last reported sale price is used.
--------------------------------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices
of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in
foreign currency exchange rates on investments is separately identified from the fluctuations arising
from changes in market values of securities held and reported with all other foreign currency gains and
losses in the funds 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. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults
and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization
of the value of the collateral by the Fund may be delayed or limited.
--------------------------------------------------------------------------------------------------------
Allocation of Income, Expenses and Gains and Losses. Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
</TABLE>
13 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
--------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C>
1. Significant Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code
Accounting Policies applicable to regulated investment companies and to distribute all of its taxable income, including
(continued) any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise 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.
--------------------------------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss) and net realized gain
(loss) may differ for financial statement and tax purposes primarily because of premium amortization,
paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was recorded by the Fund.
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.
--------------------------------------------------------------------------------------------------------
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 value shares of beneficial interest of each class.
Beneficial Interest Transactions in shares of beneficial interest were as follows:
<CAPTION>
Six Months Ended Year Ended
March 31, 1995 September 30, 1994
------------------------ ----------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 216,930 $ 1,010,227 1,541,101 $ 7,739,640
Dividends and distributions reinvested 113,935 529,812 284,805 1,388,625
Redeemed (720,209) (3,356,334) (2,518,406) (12,530,255)
-------- ----------- ---------- ------------
Net decrease (389,344) $(1,816,295) (692,500) $ (3,401,990)
======== =========== ========== ============
-------------------------------------------------------------------------------------------------------
Class B:
Sold 261,377 $ 1,214,760 1,732,642 $ 8,472,995
Dividends and distributions reinvested 61,471 285,714 74,300 587,645
Redeemed (217,771) (1,011,727) (736,073) (3,628,124)
-------- ----------- ---------- ------------
Net increase 105,077 $ 488,747 1,070,869 $ 5,432,516
======== =========== ========== ============
</TABLE>
14 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
====================================================================================================================================
3. Unrealized Gains and At March 31, 1995, net unrealized depreciation on investments of $731,048 was composed of gross
Losses on Investments appreciation of $595,457, and gross depreciation of $1,326,505.
====================================================================================================================================
4. Option Activity The Fund may buy and sell put and call options, or write covered call options on portfolio securities in
order to produce incremental earnings or protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to hedge against
adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a
premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise
of the option.
Options are valued daily based upon the last sale price on the principal exchange on which the
option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or
loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost for a written put option, or the cost of the
security for a purchased put or call option is by the amount of premium received or paid.
In this report, securities designated to cover outstanding call options are noted in the
Statement of Investments. Shares subject to call, expiration date, exercise price, premium received and
market value are detailed in a footnote to the Statement of Investments. Options written are reported as
a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of
Operations.
The risk in writing a call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and the option is exercised.
The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The
Fund also has the additional risk of not being able to enter into a closing transaction if a liquid
secondary market does not exist.
Written option activity for the six months ended March 31, 1995 was as follows:
<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, 1994 3,262,561 $41,361 -- $ --
--------------------------------------------------------------------------------------------------------
Options written 1,007 3,874 102,740 1,062
--------------------------------------------------------------------------------------------------------
Options canceled in closing transactions (3,263,128) (43,367) -- --
--------------------------------------------------------------------------------------------------------
Options outstanding at March 31, 1995 440 $ 1,868 102,740 $ 1,062
========= ======= ======== =======
====================================================================================================================================
5. Forward Contracts A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used
to tactically shift portfolio currency risk. The Fund generally enters into forward 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.
Forward contracts are valued based on the closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The
Fund will realize a gain or loss upon the closing or settlement of the forward transaction.
</TABLE>
15 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
-------------------------------------------------------------------------------------------------------
====================================================================================================================================
5. Forward Contracts In this report, securities held in segregated accounts to cover net exposure on outstanding forward
(continued) contracts are noted in the Statement of Investments where applicable. Gains and losses on
outstanding contracts (unrealized appreciation or depreciation on forward contracts) are reported
in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other
foreign currency gains and losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to meet the terms of the contract and
unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
At March 31, 1995, the Fund had outstanding forward contracts to purchase and sell foreign
currencies as follows:
<CAPTION>
Contract Valuation Unrealized
Expiration Amount as of Appreciation
Contracts to Purchase Date (000s) March 31, 1995 (Depreciation)
--------------------- ----------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Deutsche Mark 4/10/95-5/16/95 606 $ 442,964 $10,942
New Zealand Dollar 5/4/95 206 135,028 156
---------- -------
$577,992 $11,098
========== =======
Contracts to Sell
---------------------------------------------------------------------------------------------------------
Australian Dollar 5/4/95 184 $ 135,067 $ (195)
Spanish Peseta 4/10/95-5/16/95 56,000 443,552 (11,530)
---------- --------
$ 578,619 $(11,725)
========== ========
</TABLE>
<TABLE>
====================================================================================================================================
<S> <C>
6. Management Fees Management fees paid to the Manager were in accordance with the investment advisory agreement with
And Other the Fund which provides for an annual fee of .75% on the first $200 million of net assets with a
Transactions With reduction of .03% on each $200 million thereafter to $800 million, .60% on the next $200
Affiliates 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 state regulatory
limit on Fund expenses.
For the six months ended March 31, 1995, commissions (sales charges paid by investors) on sales
of Class A shares totaled $25,282, of which $10,165 was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B shares totaled $38,451, of
which $19,488 was paid to an affiliated broker/dealer. During the six months ended March 31, 1995, OFDI
received contingent deferred sales charges of $21,115 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 six months ended March 31, 1995, OFDI paid $5,099 and $1,924, respectively, to an affiliated
broker/dealer as reimbursement for Class A and Class B personal service and maintenance expenses and
retained $61,344 as reimbursement for Class B sales commissions and service fee advances, as well as
financing costs.
</TABLE>
16 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C>
7. Illiquid Securities At March 31, 1995, investments in securities included issues that are illiquid or restricted.
The securities are often purchased in private placement transactions, are not registered under the
Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. The Fund intends to invest no more than 10%
of its net assets (determined at the time of purchase) in illiquid or restricted securities. The
aggregate value of these securities subject to this limitation at March 31, 1995 was $1,927,500 which
represents 4.98% of the Fund's net assets. Information concerning these securities is as follows:
</TABLE>
<TABLE>
<CAPTION>
Valuation
Cost Per Per Unit as of
Security Acquisition Date Unit March 31, 1995
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994--C1, Cl. 2-D,
8.70%, 9/25/25 8/10/94 $98.00 $98.09
---------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1, Cl. 2-E,
8.70%, 9/25/25 8/10/94 $94.87 $94.66
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation specified above.
</TABLE>
17 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Investment Grade Bond Fund
----------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C>
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 & Wolf, P.C.
The financial statements included herein have been taken from the records of the Fund without examination
by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer 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.
</TABLE>
18 Oppenheimer Strategic Investment Grade Bond Fund
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------
OppenheimerFunds Family
-----------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C>
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 2.4 million shareholder accounts and more than $30
billion under Oppenheimer's management and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to exchange shares of eligible funds of the same
class. And you can exchange shares easily by mail or by telephone.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 Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
====================================================================================================================================
Bond Funds High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund Investment Grade Bond Fund
Strategic Income & Growth Fund Mortgage Income Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Fund Limited-Term Government Fund
Strategic Investment Grade Bond Fund
====================================================================================================================================
Tax-Exempt Funds New York Tax-Exempt Fund(4) New Jersey Tax-Exempt Fund(4)
California Tax-Exempt Fund(4) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(4) Insured Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(4) Intermediate Tax-Exempt Bond Fund
====================================================================================================================================
Money Market Funds Money Market Fund Cash Reserves
1. Exchange privileges are subject to change or termination.
2. Formerly Oppenheimer Global Bio-Tech Fund.
3. Formerly Special Fund.
4. Available only to residents of certain states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two World Trade Center,
New York, NY10048-0203.
(C) Copyright 1995 Oppenheimer Management Corporation. All rights reserved.
19 Oppenheimer Strategic Investment Grade Bond Fund
</TABLE>
<PAGE>
Information
General Information
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
- -------------------------------------
1-800-525-7048
- -------------------------------------
Telephone Transactions
Monday-Friday 8:30 a.m.-8 p.m. ET
- -------------------------------------
1-800-852-8457
- -------------------------------------
PhoneLink
24 hours a day, automated
information and transactions
- -------------------------------------
1-800-533-3310
- -------------------------------------
Telecommunications Device
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
- -------------------------------------
1-800-843-4461
- -------------------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
- -------------------------------------
1-800-835-3104
- -------------------------------------
RS0245.001.0595 May 31, 1995
[PHOTOGRAPH]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
"How may I help you?"
As an OppenheimerFunds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- --------------------------------------------------------------------------------
[LOGO] Oppenheimer Funds(R) ---------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, Co.
---------------
