-----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, N8pBSbM6Iic6Hc9HB5+vcriyIxZuQUTaBoiFFhKcnM+GL9kDcWAL5s/QgFtNWwZR 118QcjEuZryZOGi9CyPR8Q== 0000935069-02-001359.txt : 20021219 0000935069-02-001359.hdr.sgml : 20021219 20021219164404 ACCESSION NUMBER: 0000935069-02-001359 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021031 FILED AS OF DATE: 20021219 EFFECTIVENESS DATE: 20021219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER SERIES FUND INC CENTRAL INDEX KEY: 0000356865 IRS NUMBER: 061207374 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03346 FILM NUMBER: 02863393 BUSINESS ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTICUT MUTUAL LIQUID ACCOUNT INC DATE OF NAME CHANGE: 19851106 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTICUT MUTUAL INVESTMENT ACCOUNTS INC DATE OF NAME CHANGE: 19920703 N-30D 1 ra0205_5989vef.txt RA0205_5989VEF October 31, 2002 - -------------------------------------------------------------------------------- Oppenheimer Annual Report Disciplined ------ Allocation Fund Management Commentaries - -------------------------------------------------------------------------------- Fund Highlights Performance Update Investment Strategy Discussion Financial Statements "In an environment characterized by lower interest rates and a weak economy, the Fund's bond portfolio benefited from its holdings of U.S. Treasury securities and mortgage-backed securities. Within the stock portfolio, successful sector allocation and security selection strategies emphasized fundamentally sound companies in the health care and consumer discretionary sectors." [LOGO] OppenheimerFunds[R] The Right Way to Invest HIGHLIGHTS Fund Objective Oppenheimer Disciplined Allocation Fund seeks to maximize total investment return (including capital appreciation and income) principally by allocating assets among stocks, corporate bonds, U.S. government securities and money market instruments, according to changing markets conditions. Fund Highlight According to Lipper, Inc., the Fund's Class A shares ranked in the top 35% (96/287) of flexible portfolio funds for the one-year period ended October 31, 2002. 1 CONTENTS 1 Letter to Shareholders 3 An Interview with Your Fund's Managers 7 Fund Performance 12 Financial Statements 38 Independent Auditors' Report 39 Federal Income Tax Information 42 Directors and Officers Average Annual Total Returns* For the 1-Year Period Ended 10/31/02 Without With Sales Chg. Sales Chg. - --------------------------------- Class A -5.86% -11.28% - --------------------------------- Class B -6.61 -11.22 - --------------------------------- Class C -6.64 -7.56 - --------------------------------- Class N -6.17 -7.09 Top Ten Common Stock Holdings 2 SLM Corp. 2.2% AT&T Corp. 2.1 Bank of America Corp. 1.6 Bed Bath & Beyond, Inc. 1.6 Sappi Ltd., Sponsored ADR 1.6 Johnson & Johnson 1.5 Harley-Davidson, Inc. 1.5 Freddie Mac 1.4 Kohl's Corp. 1.4 Republic Services, Inc. 1.3 For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. *See Notes on page 10 for further details. 1. Source: Lipper, Inc. Lipper rankings are based on total returns, but do not consider sales charges. The Fund's Class A shares ranked, in the Lipper Flexible Portfolio Fund category, 104/145 for the five-year and 26/37 for the ten-year period ended 10/31/02. Past performance is no guarantee of future results. 2. Portfolio's holdings and strategies are subject to change. Percentages are as of October 31, 2002, and are based on net assets. LETTER TO SHAREHOLDERS Dear Shareholder, In the last 100 years, there have been about 30 bear markets--each one ultimately followed by a recovery. Although markets in 2002 proved to be challenging and extremely volatile, we now find ourselves in a changing economic environment punctuated by moderate growth and the lowest interest rates we've seen in 40 years. At OppenheimerFunds, we continue to believe in the growth, ingenuity, and underlying strength of our economy and the markets for the long haul. We also understand that your investments with us may represent retirement, a future home or a college education. We take very seriously the responsibility of helping you work toward your goals. In good markets and in bad, we are committed to providing you with the investment products and services that can help you achieve your financial objectives. In recent years, many of us have seen the assets we count on for the future decrease in value, sometimes significantly, making it extremely difficult to stick to long-term investing plans. Yet basic investment principles of asset allocation and diversification are most important precisely at the times when we seem most ready to abandon them. As a valued shareholder, we encourage you to stay the course and focus on your long-term goals. Of course that doesn't mean ignoring your portfolio. When the financial markets make major moves, portfolio changes may be necessary to adjust risk, rebalance allocations or seek to maintain sufficient income flows. Monitor your investments, stay informed and most importantly, work closely with your financial advisor to ensure that any changes you make fit within your long-term investing plan. [PHOTO OF JOHN V. MURPHY] John V. Murphy President Oppenheimer Disciplined Allocation Fund 1 | OPPENHEIMER DISCIPLINED ALLOCATION FUND LETTER TO SHAREHOLDERS With that said, we also expect the road ahead to present new and unique challenges. It is our belief that adhering to core investment principles can help you reach your goals. The principles of investing aren't exciting or easy. All they are is true. We hope you share the same convictions as we greet the start of the New Year and thank you for your continued faith in OppenheimerFunds, The Right Way to Invest. Sincerely, /s/John V. Murphy - ----------------- John V. Murphy November 21, 2002 These general market views represent opinions of OppenheimerFunds, Inc. and are not intended to predict performance of the securities markets or any particular fund. Specific information that applies to your Fund is contained in the pages that follow. For more current information regarding your Fund, please access the OppenheimerFunds website at www.oppenheimerfunds.com where you will find weekly Market Updates, and monthly Fund updates including the most recent list of top holdings. 2 | OPPENHEIMER DISCIPLINED ALLOCATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGERS Q How did Oppenheimer Disciplined Allocation Fund perform over the 12-month period that ended October 31, 2002? A. We were not satisfied with the Fund's negative returns for the period; however, we are pleased that the Fund's -5.86% Class A share total return without sales charge exceeded the -10.76% return produced by the average of the 287 funds in Lipper Flexible Portfolio Fund category. We attribute the Fund's relatively strong performance to its investment approach, which allocates assets among stocks and bonds, as well as across equity investment styles. Our stock selection strategy was also a particularly strong contributor to performance relative to the Fund's peer group. How were the Fund's assets allocated among stocks, bonds and cash? When the reporting period began in November 2001, the Fund was composed of 58% stocks, 38% bonds and 4% cash. We believed that this fully invested posture would position the Fund to benefit from low stock prices and declining interest rates in the wake of September 11th. Indeed, both stocks and bonds rallied through the end of 2001 as investors looked forward to the end of the recession. However, the economic recovery proved to be far less robust than most investors had expected, and the stock market fell sharply during the second and third quarters of 2002. In contrast, interest rate-sensitive bonds, such as U.S. government securities, continued to rally in this low inflation, slow growth environment. As a result of the combination of stock market depreciation and our efforts to preserve capital, the Fund's allocations as of the end of the reporting period were 47% stocks, 47% bonds and 6% cash. The increase in cash represents assets that we have reserved to take advantage of new investment opportunities, if and when they arise. [SIDEBAR] Portfolio Management Team Bruce Bartlett Chris Leavy Angelo Manioudakis 3 | OPPENHEIMER DISCIPLINED ALLOCATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGERS How was the Fund's stock portfolio managed in this challenging environment? Our equity investment strategy includes two primary components. We first attempt to emphasize those industry groups with the best prospects. Second, we conduct company-by-company research to identify what we believe to be the most attractive stocks within each sector. Our analyses incorporate both growth- and value-oriented criteria in order to include stocks that we believe are favored by both investment styles. Our sector allocation strategy emphasized health care and consumer discretionary stocks, decisions that contributed positively to performance. Although health care stocks lost value during the period, they fell less than the overall market, in part because many health care companies tend to produce consistent earnings regardless of economic conditions. Consumer discretionary stocks benefited greatly from robust consumer spending, which was encouraged by low interest rates. On the other hand, we allocated relatively few assets to the technology sector, which continued to suffer from anemic demand among corporate customers. What stocks contributed most to the Fund's performance? Our stock selection strategy also worked relatively well during the 12-month period, especially in the health care, consumer discretionary and financial services sectors. In the health care sector, the Fund received especially strong returns from drug manufacturer Pharmacia Corp., which announced during the period that it was being acquired by pharmaceutical giant Pfizer, Inc. Managed care company Tenet Healthcare Corp. benefited from a positive pricing environment, while Johnson & Johnson enjoyed strong sales momentum from its diversified product mix. Among consumer discretionary companies, a new management team at toy giant Mattel, Inc. captured a larger share of the market, and apparel retail chain Kohl's Corp. reported higher profit margins. In the financial services area, student loans [SIDEBAR] The Fund's disciplined, balanced investment approach once again proved its worth by helping shareholders avoid the brunt of the stock market's recent declines. 4 | OPPENHEIMER DISCIPLINED ALLOCATION FUND provider SLM Corp. ("Sallie Mae") benefited from higher revenues and profits. On the other hand, the Fund's holdings of consumer staples stocks generally detracted from performance, hurt by renewed litigation concerns at tobacco giant Phillip Morris Cos., Inc. and earnings shortfalls at retail drug chain Walgreen Co. How was the Fund's fixed-income portfolio managed during the period? A new fixed-income management team took charge of the Fund's bond portfolio during the reporting period, making changes that contributed positively to performance. Using an institutional-caliber investment strategy that carefully analyzes various types of risk, the fixed-income team reduced the Fund's holdings of U.S. Treasury securities and redeployed those assets to higher yielding areas of the bond market, including mortgage-backed securities, asset-backed securities and investment-grade corporate bonds. Mortgage-backed securities performed especially well, gaining value during the first half of 2002 when mortgage refinancing activity eased. However, corporate bonds generally lagged amid revelations of corporate scandals affecting a number of well-known corporations. What is your outlook for the foreseeable future? We are cautiously optimistic. In the Fund's well-diversified stock portfolio, we have focused on companies with growing earnings and strong business fundamentals. For example, we found some attractively valued opportunities among fundamentally sound technology companies that were hard-hit during the downturn, including a wireless communications provider committed to the CDMA (Code Division Multiple Access) standard. On the other hand, we recently reduced our holdings of consumer-oriented stocks, taking profits on holdings that reached prices we considered fully valued. [SIDEBAR] Average Annual Total Returns with Sales Charge For the Periods Ended 9/30/02 3 Class A 1-Year 5-Year 10-Year - ------------------------ - -11.94% -2.33% 5.42% Class B Since 1-Year 5-Year Inception - ------------------------ - -11.94% -2.20% 2.90% Class C Since 1-Year 5-Year Inception - ------------------------ -8.25% -1.93% 2.05% Class N Since 1-Year 5-Year Inception - ------------------------ -7.78% N/A -10.63% 3. See Notes on page 10 for further details. 5 | OPPENHEIMER DISCIPLINED ALLOCATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGERS In the bond portfolio, we recently reduced the Fund's sensitivity to changing interest rates. In addition, we have increased the Fund's exposure to high-quality corporate bonds, which we believe are attractively valued now that many issuers are aggressively repairing their balance sheets. In our view, spreading risk across asset classes and investment styles is key to what makes Oppenheimer Disciplined Allocation Fund an important part of The Right Way to Invest. [SIDEBAR] Portfolio Allocation 4 [PIECHART] o Stock 46.9% o Bonds 46.8 o Cash Equivalents 6.3 Top Five Common Stock Industries 5 - ------------------------------------------ Diversified Financials 5.6% - ------------------------------------------ Insurance 4.8 - ------------------------------------------ Health Care Providers & Services 4.7 - ------------------------------------------ Pharmaceuticals 3.0 - ------------------------------------------ Multiline Retail 2.5 4. Portfolio's holdings and allocations are subject to change. Percentages are as of October 31, 2002, and are based on total market value of investments. 5. Portfolio's holdings and allocations are subject to change. Percentages are as of October 31, 2002, and are based on net assets. 6 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FUND PERFORMANCE How Has the Fund Performed? Below is a discussion by OppenheimerFunds, Inc., of the Fund's performance during its fiscal year ended October 31, 2002, followed by a graphical comparison of the Fund's performance to appropriate broad-based market indices. Management's Discussion of Performance. During the Fund's fiscal year that ended October 31, 2002, Oppenheimer Disciplined Allocation Fund's performance was driven by its asset allocation and security selection strategies. The Fund's allocation of assets to fixed-income securities benefited when interest rate-sensitive bonds rallied in the low interest rate-environment, more than offsetting weakness among corporate fixed-income securities. In the stock portfolio, the Fund benefited from its holdings of health care, consumer discretionary and financial services stocks, which generally performed better than their respective components of the S&P 500 Index. However, the Fund's technology and consumer staples holdings generally detracted from returns. Toward the end of the reporting period, the Fund's cash position also helped preserve capital in a challenging market environment. The Fund's portfolio holdings and allocations are subject to change. Comparing the Fund's Performance to the Market. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until October 31, 2002. In the case of Class A shares, performance is measured over a 10-year period. In the case of Class B, performance is measured from inception of the class on October 2, 1995. In the case of Class C, performance is measured from inception of the class on May 1, 1996. In the case of Class N shares, performance is measured from inception of the class on March 1, 2001. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares and reinvestments of all dividends and capital gains distributions. The Fund's performance is compared to the performance of the Standard & Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded as a general measure of the performance of the U.S. equity securities market. The Fund's performance is also compared to Merrill Lynch Corporate/Government Master Index, a broad-based index of U.S. Treasury and government agency securities, corporate and Yankee bonds regarded as a general measurement of the performance of the domestic debt securities market. Index performance reflects the reinvestment of dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of Fund business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the securities in the indices. 7 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FUND PERFORMANCE Class A Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Disciplined S&P 500 Merrill Lynch Corporate/ Allocation Fund (Class A) Index Government Master Index 12/31/1992 9,425 10,000 10,000 03/31/1993 9,991 10,436 10,464 06/30/1993 10,316 10,486 10,770 09/30/1993 10,824 10,757 11,139 12/31/1993 10,923 11,006 11,106 03/31/1994 10,645 10,589 10,780 06/30/1994 10,462 10,633 10,650 09/30/1994 10,756 11,152 10,697 12/31/1994 10,692 11,150 10,743 03/31/1995 11,345 12,235 11,267 06/30/1995 12,087 13,401 11,996 09/30/1995 12,643 14,465 12,217 12/31/1995 13,254 15,335 12,782 03/31/1996 13,476 16,158 12,500 06/30/1996 13,567 16,883 12,553 09/30/1996 13,829 17,405 12,770 10/31/1996 6 14,085 17,884 13,063 01/31/1997 14,855 20,031 13,179 04/30/1997 14,897 20,515 13,252 07/31/1997 16,886 24,546 13,940 10/31/1997 16,736 23,625 14,235 01/31/1998 17,058 25,420 14,659 04/30/1998 18,214 28,940 14,743 07/31/1998 17,727 29,285 15,076 10/31/1998 17,727 28,826 15,703 01/31/1999 19,149 33,684 15,940 04/30/1999 19,214 35,257 15,688 07/31/1999 18,889 35,201 15,426 10/31/1999 18,192 36,223 15,586 01/31/2000 17,849 37,167 15,496 04/30/2000 18,855 38,825 15,843 07/31/2000 18,985 38,357 16,302 10/31/2000 19,696 38,424 16,711 01/31/2001 19,920 36,832 17,609 04/30/2001 18,763 33,791 17,743 07/31/2001 18,774 32,864 18,383 10/31/2001 17,704 28,861 19,279 01/31/2002 18,073 30,889 18,926 04/30/2002 17,931 29,528 19,066 07/31/2002 16,500 25,103 19,683 10/31/2002 16,666 24,504 20,353 Average Annual Total Returns of Class A Shares of the Fund at 10/31/02* 1-Year -11.28% 5-Year -1.26% 10-Year 5.68% Class B Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Disciplined S&P 500 Merrill Lynch Corporate/ Allocation Fund (Class B) Index Government Master Index 10/02/1995 10,000 10,000 10,000 12/31/1995 10,493 10,602 10,463 03/31/1996 10,647 11,170 10,232 06/30/1996 10,697 11,671 10,275 09/30/1996 10,880 12,032 10,453 10/31/1996 6 11,072 12,364 10,693 01/31/1997 11,651 13,848 10,788 04/30/1997 11,664 14,183 10,848 07/31/1997 13,198 16,969 11,411 10/31/1997 13,060 16,332 11,652 01/31/1998 13,283 17,573 11,999 04/30/1998 14,159 20,007 12,068 07/31/1998 13,749 20,245 12,341 10/31/1998 13,726 19,928 12,854 01/31/1999 14,805 23,286 13,048 04/30/1999 14,821 24,374 12,841 07/31/1999 14,546 24,335 12,627 10/31/1999 13,978 25,041 12,758 01/31/2000 13,687 25,694 12,685 04/30/2000 14,437 26,841 12,968 07/31/2000 14,507 26,517 13,344 10/31/2000 15,023 26,563 13,678 01/31/2001 15,171 25,463 14,414 04/30/2001 14,259 23,360 14,524 07/31/2001 14,239 22,719 15,047 10/31/2001 13,407 19,952 15,781 01/31/2002 13,686 21,354 15,492 04/30/2002 13,579 20,413 15,606 07/31/2002 12,495 17,354 16,111 10/31/2002 12,621 16,940 16,660 Average Annual Total Returns of Class B Shares of the Fund at 10/31/02* 1-Year -11.22% 5-Year -1.13% Since Inception 3.34% 6. The Fund changed its fiscal year-end from 12/31 to 10/31. * See Notes on page 10 for further details. 8 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Class C Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Disciplined S&P 500 Merrill Lynch Corporate/ Allocation Fund (Class C) Index Government Master Index 05/01/1996 10,000 10,000 10,000 06/30/1996 10,062 10,297 10,113 09/30/1996 10,225 10,615 10,288 10/31/1996 6 10,408 10,908 10,524 01/31/1997 10,955 12,217 10,618 04/30/1997 10,965 12,512 10,677 07/31/1997 12,406 14,971 11,231 10/31/1997 12,274 14,409 11,469 01/31/1998 12,489 15,503 11,810 04/30/1998 13,304 17,650 11,878 07/31/1998 12,921 17,861 12,146 10/31/1998 12,901 17,581 12,651 01/31/1999 13,912 20,544 12,842 04/30/1999 13,927 21,503 12,639 07/31/1999 13,664 21,469 12,428 10/31/1999 13,138 22,092 12,557 01/31/2000 12,858 22,668 12,485 04/30/2000 13,561 23,679 12,764 07/31/2000 13,628 23,394 13,134 10/31/2000 14,115 23,435 13,463 01/31/2001 14,248 22,464 14,187 04/30/2001 13,400 20,609 14,295 07/31/2001 13,373 20,043 14,810 10/31/2001 12,596 17,602 15,533 01/31/2002 12,835 18,839 15,248 04/30/2002 12,704 18,009 15,360 07/31/2002 11,666 15,310 15,857 10/31/2002 11,760 14,945 16,397 Average Annual Total Returns of Class C Shares of the Fund at 10/31/02* 1-Year -7.56% 5-Year -0.85% Since Inception 2.53% Class N Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Disciplined S&P 500 Merrill Lynch Corporate/ Allocation Fund (Class N) Index Government Master Index 03/01/2001 10,000 10,000 10,000 04/30/2001 9,793 10,094 9,968 07/31/2001 9,785 9,817 10,328 10/31/2001 9,210 8,621 10,831 01/31/2002 9,399 9,227 10,633 04/30/2002 9,317 8,821 10,711 07/31/2002 8,570 7,499 11,058 10/31/2002 8,642 7,320 11,435 Average Annual Total Returns of Class N Shares of the Fund at 10/31/02* 1-Year -7.09% Since Inception -8.38% The performance information for both indices in the graphs begins on 12/31/92 for Class A, 9/30/95 for Class B, 4/30/96 for Class C and 2/28/01 for Class N. Past performance cannot guarantee future results. Graphs are not drawn to same scale. 9 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES In reviewing performance and rankings, please remember that past performance cannot guarantee future results. Investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Because of ongoing market volatility, the Fund's performance may be subject to substantial fluctuations, and current performance may be more or less than the results shown. For updates on the Fund's performance, visit our website at www.oppenheimerfunds.com. Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund'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 Fund or any gains you may realize if you sell your shares. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus carefully before you invest or send money. Class A shares of the Fund were first publicly offered on 9/16/85. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. Class B shares of the Fund were first publicly offered on 10/2/95. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since inception" return for Class B uses Class A performance for the period after conversion. Class B shares are subject to an annual 0.75% asset-based sales charge. Class C shares of the Fund were first publicly offered on 5/1/96. 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 Fund were first publicly offered on 3/1/01. 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. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 10 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Financial Statements Pages 12-37 11 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF INVESTMENTS October 31, 2002
Market Value Shares See Note 1 =================================================================================== Common Stocks--52.2% - ----------------------------------------------------------------------------------- Consumer Discretionary--8.9% - ----------------------------------------------------------------------------------- Automobiles--1.5% Harley-Davidson, Inc. 30,600 $ 1,600,380 - ----------------------------------------------------------------------------------- Leisure Equipment & Products--0.3% Mattel, Inc. 19,900 365,364 - ----------------------------------------------------------------------------------- Media--1.9% Fox Entertainment Group, Inc., A Shares 1 41,200 1,005,692 - ----------------------------------------------------------------------------------- News Corp. Ltd. (The), Sponsored ADR, Preference 52,900 1,045,833 ------------- 2,051,525 - ----------------------------------------------------------------------------------- Multiline Retail--2.5% Costco Wholesale Corp. 1 35,800 1,214,694 - ----------------------------------------------------------------------------------- Kohl's Corp. 1 25,300 1,478,785 ------------- 2,693,479 - ----------------------------------------------------------------------------------- Specialty Retail--1.6% Bed Bath & Beyond, Inc. 1 48,850 1,732,221 - ----------------------------------------------------------------------------------- Textiles & Apparel--1.1% Nike, Inc., Cl. B 24,700 1,165,593 - ----------------------------------------------------------------------------------- Consumer Staples--1.4% - ----------------------------------------------------------------------------------- Food & Drug Retailing--1.1% Walgreen Co. 34,500 1,164,375 - ----------------------------------------------------------------------------------- Tobacco--0.3% Philip Morris Cos., Inc. 9,300 378,975 - ----------------------------------------------------------------------------------- Energy--1.7% - ----------------------------------------------------------------------------------- Energy Equipment & Services--0.3% Noble Corp. 1 10,800 349,056 - ----------------------------------------------------------------------------------- Oil & Gas--1.4% Ashland, Inc. 10,000 262,500 - ----------------------------------------------------------------------------------- BP plc, ADR 32,700 1,257,315 ------------- 1,519,815 - ----------------------------------------------------------------------------------- Financials--12.6% - ----------------------------------------------------------------------------------- Banks--2.2% Bank of America Corp. 25,300 1,765,940 - ----------------------------------------------------------------------------------- Wachovia Corp. 18,000 626,220 ------------- 2,392,160 - ----------------------------------------------------------------------------------- Diversified Financials--5.6% Capital One Financial Corp. 10,000 304,700 - ----------------------------------------------------------------------------------- Citigroup, Inc. 11,777 435,160 - ----------------------------------------------------------------------------------- Franklin Resources, Inc. 33,300 1,098,567 - ----------------------------------------------------------------------------------- Freddie Mac 25,193 1,551,385 - ----------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 7,200 273,240 12 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Market Value Shares See Note 1 - ----------------------------------------------------------------------------------- Diversified Financials Continued SLM Corp. 23,169 $ 2,380,383 ------------- 6,043,435 - ----------------------------------------------------------------------------------- Insurance--4.8% Allstate Corp. 15,800 628,524 - ----------------------------------------------------------------------------------- AMBAC Financial Group, Inc. 13,300 821,940 - ----------------------------------------------------------------------------------- American International Group, Inc. 22,300 1,394,865 - ----------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. 4,500 177,750 - ----------------------------------------------------------------------------------- MBIA, Inc. 18,700 816,255 - ----------------------------------------------------------------------------------- Prudential Financial, Inc. 1 20,800 607,360 - ----------------------------------------------------------------------------------- Travelers Property Casualty Corp., Cl. A 1 897 11,975 - ----------------------------------------------------------------------------------- Travelers Property Casualty Corp., Cl. B 1 1,844 24,931 - ----------------------------------------------------------------------------------- XL Capital Ltd., Cl. A 9,200 700,580 ------------- 5,184,180 - ----------------------------------------------------------------------------------- Health Care--11.1% - ----------------------------------------------------------------------------------- Biotechnology--1.4% Gilead Sciences, Inc. 1 29,000 1,007,460 - ----------------------------------------------------------------------------------- IDEC Pharmaceuticals Corp. 1 10,500 483,210 ------------- 1,490,670 - ----------------------------------------------------------------------------------- Health Care Equipment & Supplies--2.0% Biomet, Inc. 12,200 359,412 - ----------------------------------------------------------------------------------- Medtronic, Inc. 6,000 268,800 - ----------------------------------------------------------------------------------- Stryker Corp. 19,900 1,255,690 - ----------------------------------------------------------------------------------- Varian Medical Systems, Inc. 1 6,300 303,786 ------------- 2,187,688 - ----------------------------------------------------------------------------------- Health Care Providers & Services--4.7% Aetna, Inc. 21,200 854,360 - ----------------------------------------------------------------------------------- AmerisourceBergen Corp. 15,100 1,074,365 - ----------------------------------------------------------------------------------- Cardinal Health, Inc. 12,500 865,125 - ----------------------------------------------------------------------------------- HCA, Inc. 5,300 230,497 - ----------------------------------------------------------------------------------- Lincare Holdings, Inc. 1 27,100 923,297 - ----------------------------------------------------------------------------------- McKesson Corp. 6,900 205,689 - ----------------------------------------------------------------------------------- Service Corp. International 1 31,700 99,855 - ----------------------------------------------------------------------------------- Tenet Healthcare Corp. 1 27,375 787,031 ------------- 5,040,219 - ----------------------------------------------------------------------------------- Pharmaceuticals--3.0% Forest Laboratories, Inc. 1 6,700 656,533 - ----------------------------------------------------------------------------------- Johnson & Johnson 27,750 1,630,313 - ----------------------------------------------------------------------------------- Pharmacia Corp. 21,000 903,000 13 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 - ----------------------------------------------------------------------------------- Pharmaceuticals Continued Schering-Plough Corp. 5,100 $ 108,885 ------------- 3,298,731 - ----------------------------------------------------------------------------------- Industrials--4.7% - ----------------------------------------------------------------------------------- Aerospace & Defense--2.3% Boeing Co. 40,600 1,207,850 - ----------------------------------------------------------------------------------- Lockheed Martin Corp. 22,300 1,291,170 ------------- 2,499,020 - ----------------------------------------------------------------------------------- Commercial Services & Supplies--1.9% Concord EFS, Inc. 1 41,455 591,977 - ----------------------------------------------------------------------------------- Republic Services, Inc. 1 70,000 1,440,600 ------------- 2,032,577 - ----------------------------------------------------------------------------------- Industrial Conglomerates--0.4% Tyco International Ltd. 33,600 485,856 - ----------------------------------------------------------------------------------- Machinery--0.1% Navistar International Corp. 1 3,300 73,986 - ----------------------------------------------------------------------------------- Information Technology--6.0% - ----------------------------------------------------------------------------------- Communications Equipment--1.2% Geotek Communications, Inc., Series B (Escrowed) 1,2 100 -- - ----------------------------------------------------------------------------------- JDS Uniphase Corp. 1,3 204,300 459,879 - ----------------------------------------------------------------------------------- QUALCOMM, Inc. 1 23,500 811,220 ------------- 1,271,099 - ----------------------------------------------------------------------------------- Computers & Peripherals--2.3% Dell Computer Corp. 1 33,500 958,435 - ----------------------------------------------------------------------------------- Hewlett-Packard Co. 57,000 900,600 - ----------------------------------------------------------------------------------- International Business Machines Corp. 3,800 299,972 - ----------------------------------------------------------------------------------- Lexmark International, Inc., Cl. A 1 3,500 207,970 - ----------------------------------------------------------------------------------- Pinnacle Systems, Inc. 1 8,600 102,254 ------------- 2,469,231 - ----------------------------------------------------------------------------------- Electronic Equipment & Instruments--1.3% California Amplifier, Inc. 1 24 88 - ----------------------------------------------------------------------------------- Thermo Electron Corp. 1 78,100 1,436,259 ------------- 1,436,347 - ----------------------------------------------------------------------------------- Software--1.2% - ----------------------------------------------------------------------------------- Microsoft Corp. 1 24,800 1,326,056 - ----------------------------------------------------------------------------------- Materials--2.8% - ----------------------------------------------------------------------------------- Chemicals--0.5% FMC Corp. 1 13,300 406,847 - ----------------------------------------------------------------------------------- Monsanto Co. 8,751 144,654 ------------- 551,501 14 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Market Value Shares See Note 1 - ----------------------------------------------------------------------------------- Metals & Mining--0.7% Alcoa, Inc. 35,400 $ 780,924 - ----------------------------------------------------------------------------------- Paper & Forest Products--1.6% Sappi Ltd., Sponsored ADR 140,700 1,724,982 - ----------------------------------------------------------------------------------- Telecommunication Services--2.1% - ----------------------------------------------------------------------------------- Wireless Telecommunication Services--2.1% AT&T Corp. 171,600 2,237,664 - ----------------------------------------------------------------------------------- Microcell Telecommunications, Inc., Cl. B 1 1,899 228 ------------- 2,237,892 - ----------------------------------------------------------------------------------- Utilities--0.9% - ----------------------------------------------------------------------------------- Electric Utilities--0.9% Dominion Resources, Inc. 20,700 993,600 ------------- Total Common Stocks (Cost $56,848,980) 56,540,937 - ----------------------------------------------------------------------------------- Other Securities--0.7% - ----------------------------------------------------------------------------------- Nasdaq-100 Unit Investment Trust 1 (Cost $833,185) 28,600 702,130 Units - ----------------------------------------------------------------------------------- Rights, Warrants and Certificates--0.0% - ----------------------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/15/07 1,2 100 1 - ----------------------------------------------------------------------------------- McCaw International Ltd. Wts., Exp. 4/15/07 1,2 100 1 - ----------------------------------------------------------------------------------- Microcell Telecommunications, Inc. Wts., Exp. 6/1/06 1,4 500 170 - ----------------------------------------------------------------------------------- Price Communications Corp. Wts., Exp. 8/1/07 1,2 516 19,092 ------------- Total Rights, Warrants and Certificates (Cost $5,248) 19,264 Principal Amount - ----------------------------------------------------------------------------------- Asset-Backed Securities--5.3% - ----------------------------------------------------------------------------------- Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts., Series 2002-4, Cl. A2B, 1.74%, 1/17/05 2,5 $540,000 539,975 - ----------------------------------------------------------------------------------- CitiFinancial Mortgage Securities, Inc., Collateralized Mtg. Obligations, Series 2002-1, Cl. AF1, 2.474%, 10/30/32 2 280,000 280,000 - ----------------------------------------------------------------------------------- Daimler Chrysler Auto Trust, Automobile Loan Pass-Through Certificates, Series 2002-B, Cl. A2, 2.20%, 4/6/05 330,000 331,231 - ----------------------------------------------------------------------------------- Ford Credit Auto Owner Trust, Automobile Loan Certificates, Series 2002-D, Cl. A2A, 2.10%, 3/15/05 600,000 601,855 - ----------------------------------------------------------------------------------- Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts., Series 2002-2, Cl. A1, 1.91%, 4/15/07 337,905 338,431 - ----------------------------------------------------------------------------------- Honda Auto Receivables Owner Trust, Automobile Mtg. Obligations, Series 2002-3, Cl. A2, 2.26%, 12/18/04 410,000 411,783 - ----------------------------------------------------------------------------------- Household Automotive Trust, Automobile Loan Certificates, Series 2002-2, Cl. A2, 2.15%, 12/19/05 300,000 301,125 - ----------------------------------------------------------------------------------- Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates, Series 2001-1A, Cl. A1, 8.33%, 4/25/31 2 867,514 908,721 - ----------------------------------------------------------------------------------- M&I Auto Loan Trust, Automobile Loan Certificates, Series 2002-1, Cl. A2, 1.95%, 7/20/05 190,000 190,342 15 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF INVESTMENTS Continued Principal Market Value Amount See Note 1 - ----------------------------------------------------------------------------------- Asset-Backed Securities Continued - ----------------------------------------------------------------------------------- MMCA Auto Lease Trust, Auto Retail Installment Contracts, Series 2002-A, Cl. A2, 1.967%, 5/16/05 2,5 $ 280,000 $ 280,000 - ----------------------------------------------------------------------------------- Nissan Auto Receivables Owner Trust, Auto Receivable Nts., Series 2002-C, Cl. A2, 1.94%, 9/15/04 2 430,000 430,756 - ----------------------------------------------------------------------------------- Norse CBO Ltd., Collateralized Bond Obligations, Series 1A, Cl. A3, 6.515%, 8/13/10 2 948,887 949,480 - ----------------------------------------------------------------------------------- USAA Auto Owner Trust, Automobile Loan Asset-Backed Certificates, Series 2002-1, Cl. A2, 1.95%, 3/15/05 130,000 130,259 ------------- Total Asset-Backed Securities (Cost $5,643,791) 5,693,958 - ----------------------------------------------------------------------------------- Mortgage-Backed Obligations--19.5% - ----------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Gtd. Mtg. Pass-Through Participation Certificates: 8%, 4/1/16 397,631 424,485 9%, 8/1/22-5/1/25 92,330 102,487 - ----------------------------------------------------------------------------------- Federal National Mortgage Assn.: 6.50%, 3/1/26 277,045 288,098 6.50%, 11/25/32 6 12,000,000 12,435,000 7%, 2/25/22 1,052,691 1,122,875 7%, 11/25/32 6 2,016,000 2,106,720 7.50%, 1/1/08-6/1/08 146,395 155,241 - ----------------------------------------------------------------------------------- Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates Interest-Only Stripped Mtg.-Backed Security, Trust 1993-223, Cl. PM, 5.389%, 10/25/23 7 366,055 36,045 - ----------------------------------------------------------------------------------- GE Capital Mortgage Services, Inc., Collateralized Mtg. Obligations, Series 1999-2, Cl. A3, 6.50%, 4/25/29 500,000 529,198 - ----------------------------------------------------------------------------------- Government National Mortgage Assn.: 7%, 4/15/09-2/15/24 465,852 495,223 7.50%, 3/15/09 156,239 168,610 8%, 5/15/17 152,704 166,004 8.50%, 8/15/17-12/15/17 107,750 118,712 - ----------------------------------------------------------------------------------- Granite Mortgages plc, Mtg.-Backed Obligations, Series 2002-2, Cl. 1A1, 1.929%, 1/21/17 5 300,000 300,090 - ----------------------------------------------------------------------------------- Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-WF1, Cl. A2, 7.328%, 11/15/28 4,5 428,488 441,134 - ----------------------------------------------------------------------------------- Norwest Asset Securities Corp., Collateralized Mtg. Obligations, Mtg. Pass-Through Certificates: Series 1999-16, Cl. A3, 6%, 6/25/29 500,000 509,063 Series 1999-18, Cl. A2, 6%, 7/25/29 1,000,000 1,041,085 - ----------------------------------------------------------------------------------- Washington Mutual Mortgage Securities Corp., Collateralized Mtg. Obligations, Mtg. Pass-Through Certificates: Series 2002-AR10, Cl. A1, 2.359%, 10/25/32 2,5 354,042 354,374 Series 2002-AR15, Cl. A1, 2.26%, 12/25/32 2 340,000 340,000 ------------- Total Mortgage-Backed Obligations (Cost $20,729,626) 21,134,444 16 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Principal Market Value Amount See Note 1 =================================================================================== U.S. Government Obligations--8.6% Federal National Mortgage Assn. Unsec. Nts., 3.625%, 4/15/04 8 $ 2,000,000 $ 2,056,700 - ----------------------------------------------------------------------------------- U.S. Treasury Bonds: 4.375%, 8/15/12 580,000 602,294 5.375%, 2/15/31 1,800,000 1,900,478 7.50%, 11/15/16 700,000 902,618 8.75%, 5/15/17 1,250,000 1,779,981 - ----------------------------------------------------------------------------------- U.S. Treasury Nts.: 3.25%, 8/15/07 235,000 240,481 5.75%, 11/15/05 790,000 873,845 6.50%, 2/15/10 8 800,000 951,051 ------------- Total U.S. Government Obligations (Cost $8,466,610) 9,307,448 =================================================================================== Foreign Government Obligations--0.1% - ----------------------------------------------------------------------------------- United Mexican States Nts., 7.50%, 1/14/12 (Cost $111,228) 110,000 114,812 =================================================================================== Non-Convertible Corporate Bonds and Notes--19.3% - ----------------------------------------------------------------------------------- ABN Amro NA Holding Capital NV, 6.473% Bonds, 12/29/49 4 105,000 104,621 - ----------------------------------------------------------------------------------- Albertson's, Inc., 7.45% Unsec. Debs., 8/1/29 215,000 235,045 - ----------------------------------------------------------------------------------- American International Group, Inc./SunAmerica Global Financing VI, 6.30% Sr. Sec. Nts., 5/10/11 4 155,000 169,332 - ----------------------------------------------------------------------------------- Anthem, Inc., 6.80% Unsec. Unsub. Bonds, 8/1/12 170,000 183,413 - ----------------------------------------------------------------------------------- AOL Time Warner, Inc., 6.875% Nts., 5/1/12 700,000 692,950 - ----------------------------------------------------------------------------------- Archer Daniels Midland Co., 5.875% Nts., 10/1/32 35,000 33,573 - ----------------------------------------------------------------------------------- AT&T Corp.: 5.625% Nts., 3/15/04 550,000 547,462 8% Sr. Nts., 11/15/31 350,000 335,344 - ----------------------------------------------------------------------------------- AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 600,000 531,582 - ----------------------------------------------------------------------------------- AXA Group, 8.60% Unsec. Sub. Nts., 12/15/30 190,000 193,529 - ----------------------------------------------------------------------------------- Boeing Capital Corp., 5.65% Sr. Unsec. Nts., 5/15/06 200,000 205,113 - ----------------------------------------------------------------------------------- Bombardier Capital, Inc., 7.30% Nts., 12/15/02 4 190,000 188,184 - ----------------------------------------------------------------------------------- Bristol-Myers Squibb Co., 5.75% Nts., 10/1/11 210,000 223,761 - ----------------------------------------------------------------------------------- Burlington Northern Santa Fe Corp., 5.90% Sr. Nts., 7/1/12 155,000 165,139 - ----------------------------------------------------------------------------------- Cardinal Health, Inc., 4.45% Nts., 6/30/05 160,000 167,665 - ----------------------------------------------------------------------------------- Carolina Power & Light Co., 6.50% Nts., 7/15/12 30,000 31,353 - ----------------------------------------------------------------------------------- Cincinnati Gas & Electric Co., 5.70% Nts., 9/15/12 45,000 44,721 - ----------------------------------------------------------------------------------- CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 120,000 122,873 - ----------------------------------------------------------------------------------- Citigroup, Inc.: 6.625% Unsec. Sub. Nts., 6/15/32 350,000 357,777 7.25% Sub. Nts., 10/1/10 210,000 238,327 - ----------------------------------------------------------------------------------- Columbia Gas System, Inc., 6.80% Nts., Series C, 11/28/05 500,000 499,928 - ----------------------------------------------------------------------------------- Comcast Cable Communications, Inc., 8.875% Unsub. Nts., 5/1/17 209,000 216,303 - ----------------------------------------------------------------------------------- ConocoPhillips, 3.625% Nts., 10/15/07 4 70,000 70,030 - ----------------------------------------------------------------------------------- Cox Communications, Inc., 7.125% Nts., 10/1/12 135,000 139,728 - ----------------------------------------------------------------------------------- Credit Suisse First Boston (USA), Inc., 5.75% Nts., 4/15/07 205,000 213,139 17 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF INVESTMENTS Continued Principal Market Value Amount See Note 1 =================================================================================== Non-Convertible Corporate Bonds and Notes Continued - ----------------------------------------------------------------------------------- Delphi Corp., 6.55% Nts., 6/15/06 $130,000 $ 136,800 - ----------------------------------------------------------------------------------- Deutsche Telekom International BV, 8.25% Unsec. Unsub. Nts., 6/15/05 5 205,000 221,086 - ----------------------------------------------------------------------------------- Dime Bancorp, Inc., 9.33% Capital Securities, Series A, 5/6/27 240,000 267,494 - ----------------------------------------------------------------------------------- Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 135,000 151,243 - ----------------------------------------------------------------------------------- El Paso Electric Co., 8.25% First Mtg. Bonds, Series C, 2/1/03 500,000 503,510 - ----------------------------------------------------------------------------------- EOP Operating LP, 7.75% Unsec. Nts., 11/15/07 145,000 164,583 - ----------------------------------------------------------------------------------- Farmers Insurance Exchange, 8.625% Nts., 5/1/24 4 300,000 206,006 - ----------------------------------------------------------------------------------- Federated Department Stores, Inc., 6.30% Sr. Nts., 4/1/09 210,000 219,517 - ----------------------------------------------------------------------------------- FirstEnergy Corp., 7.375% Sr. Unsub. Nts., Series C, 11/15/31 150,000 130,838 - ----------------------------------------------------------------------------------- Ford Motor Co., 7.45% Bonds, 7/16/31 360,000 275,719 - ----------------------------------------------------------------------------------- Fort James Corp., 6.875% Sr. Nts., 9/15/07 1,000,000 881,048 - ----------------------------------------------------------------------------------- France Telecom SA, 8.70% Sr. Unsec. Nts., 3/1/06 5 90,000 96,502 - ----------------------------------------------------------------------------------- General Electric Capital Corp., 6% Nts., 6/15/12 285,000 303,303 - ----------------------------------------------------------------------------------- General Motors Acceptance Corp.: 6.75% Nts., 1/15/06 250,000 247,831 6.875% Unsec. Unsub. Nts., 8/28/12 200,000 181,313 7% Auto Loan Nts., 2/1/12 280,000 258,476 - ----------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The), 6.60% Sr. Unsec. Nts., 1/15/12 120,000 130,649 - ----------------------------------------------------------------------------------- GTE North, Inc., 6.73% Debs., Series G, 2/15/28 125,000 115,762 - ----------------------------------------------------------------------------------- Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12 420,000 356,307 - ----------------------------------------------------------------------------------- Household Finance Corp., 8% Sr. Nts., 5/9/05 230,000 216,380 - ----------------------------------------------------------------------------------- J.P. Morgan Chase & Co., 6.625% Sub. Nts., 3/15/12 115,000 123,456 - ----------------------------------------------------------------------------------- John Hancock Global Funding II: 5% Nts., 7/27/07 4 165,000 171,843 7.90% Nts., 7/2/10 4 105,000 121,734 - ----------------------------------------------------------------------------------- Kraft Foods, Inc., 6.50% Bonds, 11/1/31 155,000 165,032 - ----------------------------------------------------------------------------------- Kroger Co. (The), 6.75% Nts., 4/15/12 370,000 402,706 - ----------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc., 6.625% Nts., 1/18/12 80,000 86,969 - ----------------------------------------------------------------------------------- Lockheed Martin Corp., 8.20% Nts., 12/1/09 120,000 145,518 - ----------------------------------------------------------------------------------- MBNA America Bank NA, 6.625% Sub. Nts., 6/15/12 180,000 174,510 - ----------------------------------------------------------------------------------- Metropolitan Life Global Funding I, 4.75% Nts., 6/20/07 230,000 241,711 - ----------------------------------------------------------------------------------- MidAmerican Energy Holdings Co., 5.875% Sr. Nts., 10/1/12 4 265,000 260,928 - ----------------------------------------------------------------------------------- Morgan Stanley, 6.60% Nts., 4/1/12 155,000 168,746 - ----------------------------------------------------------------------------------- Nationwide CSN Trust, 9.875% Sec. Nts., 2/15/25 4 1,000,000 1,048,056 - ----------------------------------------------------------------------------------- Nationwide Financial Services, Inc., 5.90% Nts., 7/1/12 125,000 125,093 - ----------------------------------------------------------------------------------- New England Telephone & Telegraph Co., 7.875% Debs., 11/15/29 90,000 95,237 - ----------------------------------------------------------------------------------- News America Holdings, Inc., 7.75% Sr. Unsec. Debs., 12/1/45 373,000 326,802 - ----------------------------------------------------------------------------------- NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10 130,000 126,899 - ----------------------------------------------------------------------------------- Oncor Electric Delivery Co., 7% Nts., 9/1/22 4 180,000 157,323 - ----------------------------------------------------------------------------------- Petroleos Mexicanos, 9.50% Sr. Sub. Nts., 9/15/27 70,000 73,850 - ----------------------------------------------------------------------------------- Pharmacia Corp., 6.60% Sr. Unsec. Nts., 12/1/28 75,000 81,675 - ----------------------------------------------------------------------------------- PHH Corp., 8.125% Nts., 2/3/03 500,000 500,042 18 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Principal Market Value Amount See Note 1 =================================================================================== Non-Convertible Corporate Bonds and Notes Continued - ----------------------------------------------------------------------------------- Philip Morris Cos., Inc., 7.25% Nts., 1/15/03 $420,000 $ 423,271 - ----------------------------------------------------------------------------------- Progress Energy, Inc., 7.10% Nts., 3/1/11 155,000 159,163 - ----------------------------------------------------------------------------------- Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 4 170,000 185,175 - ----------------------------------------------------------------------------------- Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 4 250,000 268,028 - ----------------------------------------------------------------------------------- Pulte Corp., 8.125% Sr. Unsec. Nts., 3/1/11 155,000 166,053 - ----------------------------------------------------------------------------------- Raytheon Co., 5.70% Sr. Unsec. Nts., 11/1/03 265,000 270,552 - ----------------------------------------------------------------------------------- Reed Elsevier Capital, Inc., 6.75% Bonds, 8/1/11 110,000 121,597 - ----------------------------------------------------------------------------------- Safeway, Inc.: 4.80% Sr. Unsec. Nts., 7/16/07 170,000 176,528 5.80% Sr. Nts., 8/15/12 170,000 178,322 - ----------------------------------------------------------------------------------- Sears Roebuck Acceptance Corp.: 6% Unsec. Bonds, 3/20/03 140,000 140,246 6.90% Nts., 8/1/03 100,000 100,589 - ----------------------------------------------------------------------------------- Simon DeBartolo Group LP, 6.875% Unsec. Nts., 11/15/06 155,000 168,798 - ----------------------------------------------------------------------------------- Sprint Capital Corp., 8.75% Nts., 3/15/32 100,000 76,232 - ----------------------------------------------------------------------------------- TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 700,000 776,920 - ----------------------------------------------------------------------------------- Tenet Healthcare Corp., 6.375% Sr. Nts., 12/1/11 165,000 175,014 - ----------------------------------------------------------------------------------- Union Carbide Corp., 6.25% Nts., 6/15/03 150,000 151,597 - ----------------------------------------------------------------------------------- Union Pacific Corp., 7.60% Unsec. Nts., 5/1/05 500,000 557,376 - ----------------------------------------------------------------------------------- Viacom, Inc., 7.70% Sr. Unsec. Nts., 7/30/10 135,000 158,249 - ----------------------------------------------------------------------------------- Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 135,000 138,322 - ----------------------------------------------------------------------------------- Walt Disney Co., 6.75% Sr. Nts., 3/30/06 145,000 155,557 - ----------------------------------------------------------------------------------- Waste Management, Inc.: 7% Sr. Nts., 7/15/28 460,000 406,696 7.75% Bonds, 5/15/32 4 90,000 88,210 - ----------------------------------------------------------------------------------- WellPoint Health Networks, Inc., 6.375% Nts., 1/15/12 110,000 119,049 - ----------------------------------------------------------------------------------- Wyeth, 5.875% Nts., 3/15/04 160,000 165,135 ------------- Total Non-Convertible Corporate Bonds and Notes (Cost $20,965,393) 20,900,068 =================================================================================== Short-Term Notes--2.0% - ----------------------------------------------------------------------------------- Federal Home Loan Bank, 1.65%, 11/1/02 (Cost $2,150,000) 2,150,000 2,150,000 =================================================================================== Joint Repurchase Agreements--5.1% - ----------------------------------------------------------------------------------- Undivided interest of 29.68% in joint repurchase agreement (Market Value $18,754,000) with Zion Bank/Capital Markets Group, 1.85%, dated 10/31/02, to be repurchased at $5,567,286 on 11/1/02, collateralized by U.S. Treasury Bonds, 2.125%, 10/31/04, with a value of $19,178,339 (Cost $5,567,000) 5,567,000 5,567,000 - ----------------------------------------------------------------------------------- Total Investments, at Value (Cost $121,321,061) 112.8% 122,130,061 - ----------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (12.8) (13,895,401) -------------------------- Net Assets 100.0% $108,234,660 ==========================
19 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF INVESTMENTS Continued Footnotes to Statement of Investments 1. Non-income producing security. 2. Identifies issues considered to be illiquid or restricted--See Note 7 of Notes to Financial Statements. 3. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows: Contracts Expiration Exercise Premium Market Value Subject to Call Date Price Received See Note 1 - ------------------------------------------------------------------------------ JDS Uniphase Corp. 2 3/24/03 $2.50 $106 $100 4. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Directors. These securities amount to $3,480,774 or 3.22% of the Fund's net assets as of October 31, 2002. 5. Represents the current interest rate for a variable or increasing rate security. 6. When-issued security to be delivered and settled after October 31, 2002. 7. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 8. Securities with an aggregate market value of $1,622,757 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 5 of Notes to Financial Statements. See accompanying Notes to Financial Statements. 20 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES October 31, 2002
======================================================================================= Assets - --------------------------------------------------------------------------------------- Investments, at value (cost $121,321,061)--see accompanying statement $ 122,130,061 - --------------------------------------------------------------------------------------- Cash 15,829 - --------------------------------------------------------------------------------------- Receivables and other assets: Interest and dividends 710,800 Investments sold 290,873 Shares of capital stock sold 92,713 Other 1,658 --------------- Total assets 123,241,934 ======================================================================================= Liabilities - --------------------------------------------------------------------------------------- Options written, at value (premiums received $106)--see accompanying statement 100 - --------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $14,516,186 purchased on a when-issued basis) 14,791,007 Shares of capital stock redeemed 46,106 Shareholder reports 39,131 Directors' compensation 30,979 Daily variation on futures contracts 29,156 Transfer and shareholder servicing agent fees 26,075 Distribution and service plan fees 22,475 Other 22,245 --------------- Total liabilities 15,007,274 ======================================================================================= Net Assets $108,234,660 --------------- ======================================================================================= Composition of Net Assets - --------------------------------------------------------------------------------------- Par value of shares of capital stock $ 9,349 - --------------------------------------------------------------------------------------- Additional paid-in capital 132,351,230 - --------------------------------------------------------------------------------------- Undistributed net investment income 176,788 - --------------------------------------------------------------------------------------- Accumulated net realized loss on investment transactions (24,950,736) - --------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 648,029 ------------- Net Assets $108,234,660 =============
21 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES Continued
======================================================================================= Net Asset Value Per Share - --------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $92,805,690 and 8,026,368 shares of capital stock outstanding) $11.56 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $12.27 - --------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $12,204,286 and 1,040,221 shares of capital stock outstanding) $11.73 - --------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $2,983,992 and 261,034 shares of capital stock outstanding) $11.43 - --------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $240,692 and 20,887 shares of capital stock outstanding) $11.52
See accompanying Notes to Financial Statements. 22 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENT OF OPERATIONS For the Year Ended October 31, 2002
=================================================================================== Investment Income - ----------------------------------------------------------------------------------- Interest $ 2,965,786 - ----------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $3,229) 592,392 ------------ Total investment income 3,558,178 =================================================================================== Expenses - ----------------------------------------------------------------------------------- Management fees 757,734 - ----------------------------------------------------------------------------------- Distribution and service plan fees: Class A 258,615 Class B 136,465 Class C 29,608 Class N 795 - ----------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 266,932 Class B 40,517 Class C 8,811 Class N 641 - ----------------------------------------------------------------------------------- Shareholder reports 52,401 - ----------------------------------------------------------------------------------- Accounting service fees 15,000 - ----------------------------------------------------------------------------------- Directors' compensation 7,290 - ----------------------------------------------------------------------------------- Custodian fees and expenses 321 - ----------------------------------------------------------------------------------- Other 19,030 ------------ Total expenses 1,594,160 Less reduction to custodian expenses (321) Less voluntary waiver of transfer and shareholder servicing agent fees--Classes A, B, C and N (3,263) ------------ Net expenses 1,590,576 =================================================================================== Net Investment Income 1,967,602 =================================================================================== Realized and Unrealized Gain (Loss) - ----------------------------------------------------------------------------------- Net realized gain (loss) on: Investments (including premiums on options exercised) (9,930,085) Closing of futures contracts (878,870) Closing and expiration of option contracts written 41,756 ------------ Net realized loss (10,767,199) - ----------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments 1,737,740 Translation of assets and liabilities denominated in foreign currencies 168 ------------ Net change 1,737,908 ------------ Net realized and unrealized loss (9,029,291) =================================================================================== Net Decrease in Net Assets Resulting from Operations $(7,061,689) ============
See accompanying Notes to Financial Statements. 23 | OPPENHEIMER DISCIPLINED ALLOCATION FUND STATEMENTS OF CHANGES IN NET ASSETS
Year Ended October 31, 2002 2001 =================================================================================== Operations - ----------------------------------------------------------------------------------- Net investment income $ 1,967,602 $ 2,654,379 - ----------------------------------------------------------------------------------- Net realized loss (10,767,199) (13,176,727) - ----------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 1,737,908 (5,224,834) --------------------------- Net decrease in net assets resulting from operations (7,061,689) (15,747,182) =================================================================================== Dividends and/or Distributions to Shareholders - ----------------------------------------------------------------------------------- Dividends from net investment income: Class A (2,252,545) (2,498,703) Class B (179,379) (195,117) Class C (40,660) (40,745) Class N (3,372) (10) =================================================================================== Capital Stock Transactions - ----------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from capital stock transactions: Class A (11,878,838) (15,345,653) Class B (1,491,347) (1,061,078) Class C 322,450 (637,673) Class N 276,606 1,730 =================================================================================== Net Assets - ----------------------------------------------------------------------------------- Total decrease (22,308,774) (35,524,431) - ----------------------------------------------------------------------------------- Beginning of period 130,543,434 166,067,865 --------------------------- End of period [including undistributed net investment income of $176,788 and $685,142, respectively] $108,234,660 $130,543,434 ===========================
See accompanying Notes to Financial Statements. 24 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FINANCIAL HIGHLIGHTS
Class A Year Ended October 31 2002 2001 2000 1999 1998 ========================================================================================== Per Share Operating Data - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.54 $ 14.23 $ 15.03 $ 15.45 $ 16.81 - ------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .22 .26 .44 .44 .45 Net realized and unrealized gain (loss) (.94) (1.69) .68 (.01) .45 ------------------------------------------------ Total from investment operations (.72) (1.43) 1.12 .43 .90 - ------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.26) (.26) (.44) (.44) (.45) Distributions from net realized gain -- -- (1.48) (.41) (1.81) ------------------------------------------------ Total dividends and/or distributions to shareholders (.26) (.26) (1.92) (.85) (2.26) - ------------------------------------------------------------------------------------------ Net asset value, end of period $11.56 $12.54 $14.23 $15.03 $15.45 =============================================== ========================================================================================== Total Return, at Net Asset Value 1 (5.86)% (10.12)% 8.27% 2.62% 5.93% - ------------------------------------------------------------------------------------------ ========================================================================================== Ratios/Supplemental Data - ------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 92,806 $112,864 $144,244 $258,159 $298,558 - ------------------------------------------------------------------------------------------ Average net assets (in thousands) $104,415 $128,477 $172,514 $293,677 $268,715 - ------------------------------------------------------------------------------------------ Ratios to average net assets: 2 Net investment income 1.73% 1.88% 2.88% 2.72% 2.96% Expenses 1.21% 1.19% 1.11% 1.04% 1.04% 3 - ------------------------------------------------------------------------------------------ Portfolio turnover rate 193% 164% 34% 122% 97%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 25 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FINANCIAL HIGHLIGHTS Continued
Class B Year Ended October 31 2002 2001 2000 1999 1998 ========================================================================================== Per Share Operating Data - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.72 $ 14.43 $ 15.20 $ 15.62 $ 16.99 - ------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .11 .15 .30 .31 .36 Net realized and unrealized gain (loss) (.94) (1.70) .73 -- .43 ------------------------------------------------ Total from investment operations (.83) (1.55) 1.03 .31 .79 - ------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: - ------------------------------------------------------------------------------------------ Dividends from net investment income (.16) (.16) (.32) (.32) (.35) Distributions from net realized gain -- -- (1.48) (.41) (1.81) ------------------------------------------------ Total dividends and/or distributions to shareholders (.16) (.16) (1.80) (.73) (2.16) - ------------------------------------------------------------------------------------------ Net asset value, end of period $11.73 $12.72 $14.43 $15.20 $15.62 =============================================== ========================================================================================== Total Return, at Net Asset Value 1 (6.61)% (10.79)% 7.48% 1.84% 5.10% - ------------------------------------------------------------------------------------------ ========================================================================================== Ratios/Supplemental Data - ------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $12,204 $14,770 $17,892 $23,522 $21,754 - ------------------------------------------------------------------------------------------ Average net assets (in thousands) $13,639 $16,569 $19,643 $24,648 $14,235 - ------------------------------------------------------------------------------------------ Ratios to average net assets: 2 Net investment income 0.94% 1.14% 2.12% 1.97% 2.19% Expenses 2.00% 1.94% 1.87% 1.80% 1.80% 3 - ------------------------------------------------------------------------------------------ Portfolio turnover rate 193% 164% 34% 122% 97%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 26 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Class C Year Ended October 31 2002 2001 2000 1999 1998 ========================================================================================== Per Share Operating Data - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.41 $ 14.08 $ 14.88 $ 15.31 $ 16.70 - ------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .13 .13 .28 .32 .37 Net realized and unrealized gain (loss) (.94) (1.64) .72 (.01) .40 ------------------------------------------------ Total from investment operations (.81) (1.51) 1.00 .31 .77 - ------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.17) (.16) (.32) (.33) (.35) Distributions from net realized gain -- -- (1.48) (.41) (1.81) ------------------------------------------------ Total dividends and/or distributions to shareholders (.17) (.16) (1.80) (.74) (2.16) - ------------------------------------------------------------------------------------------ Net asset value, end of period $11.43 $12.41 $14.08 $14.88 $15.31 =============================================== ========================================================================================== Total Return, at Net Asset Value 1 (6.64)% (10.76)% 7.44% 1.84% 5.10% - ------------------------------------------------------------------------------------------ ========================================================================================== Ratios/Supplemental Data - ------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,984 $2,893 $3,931 $5,719 $4,824 - ------------------------------------------------------------------------------------------ Average net assets (in thousands) $2,961 $3,280 $4,255 $5,876 $2,861 - ------------------------------------------------------------------------------------------ Ratios to average net assets: 2 Net investment income 0.93% 1.14% 2.13% 1.97% 2.18% Expenses 2.00% 1.94% 1.86% 1.80% 1.80% 3 - ------------------------------------------------------------------------------------------ Portfolio turnover rate 193% 164% 34% 122% 97%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 27 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FINANCIAL HIGHLIGHTS Continued
Class N Year Ended October 31 2002 2001 1 ======================================================================================= Per Share Operating Data - --------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.52 $ 13.74 - --------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .16 .12 Net realized and unrealized loss (.91) (1.20) -------------------- Total from investment operations (.75) (1.08) - --------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.25) (.14) Distributions from net realized gain -- -- -------------------- Total dividends and/or distributions to shareholders (.25) (.14) - --------------------------------------------------------------------------------------- Net asset value, end of period $11.52 $12.52 ==================== ======================================================================================= Total Return, at Net Asset Value 2 (6.17)% (7.90)% - --------------------------------------------------------------------------------------- ======================================================================================= Ratios/Supplemental Data - --------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $241 $2 - --------------------------------------------------------------------------------------- Average net assets (in thousands) $160 $1 - --------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 1.28% 1.04% Expenses 1.60% 1.68% - --------------------------------------------------------------------------------------- Portfolio turnover rate 193% 164%
1. For the period from March 1, 2001 (inception of offering) to October 31, 2001. 2. Assumes an investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. See accompanying Notes to Financial Statements. 28 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Oppenheimer Disciplined Allocation Fund (the Fund), a series of Oppenheimer Series Fund, Inc. (the Company), is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek to maximize total investment return (including capital appreciation and income) principally by allocating its assets among stocks, corporate bonds, U.S. government securities and money market instruments, according to changing market conditions. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class N 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. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Securities Valuation. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Directors, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Directors. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- Securities Purchased on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its commitments. These transactions of securities on a when-issued basis may increase the volatility of the Fund's net asset value to the extent the Fund executes such transactions while remaining 29 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued substantially fully invested. As of October 31, 2002, the Fund had entered into when-issued purchase commitments of $14,516,186. In connection with its ability to purchase securities on a when-issued basis, the Fund may enter into forward roll transactions with respect to mortgage-related securities. Forward roll transactions require the sale of securities for delivery in the current month, and a simultaneous agreement with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The forward roll may not extend for a period of greater than one year. The Fund generally records the incremental difference between the forward purchase and sell of each forward roll as interest income. Risks to the Fund of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities to what was sold to the counterparty at redelivery; counterparty credit risk; and the potential pay down speed variance between the mortgage-related pools. - -------------------------------------------------------------------------------- Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the prevailing exchange rates on the valuation date. Amounts related to the purchase and sale of foreign securities and investment income are translated at the prevailing exchange rates on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- Joint Repurchase Agreements. The Fund, along with other affiliated funds of the Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. 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; however, 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 daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. 30 | OPPENHEIMER DISCIPLINED ALLOCATION FUND - -------------------------------------------------------------------------------- Directors' Compensation. The Fund has adopted a nonfunded retirement plan for the Fund's independent directors. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended October 31, 2002, the Fund's projected benefit obligations were increased by $3,093 and payments of $4,585 were made to retired directors, resulting in an accumulated liability of $30,424 as of October 31, 2002. The Board of Directors has adopted a deferred compensation plan for independent directors that enables directors to elect to defer receipt of all or a portion of annual compensation they are entitled to receive from the Fund. Under the plan, the compensation deferred is invested for the Board of Directors in shares of one or more Oppenheimer funds selected by the director. The amount paid to the Board of Directors under the plan will be determined based upon the performance of the selected funds. Deferral of directors' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. - -------------------------------------------------------------------------------- Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. During the fiscal year ended October 31, 2002, the Fund did not utilize any capital loss carryforward. As of October 31, 2002, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: Expiring ---------------------- 2008 $ 167,496 2009 13,696,976 2010 10,218,293 ----------- Total $24,082,765 =========== - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- Classification of Dividends and Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for 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 Fund. 31 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 1. Significant Accounting Policies Continued The tax character of distributions paid during the year ended October 31, 2002 and year ended October 31, 2001 was as follows: Year Ended Year Ended October 31, 2002 October 31, 2001 ------------------------------------------------------ Distributions paid from: Ordinary income $2,475,956 $2,734,575 Long-term capital gain -- -- Return of capital -- -- ---------------------------- Total $2,475,956 $2,734,575 ============================ As of October 31, 2002, the components of distributable earnings on a tax basis were as follows: Undistributed net investment income $ 176,788 Accumulated net realized loss (24,950,736) Net unrealized appreciation 648,029 ------------ Total $(24,125,919) ============ - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. 32 | OPPENHEIMER DISCIPLINED ALLOCATION FUND ================================================================================ 2. Shares of Capital Stock The Fund has authorized 550 million shares of $0.001 par value capital stock. Transactions in shares of capital stock were as follows:
Year Ended October 31, 2002 Year Ended October 31, 2001 1 Shares Amount Shares Amount - ----------------------------------------------------------------------------------- Class A Sold 628,916 $ 7,576,816 453,469 $ 6,078,435 Dividends and/or distributions reinvested 174,069 2,175,432 182,218 2,404,510 Redeemed (1,777,767) (21,631,086) (1,772,576) (23,828,598) ------------------------------------------------------- Net decrease (974,782) $(11,878,838) (1,136,889) $(15,345,653) ======================================================= - ----------------------------------------------------------------------------------- Class B Sold 220,549 $ 2,710,789 229,496 $ 3,127,331 Dividends and/or distributions reinvested 13,413 171,302 13,741 184,308 Redeemed (354,813) (4,373,438) (322,213) (4,372,717) ------------------------------------------------------- Net decrease (120,851) $ (1,491,347) (78,976) $ (1,061,078) ======================================================= - ----------------------------------------------------------------------------------- Class C Sold 101,338 $ 1,207,406 63,616 $ 848,633 Dividends and/or distributions reinvested 3,185 39,488 3,008 39,397 Redeemed (76,698) (924,444) (112,706) (1,525,703) ------------------------------------------------------- Net increase (decrease) 27,825 $ 322,450 (46,082) $ (637,673) ======================================================= - ----------------------------------------------------------------------------------- Class N Sold 108,852 $ 1,331,998 131 $ 1,730 Dividends and/or distributions reinvested 134 1,621 -- -- Redeemed (88,230) (1,057,013) -- -- ------------------------------------------------------- Net increase 20,756 $ 276,606 131 $ 1,730 =======================================================
1. For the year ended October 31, 2001, for Class A, B and C shares and for the period from March 1, 2001 (inception of offering) to October 31, 2001, for Class N shares. ================================================================================ 3. Purchases and Sales of Securities The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended October 31, 2002, were $216,983,384 and $220,483,280, respectively. As of October 31, 2002, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $122,350,018 was composed of: Gross unrealized appreciation $ 6,376,349 Gross unrealized depreciation (6,596,306) ----------- Net unrealized depreciation $ (219,957) =========== 33 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 3. Purchases and Sales of Securities Continued The difference between book-basis and tax-basis unrealized appreciation and depreciation, if applicable, is attributable primarily to the tax deferral of losses on wash sales, or return of capital dividends, and the realization for tax purposes of unrealized gain (loss) on certain futures contracts, investments in passive foreign investment companies, and forward foreign currency exchange contracts. ================================================================================ 4. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager are in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.625% of the first $300 million of average annual net assets of the Fund, 0.50% of the next $100 million, and 0.45% of average annual net assets in excess of $400 million. - -------------------------------------------------------------------------------- Accounting Fees. The Manager acts as the accounting agent for the Fund at an annual fee of $15,000, plus out-of-pocket costs and expenses reasonably incurred. - -------------------------------------------------------------------------------- Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes, up to an annual rate of 0.35% of average net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- Distribution and Service Plan (12b-1) Fees. Under its General Distributor's Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions Front-End Front-End on Class A on Class B on Class C on Class N Sales Charges Sales Charges Shares Shares Shares Shares on Class A Retained by Advanced by Advanced by Advanced by Advanced by Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1 - ----------------------------------------------------------------------------------------------- October 31, 2002 $100,924 $63,284 $7,439 $65,199 $8,315 $1,759
1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale. Class A Class B Class C Class N Contingent Contingent Contingent Contingent Deferred Deferred Deferred Deferred Sales Charges Sales Charges Sales Charges Sales Charges Retained by Retained by Retained by Retained by Year Ended Distributor Distributor Distributor Distributor - -------------------------------------------------------------------------------- October 31, 2002 $300 $40,714 $1,530 $775 34 | OPPENHEIMER DISCIPLINED ALLOCATION FUND - -------------------------------------------------------------------------------- Service Plan for Class A Shares. The Fund 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 quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. For the year ended October 31, 2002, payments under the Class A Plan totaled $258,615, all of which were paid by the Distributor to recipients, and included $129,116 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. - -------------------------------------------------------------------------------- Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares and the Fund pays the Distributor an annual asset-based sales charge of 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. Distribution fees paid to the Distributor for the year ended October 31, 2002, were as follows: Distributor's Distributor's Aggregate Aggregate Unreimbursed Unreimbursed Expenses as % Total Payments Amount Retained Expenses of Net Assets Under Plan by Distributor Under Plan of Class - ------------------------------------------------------------------------------- Class B Plan $136,465 $106,578 $522,569 4.28% Class C Plan 29,608 7,083 93,429 3.13 Class N Plan 795 739 42 0.02 ================================================================================ 5. Futures Contracts A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date at a negotiated price. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices "financial futures" or debt securities "interest rate futures" in order to gain exposure to or to seek to protect against changes in market value of stock and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. 35 | OPPENHEIMER DISCIPLINED ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 5. Futures Contracts Continued Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and losses are reported in the Statement of Operations as closing and expiration of futures contracts. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of October 31, 2002, the Fund had outstanding futures contracts as follows:
Unrealized Expiration Number of Valuation as of Appreciation Contract Description Dates Contracts October 31, 2002 (Depreciation) - ----------------------------------------------------------------------------------- Contracts to Purchase U.S. Treasury Nts., 2 yr. 12/27/02 9 $1,936,547 $ 13,422 U.S. Treasury Nts., 10 yr. 12/19/02 3 344,156 5,922 ---------- 19,344 ---------- Contracts to Sell U.S. Long Bonds 12/19/02 36 3,983,625 (38,117) U.S. Treasury Nts., 5 yr. 12/19/02 63 7,165,266 (142,211) ---------- (180,328) ---------- $(160,984) ==========
================================================================================ 6. Option Activity The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. 36 | OPPENHEIMER DISCIPLINED ALLOCATION FUND The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended October 31, 2002 was as follows: Call Options ------------------------ Number of Amount of Contracts Premiums - ----------------------------------------------------- Options outstanding as of October 31, 2001 -- $ -- Options written 539 107,296 Options closed or expired (457) (87,763) Options exercised (80) (19,427) ------------------------ Options outstanding as of October 31, 2002 2 $ 106 ======================== ================================================================================ 7. Illiquid or Restricted Securities As of October 31, 2002, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Directors as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of October 31, 2002 was $4,102,400, which represents 3.79% of the Fund's net assets, of which zero is considered restricted. Information concerning restricted securities is as follows: Valuation Acquisition as of Unrealized Security Date Cost October 31, 2002 Depreciation - -------------------------------------------------------------------------------- Stocks and/or Warrants Geotek Communications, Inc., Series B (Escrowed) 1/4/01 $400 $-- $400 ================================================================================ 8. Bank Borrowings Effective November 13, 2001, the Fund no longer participated in an agreement with other Oppenheimer funds in an unsecured line of credit with a bank. The Fund may borrow from a bank for temporary or emergency purposes, provided asset coverage for borrowings exceeds 300%. The Fund had no borrowings outstanding during the year ended October 31, 2002. 37 | OPPENHEIMER DISCIPLINED ALLOCATION FUND INDEPENDENT AUDITORS' REPORT ================================================================================ The Board of Directors and Shareholders of Oppenheimer Disciplined Allocation Fund: We have audited the accompanying statement of assets and liabilities of Oppenheimer Disciplined Allocation Fund, including the statement of investments, as of October 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2002, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Disciplined Allocation Fund as of October 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Denver, Colorado November 21, 2002 38 | OPPENHEIMER DISCIPLINED ALLOCATION FUND FEDERAL INCOME TAX INFORMATION Unaudited ================================================================================ In early 2003, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2002. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends paid by the Fund during the fiscal year ended October 31, 2002 which are not designated as capital gain distributions should be multiplied by 25.289% to arrive at the amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 39 | OPPENHEIMER DISCIPLINED ALLOCATION FUND SHAREHOLDER MEETING Unaudited ================================================================================ On September 24, 2002, a special shareholder meeting of the Fund was held at which all of the nominees for Director of Oppenheimer Series Fund, Inc. (the "Corporation") on behalf of its series, Oppenheimer Disciplined Allocation Fund were elected and all proposals were approved by shareholders as described in the Fund's proxy statement for that meeting. The following is a report of the votes cast: - -------------------------------------------------------------------------------- Proposal No. 1 The following eleven persons were elected to serve as Director of the Corporation 1 until their successors are elected and shall qualify:
Nominee For Against Total - ----------------------------------------------------------------------------------- Leon Levy 13,583,623.209 476,148.281 14,059,771.490 Donald W. Spiro 13,633,611.516 426,159.974 14,059,771.490 John V. Murphy 13,659,242.576 400,528.914 14,059,771.490 Robert G. Galli 13,614,810.277 444,961.213 14,059,771.490 Phillip A. Griffiths 13,664,597.884 395,176.606 14,059,771.490 Benjamin Lipstein 13,617,938.322 441,833.168 14,059,771.490 Elizabeth B. Moynihan 13,655,782.047 403,989.443 14,059,771.490 Kenneth A. Randall 13,648,925.235 410,846.255 14,059,771.490 Edward V. Regan 13,664,856.007 394,915.483 14,059,771.490 Russell S. Reynolds, Jr. 13,645,375.820 414,395.670 14,059,771.490 Clayton K. Yeutter 13,646,989.416 412,782.074 14,059,771.490
1. The Fund, along with Oppenheimer Value Fund (the "Funds"), are series of the Corporation. Therefore the Funds have the same Board of Directors and the voting results for the election of Directors reflects the combined vote of the shares of both funds.
For Against Abstain Broker Non-Votes Total - --------------------------------------------------------------------------------------- Proposal No. 2 2(a). Replacement of the fundamental investment policy with a non-fundamental investment policy with respect to purchasing restricted or illiquid securities: 4,572,754.678 604,230.531 728,878.703 423,892.000 6,329,755.912 2(b). Elimination of the fundamental investment policy with respect to purchasing securities on margin and making short sales: 4,495,581.898 749,012.743 661,269.272 423,891.999 6,329,755.912 2(c). Elimination of the fundamental investment policy with respect to investing in a company of the purpose of exercising control: 4,555,392.503 790,870.827 559,600.582 423,892.000 6,329,755.912 2(d). Elimination of the fundamental investment policy with respect to investing in oil, gas or other mineral exploration or development programs, and amendment of the fundamental policy with respect to commodities and real estate: 4,793,328.229 420,545.145 691,990.538 423,892.000 6,329,755.912 2(e). Elimination of the fundamental investment policy with respect to entering in reverse repurchase agreements: 4,450,522.458 748,734.617 706,606.837 423,892.000 6,329,755.912 2(f). Elimination of the fundamental investment policy with respect to investing in securities of foreign issuers: 4,530,253.177 776,083.427 599,527.308 423,892.000 6,329,755.912 2(g). Amendment of the fundamental investment policy with respect to industry concentration: 4,678,913.818 451,123.035 775,827.059 423,892.000 6,329,755.912
40 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
2(h). Replacement of the fundamental investment policy with a non-fundamental investment policy with respect to investing in other investment companies: 4,639,219.989 494,631.941 772,011.982 423,892.000 6,329,755.912 2(i). Elimination of the fundamental investment policy with respect to writing, purchasing or selling puts, calls of combinations thereof: 4,485,896.058 668,096.366 751,871.488 423,892.000 6,329,755.912 2(j). Amendment of the fundamental investment policy with respect to borrowing: 4,440,245.708 685,980.278 779,637.927 423,891.999 6,329,755.912 2(k). Elimination of the fundamental investment policy with respect to ledging, mortgaging or hypothecating of assets: 4,448,449.774 731,485.079 725,929.059 423,892.000 6,329,755.912 2(l). Amendment of the fundamental investment policy with respect to lending: 4,572,510.124 576,751.531 756,602.256 423,892.001 6,329,755.912 2(m). Amendment of the fundamental investment policy with respect to iversification: 5,048,240.943 319,411.154 537,211.815 424,892.000 6,329,755.912
41 | OPPENHEIMER DISCIPLINED ALLOCATION FUND DIRECTORS AND OFFICERS
============================================================================================ Name, Age, Position(s) Held Principal Occupation(s) During Past 5 Years / Other with Fund and Length Trusteeships/Directorships Held by Director / Number of of Service Portfolios in Fund Complex Currently Overseen by Director INDEPENDENT The address of each Director in the chart below is 6803 S. DIRECTORS Tucson Way, Centennial, CO 80112-3924. Each Director serves for an indefinite term, until his or her resignation, retirement, death or removal. Leon Levy, Chairman of General Partner (since 1982) of Odyssey Partners, L.P. the Board of Directors (investment partnership) and Chairman of the Board (since (since 1985) 1981) of Avatar Holdings, Inc. (real estate development). Age: 77 Oversees 31 portfolios in the OppenheimerFunds complex. Robert G. Galli, A trustee or director of other Oppenheimer funds. Formerly Director (since 1993) Vice Chairman (October 1995-December 1997) of Age: 69 OppenheimerFunds, Inc. (the Manager). Oversees 41 portfolios in the OppenheimerFunds complex. Phillip A. Griffiths, The Director (since 1991) of the Institute for Advanced Director (since 1999) Study, Princeton, N.J., director (since 2001) of GSI Age: 64 Lumonics and a member of the National Academy of Sciences (since 1979); formerly (in descending chronological order) a director of Bankers Trust Corporation, Provost and Professor of Mathematics at Duke University, a director of Research Triangle Institute, Raleigh, N.C., and a Professor of Mathematics at Harvard University. Oversees 31 portfolios in the OppenheimerFunds complex. Benjamin Lipstein, Professor Emeritus of Marketing, Stern Graduate School of Director (since 1985) Business Administration, New York University. Oversees 31 Age: 79 portfolios in the OppenheimerFunds complex. Joel W. Motley, Director (January 2002-present), Columbia Equity Financial Director (since 2002) Corp. (privately-held financial adviser); Managing Director Age: 50 (January 2002-present), Carmona Motley Inc. (privately-held financial adviser); Formerly he held the following positions: Managing Director (January 1998-December 2001), Carmona Motley Hoffman Inc. (privately-held financial adviser); Managing Director (January 1992-December 1997), Carmona Motley & Co. (privately-held financial adviser). Oversees 31 portfolios in the OppenheimerFunds complex. Elizabeth B. Moynihan, Author and architectural historian; a trustee of the Freer Director (since 1992) Gallery of Art and Arthur M. Sackler Gallery (Smithsonian Age: 73 Institute), Trustees Council of the National Building Museum; a member of the Trustees Council, Preservation League of New York State. Oversees 31 portfolios in the OppenheimerFunds complex. Kenneth A. Randall, A director of Dominion Resources, Inc. (electric utility Director (since 1985) holding company) and Prime Retail, Inc. (real estate Age: 75 investment trust); formerly a director of Dominion Energy, Inc. (electric power and oil & gas producer), President and Chief Executive Officer of The Conference Board, Inc. (international economic and business research) and a director of Lumbermens Mutual Casualty Company, American Motorists Insurance Company and American Manufacturers Mutual Insurance Company. Oversees 31 portfolios in the OppenheimerFunds complex. 42 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Edward V. Regan, President, Baruch College, CUNY; a director of RBAsset (real Director (since 1993) estate manager); a director of OffitBank; formerly Trustee, Age: 72 Financial Accounting Foundation (FASB and GASB), Senior Fellow of Jerome Levy Economics Institute, Bard College, Chairman of Municipal Assistance Corporation for the City of New York, New York State Comptroller and Trustee of New York State and Local Retirement Fund. Oversees 31 investment companies in the OppenheimerFunds complex. Russell S. Reynolds, Jr., Chairman (since 1993) of The Directorship Search Group, Inc. Director (since 1989) (corporate governance consulting and executive recruiting); Age: 70 a life trustee of International House (non-profit educational organization), and a trustee (since 1996) of the Greenwich Historical Society. Oversees 31 portfolios in the OppenheimerFunds complex. Donald W. Spiro, Vice Chairman Emeritus (since January 1991) of OppenheimerFunds, Chairman of the Board of Inc. (the Manager). Formerly a director (January 1969-August Directors (since 1985) 1999) of the Manager. Oversees 31 portfolios in the Age: 76 OppenheimerFunds complex. Clayton K. Yeutter, Of Counsel (since 1993), Hogan & Hartson (a law firm). Other Director (since 1991) directorships: Caterpillar, Inc. (since 1993) and Age: 71 Weyerhaeuser Co. (since 1999). Oversees 31 portfolios in the OppenheimerFunds complex. ============================================================================================ INTERESTED DIRECTOR The address of Mr. Murphy in the chart below is 498 Seventh AND OFFICER Avenue, New York, NY 10018. Mr. Murphy serves for an indefinite term, until his resignation, death or removal. John V. Murphy, Chairman, Chief Executive Officer and director (since June President and Director 2001) and President (since September 2000) of the Manager; (since 2001) President and a director or trustee of other Oppenheimer Age: 53 funds; President and a director (since July 2001) of Oppenheimer Acquisition Corp., the Manager's parent holding company, and of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the Manager; a director (since November 2001) of OppenheimerFunds Distributor, Inc., the Fund's distributor; Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc., transfer agent subsidiaries of the Manager; President and a director (since July 2001) of OppenheimerFunds Legacy Program, a charitable trust program established by the Manager; a director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc., investment advisory affiliates of the Manager; Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company, the Manager's parent company; a director (since June 1995) of DLB Acquisition Corporation (a holding company that holds the shares of David L. Babson &Company, Inc.); formerly, Chief Operating Officer (from September 2000 to June 2001) of the Manager; President and trustee (from November 1999 to November 2001) of MML Series Investment Fund and MassMutual Institutional Funds, open-end investment companies; a director (from September 1999 to August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (from September 1999 to August 2000) of MML Bay State Life Insurance Company; a director (from June 1989 to June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank, a wholly-owned subsidiary of Emerald Isle Bancorp. Oversees 69 portfolios in the OppenheimerFunds complex. 43 | OPPENHEIMER DISCIPLINED ALLOCATION FUND DIRECTORS AND OFFICERS Continued ============================================================================================ OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Bartlett, Leavy, Manioudakis, and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an annual term or until his or her earlier resignation, death or removal. Bruce Bartlett, Senior Vice President (since January 1999) of the Manager. Vice President Prior to joining the Manager in April, 1995, he was a Vice (since 2000) President and Senior Portfolio Manager at First of America Age: 52 Investment Corp. (September 1986 - April 1995). an officer of 6 portfolios in the OppenheimerFunds complex. Christopher Leavy, Senior Vice President (since September 2000) of the Manager; Vice President prior to joining the Manager in September 2000, he was a (since 2000) portfolio manager of Morgan Stanley Dean Witter Investment Age: 31 Management (from 1997) prior to which he was a portfolio manager and equity analyst of Crestar Asset Management (from 1995). An officer of 5 portfolios in the OppenheimerFunds complex. Angelo Manioudakis, Senior Vice President of the Manager (since April 2002); Vice President formerly Executive Director and portfolio manager for (since 2002) Miller, Anderson & Sherrerd, a division of Morgan Stanley Age: 35 Investment Management (August 1993-April 2002). An officer of 9 portfolios in the OppenheimerFunds complex. Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of Treasurer, Principal Financial the Manager; Treasurer (since March 1999) of HarbourView and Accounting Officer Asset Management Corporation, Shareholder Services, Inc., (since 1999) Oppenheimer Real Asset Management Corporation, Shareholder Age: 43 Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000) (offshore fund management subsidiaries of the Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief Operating Officer (March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An officer of 85 portfolios in the OppenheimerFunds complex. 44 | OPPENHEIMER DISCIPLINED ALLOCATION FUND Robert G. Zack, Senior Vice President (since May 1985) and General Counsel Secretary (since 2001) (since February 2002) of the Manager; General Counsel and a Age: 54 director (since November 2001) of OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Vice President and a director (since November 2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional Asset Management, Inc.; General Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director (since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (October 1997-November 2001). An officer of 85 portfolios in the OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information about the Fund's Directors and is available without charge upon request. MANAGEMENT AND OTHER AFFILIATES A Series of Oppenheimer Series Fund, Inc. ================================================================================ Investment Advisor OppenheimerFunds, Inc. ================================================================================ Distributor OppenheimerFunds Distributor, Inc. ================================================================================ Transfer and Shareholder OppenheimerFunds Services Servicing Agent ================================================================================ Independent Auditors KPMG LLP ================================================================================ Legal Counsel Mayer Brown Rowe & Maw (C)Copyright 2002 OppenheimerFunds, Inc. All rights reserved. 45 | OPPENHEIMER DISCIPLINED ALLOCATION FUND INFORMATION AND SERVICES eDocsDirect Get This Report Online! You can quickly view, download and print this report at your convenience. It's EASY, FAST, CONVENIENT, and FREE! With OppenheimerFunds eDocs Direct, you'll receive email notification when shareholder reports, prospectuses or prospectus supplements for your fund(s) become available online, instead of receiving them through the mail. You'll cut down on paper mail and help reduce fund expenses! Sign up for eDocs Direct today at www.oppenheimerfunds.com Internet 24-hr access to account information and transactions 1 www.oppenheimerfunds.com - -------------------------------------------------------------------------------- PhoneLink 1 and General Information 24-hr automated information and automated transactions Representatives also available Mon-Fri 8am-9pm ET Sat (January-April) 10am-4pm ET 1.800.CALL OPP (1.800.225.5677) - -------------------------------------------------------------------------------- Written Correspondence and Transaction Requests OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 For Overnight Delivery OppenheimerFunds Services 10200 East Girard Avenue, Building D Denver, CO 80231 - -------------------------------------------------------------------------------- Ticker Symbols Class A: CNMTX Class B: CDABX Class C: CDACX Class N: CDANX 1. At times the website or PhoneLink may be inaccessible or their transaction features may be unavailable. [LOGO] OppenheimerFunds[R] Distributor, Inc. RA0205.001.1002 December 30, 2002 -----END PRIVACY-ENHANCED MESSAGE-----