-----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, FvN43cl7Un7KgxBb+qs4JfaPok3RBmro0iZAQY2HsLmJaOTY4rqIF74r2RWi5BTu BlgpgcqHuMgTiSps0R7ztA== 0000935069-05-001483.txt : 20050611 0000935069-05-001483.hdr.sgml : 20050611 20050601161925 ACCESSION NUMBER: 0000935069-05-001483 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050601 DATE AS OF CHANGE: 20050601 EFFECTIVENESS DATE: 20050601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER BALANCED FUND CENTRAL INDEX KEY: 0000729968 IRS NUMBER: 133395850 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03864 FILM NUMBER: 05871021 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER MULTIPLE STRATEGIES FUND DATE OF NAME CHANGE: 19970306 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER ASSET ALLOCATION FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER RETIREMENT FUND DATE OF NAME CHANGE: 19870503 N-CSRS 1 rs240_15537ncsrs.txt RS240_15537NCSRS.TXT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-3864 OPPENHEIMER BALANCED FUND (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) ROBERT G. ZACK, ESQ. OPPENHEIMERFUNDS, INC. TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: SEPTEMBER 30 Date of reporting period: OCTOBER 1, 2004 - MARCH 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- TOP TEN COMMON STOCK INDUSTRIES - -------------------------------------------------------------------------------- Media 6.1% - -------------------------------------------------------------------------------- Software 4.8 - -------------------------------------------------------------------------------- Oil & Gas 3.7 - -------------------------------------------------------------------------------- Pharmaceuticals 3.4 - -------------------------------------------------------------------------------- Aerospace & Defense 3.4 - -------------------------------------------------------------------------------- Diversified Financial Services 3.1 - -------------------------------------------------------------------------------- Insurance 2.3 - -------------------------------------------------------------------------------- Tobacco 2.1 - -------------------------------------------------------------------------------- Commercial Services & Supplies 2.1 - -------------------------------------------------------------------------------- Computers & Peripherals 2.1 Portfolio holdings and allocations are subject to change. Percentages are as of March 31, 2005, and are based on net assets. TOP TEN COMMON STOCK HOLDINGS - -------------------------------------------------------------------------------- UnitedGlobalCom, Inc., Cl. A 2.5% - -------------------------------------------------------------------------------- Liberty Media Corp., Cl. A 2.5 - -------------------------------------------------------------------------------- Take-Two Interactive Software, Inc. 2.5 - -------------------------------------------------------------------------------- Altria Group, Inc. 2.1 - -------------------------------------------------------------------------------- Cendant Corp. 2.1 - -------------------------------------------------------------------------------- International Business Machines Corp. 1.6 - -------------------------------------------------------------------------------- Genworth Financial, Inc., Cl. A 1.3 - -------------------------------------------------------------------------------- Citigroup, Inc. 1.2 - -------------------------------------------------------------------------------- IDT Corp., Cl. B 1.2 - -------------------------------------------------------------------------------- Constellation Brands, Inc., Cl. A 1.1 Portfolio holdings and allocations are subject to change. Percentages are as of March 31, 2005, and are based on net assets. For more current Fund holdings, please visit www.oppenheimerfunds.com. - -------------------------------------------------------------------------------- 9 | OPPENHEIMER BALANCED FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] PORTFOLIO ALLOCATION Bonds and Notes 50.4% Stocks 42.6 Cash Equivalents 7.0 Portfolio holdings and allocations are subject to change. Percentages are as of March 31, 2005, and are based on total investments. - -------------------------------------------------------------------------------- 10 | OPPENHEIMER BALANCED FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The 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. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Fund were first publicly offered on 4/24/87. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. The Fund's maximum sales charge for Class A shares was lower prior to 4/1/91, so actual performance may have been higher. CLASS B shares of the Fund were first publicly offered on 8/29/95. 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 12/1/93. 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. 11 | OPPENHEIMER BALANCED FUND FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended March 31, 2005. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 12 | OPPENHEIMER BALANCED FUND the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (10/1/04) (3/31/05) MARCH 31, 2005 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,063.20 $ 5.41 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,019.70 5.30 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,058.50 10.21 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,015.06 10.00 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,058.40 9.85 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,015.41 9.64 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,061.10 7.74 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,017.45 7.57 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended March 31, 2005 are as follows: CLASS EXPENSE RATIOS - -------------------------------- Class A 1.05% - -------------------------------- Class B 1.98 - -------------------------------- Class C 1.91 - -------------------------------- Class N 1.50 13 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS March 31, 2005 / Unaudited - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ COMMON STOCKS--51.4% - ------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY--7.9% - ------------------------------------------------------------------------------------------------------------------ HOTELS, RESTAURANTS & LEISURE--0.8% McDonald's Corp. 217,200 $ 6,763,608 - ------------------------------------------------------------------------------------------------------------------ HOUSEHOLD DURABLES--0.3% WCI Communities, Inc. 1 97,400 2,929,792 - ------------------------------------------------------------------------------------------------------------------ INTERNET & CATALOG RETAIL--0.4% IAC/InterActiveCorp 1 144,400 3,215,788 - ------------------------------------------------------------------------------------------------------------------ MEDIA--6.1% Liberty Media Corp., Cl. A 2,102,400 21,801,888 - ------------------------------------------------------------------------------------------------------------------ Liberty Media International, Inc., Cl. A 1 65,504 2,865,145 - ------------------------------------------------------------------------------------------------------------------ UnitedGlobalCom, Inc., Cl. A 1 2,313,567 21,886,344 - ------------------------------------------------------------------------------------------------------------------ Viacom, Inc., Cl. B 188,800 6,575,904 -------------- 53,129,281 - ------------------------------------------------------------------------------------------------------------------ SPECIALTY RETAIL--0.3% Gap, Inc. (The) 118,800 2,594,592 - ------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES--3.9% - ------------------------------------------------------------------------------------------------------------------ BEVERAGES--1.2% Constellation Brands, Inc., Cl. A 1 187,000 9,886,690 - ------------------------------------------------------------------------------------------------------------------ FOOD PRODUCTS--0.6% Tyson Foods, Inc., Cl. A 328,900 5,486,052 - ------------------------------------------------------------------------------------------------------------------ TOBACCO--2.1% Altria Group, Inc. 282,400 18,466,136 - ------------------------------------------------------------------------------------------------------------------ ENERGY--4.2% - ------------------------------------------------------------------------------------------------------------------ ENERGY EQUIPMENT & SERVICES--0.5% Halliburton Co. 103,300 4,467,725 - ------------------------------------------------------------------------------------------------------------------ OIL & GAS--3.7% BP plc, ADR 70,900 4,424,160 - ------------------------------------------------------------------------------------------------------------------ Kinder Morgan, Inc. 49,100 3,716,870 - ------------------------------------------------------------------------------------------------------------------ LUKOIL, Sponsored ADR 62,300 8,441,650 - ------------------------------------------------------------------------------------------------------------------ Petroleo Brasileiro SA, Preference 112,000 4,326,472 - ------------------------------------------------------------------------------------------------------------------ Talisman Energy, Inc. 200,400 6,857,839 - ------------------------------------------------------------------------------------------------------------------ TotalFinaElf SA, Sponsored ADR 37,500 4,396,125 -------------- 32,163,116 - ------------------------------------------------------------------------------------------------------------------ FINANCIALS--9.1% - ------------------------------------------------------------------------------------------------------------------ CAPITAL MARKETS--0.3% UBS AG 34,492 2,911,812 - ------------------------------------------------------------------------------------------------------------------ COMMERCIAL BANKS--2.0% Bank of America Corp. 195,352 8,615,023 - ------------------------------------------------------------------------------------------------------------------ Wachovia Corp. 85,974 4,376,936
14 | OPPENHEIMER BALANCED FUND
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ COMMERCIAL BANKS Continued Wells Fargo & Co. 77,300 $ 4,622,540 -------------- 17,614,499 - ------------------------------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIAL SERVICES--3.1% Citigroup, Inc. 230,700 10,367,658 - ------------------------------------------------------------------------------------------------------------------ JPMorgan Chase & Co. 144,300 4,992,780 - ------------------------------------------------------------------------------------------------------------------ Lehman Brothers Holdings, Inc. 99,200 9,340,672 - ------------------------------------------------------------------------------------------------------------------ Morgan Stanley 43,000 2,461,750 -------------- 27,162,860 - ------------------------------------------------------------------------------------------------------------------ INSURANCE--2.3% Assured Guaranty Ltd. 255,600 4,588,020 - ------------------------------------------------------------------------------------------------------------------ Everest Re Group Ltd. 49,600 4,221,456 - ------------------------------------------------------------------------------------------------------------------ Genworth Financial, Inc., Cl. A 400,900 11,032,768 -------------- 19,842,244 - ------------------------------------------------------------------------------------------------------------------ REAL ESTATE--0.4% Host Marriott Corp. 197,600 3,272,256 - ------------------------------------------------------------------------------------------------------------------ THRIFTS & MORTGAGE FINANCE--1.0% Countrywide Financial Corp. 114,800 3,726,408 - ------------------------------------------------------------------------------------------------------------------ Freddie Mac 74,100 4,683,120 -------------- 8,409,528 - ------------------------------------------------------------------------------------------------------------------ HEALTH CARE--6.7% - ------------------------------------------------------------------------------------------------------------------ BIOTECHNOLOGY--1.7% MedImmune, Inc. 1 236,000 5,619,160 - ------------------------------------------------------------------------------------------------------------------ Wyeth 222,400 9,380,832 -------------- 14,999,992 - ------------------------------------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SUPPLIES--0.7% Beckman Coulter, Inc. 85,200 5,661,540 - ------------------------------------------------------------------------------------------------------------------ HEALTH CARE PROVIDERS & SERVICES--0.9% Manor Care, Inc. 67,000 2,436,120 - ------------------------------------------------------------------------------------------------------------------ Tenet Healthcare Corp. 1 491,500 5,666,995 -------------- 8,103,115 - ------------------------------------------------------------------------------------------------------------------ PHARMACEUTICALS--3.4% GlaxoSmithKline plc, ADR 87,800 4,031,776 - ------------------------------------------------------------------------------------------------------------------ Novartis AG 127,663 5,954,192 - ------------------------------------------------------------------------------------------------------------------ Pfizer, Inc. 291,740 7,664,010 - ------------------------------------------------------------------------------------------------------------------ Schering-Plough Corp. 245,800 4,461,270
15 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ PHARMACEUTICALS Continued Watson Pharmaceuticals, Inc. 1 239,900 $ 7,372,127 -------------- 29,483,375 - ------------------------------------------------------------------------------------------------------------------ INDUSTRIALS--6.5% - ------------------------------------------------------------------------------------------------------------------ AEROSPACE & DEFENSE--3.4% Empresa Brasileira de Aeronautica SA, ADR 142,100 4,447,730 - ------------------------------------------------------------------------------------------------------------------ Honeywell International, Inc. 245,700 9,142,497 - ------------------------------------------------------------------------------------------------------------------ Orbital Sciences Corp. 1 957,717 9,270,701 - ------------------------------------------------------------------------------------------------------------------ Raytheon Co. 170,100 6,582,870 -------------- 29,443,798 - ------------------------------------------------------------------------------------------------------------------ COMMERCIAL SERVICES & SUPPLIES--2.1% Cendant Corp. 873,700 17,945,798 - ------------------------------------------------------------------------------------------------------------------ ELECTRICAL EQUIPMENT--0.2% GrafTech International Ltd. 1 230,900 1,313,821 - ------------------------------------------------------------------------------------------------------------------ INDUSTRIAL CONGLOMERATES--0.8% General Electric Co. 137,700 4,965,462 - ------------------------------------------------------------------------------------------------------------------ Tyco International Ltd. 71,000 2,399,800 -------------- 7,365,262 - ------------------------------------------------------------------------------------------------------------------ INFORMATION TECHNOLOGY--9.2% - ------------------------------------------------------------------------------------------------------------------ COMPUTERS & PERIPHERALS--2.1% Hewlett-Packard Co. 204,479 4,486,269 - ------------------------------------------------------------------------------------------------------------------ International Business Machines Corp. 147,100 13,441,998 -------------- 17,928,267 - ------------------------------------------------------------------------------------------------------------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--0.7% Flextronics International Ltd. 1 485,300 5,843,012 - ------------------------------------------------------------------------------------------------------------------ INTERNET SOFTWARE & SERVICES--0.1% Net2Phone, Inc. 1 676,600 1,089,326 - ------------------------------------------------------------------------------------------------------------------ IT SERVICES--0.3% CSG Systems International, Inc. 1 162,300 2,643,867 - ------------------------------------------------------------------------------------------------------------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.2% Freescale Semiconductor, Inc., Cl. A 1 397,500 6,737,625 - ------------------------------------------------------------------------------------------------------------------ Intel Corp. 180,700 4,197,661 -------------- 10,935,286 - ------------------------------------------------------------------------------------------------------------------ SOFTWARE--4.8% Computer Associates International, Inc. 146 3,957 - ------------------------------------------------------------------------------------------------------------------ Compuware Corp. 1 345,329 2,486,369 - ------------------------------------------------------------------------------------------------------------------ Microsoft Corp. 408,500 9,873,445
16 | OPPENHEIMER BALANCED FUND
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ SOFTWARE Continued Novell, Inc. 1 900,300 $ 5,365,788 - ------------------------------------------------------------------------------------------------------------------ Synopsys, Inc. 1 120,700 2,184,670 - ------------------------------------------------------------------------------------------------------------------ Take-Two Interactive Software, Inc. 1 550,800 21,536,280 -------------- 41,450,509 - ------------------------------------------------------------------------------------------------------------------ MATERIALS--1.2% - ------------------------------------------------------------------------------------------------------------------ CHEMICALS--0.5% Praxair, Inc. 82,700 3,958,022 - ------------------------------------------------------------------------------------------------------------------ METALS & MINING--0.5% Companhia Vale do Rio Doce, Sponsored ADR 162,900 4,328,253 - ------------------------------------------------------------------------------------------------------------------ PAPER & FOREST PRODUCTS--0.2% Bowater, Inc. 47,100 1,774,257 - ------------------------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES--1.2% - ------------------------------------------------------------------------------------------------------------------ DIVERSIFIED TELECOMMUNICATION SERVICES--1.2% IDT Corp., Cl. B 1 696,200 10,296,798 - ------------------------------------------------------------------------------------------------------------------ WorldCom, Inc./WorldCom Group 1 450,000 -- -------------- 10,296,798 - ------------------------------------------------------------------------------------------------------------------ WIRELESS TELECOMMUNICATION SERVICES--0.0% Leap Wireless International, Inc. 1 2,251 58,639 - ------------------------------------------------------------------------------------------------------------------ UTILITIES--1.5% - ------------------------------------------------------------------------------------------------------------------ ELECTRIC UTILITIES--1.5% AES Corp. (The) 1 534,000 8,746,920 - ------------------------------------------------------------------------------------------------------------------ Reliant Energy, Inc. 1 344,500 3,920,410 -------------- 12,667,330 -------------- Total Common Stocks (Cost $329,088,224) 445,606,246 UNITS - ------------------------------------------------------------------------------------------------------------------ RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------------------------------------------ Lucent Technologies, Inc. Wts., Exp. 12/10/07 1 (Cost $0) 11,758 7,878 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------------ ASSET-BACKED SECURITIES--7.0% - ------------------------------------------------------------------------------------------------------------------ Aesop Funding II LLC, Automobile Asset-Backed Certificates, Series 2005-1A, Cl. A2, 2.91%, 4/20/08 2,3 $ 550,000 550,000 - ------------------------------------------------------------------------------------------------------------------ Bank One Auto Securitization Trust, Automobile Receivable Certificates, Series 2003-1, Cl. A2, 1.29%, 8/21/06 245,809 245,538 - ------------------------------------------------------------------------------------------------------------------ BMW Vehicle Owner Trust, Automobile Loan Certificates: Series 2004-A, Cl. A2, 1.88%, 10/25/06 1,244,719 1,241,504 Series 2005-A, Cl. A2, 3.65%, 12/26/07 2,180,000 2,177,356
17 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ ASSET-BACKED SECURITIES Continued - ------------------------------------------------------------------------------------------------------------------ Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts., Series 2004-2, Cl. A3, 3.58%, 1/15/09 $ 1,870,000 $ 1,840,174 - ------------------------------------------------------------------------------------------------------------------ Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates: Series 2004-A, Cl. AF1, 2.03%, 6/25/19 161,161 160,857 Series 2004-D, Cl. AF1, 2.98%, 4/25/20 2 714,401 710,229 Series 2005-B, Cl. AF1, 4.02%, 3/26/35 2 680,000 680,000 - ------------------------------------------------------------------------------------------------------------------ Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity Mtg. Obligations: Series 2002-4, Cl. 1A3, 3.44%, 4/25/23 92,541 92,406 Series 2003-1, Cl. 1A3, 3.14%, 7/25/23 409,124 408,437 Series 2003-3, Cl. 1A2, 1.93%, 5/25/18 278,357 277,924 Series 2003-4, Cl. 1A2, 2.138%, 7/25/18 1,233,539 1,229,897 Series 2003-5, Cl. 1A2, 2.451%, 11/25/18 400,000 397,544 Series 2004-1, Cl. 2A1, 2.96%, 9/25/21 3 307,963 308,156 - ------------------------------------------------------------------------------------------------------------------ Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through Certificates, Series 2002-A, Cl. A4, 4.24%, 9/15/08 325,602 327,209 - ------------------------------------------------------------------------------------------------------------------ CIT Equipment Collateral, Equipment Receivable-Backed Nts., Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 2 1,330,000 1,320,738 - ------------------------------------------------------------------------------------------------------------------ CIT Group Home Equity Loan Trust, Home Equity Loan Asset-Backed Certificates, Series 2003-1, Cl. A2, 2.35%, 4/20/27 440,705 439,715 - ------------------------------------------------------------------------------------------------------------------ Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.: Series 2001-A6, Cl. A6, 5.65%, 6/16/08 1,760,000 1,796,171 Series 2002-A3, Cl. A3, 4.40%, 5/15/07 1,430,000 1,433,168 Series 2003-C4, Cl. C4, 5%, 6/10/15 270,000 265,109 - ------------------------------------------------------------------------------------------------------------------ CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized Mtg. Obligations, Series 2003-3, Cl. AF1, 2.97%, 8/25/33 3 229,630 229,779 - ------------------------------------------------------------------------------------------------------------------ Citigroup Mortgage Loan Trust, Inc., Home Equity Mtg. Obligations, Series 2004-OPT1, Cl. A1B, 2.388%, 9/1/34 2 522,670 522,016 - ------------------------------------------------------------------------------------------------------------------ Countrywide Asset-Backed Certificates, Inc., Home Equity Asset-Backed Certificates, Series 2002-4, Cl. A1, 3.22%, 2/25/33 3 211,213 213,683 - ------------------------------------------------------------------------------------------------------------------ DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates: Series 2001-D, Cl. A4, 3.78%, 2/6/07 367,952 368,761 Series 2002-A, Cl. A4, 4.49%, 10/6/08 726,635 730,640 Series 2003-B, Cl. A2, 1.61%, 7/10/06 932,674 931,914 Series 2004-B, Cl. A2, 2.48%, 2/8/07 2 1,449,706 1,446,770 Series 2004-C, Cl. A2, 2.62%, 6/8/07 2,520,000 2,509,053 Series 2005-A, Cl. A2, 3.17%, 9/8/07 2 2,290,000 2,283,126 - ------------------------------------------------------------------------------------------------------------------ Equity One ABS, Inc., Home Equity Mtg. Pass-Through Certificates, Series 2004-3, Cl. AF2, 3.80%, 7/25/34 350,000 346,525 - ------------------------------------------------------------------------------------------------------------------ Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates: Series 2004-A, Cl. A2, 2.13%, 10/15/06 2,478,507 2,470,382 Series 2005-A, Cl. A3, 3.48%, 11/17/08 1,370,000 1,357,936 - ------------------------------------------------------------------------------------------------------------------ Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts., Series 2003-3, Cl. A1, 1.50%, 1/15/08 796,749 794,660
18 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ ASSET-BACKED SECURITIES Continued - ------------------------------------------------------------------------------------------------------------------ Honda Auto Receivables Owner Trust, Automobile Receivable Obligations: Series 2003-3, Cl. A2, 1.52%, 4/21/06 $ 388,397 $ 388,077 Series 2003-4, Cl. A2, 1.58%, 7/17/06 879,159 877,704 Series 2005-1, Cl. A2, 3.21%, 5/21/07 2 930,000 927,566 - ------------------------------------------------------------------------------------------------------------------ Household Automotive Trust, Automobile Loan Certificates, Series 2003-2, Cl. A2, 1.56%, 12/18/06 261,185 260,954 - ------------------------------------------------------------------------------------------------------------------ M&I Auto Loan Trust, Automobile Loan Certificates: Series 2002-1, Cl. A3, 2.49%, 10/22/07 411,003 410,783 Series 2003-1, Cl. A2, 1.60%, 7/20/06 308,400 308,282 - ------------------------------------------------------------------------------------------------------------------ MBNA Credit Card Master Note Trust, Credit Card Receivables, Series 2003-C7, Cl. C7, 4.16%, 3/15/16 3 2,540,000 2,695,762 - ------------------------------------------------------------------------------------------------------------------ National City Auto Receivables Trust, Automobile Receivable Obligations, Series 2004-A, Cl. A2, 1.50%, 2/15/07 750,412 748,316 - ------------------------------------------------------------------------------------------------------------------ Nissan Auto Lease Trust, Automobile Lease Obligations, Series 2004-A, Cl. A2, 2.55%, 1/15/07 1,250,000 1,244,087 - ------------------------------------------------------------------------------------------------------------------ Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.: Series 2002-A, Cl. A4, 4.28%, 10/16/06 213,231 213,760 Series 2004-A, Cl. A2, 1.40%, 7/17/06 843,128 840,361 - ------------------------------------------------------------------------------------------------------------------ Option One Mortgage Loan Trust, Home Equity Mtg. Obligations, Series 2004-3, Cl. A2, 3%, 11/25/34 2,3 583,221 583,678 - ------------------------------------------------------------------------------------------------------------------ Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through Certificates: Series 2004-5, Cl. A F2, 3.735%, 11/10/34 2 500,000 494,048 Series 2005-1, Cl. A F2, 3.914%, 5/25/35 390,000 385,751 Series 2005-2, Cl. A F2, 4.415%, 4/25/35 630,000 630,000 - ------------------------------------------------------------------------------------------------------------------ Structured Asset Securities Corp., Collateralized Mtg. Obligations, Mtg. Pass-Through Certificates, Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 3,502,108 3,530,926 - ------------------------------------------------------------------------------------------------------------------ Toyota Auto Receivables Owner Trust, Automobile Mg.-Backed Obligations, Series 2002-B, Cl. A4, 4.39%, 5/15/09 2,949,311 2,963,162 - ------------------------------------------------------------------------------------------------------------------ USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.: Series 2002-1, Cl. A3, 2.41%, 10/16/06 123,677 123,671 Series 2004-1, Cl. A2, 1.43%, 9/15/06 1,783,456 1,779,347 Series 2004-2, Cl. A2, 2.41%, 2/15/07 1,530,000 1,526,016 Series 2004-3, Cl. A2, 2.79%, 6/15/07 1,190,000 1,184,950 - ------------------------------------------------------------------------------------------------------------------ Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities: Series 2004-A, Cl. A2, 2.47%, 1/22/07 1,560,000 1,551,347 Series 2005-A, Cl. A2, 3.52%, 4/20/07 1,610,000 1,608,185 - ------------------------------------------------------------------------------------------------------------------ Volkswagen Auto Loan Enhanced Trust, Automobile Loan Receivable Certificates, Series 2003-2, Cl. A2, 1.55%, 6/20/06 417,097 416,553 - ------------------------------------------------------------------------------------------------------------------ Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B, Cl. A2, 2.40%, 5/21/07 1,110,000 1,105,199 - ------------------------------------------------------------------------------------------------------------------ Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations, Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 2,039,939 2,023,972
19 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ ASSET-BACKED SECURITIES Continued - ------------------------------------------------------------------------------------------------------------------ Whole Auto Loan Trust, Automobile Loan Receivable Certificates: Series 2003-1, Cl. A2A, 1.40%, 4/15/06 $ 396,542 $ 396,253 Series 2004-1, Cl. A2A, 2.59%, 5/15/07 1,580,000 1,571,565 -------------- Total Asset-Backed Securities (Cost $61,120,871) 60,897,652 - ------------------------------------------------------------------------------------------------------------------ MORTGAGE-BACKED OBLIGATIONS--33.1% - ------------------------------------------------------------------------------------------------------------------ GOVERNMENT AGENCY--28.5% - ------------------------------------------------------------------------------------------------------------------ FHLMC/FNMA/SPONSORED--28.2% Federal Home Loan Mortgage Corp.: 6%, 9/1/24-9/1/34 16,941,334 17,356,888 6.50%, 7/1/28-4/1/34 1,900,382 1,979,350 7%, 5/1/29-11/1/32 4,055,725 4,275,444 7%, 6/1/35 4 4,299,000 4,524,698 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Pass-Through Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 66,753 66,746 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Series 1669, Cl. G, 6.50%, 2/15/23 285,717 287,112 Series 2034, Cl. Z, 6.50%, 2/15/28 659,213 685,530 Series 2053, Cl. Z, 6.50%, 4/15/28 731,968 760,450 Series 2055, Cl. ZM, 6.50%, 5/15/28 920,811 954,784 Series 2075, Cl. D, 6.50%, 8/15/28 2,187,195 2,271,954 Series 2080, Cl. Z, 6.50%, 8/15/28 591,386 611,940 Series 2387, Cl. PD, 6%, 4/15/30 1,101,682 1,130,812 Series 2466, Cl. PD, 6.50%, 4/15/30 114,614 114,721 Series 2498, Cl. PC, 5.50%, 10/15/14 137,849 138,823 Series 2500, Cl. FD, 3.31%, 3/15/32 3 336,013 337,396 Series 2526, Cl. FE, 3.21%, 6/15/29 3 416,144 418,451 Series 2550, Cl. QK, 4.50%, 4/15/22 517,244 518,302 Series 2551, Cl. FD, 3.21%, 1/15/33 3 333,490 336,194 Series 2583, Cl. KA, 5.50%, 3/15/22 2,554,733 2,585,699 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Series 176, Cl. IO, 5.864%, 6/1/26 5 581,725 123,031 Series 183, Cl. IO, 3.74%, 4/1/27 5 923,092 200,051 Series 184, Cl. IO, 8.29%, 12/1/26 5 967,850 197,289 Series 192, Cl. IO, 10.937%, 2/1/28 5 270,816 54,659 Series 200, Cl. IO, 10.725%, 1/1/29 5 332,744 69,346 Series 2130, Cl. SC, 14.205%, 3/15/29 5 731,001 58,299 Series 2796, Cl. SD, 21.136%, 7/15/26 5 1,071,748 94,455 Series 2920, Cl. S, 30.867%, 1/15/35 5 6,869,069 383,294 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security, Series 176, Cl. PO, 5.874%, 6/1/26 6 235,860 199,695
20 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ FHLMC/FNMA/SPONSORED Continued Federal National Mortgage Assn.: 5%, 6/1/18-4/1/35 4 $ 53,740,359 $ 53,160,313 5.50%, 3/1/33-1/1/34 8,673,683 8,705,114 5.50%, 4/1/20-4/1/35 4 56,449,000 56,767,456 6%, 5/1/16-3/1/23 10,288,326 10,598,809 6%, 4/1/20 4 10,615,000 10,963,299 6.50%, 12/1/27-10/1/30 1,007,541 1,050,303 6.50%, 4/1/35 4 34,548,000 35,854,329 7%, 6/1/28-8/1/34 2,653,410 2,797,079 7%, 4/1/35 4 2,437,000 2,567,989 7.50%, 8/1/29 908,295 974,264 8.50%, 7/1/32 65,168 70,771 - ------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1993-87, Cl. Z, 6.50%, 6/25/23 1,680,600 1,746,740 Trust 1998-63, Cl. PG, 6%, 3/25/27 280,216 280,890 Trust 2001-50, Cl. NE, 6%, 8/25/30 611,055 617,219 Trust 2001-70, Cl. LR, 6%, 9/25/30 595,944 607,496 Trust 2001-72, Cl. NH, 6%, 4/25/30 461,130 466,466 Trust 2001-74, Cl. PD, 6%, 5/25/30 194,089 196,730 Trust 2002-77, Cl. WF, 3.234%, 12/18/32 3 525,232 528,809 Trust 2002-94, Cl. MA, 4.50%, 8/25/09 734,299 734,632 Trust 2002-T1, Cl. A2, 7%, 11/25/31 2,109,488 2,227,487 Trust 2003-10, Cl. HP, 5%, 2/25/18 2,480,000 2,453,648 Trust 2003-81, Cl. PA, 5%, 2/25/12 177,111 177,214 Trust 2004-101, Cl. BG, 5%, 1/25/20 1,633,000 1,620,991 - ------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security: Trust 2002-38, Cl. SO, 15.955%, 4/25/32 5 1,232,657 76,636 Trust 2002-47, Cl. NS, 12.675%, 4/25/32 5 1,260,297 115,821 Trust 2002-51, Cl. S, 12.94%, 8/25/32 5 1,157,152 106,342 Trust 2002-77, Cl. IS, 13.641%, 12/18/32 5 2,100,082 195,458 Trust 319, Cl. 2, 3.929%, 2/1/32 5 629,946 141,237 - ------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Trust 2001-81, Cl. S, 17.217%, 1/25/32 5 658,846 60,765 Trust 2002-9, Cl. MS, 14.197%, 3/25/32 5 877,838 84,279 Trust 2002-52, Cl. SD, 7.319%, 9/25/32 5 1,451,454 130,564 Trust 2002-77, Cl. SH, 22.484%, 12/18/32 5 839,561 82,241 Trust 2004-54, Cl. DS, 18.428%, 11/25/30 5 1,291,201 98,555 Trust 2005-6, Cl. SE, 27.111%, 2/25/35 5 4,523,700 275,402 Trust 2005-19, Cl. SA, 27.69%, 3/25/35 5 18,705,838 1,081,343 Trust 2005-40, Cl. SA, 0%, 5/25/35 4,5 3,930,000 229,045 Trust 214, Cl. 2, 6.978%, 3/1/23 5 1,713,027 333,548 Trust 222, Cl. 2, 3.25%, 6/1/23 5 1,932,378 389,697 Trust 240, Cl. 2, 6.26%, 9/1/23 5 2,914,544 601,272 Trust 252, Cl. 2, 0.567%, 11/1/23 5 1,466,827 287,994 Trust 254, Cl. 2, 3.712%, 1/1/24 5 737,711 144,759 Trust 273, Cl. 2, 5.74%, 7/1/26 5 421,489 87,611
21 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ FHLMC/FNMA/SPONSORED Continued Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued Trust 321, Cl. 2, (1.70)%, 3/1/32 5 $ 6,438,286 $ 1,480,244 Trust 329, Cl. 2, 7.239%, 1/1/33 5 1,422,539 339,782 Trust 333, Cl. 2, 8.18%, 3/1/33 5 6,594,750 1,591,191 Trust 334, Cl. 17, (6.605)%, 2/1/33 5 1,058,696 233,207 - ------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 7.615%, 9/25/23 6 643,841 544,154 -------------- 244,614,608 - ------------------------------------------------------------------------------------------------------------------ GNMA/GUARANTEED--0.3% Government National Mortgage Assn.: 3.375%, 3/20/26 3 48,223 49,190 7%, 4/15/26 292,097 309,836 7.50%, 5/15/27 1,419,193 1,525,335 - ------------------------------------------------------------------------------------------------------------------ Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Series 2001-21, Cl. SB, 12.767%, 1/16/27 5 1,421,236 119,518 Series 2002-15, Cl. SM, 7.742%, 2/16/32 5 1,331,201 115,974 Series 2002-76, Cl. SY, 12.757%, 12/16/26 5 2,759,173 252,888 Series 2004-11, Cl. SM, 8.358%, 1/17/30 5 1,079,728 88,033 -------------- 2,460,774 - ------------------------------------------------------------------------------------------------------------------ PRIVATE--4.6% - ------------------------------------------------------------------------------------------------------------------ COMMERCIAL--4.5% Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2004-6, Cl. A3, 4.512%, 12/10/42 1,480,000 1,447,812 - ------------------------------------------------------------------------------------------------------------------ Bank of America Mortgage Securities, Inc., Collateralized Mtg. Obligations Pass-Through Certificates: Series 2004-G, Cl. 2A1, 2.469%, 8/25/34 3 527,118 526,404 Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 1,124,564 1,125,409 Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 1,680,381 1,727,642 Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 2,154,075 2,186,361 - ------------------------------------------------------------------------------------------------------------------ Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg. Obligations, Series 2005-PWR7, Cl. A2, 4.945%, 2/11/41 750,000 750,770 - ------------------------------------------------------------------------------------------------------------------ Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations, Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 2,435,766 2,486,706 - ------------------------------------------------------------------------------------------------------------------ First Union National Bank/Lehman Brothers/Bank of America Commercial Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 980,000 1,033,057 - ------------------------------------------------------------------------------------------------------------------ GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations: Series 2004-C3, Cl. A2, 4.433%, 7/10/39 960,000 952,372 Series 2005-C1, Cl. A3, 4.578%, 6/10/48 650,000 638,504 - ------------------------------------------------------------------------------------------------------------------ GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Obligations, Series 2004-C3, Cl. A4, 4.547%, 12/10/41 940,000 922,367
22 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ COMMERCIAL Continued GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 $ 668,398 $ 699,900 - ------------------------------------------------------------------------------------------------------------------ Greenwich Capital Commercial Funding Corp., Commercial Mtg. Pass-Through Certificates, Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 1,330,000 1,310,362 - ------------------------------------------------------------------------------------------------------------------ GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates: Series 2004-C1, Cl. A1, 3.659%, 10/10/28 1,000,244 973,239 Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 620,000 619,171 - ------------------------------------------------------------------------------------------------------------------ GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 04-12, Cl. 3A1, 4.513%, 12/25/34 2,3 2,154,155 2,151,556 - ------------------------------------------------------------------------------------------------------------------ Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg. Obligations, Series 2004-6, Cl. 10A1, 6%, 7/25/34 2,566,670 2,626,169 - ------------------------------------------------------------------------------------------------------------------ Mastr Asset Securitization Trust, Pass-Through Collateralized Mtg. Obligations, Series 2004-9, Cl. A3, 4.70%, 8/25/34 3 3,541,867 3,531,710 - ------------------------------------------------------------------------------------------------------------------ Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 1,130,000 1,197,692 - ------------------------------------------------------------------------------------------------------------------ Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 1,362,000 1,531,473 - ------------------------------------------------------------------------------------------------------------------ Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. F, 8.421%, 1/20/28 2,3 250,000 205,781 - ------------------------------------------------------------------------------------------------------------------ Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Obligations: Series 2005-C16, Cl. A2, 4.38%, 10/15/41 1,930,000 1,904,137 Series 2005-C17, Cl. A2, 4.763%, 3/15/42 2,190,000 2,194,534 - ------------------------------------------------------------------------------------------------------------------ Wells Fargo Mortgage-Backed Securities Trust, Collateralized Mtg. Obligations: Series 2004-DD, Cl. 2A1, 4.545%, 1/25/35 3 2,973,932 2,976,843 Series 2004-N, Cl. A10, 3.803%, 8/25/34 2 2,036,593 2,041,090 Series 2004-W, Cl. A2, 4.623%, 11/25/34 3 1,031,923 1,031,497 -------------- 38,792,558 - ------------------------------------------------------------------------------------------------------------------ RESIDENTIAL--0.1% Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations, Series 2004-J9, Cl. 1A1, 3.03%, 10/25/34 3 1,472,202 1,473,806 -------------- Total Mortgage-Backed Obligations (Cost $288,191,338) 287,341,746 - ------------------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS--5.4% - ------------------------------------------------------------------------------------------------------------------ Fannie Mae Unsec. Nts., 3.96%, 10/5/07 7 1,245,000 1,122,527 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Bank Unsec. Bonds, 3.125%, 11/15/06 2,600,000 2,569,250 - ------------------------------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp. Unsec. Nts.: 3.625%, 9/15/06 3,495,000 3,484,574 6.625%, 9/15/09 475,000 516,755 6.875%, 9/15/10 1,000,000 1,111,879 - ------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn. Unsec. Nts.: 4.25%, 7/15/07 5,470,000 5,491,202 6.625%, 9/15/09 365,000 396,932 7.25%, 1/15/10-5/15/30 6,615,000 7,606,012
23 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS Continued - ------------------------------------------------------------------------------------------------------------------ Tennessee Valley Authority Bonds: 5.375%, 11/13/08 $ 375,000 $ 389,253 7.125%, 5/1/30 1,128,000 1,439,439 Series A, 6.79%, 5/23/12 11,936,000 13,462,292 - ------------------------------------------------------------------------------------------------------------------ U.S. Treasury Bonds: 4.375%, 8/15/12 1,090,000 1,092,896 5.50%, 8/15/28 2,566,000 2,788,321 - ------------------------------------------------------------------------------------------------------------------ U.S. Treasury Nts., 2.50%, 9/30/06-10/31/06 5,715,000 5,616,587 -------------- Total U.S. Government Obligations (Cost $47,588,246) 47,087,919 - ------------------------------------------------------------------------------------------------------------------ FOREIGN GOVERNMENT OBLIGATIONS--0.1% - ------------------------------------------------------------------------------------------------------------------ United Mexican States Nts., 7.50%, 1/14/12 (Cost $726,774) 665,000 735,823 - ------------------------------------------------------------------------------------------------------------------ NON-CONVERTIBLE CORPORATE BONDS AND NOTES--15.1% - ------------------------------------------------------------------------------------------------------------------ ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93 500,000 582,171 - ------------------------------------------------------------------------------------------------------------------ Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 1,675,000 1,724,156 - ------------------------------------------------------------------------------------------------------------------ AIG SunAmerica Global Financing II, 7.60% Sr. Sec. Nts., 6/15/05 8 720,000 725,933 - ------------------------------------------------------------------------------------------------------------------ Albertson's, Inc.: 8% Sr. Unsec. Debs., 5/1/31 885,000 1,044,971 8.70% Sr. Unsec. Debs., 5/1/30 459,000 580,697 - ------------------------------------------------------------------------------------------------------------------ Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 740,000 768,675 - ------------------------------------------------------------------------------------------------------------------ Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08 8 365,000 361,767 - ------------------------------------------------------------------------------------------------------------------ Allstate Life Global Funding II, 3.50% Nts., 7/30/07 495,000 486,326 - ------------------------------------------------------------------------------------------------------------------ American Express Centurion Bank, 4.375% Nts., 7/30/09 650,000 645,522 - ------------------------------------------------------------------------------------------------------------------ American Honda Finance Corp., 3.85% Nts., 11/6/08 8 1,220,000 1,193,527 - ------------------------------------------------------------------------------------------------------------------ AT&T Wireless Services, Inc., 8.125% Sr. Unsec. Nts., 5/1/12 1,515,000 1,772,302 - ------------------------------------------------------------------------------------------------------------------ AXA, 8.60% Unsec. Sub. Nts., 12/15/30 1,030,000 1,355,101 - ------------------------------------------------------------------------------------------------------------------ Bank of America Corp.: 4.875% Sr. Unsec. Nts., 1/15/13 23,000 22,866 7.80% Jr. Unsec. Sub. Nts., 2/15/10 500,000 566,567 - ------------------------------------------------------------------------------------------------------------------ Bankers Trust Corp., 7.375% Unsec. Sub. Nts., 5/1/08 140,000 151,753 - ------------------------------------------------------------------------------------------------------------------ Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts., 5/15/11 770,000 820,050 - ------------------------------------------------------------------------------------------------------------------ Boeing Capital Corp.: 5.75% Sr. Nts., 2/15/07 142,000 145,883 6.50% Nts., 2/15/12 9 1,000,000 1,086,406 - ------------------------------------------------------------------------------------------------------------------ British Telecommunications plc, 8.625% Bonds, 12/15/30 930,000 1,242,915 - ------------------------------------------------------------------------------------------------------------------ Canadian National Railway Co., 4.25% Nts., 8/1/09 238,000 234,929 - ------------------------------------------------------------------------------------------------------------------ CenterPoint Energy, Inc.: 5.875% Sr. Nts., 6/1/08 980,000 1,010,843 8.125% Unsec. Nts., Series B, 7/15/05 335,000 339,514 - ------------------------------------------------------------------------------------------------------------------ Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 1,710,000 1,844,474
24 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued - ------------------------------------------------------------------------------------------------------------------ Chesapeake Energy Corp., 7.50% Sr. Nts., 6/15/14 $ 895,000 $ 950,938 - ------------------------------------------------------------------------------------------------------------------ CIGNA Corp., 7.40% Unsec. Nts., 5/15/07 2,020,000 2,136,409 - ------------------------------------------------------------------------------------------------------------------ CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 1,410,000 1,633,147 - ------------------------------------------------------------------------------------------------------------------ Citigroup, Inc.: 6.625% Unsec. Sub. Nts., 6/15/32 1,295,000 1,448,779 6.875% Unsec. Nts., 2/15/98 550,000 628,261 - ------------------------------------------------------------------------------------------------------------------ Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 399,000 438,900 - ------------------------------------------------------------------------------------------------------------------ Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93 440,000 563,947 - ------------------------------------------------------------------------------------------------------------------ ConAgra Foods, Inc., 6% Nts., 9/15/06 925,000 948,154 - ------------------------------------------------------------------------------------------------------------------ Conectiv, Inc., 5.30% Unsec. Unsub. Nts., Series B, 6/1/05 230,000 230,602 - ------------------------------------------------------------------------------------------------------------------ Constellation Energy Group, 7% Unsec. Nts., 4/1/12 1,455,000 1,620,240 - ------------------------------------------------------------------------------------------------------------------ Cox Communications, Inc., 7.875% Unsec. Nts., 8/15/09 215,000 237,472 - ------------------------------------------------------------------------------------------------------------------ Cox Enterprises, Inc., 7.375% Unsec. Debs., 6/15/09 8 970,000 1,037,754 - ------------------------------------------------------------------------------------------------------------------ Credit Suisse First Boston (USA), Inc., 5.50% Nts., 8/15/13 2,035,000 2,079,807 - ------------------------------------------------------------------------------------------------------------------ CSX Corp., 6.25% Unsec. Nts., 10/15/08 780,000 821,492 - ------------------------------------------------------------------------------------------------------------------ D.R. Horton, Inc., 6.125% Nts., 1/15/14 760,000 757,317 - ------------------------------------------------------------------------------------------------------------------ DaimlerChrysler NA Holdings Corp., 7.20% Unsec. Nts., 9/1/09 2,030,000 2,187,479 - ------------------------------------------------------------------------------------------------------------------ Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 810,000 988,149 - ------------------------------------------------------------------------------------------------------------------ Delphi Corp., 6.55% Nts., 6/15/06 1,020,000 1,002,975 - ------------------------------------------------------------------------------------------------------------------ Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10 1,050,000 1,208,872 - ------------------------------------------------------------------------------------------------------------------ Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 725,000 830,256 - ------------------------------------------------------------------------------------------------------------------ DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 830,000 852,515 - ------------------------------------------------------------------------------------------------------------------ Duke Capital LLC, 5.668% Nts., 8/15/14 980,000 987,303 - ------------------------------------------------------------------------------------------------------------------ EOP Operating LP: 6.763% Sr. Unsec. Nts., 6/15/07 295,000 308,486 8.10% Unsec. Nts., 8/1/10 680,000 773,222 8.375% Nts., 3/15/06 560,000 582,378 - ------------------------------------------------------------------------------------------------------------------ Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 1,205,000 1,269,988 - ------------------------------------------------------------------------------------------------------------------ FedEx Corp., 2.65% Unsec. Nts., 4/1/07 1,875,000 1,817,826 - ------------------------------------------------------------------------------------------------------------------ FirstEnergy Corp.: 5.50% Sr. Unsub. Nts., Series A, 11/15/06 730,000 742,684 7.375% Sr. Unsub. Nts., Series C, 11/15/31 835,000 948,751 - ------------------------------------------------------------------------------------------------------------------ Ford Holdings, Inc., 9.30% Unsec. Unsub. Debs., 3/1/30 350,000 371,376 - ------------------------------------------------------------------------------------------------------------------ Ford Motor Credit Co., 7.375% Nts., 10/28/09 375,000 376,999 - ------------------------------------------------------------------------------------------------------------------ France Telecom SA: 8% Sr. Unsec. Nts., 3/1/11 3 960,000 1,099,780 8.75% Sr. Unsec. Nts., 3/1/31 3 310,000 409,232 - ------------------------------------------------------------------------------------------------------------------ Franklin Resources, Inc., 3.70% Nts., 4/15/08 585,000 575,128 - ------------------------------------------------------------------------------------------------------------------ Gap, Inc. (The): 6.90% Nts., 9/15/07 2 496,000 520,180 9.80% Unsub. Nts., 12/15/08 3 199,000 232,581
25 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued - ------------------------------------------------------------------------------------------------------------------ General Mills, Inc., 3.875% Nts., 11/30/07 $ 1,400,000 $ 1,380,977 - ------------------------------------------------------------------------------------------------------------------ General Motors Acceptance Corp.: 7.25% Nts., 3/2/11 1,800,000 1,673,154 8% Bonds, 11/1/31 1,440,000 1,257,157 - ------------------------------------------------------------------------------------------------------------------ Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 1,965,000 2,026,009 - ------------------------------------------------------------------------------------------------------------------ Hartford Financial Services Group, Inc. (The), 2.375% Nts., 6/1/06 480,000 469,249 - ------------------------------------------------------------------------------------------------------------------ HCA Healthcare Corp., 6.91% Sr. Sub. Nts., 6/15/05 695,000 702,817 - ------------------------------------------------------------------------------------------------------------------ Hertz Corp. (The), 6.35% Nts., 6/15/10 2,270,000 2,183,552 - ------------------------------------------------------------------------------------------------------------------ Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 635,000 678,109 - ------------------------------------------------------------------------------------------------------------------ HSBC Finance Corp., 4.75% Sr. Unsec. Nts., 7/15/13 2,245,000 2,189,335 - ------------------------------------------------------------------------------------------------------------------ IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 2,3 810,000 886,950 - ------------------------------------------------------------------------------------------------------------------ iStar Financial, Inc.: 4.875% Sr. Unsec. Nts., Series B, 1/15/09 775,000 765,870 8.75% Sr. Unsec. Nts., 8/15/08 565,000 632,477 - ------------------------------------------------------------------------------------------------------------------ J.C. Penney Co., Inc., 8% Nts., 3/1/10 1,640,000 1,648,200 - ------------------------------------------------------------------------------------------------------------------ John Hancock Global Funding II, 7.90% Nts., 7/2/10 8 1,341,000 1,532,882 - ------------------------------------------------------------------------------------------------------------------ Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., Series B, 10/15/06 1,11 250,000 215,000 - ------------------------------------------------------------------------------------------------------------------ Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 810,000 871,065 - ------------------------------------------------------------------------------------------------------------------ Kraft Foods, Inc., 5.25% Nts., 6/1/07 2,040,000 2,077,885 - ------------------------------------------------------------------------------------------------------------------ Kroger Co. (The), 7.80% Sr. Nts., 8/15/07 1,255,000 1,344,293 - ------------------------------------------------------------------------------------------------------------------ Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 1,450,000 1,570,549 - ------------------------------------------------------------------------------------------------------------------ Lehman Brothers Holdings, Inc., 7% Nts., 2/1/08 1,165,000 1,243,880 - ------------------------------------------------------------------------------------------------------------------ Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 185,000 195,270 - ------------------------------------------------------------------------------------------------------------------ Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 880,000 906,707 - ------------------------------------------------------------------------------------------------------------------ Liberty Media Corp., 5.70% Sr. Unsec. Nts., 5/15/13 1,105,000 1,043,150 - ------------------------------------------------------------------------------------------------------------------ Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 935,000 947,561 - ------------------------------------------------------------------------------------------------------------------ Lockheed Martin Corp., 7.65% Unsec. Unsub. Debs., 5/1/16 682,000 816,855 - ------------------------------------------------------------------------------------------------------------------ Marsh & McLennan Cos., Inc., 5.375% Sr. Unsec. Nts., 3/15/07 1,245,000 1,265,165 - ------------------------------------------------------------------------------------------------------------------ May Department Stores Co.: 3.95% Nts., 7/15/07 796,000 785,528 7.90% Unsec. Debs., 10/15/07 735,000 787,497 - ------------------------------------------------------------------------------------------------------------------ MBNA Corp., 7.50% Sr. Nts., Series F, 3/15/12 1,620,000 1,829,217 - ------------------------------------------------------------------------------------------------------------------ McDonnell Douglas Corp., 6.875% Unsec. Unsub. Nts., 11/1/06 228,000 236,954 - ------------------------------------------------------------------------------------------------------------------ Mellon Bank NA, 4.75% Unsec. Sub. Nts., 12/15/14 1,705,000 1,669,412 - ------------------------------------------------------------------------------------------------------------------ Merck & Co., Inc., 4.726% Nts., 2/22/06 8 1,715,000 1,724,741 - ------------------------------------------------------------------------------------------------------------------ Merrill Lynch & Co., Inc., 5% Sr. Unsub. Nts., Series C, 2/3/14 2,090,000 2,051,141 - ------------------------------------------------------------------------------------------------------------------ Morgan Stanley, 6.60% Nts., 4/1/12 760,000 830,767 - ------------------------------------------------------------------------------------------------------------------ National City Bank, 6.20% Sub. Nts., 12/15/11 124,000 133,604
26 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------ NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued - ------------------------------------------------------------------------------------------------------------------ NiSource Finance Corp.: 3.20% Nts., 11/1/06 $ 250,000 $ 245,115 7.875% Sr. Unsec. Nts., 11/15/10 1,070,000 1,221,609 - ------------------------------------------------------------------------------------------------------------------ Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 1,125,000 1,256,103 - ------------------------------------------------------------------------------------------------------------------ Pemex Project Funding Master Trust, 7.875% Unsec. Unsub. Nts., 2/1/09 570,000 617,595 - ------------------------------------------------------------------------------------------------------------------ PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 8 577,220 546,676 - ------------------------------------------------------------------------------------------------------------------ Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 8 1,215,000 1,541,498 - ------------------------------------------------------------------------------------------------------------------ Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 8 1,285,000 1,675,418 - ------------------------------------------------------------------------------------------------------------------ PSE&G Power LLC, 6.875% Sr. Unsec. Nts., 4/15/06 915,000 941,048 - ------------------------------------------------------------------------------------------------------------------ PSEG Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 2 810,000 836,325 - ------------------------------------------------------------------------------------------------------------------ R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08 750,000 866,372 - ------------------------------------------------------------------------------------------------------------------ Raytheon Co., 6.50% Unsec. Nts., 7/15/05 312,000 314,586 - ------------------------------------------------------------------------------------------------------------------ Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 2,110,000 2,111,960 - ------------------------------------------------------------------------------------------------------------------ Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10 900,000 1,014,131 - ------------------------------------------------------------------------------------------------------------------ Simon Property Group LP: 5.45% Unsec. Nts., 3/15/13 820,000 822,444 5.625% Unsec. Unsub. Nts., 8/15/14 795,000 800,114 - ------------------------------------------------------------------------------------------------------------------ Sprint Capital Corp.: 6% Sr. Unsec. Nts., 1/15/07 870,000 894,716 8.75% Nts., 3/15/32 725,000 943,429 - ------------------------------------------------------------------------------------------------------------------ Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 1,350,000 1,400,625 - ------------------------------------------------------------------------------------------------------------------ Sterling Chemicals, Inc., 10% Sr. Sec. Nts., 12/19/07 2,10 136,379 137,061 - ------------------------------------------------------------------------------------------------------------------ SunTrust Banks, Inc.: 4% Nts., 10/15/08 965,000 953,252 7.75% Unsec. Sub. Nts., 5/1/10 86,000 97,783 - ------------------------------------------------------------------------------------------------------------------ TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 1,720,000 2,158,722 - ------------------------------------------------------------------------------------------------------------------ TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07 680,000 766,700 - ------------------------------------------------------------------------------------------------------------------ Telefonos de Mexico SA de CV, 4.75% Nts., 1/27/10 8 1,145,000 1,118,530 - ------------------------------------------------------------------------------------------------------------------ Time Warner Cos., Inc., 9.125% Debs., 1/15/13 695,000 860,001 - ------------------------------------------------------------------------------------------------------------------ Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 308,000 391,975 - ------------------------------------------------------------------------------------------------------------------ Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 770,000 829,675 - ------------------------------------------------------------------------------------------------------------------ Travelers Property Casualty Corp., 3.75% Sr. Unsec. Nts., 3/15/08 1,605,000 1,570,863 - ------------------------------------------------------------------------------------------------------------------ TXU Corp., 4.80% Nts., 11/15/09 8 795,000 770,956 - ------------------------------------------------------------------------------------------------------------------ Tyco International Group SA: 6.375% Sr. Unsec. Unsub. Nts., 2/15/06 1,220,000 1,241,787 6.375% Nts., 10/15/11 1,000,000 1,068,978 6.75% Sr. Unsub. Nts., 2/15/11 515,000 558,723 - ------------------------------------------------------------------------------------------------------------------ UnitedHealth Group, Inc., 4.875% Bonds, 3/15/15 530,000 518,940 - ------------------------------------------------------------------------------------------------------------------ Univision Communications, Inc.: 2.875% Sr. Unsec. Nts., 10/15/06 241,000 236,222 3.50% Sr. Unsec. Nts., 10/15/07 1,255,000 1,227,463
27 | OPPENHEIMER BALANCED FUND STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued - ------------------------------------------------------------------------------------------------------------------- Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 $ 1,765,000 $ 1,809,826 - ------------------------------------------------------------------------------------------------------------------- Waste Management, Inc.: 7% Sr. Nts., 7/15/28 290,000 325,107 7.125% Sr. Unsec. Nts., 10/1/07 1,185,000 1,257,605 - ------------------------------------------------------------------------------------------------------------------- Western Forest Products, Inc., 15% Sec. Nts., 7/28/09 2,10 292,000 321,200 - ------------------------------------------------------------------------------------------------------------------- Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 1,755,000 1,832,152 --------------- Total Non-Convertible Corporate Bonds and Notes (Cost $131,251,511) 131,002,991 - ------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--5.7% - ------------------------------------------------------------------------------------------------------------------- Undivided interest of 5.87% in joint repurchase agreement (Principal Amount/ Value $838,272,000, with a maturity value of $838,336,035) with UBS Warburg LLC, 2.75%, dated 3/31/05, to be repurchased at $49,214,759 on 4/1/05, collateralized by Federal National Mortgage Assn., 4.50%--5%, 5/1/19--3/1/34, with a value of $857,182,684 (Cost $49,211,000) 49,211,000 49,211,000 - ------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $907,177,964) 1,021,891,255 - ------------------------------------------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--2.8% - ------------------------------------------------------------------------------------------------------------------- ASSET BACKED FLOATING NOTE--0.3% Whitehawk CDO Funding Corp., 3.08%, 6/15/05 12 2,000,000 2,000,000 - ------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--2.4% Undivided interest of 4.19% in joint repurchase agreement (Principal Amount/ Value $500,000,000, with a maturity value of $500,040,972) with Merrill Lynch Securities/MLPFS, 2.95%, dated 3/31/05, to be repurchased at $20,959,534 on 4/1/05, collateralized by AA Asset-Backed Securities, 0.0%-7.76%, 6/15/09-1/25/45, with a value of $525,002,014 12 20,957,817 20,957,817 - ------------------------------------------------------------------------------------------------------------------- MASTER FLOATING NOTES--0.1% Bear Stearns, 3.055%, 4/1/05 12 1,000,000 1,000,000 --------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $23,957,817) 23,957,817 - ------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $931,135,781) 120.6% 1,045,849,072 - ------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (20.6) (178,809,592) -------------------------------- NET ASSETS 100.0% $ 867,039,480 ================================
28 | OPPENHEIMER BALANCED FUND FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Illiquid security. The aggregate value of illiquid securities as of March 31, 2005 was $16,618,314, which represents 1.92% of the Fund's net assets. See Note 8 of Notes to Financial Statements. 3. Represents the current interest rate for a variable or increasing rate security. 4. When-issued security or forward commitment to be delivered and settled after March 31, 2005. See Note 1 of Notes to Financial Statements. 5. 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. These securities amount to $9,923,830 or 1.14% of the Fund's net assets as of March 31, 2005. 6. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $743,849 or 0.09% of the Fund's net assets as of March 31, 2005. 7. Zero coupon bond reflects effective yield on the date of purchase. 8. 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 Trustees. These securities amount to $12,229,682 or 1.41% of the Fund's net assets as of March 31, 2005. 9. All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures sales contracts with an aggregate market value of $1,086,406. See Note 6 of Notes to Financial Statements. 10. Interest or dividend is paid-in-kind. 11. Issue is in default. See Note 1 of Notes to Financial Statements. 12. The security has been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 9 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 29 | OPPENHEIMER BALANCED FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - --------------------------------------------------------------------------------
March 31, 2005 - --------------------------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------------------------- Investments, at value (including securities loaned of $39,885,266) (cost $931,135,781)--see accompanying statement of investments $ 1,045,849,072 - --------------------------------------------------------------------------------------------------------- Cash 1,072,432 - --------------------------------------------------------------------------------------------------------- Collateral for securities loaned 16,715,981 - --------------------------------------------------------------------------------------------------------- Receivables and other assets: Investments sold (including $43,759,960 sold on a when-issued basis or forward commitment) 44,732,983 Interest, dividends and principal paydowns 4,187,774 Shares of beneficial interest sold 1,065,167 Other 25,941 ---------------- Total assets 1,113,649,350 - --------------------------------------------------------------------------------------------------------- LIABILITIES - --------------------------------------------------------------------------------------------------------- Return of collateral for securities loaned 40,673,798 - --------------------------------------------------------------------------------------------------------- Unrealized depreciation on swap contracts 65,754 - --------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $202,077,999 purchased on a when-issued basis or forward commitment) 203,904,148 Shares of beneficial interest redeemed 984,523 Distribution and service plan fees 446,325 Trustees' compensation 148,010 Futures margins 126,328 Transfer and shareholder servicing agent fees 98,600 Shareholder communications 97,826 Other 64,558 ---------------- Total liabilities 246,609,870 - --------------------------------------------------------------------------------------------------------- NET ASSETS $ 867,039,480 ================ - --------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - --------------------------------------------------------------------------------------------------------- Paid-in capital $ 721,356,167 - --------------------------------------------------------------------------------------------------------- Accumulated net investment income 3,416,295 - --------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 27,205,104 - --------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 115,061,914 ---------------- NET ASSETS $ 867,039,480 ================
30 | OPPENHEIMER BALANCED FUND
- --------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - --------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $687,335,249 and 49,555,358 shares of beneficial interest outstanding) $ 13.87 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 14.72 - --------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $91,970,798 and 6,762,339 shares of beneficial interest outstanding) $ 13.60 - --------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $77,602,038 and 5,680,596 shares of beneficial interest outstanding) $ 13.66 - --------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $10,131,395 and 736,928 shares of beneficial interest outstanding) $ 13.75
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 31 | OPPENHEIMER BALANCED FUND STATEMENT OF OPERATIONS Unaudited - -------------------------------------------------------------------------------- For the Six Months Ended March 31, 2005 - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Interest $ 7,417,006 - -------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $79,497) 4,251,642 - -------------------------------------------------------------------------------- Portfolio lending fees 27,446 ---------------- Total investment income 11,696,094 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Management fees 2,968,632 - -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 673,214 Class B 445,603 Class C 365,147 Class N 23,657 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 405,540 Class B 100,040 Class C 63,112 Class N 12,732 - -------------------------------------------------------------------------------- Shareholder communications: Class A 56,765 Class B 19,289 Class C 9,567 Class N 1,080 - -------------------------------------------------------------------------------- Trustees' compensation 15,074 - -------------------------------------------------------------------------------- Custodian fees and expenses 8,017 - -------------------------------------------------------------------------------- Other 49,282 ---------------- Total expenses 5,216,751 Less reduction to custodian expenses (7,799) ---------------- Net expenses 5,208,952 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 6,487,142 32 | OPPENHEIMER BALANCED FUND - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN - -------------------------------------------------------------------------------- Net realized gain on: Investments $ 33,025,027 Closing of futures contracts 2,674,511 Foreign currency transactions 130,339 Swap contracts 7,762 ---------------- Net realized gain 35,837,639 - -------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments 8,215,636 Translation of assets and liabilities denominated in foreign currencies 619,978 Futures contracts (773,066) Swap contracts (80,886) ---------------- Net change in unrealized appreciation 7,981,662 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 50,306,443 ================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 33 | OPPENHEIMER BALANCED FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2005 SEPTEMBER 30, (UNAUDITED) 2004 - ------------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------------ Net investment income $ 6,487,142 $ 6,881,213 - ------------------------------------------------------------------------------------------------------ Net realized gain 35,837,639 64,202,686 - ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation 7,981,662 240,460 ------------------------------------ Net increase in net assets resulting from operations 50,306,443 71,324,359 - ------------------------------------------------------------------------------------------------------ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------ Dividends from net investment income: Class A (2,136,452) (4,777,266) Class B (118,750) (111,890) Class C (112,560) (122,220) Class N (21,990) (30,405) - ------------------------------------------------------------------------------------------------------ Distributions from net realized gain: Class A (33,213,929) -- Class B (4,435,486) -- Class C (3,587,318) -- Class N (466,585) -- - ------------------------------------------------------------------------------------------------------ BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from beneficial interest transactions: Class A 30,055,891 20,788,123 Class B 6,666,630 13,846,692 Class C 9,323,201 16,261,663 Class N 1,311,522 4,986,013 - ------------------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------------------ Total increase 53,570,617 122,165,069 - ------------------------------------------------------------------------------------------------------ Beginning of period 813,468,863 691,303,794 ------------------------------------ End of period (including accumulated net investment income (loss) of $3,416,295 and $(681,095), respectively) $ 867,039,480 $ 813,468,863 ====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 34 | OPPENHEIMER BALANCED FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2005 SEPT. 30, CLASS A (UNAUDITED) 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.75 $ 12.55 $ 10.51 $ 12.14 $ 14.23 $ 14.06 - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .12 1 .14 .21 .35 .43 .53 Net realized and unrealized gain (loss) .74 1.16 2.08 (1.29) (1.40) 1.21 -------------------------------------------------------------------------------- Total from investment operations .86 1.30 2.29 (.94) (.97) 1.74 - ------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.04) (.10) (.22) (.31) (.38) (.48) Tax return of capital distribution -- -- (.03) -- -- -- Distributions from net realized gain (.70) -- -- (.38) (.74) (1.09) -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.74) (.10) (.25) (.69) (1.12) (1.57) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.87 $ 13.75 $ 12.55 $ 10.51 $ 12.14 $ 14.23 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 6.32% 10.37% 21.98% (8.58)% (7.27)% 13.31% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 687,335 $ 651,754 $ 575,799 $ 483,311 $ 562,281 $ 639,648 - ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 681,281 $ 631,041 $ 523,477 $ 570,796 $ 626,251 $ 644,356 - ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 1.70% 1.05% 1.78% 2.84% 3.16% 3.71% Total expenses 1.05% 1.07% 1.11% 1.15% 1.01% 1.13% Expenses after payments and waivers and reduction to custodian expenses N/A 4 1.06% N/A 4 N/A 4 N/A 4 N/A 4 - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 5 61% 6 205% 31% 40% 33%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,212,069,038 and $1,209,479,746, respectively. 6. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,069,526,653 and $1,026,457,980, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER BALANCED FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2005 SEPT. 30, CLASS B (UNAUDITED) 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 13.53 $ 12.40 $ 10.38 $ 12.01 $ 14.08 $ 13.93 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .05 1 .02 .09 .25 .31 .41 Net realized and unrealized gain (loss) .74 1.13 2.07 (1.29) (1.36) 1.19 ------------------------------------------------------------------------------------- Total from investment operations .79 1.15 2.16 (1.04) (1.05) 1.60 - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.02) (.02) (.11) (.21) (.28) (.36) Tax return of capital distribution -- -- (.03) -- -- -- Distributions from net realized gain (.70) -- -- (.38) (.74) (1.09) ------------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.72) (.02) (.14) (.59) (1.02) (1.45) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 13.60 $ 13.53 $ 12.40 $ 10.38 $ 12.01 $ 14.08 ===================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 5.85% 9.26% 20.91% (9.38)% (7.96)% 12.30% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 91,971 $ 84,924 $ 64,944 $ 54,757 $ 63,487 $ 66,777 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 89,615 $ 77,082 $ 57,836 $ 64,702 $ 67,959 $ 66,956 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment income 0.77% 0.11% 0.81% 2.02% 2.37% 2.92% Total expenses 1.98% 4 2.02% 4,5 2.08% 4 1.97% 4 1.81% 4 1.94% 4 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 41% 6 61% 7 205% 31% 40% 33%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. 6. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,212,069,038 and $1,209,479,746, respectively. 7. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,069,526,653 and $1,026,457,980, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 36 | OPPENHEIMER BALANCED FUND
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2005 SEPT. 30, CLASS C (UNAUDITED) 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.59 $ 12.44 $ 10.42 $ 12.06 $ 14.13 $ 13.97 - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .06 1 .04 .11 .24 .31 .41 Net realized and unrealized gain (loss) .73 1.13 2.06 (1.29) (1.37) 1.20 --------------------------------------------------------------------------------- Total from investment operations .79 1.17 2.17 (1.05) (1.06) 1.61 - -------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.02) (.02) (.12) (.21) (.27) (.36) Tax return of capital distribution -- -- (.03) -- -- -- Distributions from net realized gain (.70) -- -- (.38) (.74) (1.09) --------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.72) (.02) (.15) (.59) (1.01) (1.45) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.66 $ 13.59 $ 12.44 $ 10.42 $ 12.06 $ 14.13 ================================================================================= - -------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 5.84% 9.45% 20.98% (9.41)% (8.00)% 12.35% - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 77,602 $ 68,018 $ 47,212 $ 33,300 $ 36,171 $ 38,522 - -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 73,490 $ 60,095 $ 38,407 $ 37,412 $ 39,030 $ 38,597 - -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 0.84% 0.19% 0.90% 2.03% 2.37% 2.92% Total expenses 1.91% 4 1.93% 4,5 1.98% 4 1.96% 4 1.81% 4 1.94% 4 - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 6 61% 7 205% 31% 40% 33%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. 6. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,212,069,038 and $1,209,479,746, respectively. 7. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,069,526,653 and $1,026,457,980, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 37 | OPPENHEIMER BALANCED FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED MARCH 31, SEPT. 30, CLASS N (UNAUDITED) 2004 2003 2002 2001 1 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.65 $ 12.49 $ 10.48 $ 12.13 $ 13.67 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .09 2 .10 .20 .39 .24 Net realized and unrealized gain (loss) .74 1.12 2.01 (1.38) (1.48) ---------------------------------------------------------------------- Total from investment operations .83 1.22 2.21 (.99) (1.24) - --------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.03) (.06) (.17) (.28) (.30) Tax return of capital distribution -- -- (.03) -- -- Distributions from net realized gain (.70) -- -- (.38) -- ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.73) (.06) (.20) (.66) (.30) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.75 $ 13.65 $ 12.49 $ 10.48 $ 12.13 ====================================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 6.11% 9.77% 21.27% (8.94)% (9.30)% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 10,131 $ 8,772 $ 3,349 $ 798 $ 95 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 9,520 $ 5,701 $ 1,604 $ 454 $ 12 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 1.24% 0.55% 1.24% 2.49% 5.81% Total expenses 1.50% 1.58% 1.76% 1.48% 1.32% Expenses after payments and waivers and reduction to custodian expenses N/A 5 1.57% 1.62% N/A 5 N/A 5 - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 6 61% 7 205% 31% 40%
1. For the period from March 1, 2001 (inception of offering) to September 30, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 4. Annualized for periods of less than one full year. 5. Reduction to custodian expenses less than 0.01%. 6. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,212,069,038 and $1,209,479,746, respectively. 7. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $1,069,526,653 and $1,026,457,980, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 38 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Balanced Fund (the Fund) 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 high total investment return consistent with the preservation of principal. 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 with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. 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. The Fund calculates the net asset value of its shares as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. 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. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ 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. Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). 39 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis or forward commitment can take place up to ten days 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 internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued basis or forward commitment may increase the volatility of the Fund's net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase. As of March 31, 2005, the Fund had purchased $202,077,999 of securities issued on a when-issued basis or forward commitment and sold $43,759,960 of securities issued on a when-issued basis or forward commitment. - -------------------------------------------------------------------------------- SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, market fluctuations and loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of March 31, 2005, securities with an aggregate market value of $215,000, representing 0.02% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Foreign exchange rates may be valued primarily using dealer supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. 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 40 | OPPENHEIMER BALANCED FUND and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. During the year ended September 30, 2004, the Fund utilized $4,257,280 of capital loss carryforward to offset realized capital gains in that fiscal year. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended March 31, 2005, the Fund's projected benefit obligations were increased by $3,573 and payments of $10,565 were made to retired trustees, resulting in an accumulated liability of $121,827 as of March 31, 2005. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for 41 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared and paid quarterly. Capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 42 | OPPENHEIMER BALANCED FUND - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED MARCH 31, 2005 YEAR ENDED SEPTEMBER 30, 2004 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------- CLASS A Sold 3,083,836 $ 43,291,650 6,122,137 $ 82,783,982 Dividends and/or distributions reinvested 2,333,752 32,433,894 313,143 4,294,088 Redeemed (3,258,564) (45,669,653) (4,905,906) (66,289,947) ------------------------------------------------------------------------ Net increase 2,159,024 $ 30,055,891 1,529,374 $ 20,788,123 ======================================================================== - ------------------------------------------------------------------------------------------------------- CLASS B Sold 1,035,803 $ 14,270,240 2,864,209 $ 38,137,332 Dividends and/or distributions reinvested 309,953 4,225,611 7,693 103,111 Redeemed (857,947) (11,829,221) (1,835,055) (24,393,751) ------------------------------------------------------------------------ Net increase 487,809 $ 6,666,630 1,036,847 $ 13,846,692 ======================================================================== - ------------------------------------------------------------------------------------------------------- CLASS C Sold 908,071 $ 12,578,784 2,004,496 $ 26,837,027 Dividends and/or distributions reinvested 251,180 3,439,568 8,365 112,683 Redeemed (483,913) (6,695,151) (801,328) (10,688,047) ------------------------------------------------------------------------ Net increase 675,338 $ 9,323,201 1,211,533 $ 16,261,663 ======================================================================== - ------------------------------------------------------------------------------------------------------- CLASS N Sold 138,490 $ 1,928,352 553,663 $ 7,419,779 Dividends and/or distributions reinvested 34,517 475,835 2,182 29,726 Redeemed (78,541) (1,092,665) (181,488) (2,463,492) ------------------------------------------------------------------------ Net increase 94,466 $ 1,311,522 374,357 $ 4,986,013 ========================================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than U.S. government obligations and short-term obligations, for the six months ended March 31, 2005, were $294,970,018 and $250,557,417, respectively. There were purchases of $54,825,656 and sales of $67,465,709 of U.S. government and government agency obligations for the six months ended March 31, 2005. In addition, there were purchases of $1,212,069,038 and sales of $1,209,479,746 of To Be Announced (TBA) mortgage-related securities for the six months ended March 31, 2005. 43 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 at an annual rate of 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700 million, and 0.58% of average annual net assets in excess of $1.5 billion. - -------------------------------------------------------------------------------- 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 per account fee. For the six months ended March 31, 2005, the Fund paid $581,144 to OFS for services to the Fund. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the Fund's classes of shares. - -------------------------------------------------------------------------------- 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. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions quarterly for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- 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 to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B and Class C shares and 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at March 31, 2005 for Class B, Class C and Class N shares were $2,769,742, $1,284,827 and $119,146, respectively. Fees incurred by the Fund under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, 44 | OPPENHEIMER BALANCED FUND as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - -------------------------------------------------------------------------------------------------- March 31, 2005 $ 214,285 $ 2,464 $ 91,662 $ 5,296 $ 2,811
- -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Contracts closed or settled with the same broker are recorded as net realized gains or losses. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of March 31, 2005, the Fund had no outstanding foreign currency contracts. - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. 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 protection from changes in market value of stocks 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 as a hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures 45 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS Continued contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying 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 has expired. Cash held by the broker to cover initial margin requirements on open futures contracts is noted in the Statement of Assets and Liabilities. 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 the closing and expiration of futures contracts. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. 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 March 31, 2005, the Fund had outstanding futures contracts as follows:
UNREALIZED EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS MARCH 31, 2005 (DEPRECIATION) - ------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE U.S. Long Bonds 6/21/05 368 $ 40,986,000 $ (459,700) U.S. Treasury Nts., 10 yr. 6/21/05 99 10,817,297 (20,945) -------------- (480,645) -------------- CONTRACTS TO SELL U.S. Treasury Nts., 2 yr. 6/30/05 366 75,721,969 211,196 U.S. Treasury Nts., 5 yr. 6/21/05 806 86,317,563 679,571 -------------- 890,767 -------------- $ 410,122 ==============
- -------------------------------------------------------------------------------- 7. TOTAL RETURN SWAP CONTRACTS The Fund may enter into a total return swap transaction to maintain a total return on a particular investment, or portion of its portfolio, or for other non-speculative purposes. Because the principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as notional. The Fund records an increase or decrease to unrealized gain (loss), in the amount due to or owed by the Fund at termination or settlement. Total return swaps are subject to risks (if the counterparty fails to meet its obligations). 46 | OPPENHEIMER BALANCED FUND As of March 31, 2005, the Fund had entered into the following total return swap agreements:
PAID BY RECEIVED BY NOTIONAL THE FUND AT THE FUND AT TERMINATION UNREALIZED SWAP COUNTERPARTY AMOUNT MARCH 31, 2005 MARCH 31, 2005 DATE DEPRECIATION - ----------------------------------------------------------------------------------------------------------------- Value of total return of Goldman Sachs One-Month Lehman Brothers Capital Markets LP $5,500,000 LIBOR BBA CMBS Index 4/4/05 $ 65,754
Index abbreviations are as follows: CMBS Commercial Mortgage Backed Securities Markets LIBOR BBA London-Interbank Offered Rate British Bankers Association - -------------------------------------------------------------------------------- 8. ILLIQUID SECURITIES As of March 31, 2005, investments in securities included issues that are illiquid. A security may 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 will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. - -------------------------------------------------------------------------------- 9. SECURITIES LENDING The Fund lends portfolio securities from time to time in order to earn additional income. In return, the Fund receives collateral in the form of US Treasury obligations or cash, against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the funds and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The Fund retains a portion of the interest earned from the collateral. The Fund also continues to receive interest or dividends paid on the securities loaned. As of March 31, 2005, the Fund had on loan securities valued at $39,885,266. Collateral of $40,673,798 was received for the loans, of which $23,957,817 was received in cash and subsequently invested in approved instruments. - -------------------------------------------------------------------------------- 10. LITIGATION A consolidated amended complaint has been filed as putative derivative and class actions against the Manager, OFS and the Distributor (collectively, the "Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and former Directors or Trustees and 8 present and former officers of the funds. This complaint, initially filed in the U.S. District Court for the Southern District of New York on January 10, 2005 and amended on March 4, 2005, consolidates into a single 47 | OPPENHEIMER BALANCED FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10. LITIGATION Continued action and amends six individual previously-filed putative derivative and class action complaints. Like those prior complaints, the complaint alleges that the Manager charged excessive fees for distribution and other costs, improperly used assets of the funds in the form of directed brokerage commissions and 12b-1 fees to pay brokers to promote sales of the funds, and failed to properly disclose the use of assets of the funds to make those payments in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. Also, like those prior complaints, the complaint further alleges that by permitting and/or participating in those actions, the Directors/Trustees and the Officers breached their fiduciary duties to shareholders of the funds under the Investment Company Act of 1940 and at common law. The complaint seeks unspecified compensatory and punitive damages, rescission of the funds' investment advisory agreements, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. The Oppenheimer defendants believe that the allegations contained in the Complaints are without merit and that they, the funds named as Nominal Defendants, and the Directors/Trustees of those funds have meritorious defenses against the claims asserted. The Oppenheimer defendants intend to defend these lawsuits vigorously and to contest any claimed liability. The Oppenheimer defendants believe that it is premature to render any opinion as to the likelihood of an outcome unfavorable to them and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 48 | OPPENHEIMER BALANCED FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's voting record is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in Form N-PX filing on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 49 | OPPENHEIMER BALANCED FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Each year, the Board of Trustees (the "Board"), including a majority of the independent Trustees, is required to determine whether to renew the advisory agreement. The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager provide, such information as may be reasonably necessary to evaluate the terms of the advisory agreement. The Board employs an independent consultant to prepare a report that provides information, including comparative information, that the Board requests for this purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance. NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's advisory agreement for the current year, the Board evaluated the nature and extent of the services provided by the Manager and its affiliates. The Manager provides the Fund with office space, facilities and equipment; administrative, accounting, clerical, legal and compliance personnel; securities trading services; oversight of third party service providers and the services of the portfolio managers and the Manager's investment team, who provide research, analysis and other advisory services in regard to the Fund's investments. QUALITY OF SERVICES. The Board also considered the quality of the services provided and the quality of the Manager's resources that are available to the Fund. The Board noted that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager's administrative, accounting, legal and compliance services and information the Board received regarding the experience and professional qualifications of the Manager's personnel and the size and functions of its staff. The Board members also considered their experiences as directors or trustees of the Fund and other funds advised by the Manager. The Board received and reviewed information regarding the quality of services provided by affiliates of the Manager, which it also reviews at other times during the year in connection with the renewal of the Fund's service agreements. The Board noted that the relatively low redemption rate for funds advised by the Manager provided an indication of shareholder satisfaction with the overall level of services provided by the Manager. PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of the Fund's portfolio managers and the Manager's value and fixed-income investment teams and analysts. The equity component of the Fund's portfolio has been managed by Emmanuel Ferreira, Christopher Leavy since January 2003. Mr. Leavy has been a Senior Vice President of the Manager since September 2000 and Mr. Ferreira has been a Vice President of the Manager since January 2003. Mr. Ferreira has had over 11 years of 50 | OPPENHEIMER BALANCED FUND experience managing fixed income investments. The Fund's fixed-income component has been managed by a portfolio management team comprised of Angelo Manioudakis, Benjamin Gord, Charles Moon, Geoffrey Caan and Antulio N. Bomfim. Mr. Manioudakis has been a portfolio manager of the Fund since January 2003, a Senior Vice President of the Manager and of HarbourView Asset Management Corporation since April 2002 and a Senior Vice President of OFI Institutional Asset Management, Inc. since June 2002. Mr. Gord and Mr. Moon have been portfolio managers of the Fund since 2003 and Vice Presidents of the Manager since April 2002. Mr. Caan has been a portfolio manager of the Fund and a Vice President of the Manager, and Mr. Bomfim has been a portfolio manager of the Fund and a Vice President of the Manager, since 2003. Mr. Manioudakis was Executive Director and portfolio manager for Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment Management ("MA&S") from August 1993 through April 2002. Mr. Gord was an Executive Director and a senior fixed income analyst at MA&S from April 1992 through March 2002 and Mr. Moon was an Executive Director and portfolio manager at MA&S from June 1999 through March 2002. Mr. Caan was a Vice President of ABN AMRO N.A., Inc. from June 2002 through August 2003, and a Vice President of Zurich Scudder Investments from January 1999 through June 2002. Mr. Bomfim was a Senior Economist at the Board of Governors of the Federal Reserve System from June 1992 to October 2003. Messrs. Manioudakis, Gord, Caan, Moon and Bomfim have each had between 10 and 15 years of experience managing fixed-income investments. The Board reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund's historical performance to relevant market indices and to the performance of other balanced funds (including both funds advised by the Manager and funds advised by other investment advisers). The Board also receives and reviews comparative performance information regarding the Fund and other funds at each Board meeting. The Board noted that the Fund's one-, three-, five- and ten-year performance were each better than its peer group average. MANAGEMENT FEES AND EXPENSES. The Board also reviewed information, including comparative information, regarding the fees paid to the Manager and its affiliates and the other expenses borne by the Fund. The independent consultant provided comparative data in regard to the fees and expenses of the Fund, other balanced funds and other funds with comparable asset levels and distribution features. The Board noted that the Fund's contractual and actual management fees are higher than its peer group average. However, the Fund's total expenses are slightly lower than its peer group average. In addition, the Board evaluated the comparability of the fees charged and services provided to 51 | OPPENHEIMER BALANCED FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued - -------------------------------------------------------------------------------- the Fund to the fees charged and services provided to other types of entities advised by the Manager. PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed information regarding the cost of services provided by the Manager and its affiliates and the Manager's profitability. The Board considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide services to the Fund and that maintaining the financial viability of the Manager is important in order for the Manager to continue to provide significant services to the Fund and its shareholders. In addition the Board considered information that was provided regarding the direct and indirect benefits the Manager receives as a result of its relationship with the Fund, including compensation paid to the Manager's affiliates and research provided to the Manager in connection with permissible brokerage arrangements (soft dollar arrangements). ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may realize economies of scale in managing and supporting the Fund and the current level of Fund assets in relation to the Fund's breakpoint schedule for its management fees. The Board noted that the Fund has recently experienced moderate asset growth but, based on current asset levels, the Fund is not yet approaching its last management fee breakpoint. CONCLUSIONS. These factors were also considered by the independent Trustees meeting separately from the full Board, assisted by experienced counsel to the Fund. Fund counsel is independent of the Manager within the meaning and intent of the Securities and Exchange Commission Rules. The Board was aware that there are alternatives to retaining the Manager. Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Trustees, concluded that the nature, extent and quality of the services provided to the Fund by the Manager are a benefit to the Fund and in the best interest of the Fund's shareholders and that the amount and structure of the compensation received by the Manager and its affiliates are reasonable in relation to the services provided. Accordingly, the Board elected to continue the investment advisory agreement for another year. In arriving at this decision, the Board did not single out any factor or factors as being more important than others, but considered all of the factors together. The Board judged the terms and conditions of the advisory agreement, including the management fee, in light of all of the surrounding circumstances. 52 | OPPENHEIMER BALANCED FUND ITEM 2. CODE OF ETHICS Not applicable to semiannual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not applicable to semiannual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable to semiannual reports. ITEM 5. NOT APPLICABLE ITEM 6. SCHEDULE OF INVESTMENTS Not applicable. ITEM 7. DISCLOSURE OF PROXY POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES Not applicable. ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At a meeting of the Board of Trustees of the registrant held on February 18, 2004, the Board adopted (1) a policy that, should the Board determine that a vacancy exists or is likely to exist on the Board, the Governance Committee of the Board, which is comprised entirely of independent trustees, shall consider any candidates for Board membership recommended by the registrant's security holders and (2) a policy that security holders wishing to submit a nominee for election to the Board may do so by mailing their submission to the offices of OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street - 11th Floor, New York, NY 10281-1008, to the attention of the Chair of the Governance Committee. Prior to February 18, 2004, the Board did not have a formalized policy with respect to consideration of security holder nominees or a procedure by which security holders may make their submissions. In addition to security holder nominees, the Governance Committee may also consider nominees recommended by independent Board members or recommended by any other Board members and is authorized under its Charter, upon Board approval, to retain an executive search firm to assist in screening potential candidates. Upon Board approval, the Governance Committee may also obtain legal, financial, or other external counsel that may be necessary or desirable in the screening process. ITEM 11. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of March 31, 2005, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no changes in registrant's internal controls over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT APPLICABLE TO SEMIANNUAL REPORTS) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer Balanced Fund By: /s/ John V. Murphy ---------------------------- John V. Murphy Principal Executive Officer Date:May 13, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ John V. Murphy ---------------------------- John V. Murphy Principal Executive Officer Date: May 13, 2005 By: /s/ Brian W. Wixted ---------------------------- Brian W. Wixted Chief Financial Officer Date: May 13, 2005 EX-99.CERT 2 rs240_15537ex99-302.txt RS240_15537EX99-302.TXT Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, JOHN V. MURPHY, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Balanced Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 13, 2005 /s/ John V. Murphy ---------------------------- John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, BRIAN W. WIXTED, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Balanced Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 13, 2005 /s/ Brian W. Wixted ---------------------------- Brian W. Wixted Chief Financial Officer EX-99.906 3 rs240_15537ex99-906.txt RS240_15537EX99-906.TXT EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 JOHN V. MURPHY, Principal Executive Officer, and BRIAN W. WIXTED, Chief Financial Officer, of Oppenheimer Balanced Fund (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended March 31, 2005 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Chief Financial Officer Oppenheimer Balanced Fund Oppenheimer Balanced Fund /s/ John V. Murphy /s/ Brian W. Wixted - ---------------------------- ---------------------------- John V. Murphy Brian W. Wixted Date: May 13, 2005 Date: May 13, 2005 -----END PRIVACY-ENHANCED MESSAGE-----