-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GZLFm7eifJI9d7HdoyPEsqSDGyY+ulPDylkntriP1VFTsYkmDMUZLSL8YqRSZu44 1vKUtPWUbRkFwm4rHiCUNw== 0000935069-06-002692.txt : 20060927 0000935069-06-002692.hdr.sgml : 20060927 20060927141256 ACCESSION NUMBER: 0000935069-06-002692 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060731 FILED AS OF DATE: 20060927 DATE AS OF CHANGE: 20060927 EFFECTIVENESS DATE: 20060927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Oppenheimer Portfolio Series CENTRAL INDEX KEY: 0001307792 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21686 FILM NUMBER: 061110816 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 0001307792 S000007513 Conservative Investor Fund C000020537 A C000020538 B C000020539 C C000020540 N C000020541 Y N-CSRS 1 rs540_34994ncsrs.txt RS540_34994NCSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-21686 OPPENHEIMER PORTFOLIO SERIES (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) ROBERT G. ZACK, ESQ. OPPENHEIMERFUNDS, INC. TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: JANUARY Date of reporting period: 07/31/2006 ITEM 1. REPORTS TO STOCKHOLDERS. CONSERVATIVE INVESTOR FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET CLASS ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Alternative Investments 11.6% Fixed Income 67.3 Global Equity 5.2 U.S. Equity 15.9 Portfolio holdings and allocations are subject to change. Percentages are as of July 31, 2006, and are based on the total market value of investments in affiliated companies. - -------------------------------------------------------------------------------- 9 | CONSERVATIVE INVESTOR FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Portfolio's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Portfolio or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Portfolio's investment strategy and focus can change over time. The mention of specific holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Portfolio were first publicly offered on 4/5/05. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. 10 | CONSERVATIVE INVESTOR FUND CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Portfolio's Statement of Additional Information. 11 | CONSERVATIVE INVESTOR FUND PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- PORTFOLIO EXPENSES. As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended July 31, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 12 | CONSERVATIVE INVESTOR FUND Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (2/1/06) (7/31/06) JULY 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,008.60 $1.89 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,022.91 1.91 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,004.80 6.08 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,018.74 6.12 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,005.70 5.94 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,018.89 5.97 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,007.60 3.39 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,021.42 3.41 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,010.40 0.50 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,024.30 0.50 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Portfolio's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Those annualized expense ratios, excluding all underlying fund expenses, based on the 6-month period ended July 31, 2006 are as follows: CLASS EXPENSE RATIOS - -------------------------- Class A 0.38% - -------------------------- Class B 1.22 - -------------------------- Class C 1.19 - -------------------------- Class N 0.68 - -------------------------- Class Y 0.10 - -------------------------------------------------------------------------------- 13 | CONSERVATIVE INVESTOR FUND STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- INVESTMENTS IN AFFILIATED COMPANIES--98.3% 1 - ------------------------------------------------------------------------------------------------------------------- ALTERNATIVE INVESTMENTS--11.4% Oppenheimer Real Asset Fund, Cl. Y 962,355 $ 8,122,277 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Real Estate Fund, Cl. Y 354,780 7,986,089 -------------- 16,108,366 - ------------------------------------------------------------------------------------------------------------------- FIXED INCOME--66.1% Oppenheimer Core Bond Fund, Cl. Y 4,610,314 46,241,454 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer High Yield Fund, Cl. Y 1,745,730 15,990,888 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer International Bond Fund, Cl. Y 1,317,462 7,588,585 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Limited-Term Government Fund, Cl. Y 2,405,200 23,787,431 -------------- 93,608,358 - ------------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY--5.1% Oppenheimer Global Fund, Cl. Y 105,347 7,256,287 - ------------------------------------------------------------------------------------------------------------------- U.S. EQUITY--15.7% Oppenheimer Capital Appreciation Fund, Cl. Y 166,218 7,077,551 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund, Cl. Y 193,577 7,506,908 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Value Fund, Cl. Y 307,785 7,577,658 -------------- 22,162,117 -------------- Total Investments in Affiliated Companies (Cost $138,416,685) 139,135,128 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--0.1% - ------------------------------------------------------------------------------------------------------------------- Undivided interest of 0.005% in joint repurchase agreement (Principal Amount/ Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $65,009 on 8/1/06, collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35, with a value of $448,829,145 (Cost $65,000) $ 65,000 65,000 - ------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $138,481,685) 98.4% 139,200,128 - ------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 1.6 2,280,192 ------------------------------ NET ASSETS 100.0% $ 141,480,320 ==============================
14 | CONSERVATIVE INVESTOR FUND FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Represents ownership of an affiliated fund, at or during the period ended July 31, 2006. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES SHARES JANUARY 31, GROSS GROSS JULY 31, 2006 ADDITIONS REDUCTIONS 2006 - ---------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y 99,978 73,929 7,689 166,218 Oppenheimer Core Bond Fund, Cl. Y 2,533,270 2,144,757 67,713 4,610,314 Oppenheimer Global Fund, Cl. Y 66,908 46,898 8,459 105,347 Oppenheimer High Yield Fund, Cl. Y 978,485 792,677 25,432 1,745,730 Oppenheimer International Bond Fund, Cl. Y 751,912 586,688 21,138 1,317,462 Oppenheimer Limited-Term Government Fund, Cl. Y 1,326,111 1,114,407 35,318 2,405,200 Oppenheimer Main Street Fund, Cl. Y 117,728 85,354 9,505 193,577 Oppenheimer Real Asset Fund, Cl. Y 524,309 452,137 14,091 962,355 Oppenheimer Real Estate Fund, Cl. Y 230,456 156,275 31,951 354,780 Oppenheimer Value Fund, Cl. Y 181,842 134,591 8,648 307,785
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y $ 7,077,551 $ -- $ (71) Oppenheimer Core Bond Fund, Cl. Y 46,241,454 880,082 (25,989) Oppenheimer Global Fund, Cl. Y 7,256,287 -- 8,949 Oppenheimer High Yield Fund, Cl. Y 15,990,888 464,044 (4,237) Oppenheimer International Bond Fund, Cl. Y 7,588,585 119,111 (4,039) Oppenheimer Limited-Term Government Fund, Cl. Y 23,787,431 416,383 (6,621) Oppenheimer Main Street Fund, Cl. Y 7,506,908 -- 296 Oppenheimer Real Asset Fund, Cl. Y 8,122,277 29,677 (19,697) Oppenheimer Real Estate Fund, Cl. Y 7,986,089 13,482 2,698 Oppenheimer Value Fund, Cl. Y 7,577,658 -- (3,345) ----------------------------------------- $ 139,135,128 $ 1,922,779 $ (52,056) =========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 15 | CONSERVATIVE INVESTOR FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - --------------------------------------------------------------------------------
July 31, 2006 - --------------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $65,000) $ 65,000 Affiliated companies (cost $138,416,685) 139,135,128 --------------- 139,200,128 - --------------------------------------------------------------------------------------------- Cash 53,272 - --------------------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 2,579,881 Interest and dividends 375,212 Other 2,231 --------------- Total assets 142,210,724 - --------------------------------------------------------------------------------------------- LIABILITIES - --------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 493,791 Shares of beneficial interest redeemed 164,369 Distribution and service plan fees 28,158 Shareholder communications 12,118 Transfer and shareholder servicing agent fees 11,499 Trustees' compensation 3,938 Other 16,531 --------------- Total liabilities 730,404 - --------------------------------------------------------------------------------------------- NET ASSETS $ 141,480,320 =============== - --------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - --------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 13,363 - --------------------------------------------------------------------------------------------- Additional paid-in capital 138,844,704 - --------------------------------------------------------------------------------------------- Accumulated net investment income 1,693,865 - --------------------------------------------------------------------------------------------- Accumulated net realized gain on investments 209,945 - --------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 718,443 --------------- NET ASSETS $ 141,480,320 ===============
16 | CONSERVATIVE INVESTOR FUND
- -------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $77,227,465 and 7,271,156 shares of beneficial interest outstanding) $10.62 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.27 - -------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $16,268,806 and 1,543,227 shares of beneficial interest outstanding) $10.54 - -------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $35,191,541 and 3,340,369 shares of beneficial interest outstanding) $10.54 - -------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $12,638,309 and 1,193,971 shares of beneficial interest outstanding) $10.59 - -------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $154,199 and 14,476 shares of beneficial interest outstanding) $10.65
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | CONSERVATIVE INVESTOR FUND STATEMENT OF OPERATIONS Unaudited - -------------------------------------------------------------------------------- For the Six Months Ended July 31, 2006 - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Dividends from affiliated companies $ 1,922,779 - -------------------------------------------------------------------------------- Interest 10,766 ------------- Total investment income 1,933,545 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 73,240 Class B 63,295 Class C 133,723 Class N 23,904 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 21,620 Class B 8,418 Class C 16,126 Class N 6,306 Class Y 22 - -------------------------------------------------------------------------------- Shareholder communications: Class A 7,396 Class B 3,186 Class C 4,659 Class N 673 Class Y 7 - -------------------------------------------------------------------------------- Trustees' compensation 4,389 - -------------------------------------------------------------------------------- Custodian fees and expenses 950 - -------------------------------------------------------------------------------- Other 15,671 Total expenses 383,585 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 1,549,960 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED LOSS - -------------------------------------------------------------------------------- Net realized loss on investments from affiliated companies (52,056) - -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments (348,986) - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,148,918 ============= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | CONSERVATIVE INVESTOR FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, (UNAUDITED) 2006 1 - -------------------------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------------------------- Net investment income $ 1,549,960 $ 1,267,858 - -------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (52,056) 318,074 - -------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (348,986) 1,067,429 -------------------------------- Net increase in net assets resulting from operations 1,148,918 2,653,361 - -------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A -- (681,145) Class B -- (105,273) Class C -- (216,389) Class N -- (125,016) Class Y -- (1,638) - -------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - -------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 30,169,641 45,236,761 Class B 6,993,651 9,001,293 Class C 15,848,583 18,835,139 Class N 4,972,484 7,498,474 Class Y 56,275 91,201 - -------------------------------------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------------------------------------- Total increase 59,189,552 82,186,768 - -------------------------------------------------------------------------------------------------------------- Beginning of period 82,290,768 104,000 2 -------------------------------- End of period (including accumulated net investment income of $1,693,865 and $143,905, respectively) $ 141,480,320 $ 82,290,768 ================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Reflects the value of the Manager's initial seed money investment on March 15, 2005. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | CONSERVATIVE INVESTOR FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS A (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.53 $ 10.00 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 1.74 .38 Net realized and unrealized gain (loss) (1.65) .33 ------------------------------ Total from investment operations .09 .71 - --------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.18) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.62 $ 10.53 ============================== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 0.86% 7.15% - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 77,227 $ 46,318 - --------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 60,127 $ 21,844 - --------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 3.17% 4.50% Total expenses 0.38% 5 0.53% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.38% 0.51% - --------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 3% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.00% Period Ended January 31, 2006 1.19% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | CONSERVATIVE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS B (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.49 $ 10.00 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .12 .32 Net realized and unrealized gain (loss) (.07) .32 ------------------------------ Total from investment operations .05 .64 - --------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.15) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.54 $ 10.49 ============================== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 0.48% 6.44% - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 16,269 $ 9,163 - --------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 12,804 $ 4,018 - --------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 2.33% 3.74% Total expenses 1.22% 5 1.39% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.22% 1.34% - --------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 3% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.84% Period Ended January 31, 2006 2.05% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | CONSERVATIVE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS C (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.48 $ 10.00 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .12 .32 Net realized and unrealized gain (loss) (.06) .31 ------------------------------ Total from investment operations .06 .63 - --------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.15) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.54 $ 10.48 ============================== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 0.57% 6.37% - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 35,192 $ 19,145 - --------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 27,074 $ 7,647 - --------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 2.36% 3.78% Total expenses 1.19% 5 1.36% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.19% 1.33% - --------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 3% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.81% Period Ended January 31, 2006 2.02% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | CONSERVATIVE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS N (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.51 $ 10.00 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .15 .41 Net realized and unrealized gain (loss) (.07) .28 ------------------------------ Total from investment operations .08 .69 - --------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.18) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.59 $ 10.51 ============================== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 0.76% 6.98% - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 12,638 $ 7,569 - --------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 9,671 $ 2,231 - --------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 2.87% 4.82% Total expenses 0.68% 5 0.72% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.68% 0.71% - --------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 3% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.30% Period Ended January 31, 2006 1.38% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | CONSERVATIVE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS Y (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.54 $ 10.00 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .18 .38 Net realized and unrealized gain (loss) (.07) .35 ------------------------------ Total from investment operations .11 .73 - --------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.19) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.65 $ 10.54 ============================== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 1.04% 7.34% - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 154 $ 96 - --------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 102 $ 71 - --------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 3.45% 4.42% Total expenses 0.10% 5 0.30% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.10% 0.25% - --------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 3% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 0.72% Period Ended January 31, 2006 0.96% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | CONSERVATIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Portfolio Series (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Conservative Investor Fund (the "Portfolio") is a series of the Fund whose investment objective is to seek current income with a secondary objective of long-term growth of capital. The Portfolio is a special type of mutual fund known as a "fund of funds" because it invests in other mutual funds. The Portfolio normally invests in a portfolio consisting of a target-weighted allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's investment advisor is OppenheimerFunds, Inc. (the "Manager"). The Portfolio offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Portfolio in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. Under normal market conditions, the Manager will invest the Portfolio's assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Champion Income Fund, Oppenheimer Global Fund, Oppenheimer High Yield Fund, Oppenheimer International Bond Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer Main Street Fund(R), Oppenheimer Real Asset Fund(R), Oppenheimer Real Estate Fund and Oppenheimer Value Fund (individually, an "Underlying Fund" and collectively, the "Underlying Funds"). The following is a summary of significant accounting policies consistently followed by the Portfolio. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Portfolio calculates the net asset value of each class of shares based upon the net asset value of the applicable Underlying Funds' as of the close of The New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. For each Underlying Fund, the net asset value per share for a class of shares on a "regular business day" is determined by dividing the value of the Underlying Fund's net assets attributable to that class by the number of shares of that class outstanding on that day. To determine net asset values, the Underlying Fund assets are valued primarily on the basis of current market quotations. If market quotations are 25 | CONSERVATIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued not readily available or do not accurately reflect fair value for a security (in the Manager's judgment) or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Underlying Fund's Board of Trustees/Directors believes accurately reflects the fair value. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Underlying Fund's foreign investments may change on days when investors cannot buy or redeem Underlying Fund shares. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in which the Portfolio invests has its own investment risks, and those risks can affect the value of the Portfolio's investments and therefore the value of the Portfolio's shares. To the extent that the Portfolio invests more of its assets in one Underlying Fund than in another, the Portfolio will have greater exposure to the risks of that Underlying Fund. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolio, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Portfolio intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal 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 dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Portfolio. 26 | CONSERVATIVE INVESTOR FUND As of July 31, 2006, the Portfolio had available for federal income tax purposes an estimated capital loss carryforward of $52,056 expiring by 2015. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and is increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. During the period ended January 31, 2006, the Portfolio did not have any capital loss carryforward. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan for the Portfolio's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended July 31, 2006, the Portfolio's projected benefit obligations were increased by $3,605 and no payments were made to retired trustees, resulting in an accumulated liability of $3,605 as of July 31, 2006. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Portfolio or in other Oppenheimer funds selected by the Trustee. The Portfolio purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Portfolio asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Portfolio, and will not materially affect the Portfolio's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may include interest expense incurred by the Portfolio on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Portfolio pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Portfolio, at a rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line 27 | CONSERVATIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued item, if applicable, represents earnings on cash balances maintained by the Portfolio during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Portfolio's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Portfolio. In the normal course of business, the Portfolio may also enter into contracts that provide general indemnifications. The Portfolio's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Portfolio. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JULY 31, 2006 YEAR ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------------- CLASS A Sold 3,451,630 $ 36,287,016 4,892,094 $ 50,465,464 Dividends and/or distributions reinvested -- -- 58,785 607,250 Redeemed (581,097) (6,117,375) (560,256) (5,835,953) ------------------------------------------------------------- Net increase 2,870,533 $ 30,169,641 4,390,623 $ 45,236,761 ============================================================= - ----------------------------------------------------------------------------------------------------------- CLASS B Sold 818,960 $ 8,560,406 949,406 $ 9,789,255 Dividends and/or distributions reinvested -- -- 9,315 95,942 Redeemed (149,282) (1,566,755) (85,272) (883,904) ------------------------------------------------------------- Net increase 669,678 $ 6,993,651 873,449 $ 9,001,293 ============================================================= - ----------------------------------------------------------------------------------------------------------- CLASS C Sold 1,916,472 $ 20,052,548 1,904,973 $ 19,653,821 Dividends and/or distributions reinvested -- -- 19,416 199,792 Redeemed (402,558) (4,203,965) (98,034) (1,018,474) ------------------------------------------------------------- Net increase 1,513,914 $ 15,848,583 1,826,355 $ 18,835,139 =============================================================
28 | CONSERVATIVE INVESTOR FUND
SIX MONTHS ENDED JULY 31, 2006 YEAR ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------------- CLASS N Sold 743,859 $ 7,817,641 1,007,278 $ 10,503,896 Dividends and/or distributions reinvested -- -- 11,897 122,654 Redeemed (270,298) (2,845,157) (298,865) (3,128,076) ------------------------------------------------------------- Net increase 473,561 $ 4,972,484 720,310 $ 7,498,474 ============================================================= - ----------------------------------------------------------------------------------------------------------- CLASS Y Sold 8,128 $ 85,059 14,752 $ 151,331 Dividends and/or distributions reinvested -- -- 157 1,619 Redeemed (2,741) (28,784) (5,920) (61,749) ------------------------------------------------------------- Net increase 5,387 $ 56,275 8,989 $ 91,201 =============================================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100 shares of Class B, Class C, Class N and Class Y at a value of $1,000, respectively, to the Manager upon seeding of the Portfolio on March 15, 2005. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended July 31, 2006, were as follows: PURCHASES SALES ------------------------------------------------------ Investment securities $63,236,634 $3,749,926 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not charge a management fee, but rather collects indirect management fees from investments in the Underlying Funds. The weighted indirect management fees collected from the Underlying Funds, as a percent of average daily net assets of the Portfolio for the six months ended July 31, 2006 was 0.55%. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Portfolio. The Portfolio pays OFS a per account fee. For the six months ended July 31, 2006, the Portfolio paid $45,209 to OFS for services to the Portfolio. Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Portfolio's principal underwriter in the continuous public offering of the Portfolio's classes of shares. 29 | CONSERVATIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued SERVICE PLAN FOR CLASS A SHARES. The Portfolio has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Portfolio. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Portfolio under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Portfolio has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Portfolio pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Portfolio or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Portfolio of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at July 31, 2006 for Class B, Class C and Class N shares were $244,521, $266,820 and $162,085, respectively. Fees incurred by the Portfolio under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Portfolio. They are deducted from the proceeds of sales of Portfolio shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ---------------------------------------------------------------------------------------------------------- July 31, 2006 $ 200,355 $ 423 $ 17,175 $ 7,728 $ 3,762
30 | CONSERVATIVE INVESTOR FUND - -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a total expense limitation on the aggregate amount of combined direct (fund-of-funds level) and indirect expense so that Combined Total Annual and Underlying Fund Operating Expenses as a percentage of average daily net assets will not exceed the following annual rates: 1.25%, 2.00%, 2.00%, 1.50% and 1.00%, for Class A, Class B, Class C, Class N and Class Y, respectively. The Manager may modify or terminate this undertaking at any time without notice to shareholders. These expense limitations do not include Extraordinary Expenses and other expenses not incurred in the ordinary course of the Portfolio's business. Notwithstanding the foregoing limits, the Manager is not required to waive or reimburse Portfolio expenses in excess of indirect management fees earned from investments in Underlying Funds to assure that expenses do not exceed those limits. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees paid directly by the Portfolio to 0.35% of average annual net assets for each class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. RECENT ACCOUNTING PRONOUNCEMENT In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Portfolio's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Portfolio's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Portfolio's financial statements has not yet been determined. - -------------------------------------------------------------------------------- 6. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. 31 | CONSERVATIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. LITIGATION Continued In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 32 | CONSERVATIVE INVESTOR FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under which the Portfolio votes proxies relating to securities ("portfolio proxies") held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Portfolio is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Portfolio's voting record is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Portfolio files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Portfolio's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 33 | CONSERVATIVE INVESTOR FUND MODERATE INVESTOR FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET CLASS ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Alternative Investments 10.6% Fixed Income 45.6 Global Equity 9.6 U.S. Equity 34.2 Portfolio holdings and allocations are subject to change. Percentages are as of July 31, 2006, and are based on the total market value of investments in affiliated companies. - -------------------------------------------------------------------------------- 9 | MODERATE INVESTOR FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Portfolio's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Portfolio or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Portfolio's investment strategy and focus can change over time. The mention of specific holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Portfolio were first publicly offered on 4/5/05. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Portfolio's Statement of Additional Information. 10 | MODERATE INVESTOR FUND PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- PORTFOLIO EXPENSES. As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended July 31, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 11 | MODERATE INVESTOR FUND PORTFOLIO EXPENSES Continued - -------------------------------------------------------------------------------- Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (2/1/06) (7/31/06) JULY 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,002.80 $1.99 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,022.81 2.01 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 998.10 6.01 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,018.79 6.07 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 999.10 5.77 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,019.04 5.82 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,001.90 3.28 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,021.52 3.31 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,004.60 0.10 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,024.70 0.10 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Portfolio's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Those annualized expense ratios, excluding all underlying fund expenses, based on the 6-month period ended July 31, 2006 are as follows: CLASS EXPENSE RATIOS - -------------------------------- Class A 0.40% - -------------------------------- Class B 1.21 - -------------------------------- Class C 1.16 - -------------------------------- Class N 0.66 - -------------------------------- Class Y 0.02 - -------------------------------------------------------------------------------- 12 | MODERATE INVESTOR FUND STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------- INVESTMENTS IN AFFILIATED COMPANIES--99.4% 1 - --------------------------------------------------------------------------------------------------------------- ALTERNATIVE INVESTMENTS--10.6% Oppenheimer Real Asset Fund, Cl. Y 2,461,156 $ 20,772,159 - --------------------------------------------------------------------------------------------------------------- Oppenheimer Real Estate Fund, Cl. Y 909,022 20,462,096 -------------- 41,234,255 - --------------------------------------------------------------------------------------------------------------- FIXED INCOME--45.3% Oppenheimer Core Bond Fund, Cl. Y 7,873,884 78,975,056 - --------------------------------------------------------------------------------------------------------------- Oppenheimer High Yield Fund, Cl. Y 4,276,288 39,170,805 - --------------------------------------------------------------------------------------------------------------- Oppenheimer International Bond Fund, Cl. Y 3,375,874 19,445,030 - --------------------------------------------------------------------------------------------------------------- Oppenheimer Limited-Term Government Fund, Cl. Y 3,985,232 39,413,946 -------------- 177,004,837 - --------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY--9.5% Oppenheimer Global Fund, Cl. Y 539,500 37,160,772 - --------------------------------------------------------------------------------------------------------------- U.S. EQUITY--34.0% Oppenheimer Capital Appreciation Fund, Cl. Y 852,074 36,281,330 - --------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund, Cl. Y 990,780 38,422,456 - --------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Opportunity Fund, Cl. Y 1,341,827 19,121,035 - --------------------------------------------------------------------------------------------------------------- Oppenheimer Value Fund, Cl. Y 1,576,189 38,805,770 -------------- 132,630,591 -------------- Total Investments in Affiliated Companies (Cost $384,993,728) 388,030,455 PRINCIPAL AMOUNT - --------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--0.3% - --------------------------------------------------------------------------------------------------------------- Undivided interest of 0.07% in joint repurchase agreement (Principal Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $927,134 on 8/1/06, collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35, with a value of $448,829,145 (Cost $927,000) $ 927,000 927,000 - --------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $385,920,728) 99.7% 388,957,455 - --------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.3 1,356,510 ---------------------------- NET ASSETS 100.0% $ 390,313,965 ============================
13 | MODERATE INVESTOR FUND STATEMENT OF INVESTMENTS Unaudited / Continued - -------------------------------------------------------------------------------- FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Represents ownership of an affiliated fund, at or during the period ended July 31, 2006. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES JANUARY 31, 2006 ADDITIONS REDUCTIONS JULY 31, 2006 - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y 452,591 418,011 18,528 852,074 Oppenheimer Core Bond Fund, Cl. Y* 3,823,987 4,130,297 80,400 7,873,884 Oppenheimer Global Fund, Cl. Y 307,304 264,860 32,664 539,500 Oppenheimer High Yield Fund, Cl. Y 2,132,328 2,187,332 43,372 4,276,288 Oppenheimer International Bond Fund, Cl. Y 1,704,413 1,705,967 34,506 3,375,874 Oppenheimer Limited-Term Government Fund, Cl. Y 1,959,654 2,066,194 40,616 3,985,232 Oppenheimer Main Street Fund, Cl. Y 533,482 482,889 25,591 990,780 Oppenheimer Main Street Opportunity Fund, Cl. Y 729,566 654,419 42,158 1,341,827 Oppenheimer Real Asset Fund, Cl. Y 1,239,352 1,245,987 24,183 2,461,156 Oppenheimer Real Estate Fund, Cl. Y 527,524 441,941 60,443 909,022 Oppenheimer Value Fund, Cl. Y 829,078 763,303 16,192 1,576,189
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME (LOSS) - -------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y $ 36,281,330 $ -- $ (22,696) Oppenheimer Core Bond Fund, Cl. Y* 78,975,056 1,452,992 (39,534) Oppenheimer Global Fund, Cl. Y 37,160,772 -- (522) Oppenheimer High Yield Fund, Cl. Y 39,170,805 1,100,187 (9,628) Oppenheimer International Bond Fund, Cl. Y 19,445,030 294,646 (7,265) Oppenheimer Limited-Term Government Fund, Cl. Y 39,413,946 668,433 (8,762) Oppenheimer Main Street Fund, Cl. Y 38,422,456 -- (12,359) Oppenheimer Main Street Opportunity Fund, Cl. Y 19,121,035 -- (5,811) Oppenheimer Real Asset Fund, Cl. Y 20,772,159 70,978 (33,869) Oppenheimer Real Estate Fund, Cl. Y 20,462,096 34,646 (18,604) Oppenheimer Value Fund, Cl. Y 38,805,770 -- (11,831) -------------------------------------------- $388,030,455 $3,621,882 $ (170,881) ============================================
* Represents at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 14 | MODERATE INVESTOR FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - -------------------------------------------------------------------------------- July 31, 2006 - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $927,000) $ 927,000 Affiliated companies (cost $384,993,728) 388,030,455 -------------- 388,957,455 - -------------------------------------------------------------------------------- Cash 156,607 - -------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 3,091,444 Interest and dividends 722,592 Other 3,129 -------------- Total assets 392,931,227 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 1,806,828 Shares of beneficial interest redeemed 646,620 Distribution and service plan fees 78,525 Transfer and shareholder servicing agent fees 39,407 Shareholder communications 16,604 Trustees' compensation 9,938 Other 19,340 -------------- Total liabilities 2,617,262 - -------------------------------------------------------------------------------- NET ASSETS $ 390,313,965 ============== - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - -------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 36,241 - -------------------------------------------------------------------------------- Additional paid-in capital 383,305,251 - -------------------------------------------------------------------------------- Accumulated net investment income 2,756,191 - -------------------------------------------------------------------------------- Accumulated net realized gain on investments 1,179,555 - -------------------------------------------------------------------------------- Net unrealized appreciation on investments 3,036,727 -------------- NET ASSETS $ 390,313,965 ============== 15 | MODERATE INVESTOR FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ----------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $202,489,949 and 18,731,252 shares of beneficial interest outstanding) $10.81 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.47 - ----------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $71,154,707 and 6,635,057 shares of beneficial interest outstanding) $10.72 - ----------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $94,509,365 and 8,818,641 shares of beneficial interest outstanding) $10.72 - ----------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $22,021,927 and 2,043,485 shares of beneficial interest outstanding) $10.78 - ----------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $138,017 and 12,727 shares of beneficial interest outstanding) $10.84
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 | MODERATE INVESTOR FUND STATEMENT OF OPERATIONS Unaudited - -------------------------------------------------------------------------------- For the Six Months Ended July 31, 2006 - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Dividends from affiliated companies $ 3,621,882 - -------------------------------------------------------------------------------- Interest 26,985 ------------ Total investment income 3,648,867 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 190,745 Class B 262,685 Class C 357,721 Class N 43,244 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 83,288 Class B 42,105 Class C 44,677 Class N 11,550 - -------------------------------------------------------------------------------- Shareholder communications: Class A 15,112 Class B 8,079 Class C 7,012 Class N 1,000 - -------------------------------------------------------------------------------- Trustees' compensation 11,054 - -------------------------------------------------------------------------------- Custodian fees and expenses 737 - -------------------------------------------------------------------------------- Other 20,219 ------------ Total expenses 1,099,228 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 2,549,639 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED LOSS - -------------------------------------------------------------------------------- Net realized loss on investments from affiliated companies (170,881) - -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments (1,617,527) - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 761,231 ============ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | MODERATE INVESTOR FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------------- Net investment income $ 2,549,639 $ 2,808,609 - ------------------------------------------------------------------------------------------------- Net realized gain (loss) (170,881) 1,518,222 - ------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (1,617,527) 4,654,254 -------------------------------- Net increase in net assets resulting from operations 761,231 8,981,085 - ------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A -- (1,457,787) Class B -- (428,124) Class C -- (555,237) Class N -- (164,658) Class Y -- (5,308) - ------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A 94,157,294 104,188,008 Class B 34,094,356 35,779,888 Class C 46,568,778 46,402,364 Class N 9,934,143 11,835,440 Class Y (181,172) 299,664 - ------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------- Total increase 185,334,630 204,875,335 - ------------------------------------------------------------------------------------------------- Beginning of period 204,979,335 104,000 2 -------------------------------- End of period (including accumulated net investment income of $2,756,191 and $206,552, respectively) $ 390,313,965 $ 204,979,335 ================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Reflects the value of the Manager's initial seed money investment on March 15, 2005. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | MODERATE INVESTOR FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS A (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.78 $ 10.00 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income 2 .11 .38 Net realized and unrealized gain (loss) (.08) .57 --------------------------------- Total from investment operations .03 .95 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.17) - ------------------------------------------------------------------------------------ Net asset value, end of period $ 10.81 $ 10.78 ================================= - ------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 0.28% 9.58% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 202,490 $ 107,686 - ------------------------------------------------------------------------------------ Average net assets (in thousands) $ 155,392 $ 43,984 - ------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment income 2.07% 4.39% Total expenses 0.40% 5 0.47% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.40% 0.46% - ------------------------------------------------------------------------------------ Portfolio turnover rate 3% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.03% Period Ended January 31, 2006 1.15% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | MODERATE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS B (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.74 $ 10.00 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income 2 .07 .31 Net realized and unrealized gain (loss) (.09) .58 --------------------------------- Total from investment operations (.02) .89 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.15) - ------------------------------------------------------------------------------------ Net asset value, end of period $ 10.72 $ 10.74 ================================= - ------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 (0.19)% 8.90% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 71,155 $ 36,956 - ------------------------------------------------------------------------------------ Average net assets (in thousands) $ 53,167 $ 15,521 - ------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment income 1.26% 3.56% Total expenses 1.21% 5 1.31% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.21% 1.29% - ------------------------------------------------------------------------------------ Portfolio turnover rate 3% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.84% Period Ended January 31, 2006 1.99% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | MODERATE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS C (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.73 $ 10.00 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income 2 .07 .31 Net realized and unrealized gain (loss) (.08) .57 --------------------------------- Total from investment operations (.01) .88 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.15) - ------------------------------------------------------------------------------------ Net asset value, end of period $ 10.72 $ 10.73 ================================= - ------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 (0.09)% 8.82% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 94,509 $ 47,904 - ------------------------------------------------------------------------------------ Average net assets (in thousands) $ 72,432 $ 19,527 - ------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment income 1.30% 3.64% Total expenses 1.16% 5 1.23% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.16% 1.22% - ------------------------------------------------------------------------------------ Portfolio turnover rate 3% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.79% Period Ended January 31, 2006 1.91% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | MODERATE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS N (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.76 $ 10.00 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income 2 .10 .40 Net realized and unrealized gain (loss) (.08) .53 --------------------------------- Total from investment operations .02 .93 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.17) - ------------------------------------------------------------------------------------ Net asset value, end of period $ 10.78 $ 10.76 ================================= - ------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 0.19% 9.35% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 22,022 $ 12,117 - ------------------------------------------------------------------------------------ Average net assets (in thousands) $ 17,496 $ 4,158 - ------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment income 1.80% 4.56% Total expenses 0.66% 5 0.68% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.66% 0.67% - ------------------------------------------------------------------------------------ Portfolio turnover rate 3% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.29% Period Ended January 31, 2006 1.36% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | MODERATE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS Y (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.79 $ 10.00 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income 2 .13 .36 Net realized and unrealized gain (loss) (.08) .61 --------------------------------- Total from investment operations .05 .97 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.18) - ------------------------------------------------------------------------------------ Net asset value, end of period $ 10.84 $ 10.79 ================================= - ------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 0.46% 9.79% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 138 $ 316 - ------------------------------------------------------------------------------------ Average net assets (in thousands) $ 196 $ 216 - ------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment income 2.44% 4.20% Total expenses 0.02% 5 0.28% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.02% 0.12% - ------------------------------------------------------------------------------------ Portfolio turnover rate 3% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 0.65% Period Ended January 31, 2006 0.96% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | MODERATE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Portfolio Series (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Moderate Investor Fund (the "Portfolio") is a series of the Fund whose investment objective is to seek long term growth of capital and current income. The Portfolio is a special type of mutual fund known as a "fund of funds" because it invests in other mutual funds. The Portfolio normally invests in a portfolio consisting of a target-weighted allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's investment advisor is OppenheimerFunds, Inc. (the "Manager"). The Portfolio offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Portfolio in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. Under normal market conditions, the Manager will invest the Portfolio's assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Champion Income Fund, Oppenheimer Global Fund, Oppenheimer High Yield Fund, Oppenheimer International Bond Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer Main Street Fund(R), Oppenheimer Main Street Opportunity Fund(R), Oppenheimer Real Asset Fund(R), Oppenheimer Real Estate Fund and Oppenheimer Value Fund (individually, an "Underlying Fund" and collectively, the "Underlying Funds"). The following is a summary of significant accounting policies consistently followed by the Portfolio. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Portfolio calculates the net asset value of each class of shares based upon the net asset value of the applicable Underlying Funds' as of the close of The New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. For each Underlying Fund, the net asset value per share for a class of shares on a "regular business day" is determined by dividing the value of the Underlying Fund's net assets attributable to that class by the number of shares of that class outstanding on that day. To determine net asset values, the Underlying Fund assets are valued primarily on the basis of current market quotations. If market quotations are 24 | MODERATE INVESTOR FUND not readily available or do not accurately reflect fair value for a security (in the Manager's judgment) or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Underlying Fund's Board of Trustees/~Directors believes accurately reflects the fair value. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Underlying Fund's foreign investments may change on days when investors cannot buy or redeem Underlying Fund shares. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in which the Portfolio invests has its own investment risks, and those risks can affect the value of the Portfolio's investments and therefore the value of the Portfolio's shares. To the extent that the Portfolio invests more of its assets in one Underlying Fund than in another, the Portfolio will have greater exposure to the risks of that Underlying Fund. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolio, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Portfolio intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal 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 dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Portfolio. 25 | MODERATE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued As of July 31, 2006, the Portfolio had available for federal income tax purposes an estimated capital loss carryforward of $170,881 expiring by 2015. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and is increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. During the period ended January 31, 2006, the Portfolio did not have any capital loss carryforward. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan for the Portfolio's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended July 31, 2006, the Portfolio's projected benefit obligations were increased by $9,142 and no payments were made to retired trustees, resulting in an accumulated liability of $9,142 as of July 31, 2006. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Portfolio or in other Oppenheimer funds selected by the Trustee. The Portfolio purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Portfolio asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Portfolio, and will not materially affect the Portfolio's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may include interest expense incurred by the Portfolio on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Portfolio pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the 26 | MODERATE INVESTOR FUND Portfolio, at a rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item, if applicable, represents earnings on cash balances maintained by the Portfolio during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Portfolio's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Portfolio. In the normal course of business, the Portfolio may also enter into contracts that provide general indemnifications. The Portfolio's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Portfolio. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Portfolio has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ CLASS A Sold 10,146,391 $ 109,226,094 10,348,982 $ 108,067,839 Dividends and/or distributions reinvested -- -- 131,505 1,380,804 Redeemed (1,405,433) (15,068,800) (500,193) (5,260,635) ------------------------------------------------------------------- Net increase 8,740,958 $ 94,157,294 9,980,294 $ 104,188,008 =================================================================== - ------------------------------------------------------------------------------------------------ CLASS B Sold 3,656,627 $ 39,061,275 3,602,759 $ 37,460,502 Dividends and/or distributions reinvested -- -- 38,687 404,664 Redeemed (463,675) (4,966,919) (199,441) (2,085,278) ------------------------------------------------------------------- Net increase 3,192,952 $ 34,094,356 3,442,005 $ 35,779,888 ===================================================================
27 | MODERATE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ CLASS C Sold 5,043,626 $ 53,942,659 4,610,775 $ 47,936,138 Dividends and/or distributions reinvested -- -- 48,772 509,662 Redeemed (691,025) (7,373,881) (193,607) (2,043,436) ------------------------------------------------------------------- Net increase 4,352,601 $ 46,568,778 4,465,940 $ 46,402,364 =================================================================== - ------------------------------------------------------------------------------------------------ CLASS N Sold 1,301,095 $ 14,008,804 1,274,902 $ 13,414,589 Dividends and/or distributions reinvested -- -- 14,511 152,071 Redeemed (383,698) (4,074,661) (163,425) (1,731,220) ------------------------------------------------------------------- Net increase 917,397 $ 9,934,143 1,125,988 $ 11,835,440 =================================================================== - ------------------------------------------------------------------------------------------------ CLASS Y Sold 9,378 $ 101,482 35,197 $ 362,730 Dividends and/or distributions reinvested -- -- 503 5,289 Redeemed (25,969) (282,654) (6,482) (68,355) ------------------------------------------------------------------- Net increase (decrease) (16,591) $ (181,172) 29,218 $ 299,664 ===================================================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100 shares of Class B, Class C, Class N and Class Y at a value of $1,000, respectively, to the Manager upon seeding of the Portfolio on March 15, 2005. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended July 31, 2006, were as follows: PURCHASES SALES --------------------------------------------------------- Investment securities $194,688,872 $8,541,098 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not charge a management fee, but rather collects indirect management fees from investments in the Underlying Funds. The weighted indirect management fees collected from the Underlying Funds, as a percent of average daily net assets of the Portfolio for the six months ended July 31, 2006 was 0.56%. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Portfolio. The Portfolio pays OFS a per account fee. For the six months ended July 31, 2006, the Portfolio paid $158,319 to OFS for services to the Portfolio. 28 | MODERATE INVESTOR FUND Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Portfolio's principal underwriter in the continuous public offering of the Portfolio's classes of shares. - -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Portfolio has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Portfolio. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Portfolio under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Portfolio has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Portfolio pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Portfolio or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Portfolio of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at July 31, 2006 for Class B, Class C and Class N shares were $1,162,326, $766,342 and $234,481, respectively. Fees incurred by the Portfolio under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Portfolio. They are deducted from the proceeds of sales of Portfolio shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated. 29 | MODERATE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ------------------------------------------------------------------------------------------------------ July 31, 2006 $701,914 $780 $56,503 $15,048 $3,212
- -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a total expense limitation on the aggregate amount of combined direct (fund-of-funds level) and indirect expense so that Combined Total Annual and Underlying Fund Operating Expenses as a percentage of average daily net assets will not exceed the following annual rates: 1.30%, 2.05%, 2.05%, 1.55% and 1.05%, for Class A, Class B, Class C, Class N and Class Y, respectively. The Manager may modify or terminate this undertaking at any time without notice to shareholders. These expense limitations do not include Extraordinary Expenses and other expenses not incurred in the ordinary course of the Portfolio's business. Notwithstanding the foregoing limits, the Manager is not required to waive or reimburse Portfolio expenses in excess of indirect management fees earned from investments in Underlying Funds to assure that expenses do not exceed those limits. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. RECENT ACCOUNTING PRONOUNCEMENT In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Portfolio's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Portfolio's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Portfolio's financial statements has not yet been determined. 30 | MODERATE INVESTOR FUND - -------------------------------------------------------------------------------- 6. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 31 | MODERATE INVESTOR FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under which the Portfolio votes proxies relating to securities ("portfolio proxies") held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Portfolio is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Portfolio's voting record is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Portfolio files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Portfolio's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 32 | MODERATE INVESTOR FUND ACTIVE ALLOCATION FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET CLASS ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Alternative Investment 5.9% Fixed Income 23.2 Global Equity 24.3 U.S. Equity 46.6 Portfolio holdings and allocations are subject to change. Percentages are as of July 31, 2006, and are based on the total market value of investments in affiliated companies. - -------------------------------------------------------------------------------- 10 | ACTIVE ALLOCATION FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Portfolio's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Portfolio or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Portfolio's investment strategy and focus can change over time. The mention of specific holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Portfolio were first publicly offered on 4/5/05. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Portfolio's Statement of Additional Information. 11 | ACTIVE ALLOCATION FUND PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- PORTFOLIO EXPENSES. As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended July 31, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 12 | ACTIVE ALLOCATION FUND the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (2/1/06) (7/31/06) JULY 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $ 990.10 $2.47 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,022.32 2.51 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 985.50 6.37 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,018.40 6.48 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 985.50 6.27 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,018.50 6.38 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 988.30 3.46 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,021.32 3.51 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 991.90 0.64 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,024.15 0.65 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Portfolio's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Those annualized expense ratios, excluding all underlying fund expenses, based on the 6-month period ended July 31, 2006 are as follows: CLASS EXPENSE RATIOS - ----------------------------- Class A 0.50% - ----------------------------- Class B 1.29 - ----------------------------- Class C 1.27 - ----------------------------- Class N 0.70 - ----------------------------- Class Y 0.13 The expense ratios reflect voluntary waivers or reimbursements of expenses by the Portfolio's Manager that can be terminated at any time, without advance notice. The "Financial Highlights" tables in the Portfolio's financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements. - -------------------------------------------------------------------------------- 13 | ACTIVE ALLOCATION FUND STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------- INVESTMENTS IN AFFILIATED COMPANIES--99.3% 1 - -------------------------------------------------------------------------------------------------------------- ALTERNATIVE INVESTMENT--5.9% Oppenheimer Real Estate Fund, Cl. Y 2,929,348 $ 65,939,622 - -------------------------------------------------------------------------------------------------------------- FIXED INCOME--23.0% Oppenheimer Core Bond Fund, Cl. Y 13,625,216 136,660,913 - -------------------------------------------------------------------------------------------------------------- Oppenheimer High Yield Fund, Cl. Y 1,252,882 11,476,401 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Strategic Income Fund, Cl. Y 27,157,053 111,887,058 --------------- 260,024,372 - -------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY--24.1% Oppenheimer Global Fund, Cl. Y 1,520,539 104,734,739 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Global Opportunities Fund, Cl. Y 1,468,479 54,847,678 - -------------------------------------------------------------------------------------------------------------- Oppenheimer International Growth Fund, Cl. Y 4,771,710 112,373,765 --------------- 271,956,182 - -------------------------------------------------------------------------------------------------------------- U.S. EQUITY--46.3% Oppenheimer Capital Appreciation Fund, Cl. Y 2,422,399 103,145,728 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund, Cl. Y 2,815,400 109,181,199 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Opportunity Fund, Cl. Y 4,347,608 61,953,413 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund, Cl. Y 2,596,766 57,414,513 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Value Fund, Cl. Y 7,751,861 190,850,823 --------------- 522,545,676 --------------- Total Investments in Affiliated Companies (Cost $1,116,124,005) 1,120,465,852 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--0.3% - -------------------------------------------------------------------------------------------------------------- Undivided interest of 0.26% in joint repurchase agreement (Principal Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $3,263,473 on 8/1/06, collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35, with a value of $448,829,145 (Cost $3,263,000) $ 3,263,000 3,263,000 - -------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $1,119,387,005) 99.6% 1,123,728,852 - -------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.4 4,821,445 ------------------------------ NET ASSETS 100.0% $1,128,550,297 ==============================
14 | ACTIVE ALLOCATION FUND FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Represents ownership of an affiliated fund, at or during the period ended July 31, 2006. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES JANUARY 31, GROSS GROSS SHARES 2006 ADDITIONS REDUCTIONS JULY 31, 2006 - ---------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y 1,206,388 1,292,482 76,471 2,422,399 Oppenheimer Core Bond Fund, Cl. Y * 5,106,446 8,622,750 103,980 13,625,216 Oppenheimer Developing Markets Fund, Cl. Y 735,369 255,282 990,651 -- Oppenheimer Global Fund, Cl. Y 817,108 819,514 116,083 1,520,539 Oppenheimer Global Opportunities Fund, Cl. Y 771,757 711,459 14,737 1,468,479 Oppenheimer High Yield Fund, Cl. Y -- 1,262,166 9,284 1,252,882 Oppenheimer International Growth Fund, Cl. Y* -- 4,806,089 34,379 4,771,710 Oppenheimer International Small Company Fund, Cl. Y 1,296,021 828,275 2,124,296 -- Oppenheimer Main Street Fund, Cl. Y 1,422,021 1,495,323 101,944 2,815,400 Oppenheimer Main Street Opportunity Fund, Cl. Y 1,943,920 2,433,201 29,513 4,347,608 Oppenheimer Main Street Small Cap Fund, Cl. Y 1,258,510 1,376,044 37,788 2,596,766 Oppenheimer Quest International Value Fund, Cl. Y -- 2,851,894 2,851,894 -- Oppenheimer Real Asset Fund, Cl. Y 3,273,185 1,528,500 4,801,685 -- Oppenheimer Real Estate Fund, Cl. Y* 1,403,079 1,546,339 20,070 2,929,348 Oppenheimer Strategic Income Fund, Cl. Y 12,557,766 14,805,278 205,991 27,157,053 Oppenheimer U.S. Government Trust, Cl. Y 2,764,889 1,589,544 4,354,433 -- Oppenheimer Value Fund, Cl. Y* 2,210,413 5,643,806 102,358 7,751,861
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y $ 103,145,728 $ -- $ (6,931) Oppenheimer Core Bond Fund, Cl. Y * 136,660,913 2,368,070 (49,967) Oppenheimer Developing Markets Fund, Cl. Y -- -- 3,516,936 Oppenheimer Global Fund, Cl. Y 104,734,739 -- 81,275 Oppenheimer Global Opportunities Fund, Cl. Y 54,847,678 -- (16,121) Oppenheimer High Yield Fund, Cl. Y 11,476,401 229,701 (364) Oppenheimer International Growth Fund, Cl. Y* 112,373,765 -- (19,060) Oppenheimer International Small Company Fund, Cl. Y -- -- 735,658 Oppenheimer Main Street Fund, Cl. Y 109,181,199 -- 1,958 Oppenheimer Main Street Opportunity Fund, Cl. Y 61,953,413 -- (5,514) Oppenheimer Main Street Small Cap Fund, Cl. Y 57,414,513 -- (12,447) Oppenheimer Quest International Value Fund, Cl. Y -- -- 2,221,005 Oppenheimer Real Asset Fund, Cl. Y -- 194,036 (795,037) Oppenheimer Real Estate Fund, Cl. Y* 65,939,622 113,211 (14,313) Oppenheimer Strategic Income Fund, Cl. Y 111,887,058 2,228,680 (30,261) Oppenheimer U.S. Government Trust, Cl. Y -- 198,785 (526,338) Oppenheimer Value Fund, Cl. Y* 190,850,823 -- (19,823) ------------------------------------------------ $1,120,465,852 $ 5,332,483 $ 5,060,656 ================================================
* Represents at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 15 | ACTIVE ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - --------------------------------------------------------------------------------
July 31, 2006 - ---------------------------------------------------------------------------------- ASSETS - ---------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $3,263,000) $ 3,263,000 Affiliated companies (cost $1,116,124,005) 1,120,465,852 --------------- 1,123,728,852 - ---------------------------------------------------------------------------------- Cash 452,833 - ---------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 9,527,931 Interest and dividends 689,607 Other 4,575 --------------- Total assets 1,134,403,798 - ---------------------------------------------------------------------------------- LIABILITIES - ---------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 4,309,092 Shares of beneficial interest redeemed 1,099,699 Distribution and service plan fees 226,338 Transfer and shareholder servicing agent fees 125,801 Shareholder communications 34,049 Trustees' compensation 27,305 Other 31,217 --------------- Total liabilities 5,853,501 - ---------------------------------------------------------------------------------- NET ASSETS $1,128,550,297 =============== - ---------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ---------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 103,039 - ---------------------------------------------------------------------------------- Additional paid-in capital 1,113,023,191 - ---------------------------------------------------------------------------------- Accumulated net investment income 1,849,159 - ---------------------------------------------------------------------------------- Accumulated net realized gain on investments 9,233,061 - ---------------------------------------------------------------------------------- Net unrealized appreciation on investments 4,341,847 --------------- NET ASSETS $1,128,550,297 ===============
16 | ACTIVE ALLOCATION FUND
- --------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - --------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $582,296,505 and 52,982,781 shares of beneficial interest outstanding) $10.99 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.66 - --------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $223,123,606 and 20,450,124 shares of beneficial interest outstanding) $10.91 - --------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $263,350,972 and 24,154,247 shares of beneficial interest outstanding) $10.90 - --------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $58,412,613 and 5,327,701 shares of beneficial interest outstanding) $10.96 - --------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $1,366,601 and 123,816 shares of beneficial interest outstanding) $11.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | ACTIVE ALLOCATION FUND STATEMENT OF OPERATIONS Unaudited - -------------------------------------------------------------------------------- For the Six Months Ended July 31, 2006 - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Dividends from affiliated companies $ 5,332,483 - -------------------------------------------------------------------------------- Interest 81,440 ------------- Total investment income 5,413,923 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 548,302 Class B 857,205 Class C 981,091 Class N 104,980 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 283,257 Class B 139,215 Class C 140,721 Class N 18,267 Class Y 66 - -------------------------------------------------------------------------------- Shareholder communications: Class A 36,257 Class B 19,562 Class C 16,004 Class N 1,236 - -------------------------------------------------------------------------------- Asset allocation fees 425,545 - -------------------------------------------------------------------------------- Trustees' compensation 30,451 - -------------------------------------------------------------------------------- Custodian fees and expenses 753 - -------------------------------------------------------------------------------- Other 27,367 ------------- Total expenses 3,630,279 Less waivers and reimbursements of expenses (11,751) ------------- Net expenses 3,618,528 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 1,795,395 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain on investments from affiliated companies 5,060,656 - -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments (18,760,772) - -------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(11,904,721) ============= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | ACTIVE ALLOCATION FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------------------------ Net investment income $ 1,795,395 $ 8,127,024 - ------------------------------------------------------------------------------------------------------------------ Net realized gain 5,060,656 5,393,678 - ------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (18,760,772) 23,102,619 ------------------------------------ Net increase (decrease) in net assets resulting from operations (11,904,721) 36,623,321 - ------------------------------------------------------------------------------------------------------------------ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------ Dividends from net investment income: Class A -- (4,500,051) Class B -- (1,549,890) Class C -- (1,619,117) Class N -- (414,437) Class Y -- (6,386) - ------------------------------------------------------------------------------------------------------------------ Distributions from net realized gain: Class A -- (376,546) Class B -- (149,661) Class C -- (153,460) Class N -- (35,176) Class Y -- (507) - ------------------------------------------------------------------------------------------------------------------ BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from beneficial interest transactions: Class A 294,197,633 278,869,967 Class B 110,206,677 109,728,240 Class C 140,908,079 119,590,827 Class N 30,607,245 27,088,823 Class Y 879,480 455,957 - ------------------------------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------------------------------ Total increase 564,894,393 563,551,904 - ------------------------------------------------------------------------------------------------------------------ Beginning of period 563,655,904 104,000 2 ------------------------------------ End of period (including accumulated net investment income of $1,849,159 and $53,764, respectively) $ 1,128,550,297 $ 563,655,904 ====================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Reflects the value of the Manager's initial seed money investment on March 15, 2005. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | ACTIVE ALLOCATION FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS A (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.10 $ 10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .04 .43 Net realized and unrealized gain (loss) (.15) .89 ------------------------------------- Total from investment operations (.11) 1.32 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.20) Distributions from net realized gain -- (.02) ------------------------------------- Total dividends and/or distributions to shareholders -- (.22) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.99 $ 11.10 ===================================== - ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (0.99)% 13.31% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 582,296 $ 293,578 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 445,926 $ 112,224 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 0.76% 4.94% Total expenses 0.51% 5 0.56% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.50% 0.55% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 29% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.17% Period Ended January 31, 2006 1.28% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | ACTIVE ALLOCATION FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS B (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.07 $ 10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 -- 3 .36 Net realized and unrealized gain (loss) (.16) .91 ------------------------------------- Total from investment operations (.16) 1.27 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.18) Distributions from net realized gain -- (.02) ------------------------------------- Total dividends and/or distributions to shareholders -- (.20) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.91 $ 11.07 ===================================== - ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 4 (1.45)% 12.72% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 223,123 $ 115,629 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 173,493 $ 46,284 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 5 Net investment income (loss) (0.02)% 4.06% Total expenses 1.29% 6 1.37% 6 Expenses after waivers and reimbursements and reduction to custodian expenses 1.29% 1.34% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 29% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 5. Annualized for periods of less than one full year. 6. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.95% Period Ended January 31, 2006 2.09% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | ACTIVE ALLOCATION FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS C (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.06 $ 10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 -- 3 .37 Net realized and unrealized gain (loss) (.16) .89 ------------------------------------- Total from investment operations (.16) 1.26 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.18) Distributions from net realized gain -- (.02) ------------------------------------- Total dividends and/or distributions to shareholders -- (.20) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.90 $ 11.06 ===================================== - ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 4 (1.45)% 12.66% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 263,351 $ 125,622 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 198,651 $ 45,647 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 5 Net investment income 0.00% 4.18% Total expenses 1.27% 6 1.33% 6 Expenses after waivers and reimbursements and reduction to custodian expenses 1.27% 1.31% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 29% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 5. Annualized for periods of less than one full year. 6. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.93% Period Ended January 31, 2006 2.05% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | ACTIVE ALLOCATION FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS N (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.09 $ 10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .03 .46 Net realized and unrealized gain (loss) (.16) .85 ------------------------------------- Total from investment operations (.13) 1.31 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.20) Distributions from net realized gain -- (.02) ------------------------------------- Total dividends and/or distributions to shareholders -- (.22) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.96 $ 11.09 ===================================== - ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (1.17)% 13.18% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 58,413 $ 28,345 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 42,504 $ 9,156 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 0.57% 5.28% Total expenses 0.70% 5 0.73% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.70% 0.72% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 29% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.36% Period Ended January 31, 2006 1.45% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | ACTIVE ALLOCATION FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS Y (UNAUDITED) 2006 1 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.13 $ 10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .06 .39 Net realized and unrealized gain (loss) (.15) .97 ------------------------------------- Total from investment operations (.09) 1.36 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.21) Distributions from net realized gain -- (.02) ------------------------------------- Total dividends and/or distributions to shareholders -- (.23) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.04 $ 11.13 ===================================== - ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (0.81)% 13.72% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 1,367 $ 482 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 705 $ 196 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 1.15% 4.44% Total expenses 0.13% 5 0.33% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.13% 0.21% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 29% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 0.79% Period Ended January 31, 2006 1.05% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | ACTIVE ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Portfolio Series (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Active Allocation Fund (the "Portfolio") is a series of the Fund whose investment objective is to seek long term growth of capital with a secondary objective of current income. The Portfolio is a special type of mutual fund known as a "fund of funds" because it invests in other mutual funds. The Portfolio normally invests in a portfolio consisting of a target weighted allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's investment advisor is OppenheimerFunds, Inc. (the "Manager"). The Portfolio offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Portfolio in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. Under normal market conditions, the Manager will invest the Portfolio's assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Global Fund, Oppenheimer Global Opportunities Fund, Oppenheimer Main Street Fund(R), Oppenheimer Main Street Opportunity Fund(R), Oppenheimer Main Street Small Cap Fund(R), Oppenheimer Real Estate Fund, Oppenheimer Strategic Income Fund and Oppenheimer Value Fund (individually, an "Underlying Fund" and collectively, the "Underlying Funds"). 25 | ACTIVE ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued In addition, up to 20% of the Portfolio's net assets may be invested according to a tactical allocation among up to four Oppenheimer funds or money market securities based on recommendations made by the Manager. Oppenheimer Funds: Oppenheimer Capital Appreciation Fund Oppenheimer Core Bond Fund Oppenheimer Champion Income Fund Oppenheimer Developing Markets Fund Oppenheimer Discovery Fund Oppenheimer Gold & Special Minerals Fund Oppenheimer Growth Fund Oppenheimer High Yield Fund Oppenheimer International Bond Fund Oppenheimer International Growth Fund Oppenheimer International Small Company Fund Oppenheimer Limited-Term Government Fund Oppenheimer MidCap Fund Oppenheimer Money Market Fund, Inc. Oppenheimer Quest International Value Fund, Inc. Oppenheimer Real Asset Fund(R) Oppenheimer Small- & Mid- Cap Value Fund Oppenheimer U.S. Government Trust Oppenheimer Value Fund The following is a summary of significant accounting policies consistently followed by the Portfolio. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Portfolio calculates the net asset value of each class of shares based upon the net asset value of the applicable Underlying Funds' as of the close of The New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. For each Underlying Fund, the net asset value per share for a class of shares on a "regular business day" is determined by dividing the value of the Underlying Fund's net assets attributable to that class by the number of shares of that class outstanding on that day. To determine net asset values, the Underlying Fund assets are valued primarily on the basis of current market quotations. If market quotations are not readily available or do not accurately reflect fair value for a security (in the Manager's judgment) or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Underlying Fund's Board of Trustees/ Directors believes accurately reflects the fair value. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Underlying Fund's foreign investments may change on days when investors 26 | ACTIVE ALLOCATION FUND cannot buy or redeem Underlying Fund shares. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in which the Portfolio invests has its own investment risks, and those risks can affect the value of the Portfolio's investments and therefore the value of the Portfolio's shares. To the extent that the Portfolio invests more of its assets in one Underlying Fund than in another, the Portfolio will have greater exposure to the risks of that Underlying Fund. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolio, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Portfolio intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal 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 dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Portfolio. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan for the Portfolio's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended July 31, 2006, the Portfolio's projected benefit obligations were increased by $25,180 and no payments were made to retired trustees, resulting in an accumulated liability of $25,180 as of July 31, 2006. 27 | ACTIVE ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Portfolio or in other Oppenheimer funds selected by the Trustee. The Portfolio purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Portfolio asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Portfolio, and will not materially affect the Portfolio's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may include interest expense incurred by the Portfolio on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Portfolio pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Portfolio, at a rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item, if applicable, represents earnings on cash balances maintained by the Portfolio during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Portfolio's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Portfolio. In the normal course of business, the Portfolio may also enter into contracts that provide general indemnifications. The Portfolio's maximum exposure under these arrangements is unknown as this would be 28 | ACTIVE ALLOCATION FUND dependent on future claims that may be made against the Portfolio. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Portfolio has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------- CLASS A Sold 28,769,417 $ 318,687,635 27,068,123 $ 285,660,045 Dividends and/or distributions reinvested -- -- 438,928 4,665,805 Redeemed (2,225,229) (24,490,002) (1,078,458) (11,455,883) ------------------------------------------------------------------- Net increase 26,544,188 $ 294,197,633 26,428,593 $ 278,869,967 =================================================================== - ------------------------------------------------------------------------------------------------- CLASS B Sold 11,237,770 $ 123,841,204 10,764,936 $ 113,091,487 Dividends and/or distributions reinvested -- -- 154,655 1,639,339 Redeemed (1,236,129) (13,634,527) (471,208) (5,002,586) ------------------------------------------------------------------- Net increase 10,001,641 $ 110,206,677 10,448,383 $ 109,728,240 =================================================================== - ------------------------------------------------------------------------------------------------- CLASS C Sold 14,100,337 $ 155,184,086 11,696,791 $ 123,196,995 Dividends and/or distributions reinvested -- -- 155,748 1,649,374 Redeemed (1,306,685) (14,276,007) (492,044) (5,255,542) ------------------------------------------------------------------- Net increase 12,793,652 $ 140,908,079 11,360,495 $ 119,590,827 =================================================================== - ------------------------------------------------------------------------------------------------- CLASS N Sold 3,091,410 $ 34,114,982 2,664,849 $ 28,261,231 Dividends and/or distributions reinvested -- -- 42,051 446,165 Redeemed (320,082) (3,507,737) (150,627) (1,618,573) ------------------------------------------------------------------- Net increase 2,771,328 $ 30,607,245 2,556,273 $ 27,088,823 ===================================================================
29 | ACTIVE ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------- CLASS Y Sold 94,516 $ 1,036,561 54,640 $ 577,537 Dividends and/or distributions reinvested -- -- 645 6,870 Redeemed (13,965) (157,081) (12,120) (128,450) ------------------------------------------------------------------- Net increase 80,551 $ 879,480 43,165 $ 455,957 ===================================================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100 shares of Class B, Class C, Class N and Class Y at a value of $1,000, respectively, to the Manager upon seeding of the Portfolio on March 15, 2005. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended July 31, 2006, were as follows: PURCHASES SALES -------------------------------------------------------------------- Investment securities $830,408,522 $246,884,029 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not charge a management fee, but rather collects indirect management fees from investments in the Underlying Funds. The weighted indirect management fees collected from the Underlying Funds, as a percent of average daily net assets of the Portfolio for the six months ended July 31, 2006 was 0.59%. The Portfolio pays the Manager an asset allocation fee equal to an annual rate of 0.10% of the average daily net assets of the Portfolio. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Portfolio. The Portfolio pays OFS a per account fee. For the six months ended July 31, 2006, the Portfolio paid $505,771 to OFS for services to the Portfolio. Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Portfolio's principal underwriter in the continuous public offering of the Portfolio's classes of shares. - -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Portfolio has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services pro- 30 | ACTIVE ALLOCATION FUND vided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Portfolio. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Portfolio under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Portfolio has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Portfolio pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Portfolio or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Portfolio of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at July 31, 2006 for Class B, Class C and Class N shares were $4,128,785, $2,352,281 and $616,945, respectively. Fees incurred by the Portfolio under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Portfolio. They are deducted from the proceeds of sales of Portfolio shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ------------------------------------------------------------------------------------------------ July 31, 2006 $1,840,975 $315 $137,624 $33,517 $4,643
- -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a total expense limitation on the aggregate amount of combined direct (fund-of-funds level) and indirect expense so that Combined Total Annual and Underlying Fund Operating Expenses as a percentage of average daily net assets will not exceed the following annual rates: 1.45%, 2.20%, 2.20%, 1.70% and 1.20%, for Class A, Class B, Class C, Class N and Class Y, respectively. During the six months ended July 31, 2006, the Manager 31 | ACTIVE ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued reimbursed the Portfolio $6,099, $2,381, $2,680, $583 and $8, for the Class A, Class B, Class C, Class N and Class Y shares, respectively. The Manager may modify or terminate this undertaking at any time without notice to shareholders. These expense limitations do not include Extraordinary Expenses and other expenses not incurred in the ordinary course of the Portfolio's business. Notwithstanding the foregoing limits, the Manager is not required to waive or reimburse Portfolio expenses in excess of indirect management fees earned from investments in Underlying Funds to assure that expenses do not exceed those limits. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. RECENT ACCOUNTING PRONOUNCEMENT In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Portfolio's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Portfolio's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Portfolio's financial statements has not yet been determined. - -------------------------------------------------------------------------------- 6. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and 32 | ACTIVE ALLOCATION FUND the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 33 | ACTIVE ALLOCATION FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under which the Portfolio votes proxies relating to securities ("portfolio proxies") held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Portfolio is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Portfolio's voting record is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Portfolio files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Portfolio's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 34 | ACTIVE ALLOCATION FUND AGGRESSIVE INVESTOR FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET CLASS ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Global Equity 29.3% U.S. Equity 70.7 Portfolio holdings and allocations are subject to change. Percentages are as of July 31, 2006, and are based on the total market value of investments in affiliated companies. - -------------------------------------------------------------------------------- 9 | AGGRESSIVE INVESTOR FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Portfolio's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Portfolio or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Portfolio's investment strategy and focus can change over time. The mention of specific holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Portfolio were first publicly offered on 4/5/05. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Portfolio were first publicly offered on 4/5/05. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Portfolio's Statement of Additional Information. 10 | AGGRESSIVE INVESTOR FUND PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- PORTFOLIO EXPENSES. As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended July 31, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 11 | AGGRESSIVE INVESTOR FUND PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (2/1/06) (7/31/06) JULY 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $ 970.70 $2.50 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,022.27 2.56 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 966.20 6.46 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,018.25 6.63 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 967.10 6.31 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,018.40 6.48 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 969.80 3.52 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,021.22 3.61 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 972.40 0.24 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,024.55 0.25 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Portfolio's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Those annualized expense ratios, excluding all underlying fund expenses, based on the 6-month period ended July 31, 2006 are as follows: CLASS EXPENSE RATIOS - ------------------------------ Class A 0.51% - ------------------------------ Class B 1.32 - ------------------------------ Class C 1.29 - ------------------------------ Class N 0.72 - ------------------------------ Class Y 0.05 - -------------------------------------------------------------------------------- 12 | AGGRESSIVE INVESTOR FUND STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- INVESTMENTS IN AFFILIATED COMPANIES--99.6% 1 - ------------------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY--29.2% Oppenheimer Developing Markets Fund, Cl. Y 259,714 $ 9,528,877 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Global Fund, Cl. Y 582,915 40,151,142 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Global Opportunities Fund, Cl. Y 249,722 9,327,111 ---------------- 59,007,130 - ------------------------------------------------------------------------------------------------------------------------- U.S. EQUITY--70.4% Oppenheimer Capital Appreciation Fund, Cl. Y 920,306 39,186,629 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Fund, Cl. Y 803,907 31,175,515 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Opportunity Fund, Cl. Y 1,451,098 20,678,146 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund, Cl. Y 900,093 19,901,065 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Value Fund, Cl. Y 1,278,976 31,488,381 ---------------- 142,429,736 ---------------- Total Investments in Affiliated Companies (Cost $202,001,758) 201,436,866 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--0.1% - ------------------------------------------------------------------------------------------------------------------------- Undivided interest of 0.01% in joint repurchase agreement (Principal Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $177,026 on 8/1/06, collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35, with a value of $448,829,145 (Cost $177,000) $ 177,000 177,000 - ------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $202,178,758) 99.7% 201,613,866 - ------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.3 678,843 ------------------------------------ NET ASSETS 100.0% $ 202,292,709 ====================================
13 | AGGRESSIVE INVESTOR FUND STATEMENT OF INVESTMENTS Unaudited / Continued - -------------------------------------------------------------------------------- FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Represents ownership of an affiliated fund, at or during the period ended July 31, 2006. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES JANUARY 31, 2006 ADDITIONS REDUCTIONS JULY 31, 2006 - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y 393,164 534,530 7,388 920,306 Oppenheimer Developing Markets Fund, Cl. Y 131,194 147,557 19,037 259,714 Oppenheimer Global Fund, Cl. Y 265,671 327,251 10,007 582,915 Oppenheimer Global Opportunities Fund, Cl. Y 124,676 141,732 16,686 249,722 Oppenheimer Main Street Fund, Cl. Y 347,889 462,376 6,358 803,907 Oppenheimer Main Street Opportunity Fund, Cl. Y 633,885 828,674 11,461 1,451,098 Oppenheimer Main Street Small Cap Fund, Cl. Y 409,733 497,266 6,906 900,093 Oppenheimer Value Fund, Cl. Y 541,824 747,144 9,992 1,278,976
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME GAIN (LOSS) - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund, Cl. Y $ 39,186,629 $ -- $ (9,047) Oppenheimer Developing Markets Fund, Cl. Y 9,528,877 -- 11,997 Oppenheimer Global Fund, Cl. Y 40,151,142 -- (6,875) Oppenheimer Global Opportunities Fund, Cl. Y 9,327,111 -- 6,471 Oppenheimer Main Street Fund, Cl. Y 31,175,515 -- (2,359) Oppenheimer Main Street Opportunity Fund, Cl. Y 20,678,146 -- (1,768) Oppenheimer Main Street Small Cap Fund, Cl. Y 19,901,065 -- (4,330) Oppenheimer Value Fund, Cl. Y 31,488,381 -- (2,438) -------------------------------------------------- $ 201,436,866 $ -- $ (8,349) ==================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 14 | AGGRESSIVE INVESTOR FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - --------------------------------------------------------------------------------
July 31, 2006 - ------------------------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------------------------- Investments, at value - see accompanying statement of investments: Unaffiliated companies (cost $177,000) $ 177,000 Affiliated companies (cost $202,001,758) 201,436,866 -------------- 201,613,866 - ------------------------------------------------------------------------------------------------------------------------- Cash 95,372 - ------------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 1,310,354 Interest and dividends 26 Other 2,490 -------------- Total assets 203,022,108 - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 343,419 Investments purchased 271,945 Distribution and service plan fees 40,772 Transfer and shareholder servicing agent fees 36,596 Shareholder communications 14,598 Trustees' compensation 4,647 Other 17,422 -------------- Total liabilities 729,399 - ------------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 202,292,709 ============== - ------------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 18,034 - ------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 202,511,829 - ------------------------------------------------------------------------------------------------------------------------- Accumulated net investment loss (640,217) - ------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments 967,955 - ------------------------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments (564,892) -------------- NET ASSETS $ 202,292,709 ==============
15 | AGGRESSIVE INVESTOR FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $104,802,003 and 9,311,008 shares of beneficial interest outstanding) $ 11.26 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 11.95 - ------------------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $37,004,420 and 3,314,426 shares of beneficial interest outstanding) $ 11.16 - ------------------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $43,450,595 and 3,893,339 shares of beneficial interest outstanding) $ 11.16 - ------------------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $15,777,235 and 1,404,030 shares of beneficial interest outstanding) $ 11.24 - ------------------------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $1,258,456 and 111,424 shares of beneficial interest outstanding) $ 11.29
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 | AGGRESSIVE INVESTOR FUND STATEMENT OF OPERATIONS Unaudited - --------------------------------------------------------------------------------
For the Six Months Ended July 31, 2006 - ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------------------------- Interest $ 17,472 - ------------------------------------------------------------------------------------------------------------------------- EXPENSES - ------------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 98,998 Class B 146,560 Class C 170,430 Class N 27,289 - ------------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 79,375 Class B 35,406 Class C 39,176 Class N 10,140 Class Y 131 - ------------------------------------------------------------------------------------------------------------------------- Shareholder communications: Class A 14,857 Class B 7,569 Class C 5,890 Class N 825 - ------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 5,201 - ------------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 253 - ------------------------------------------------------------------------------------------------------------------------- Other 15,548 -------------- Total expenses 657,648 - ------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS (640,176) - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED LOSS - ------------------------------------------------------------------------------------------------------------------------- Net realized loss on investments from affiliated companies (8,349) - ------------------------------------------------------------------------------------------------------------------------- Net change in unrealized depreciation on investments (5,728,784) - ------------------------------------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (6,377,309) ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | AGGRESSIVE INVESTOR FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, (UNAUDITED) 2006 1 - -------------------------------------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) $ (640,176) $ 591,687 - -------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (8,349) 1,283,674 - -------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (5,728,784) 5,163,892 ----------------------------------- Net increase (decrease) in net assets resulting from operations (6,377,309) 7,039,253 - -------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A -- (380,503) Class B -- (127,617) Class C -- (120,802) Class N -- (41,332) Class Y -- (6,678) - -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A -- (67,178) Class B -- (28,621) Class C -- (25,903) Class N -- (7,402) Class Y -- (1,071) - -------------------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - -------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 59,837,669 44,717,597 Class B 19,136,637 17,711,412 Class C 24,914,725 18,857,875 Class N 10,644,247 5,289,149 Class Y 573,704 650,857 - -------------------------------------------------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------------------------------------------------- Total increase 108,729,673 93,459,036 - -------------------------------------------------------------------------------------------------------------------------- Beginning of period 93,563,036 104,000 2 ----------------------------------- End of period (including accumulated net investment loss of $640,217 and $41, respectively) $ 202,292,709 $ 93,563,036 ===================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Reflects the value of the Manager's initial seed money investment on March 15, 2005. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | AGGRESSIVE INVESTOR FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS A (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.60 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 (.03) .22 Net realized and unrealized gain (loss) (.31) 1.52 ------------------------------------ Total from investment operations (.34) 1.74 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.12) Distributions from net realized gain -- (.02) ------------------------------------ Total dividends and distributions to shareholders -- (.14) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.26 $ 11.60 ==================================== - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (2.93)% 17.46% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 104,802 $ 48,132 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 81,423 $ 17,321 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income (loss) (0.48)% 2.47% Total expenses 0.51% 5 0.70% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.51% 0.68% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 2% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.16% Period Ended January 31, 2006 1.39% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | AGGRESSIVE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS B (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.55 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 (.07) .16 Net realized and unrealized gain (loss) (.32) 1.50 ------------------------------------ Total from investment operations (.39) 1.66 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.09) Distributions from net realized gain -- (.02) ------------------------------------ Total dividends and distributions to shareholders -- (.11) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.16 $ 11.55 ==================================== - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (3.38)% 16.70% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 37,004 $ 19,078 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 29,657 $ 7,050 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income (loss) (1.29)% 1.83% Total expenses 1.32% 5 1.53% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.32% 1.50% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 2% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.97% Period Ended January 31, 2006 2.22% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | AGGRESSIVE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS C (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.54 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 (.07) .15 Net realized and unrealized gain (loss) (.31) 1.51 ------------------------------------ Total from investment operations (.38) 1.66 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.10) Distributions from net realized gain -- (.02) ------------------------------------ Total dividends and distributions to shareholders -- (.12) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.16 $ 11.54 ==================================== - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (3.29)% 16.64% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 43,451 $ 20,034 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 34,506 $ 6,131 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income (loss) (1.26)% 1.71% Total expenses 1.29% 5 1.48% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 1.29% 1.45% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 2% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.94% Period Ended January 31, 2006 2.17% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | AGGRESSIVE INVESTOR FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS N (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.59 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 (.04) .24 Net realized and unrealized gain (loss) (.31) 1.49 ------------------------------------ Total from investment operations (.35) 1.73 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.12) Distributions from net realized gain -- (.02) ------------------------------------ Total dividends and distributions to shareholders -- (.14) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.24 $ 11.59 ==================================== - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 (3.02)% 17.34% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 15,777 $ 5,608 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 11,070 $ 1,717 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income (loss) (0.70)% 2.62% Total expenses 0.72% 5 0.79% 5 Expenses after waivers and reimbursements and reduction to custodian expenses 0.72% 0.78% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 2% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 4. Annualized for periods of less than one full year. 5. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 1.37% Period Ended January 31, 2006 1.48% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | AGGRESSIVE INVESTOR FUND
SIX MONTHS PERIOD ENDED ENDED JULY 31, 2006 JANUARY 31, CLASS Y (UNAUDITED) 2006 1 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.61 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) 2 -- 3 .24 Net realized and unrealized gain (loss) (.32) 1.52 ------------------------------------ Total from investment operations (.32) 1.76 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.13) Distributions from net realized gain -- (.02) ------------------------------------ Total dividends and distributions to shareholders -- (.15) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 11.29 $ 11.61 ==================================== - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 4 (2.76)% 17.69% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 1,259 $ 711 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 968 $ 331 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 5 Net investment income (loss) (0.03)% 2.67% Total expenses 0.05% 6 0.30% 6 Expenses after waivers and reimbursements and reduction to custodian expenses 0.05% 0.27% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 2% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. Assumes an 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. Returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. 5. Annualized for periods of less than one full year. 6. Expenses including all underlying fund expenses were: Six Months Ended July 31, 2006 0.70% Period Ended January 31, 2006 0.99% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | AGGRESSIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Portfolio Series (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Aggressive Investor Fund (the "Portfolio") is a series of the Fund whose investment objective is to seek long term growth of capital. The Portfolio is a special type of mutual fund known as a "fund of funds" because it invests in other mutual funds. The Portfolio normally invests in a portfolio consisting of a target-weighted allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's investment advisor is OppenheimerFunds, Inc. (the "Manager"). The Portfolio offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Portfolio in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. Under normal market conditions, the Manager will invest the Portfolio's assets in shares of Oppenheimer Capital Appreciation Fund, Oppenheimer Developing Markets Fund, Oppenheimer Global Fund, Oppenheimer Global Opportunities Fund, Oppenheimer Main Street Fund(R), Oppenheimer Main Street Opportunity Fund(R), Oppenheimer Main Street Small Cap Fund(R) and Oppenheimer Value Fund (individually, an "Underlying Fund" and collectively, the "Underlying Funds"). The following is a summary of significant accounting policies consistently followed by the Portfolio. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Portfolio calculates the net asset value of each class of shares based upon the net asset value of the applicable Underlying Funds' as of the close of The New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. For each Underlying Fund, the net asset value per share for a class of shares on a "regular business day" is determined by dividing the value of the Underlying Fund's net assets attributable to that class by the number of shares of that class outstanding on that day. To determine net asset values, the Underlying Fund assets are valued primarily on the basis of current market quotations. If market quotations are not readily available or do not accurately reflect fair value for a security (in the Manager's judgment) or if a security's value has been materially affected by events occurring after 24 | AGGRESSIVE INVESTOR FUND the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Underlying Fund's Board of Trustees/ Directors believes accurately reflects the fair value. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Underlying Fund's foreign investments may change on days when investors cannot buy or redeem Underlying Fund shares. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in which the Portfolio invests has its own investment risks, and those risks can affect the value of the Portfolio's investments and therefore the value of the Portfolio's shares. To the extent that the Portfolio invests more of its assets in one Underlying Fund than in another, the Portfolio will have greater exposure to the risks of that Underlying Fund. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolio, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Portfolio intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal 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 dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Portfolio. As of July 31, 2006, the Portfolio had available for federal income tax purposes an estimated capital loss carryforward of $8,349 expiring by 2014. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for 25 | AGGRESSIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued losses deferred under tax accounting rules to the current fiscal year and is increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. During the year ended January 31, 2006, the Portfolio did not utilize any capital loss carryforward. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan for the Portfolio's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended July 31, 2006, the Portfolio's projected benefit obligations were increased by $4,301 and no payments were made to retired trustees, resulting in an accumulated liability of $4,301 as of July 31, 2006. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Portfolio or in other Oppenheimer funds selected by the Trustee. The Portfolio purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Portfolio asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Portfolio, and will not materially affect the Portfolio's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may include interest expense incurred by the Portfolio on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Portfolio pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Portfolio, at a rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item, if applicable, represents earnings on cash balances maintained by 26 | AGGRESSIVE INVESTOR FUND the Portfolio during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Portfolio's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Portfolio. In the normal course of business, the Portfolio may also enter into contracts that provide general indemnifications. The Portfolio's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Portfolio. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Portfolio has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ CLASS A Sold 5,711,273 $ 66,109,584 4,307,796 $ 46,498,407 Dividends and/or distributions reinvested -- -- 38,611 427,037 Redeemed (551,158) (6,271,915) (205,514) (2,207,847) -------------------------------------------------------------------- Net increase 5,160,115 $ 59,837,669 4,140,893 $ 44,717,597 ==================================================================== - ------------------------------------------------------------------------------------------------ CLASS B Sold 1,893,353 $ 21,779,537 1,712,718 $ 18,374,371 Dividends and/or distributions reinvested -- -- 13,238 145,879 Redeemed (230,855) (2,642,900) (74,128) (808,838) -------------------------------------------------------------------- Net increase 1,662,498 $ 19,136,637 1,651,828 $ 17,711,412 ==================================================================== - ------------------------------------------------------------------------------------------------ CLASS C Sold 2,470,923 $ 28,468,275 1,784,313 $ 19,370,332 Dividends and/or distributions reinvested -- -- 12,844 141,411 Redeemed (313,327) (3,553,550) (61,514) (653,868) -------------------------------------------------------------------- Net increase 2,157,596 $ 24,914,725 1,735,643 $ 18,857,875 ====================================================================
27 | AGGRESSIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ CLASS N Sold 1,075,889 $ 12,427,342 536,355 $ 5,884,519 Dividends and/or distributions reinvested -- -- 3,629 40,096 Redeemed (155,777) (1,783,095) (56,166) (635,466) -------------------------------------------------------------------- Net increase 920,112 $ 10,644,247 483,818 $ 5,289,149 ==================================================================== - ------------------------------------------------------------------------------------------------ CLASS Y Sold 63,918 $ 732,896 69,936 $ 744,994 Dividends and/or distributions reinvested -- -- 699 7,734 Redeemed (13,716) (159,192) (9,513) (101,871) -------------------------------------------------------------------- Net increase 50,202 $ 573,704 61,122 $ 650,857 ====================================================================
1. For the period from April 5, 2005 (commencement of operations) to January 31, 2006. 2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100 shares of Class B, Class C, Class N and Class Y at a value of $1,000, respectively, to the Manager upon seeding of the Portfolio on March 15, 2005. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended July 31, 2006, were as follows: PURCHASES SALES ------------------------------------------------------- Investment securities $119,002,711 $3,422,431 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not charge a management fee, but rather collects indirect management fees from investments in the Underlying Funds. The weighted indirect management fees collected from the Underlying Funds, as a percent of average daily net assets of the Portfolio for the six months ended July 31, 2006 was 0.58%. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Portfolio. The Portfolio pays OFS a per account fee. For the six months ended July 31, 2006, the Portfolio paid $139,257 to OFS for services to the Portfolio. Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. 28 | AGGRESSIVE INVESTOR FUND - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Portfolio's principal underwriter in the continuous public offering of the Portfolio's classes of shares. - -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Portfolio has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Portfolio. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Portfolio under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Portfolio has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Portfolio pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Portfolio or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Portfolio of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at July 31, 2006 for Class B, Class C and Class N shares were $756,186, $417,895 and $137,321, respectively. Fees incurred by the Portfolio under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Portfolio. They are deducted from the proceeds of sales of Portfolio shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ----------------------------------------------------------------------------------------- July 31, 2006 $ 421,771 $ -- $ 28,933 $ 4,176 $ 814
29 | AGGRESSIVE INVESTOR FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a total expense limitation on the aggregate amount of combined direct (fund-of-funds level) and indirect expense so that Combined Total Annual and Underlying Fund Operating Expenses as a percentage of average daily net assets will not exceed the following annual rates: 1.45%, 2.20%, 2.20%, 1.70% and 1.20%, for Class A, Class B, Class C, Class N and Class Y, respectively. The Manager may modify or terminate this undertaking at any time without notice to shareholders. These expense limitations do not include Extraordinary Expenses and other expenses not incurred in the ordinary course of the Portfolio's business. Notwithstanding the foregoing limits, the Manager is not required to waive or reimburse Portfolio expenses in excess of indirect management fees earned from investments in Underlying Funds to assure that expenses do not exceed those limits. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. RECENT ACCOUNTING PRONOUNCEMENT In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Portfolio's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Portfolio's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Portfolio's financial statements has not yet been determined. - -------------------------------------------------------------------------------- 6. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as 30 | AGGRESSIVE INVESTOR FUND nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 31 | AGGRESSIVE INVESTOR FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under which the Portfolio votes proxies relating to securities ("portfolio proxies") held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Portfolio is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Portfolio's voting record is available (i) without charge, upon request, by calling the Portfolio toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Portfolio files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Portfolio's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 32 | AGGRESSIVE INVESTOR FUND ITEM 2. CODE OF ETHICS. Not applicable to semiannual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to semiannual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable to semiannual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS 1. The Fund's Governance Committee (the "Committee") will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds' investment manager and its affiliates in making the selection. 2. The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the Committee considers, among other things, an individual's background, skills, and experience; whether the individual is an "interested person" as defined in the Investment Company Act of 1940; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder. 3. The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following: o the name, address, and business, educational, and/or other pertinent background of the person being recommended; o a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; o any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and o the name and address of the person submitting the recommendation and, if that person is a shareholder, the period for which that person held Fund shares. The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation. 4. Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds' investment adviser) would be deemed an "interested person" under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an "interested person." 5. Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company. ITEM 11. CONTROLS AND PROCEDURES. Based on their evaluation of the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of 07/31/2006, the registrant's principal executive officer and principal financial officer found the registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. There have been no changes in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Not applicable to semiannual reports. (2) Exhibits attached hereto. (3) Not applicable. (b) Exhibit attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer Portfolio Series By: /S/ JOHN V. MURPHY ---------------------------- John V. Murphy Principal Executive Officer Date: 09/14/2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /S/ JOHN V. MURPHY --------------------------- John V. Murphy Principal Executive Officer Date: 09/14/2006 By: /S/ BRIAN W. WIXTED --------------------------- Brian W. Wixted Principal Financial Officer Date: 09/14/2006
EX-99.CERT 2 rs540_34994cert302.txt RS540_34994CERT302 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, John V. Murphy, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Portfolio Series; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 09/14/2006 /S/ JOHN V. MURPHY - ---------------------------- John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Portfolio Series; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 09/14/2006 /S/ BRIAN W. WIXTED - ---------------------------- Brian W. Wixted Principal Financial Officer EX-99.906CERT 3 rs540_34994cert906.txt RS540_34994CERT906 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 John V. Murphy, Principal Executive Officer, and Brian W. Wixted, Principal Financial Officer, of Oppenheimer Portfolio Series (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended 07/31/2006 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Principal Financial Officer Oppenheimer Portfolio Series Oppenheimer Portfolio Series /S/ JOHN V. MURPHY /S/ BRIAN W. WIXTED - ------------------------------- ------------------------------- John V. Murphy Brian W. Wixted Date: 09/14/2006 Date: 09/14/2006
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