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 811-3346
Oppenheimer Disciplined Allocation 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: October 31
Date of reporting period: November 1, 2002 - October 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of
the Fund's performance during its fiscal year ended October 31, 2003, followed
by a graphical comparison of the Fund's performance to appropriate broad-based
market indices.
Management's Discussion of Fund Performance. The Fund's total return was 14.17%
during the 12 months that ended October 31, 2003 (Class A shares at net asset
value). By comparison, the Standard & Poor's 500 Index returned 20.79% and the
Merrill Lynch Government/Corporate Master Index returned 5.85% during the same
time frame. Strong relative performance from the Fund's bond portfolio was
overshadowed by weaker results from its growth investments. In particular, our
focus on high-quality growth names hurt performance at a time when more
speculative growth stocks were more likely to outperform.
To provide shareholders with portfolio diversification, Oppenheimer
Disciplined Allocation Fund consists of a mix of stock and bond investments.
During the period we sought to keep the Fund's asset allocation relatively close
to that of our peer group, and to add performance through strong stock
selection. As of October 31, 2003, approximately 57.3% of the Fund's assets
invested in stocks, compared to 39.5% in bonds. Roughly half of the equity
portfolio was managed according to a value-investing style, while the other half
was managed using a growth style.
Our value-investing management strategy remained consistent throughout the
reporting period, as it does in all types of market conditions. While the stocks
we select for the Fund may well be influenced by what is happening in the
economy and stock market, we believe we serve our shareholders best by
evaluating stocks in a variety of sectors and choosing those that we believe
offer the best value within each category. In other words, we primarily look to
evaluate energy stocks against other energy stocks, technology stocks against
other technology stocks, and so on.
Recent investments in the stocks of companies that provide
satellite-television services provide one example of how we applied this
strategy during the period. As we assessed value opportunities in the
consumer-discretionary sector, and specifically the media industry, we became
convinced that companies that provide satellite television services would
continue to grow faster than other media companies. We also anticipated an
increase in these companies' free cash flow (cash flow after expenses). Finally,
we believed that many stocks of companies that provide satellite television
services offered compelling value compared to other consumer-discretionary
stocks.
Based on this analysis, we bought shares of companies that provide satellite
television services such as EchoStar Communication Corp., Cl. A and General
Motors--Class H stock (also called Hughes Electronics which owns DirecTV). This
decision proved to be
6 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
a successful one for the Fund. Both stocks performed very well during the past
year and contributed to the portfolio's strong performance. As the period went
on, however, we eliminated our position in General Motors--Class H stock.
Another strong consumer-discretionary performer for the Fund was OfficeMax,
Inc. one of the nation's leading office-supply retailers. A takeover bid from
Boise Cascade boosted OfficeMax's stock price. In the financial sector, the Fund
benefited from owning Chubb Corp., a large property- and casualty-insurance
holding company. Chubb Corp. saw its profit margins improve during the period,
thanks to a more favorable pricing environment for insurance companies and the
firm's ability to keep expenses under control.
Our growth-investing strategy continued to focus on revenue growth, as
opposed to earnings growth. While accelerating earnings is a desirable trait, we
believe that growth in sales provides investors with a better picture of how
sustainable earnings are. For example, earnings can be increased through more
efficient operations, layoffs, or mergers, but these approaches are not
endlessly repeatable. In our view, revenue growth is the key for a company to
realize lasting earnings growth over time.
Consistent with this revenue-oriented focus, during the past 12 months we
favored growth stocks with strong fundamentals. For instance, we overweighted
the health care sector, which provided steady but unspectacular results as the
economy was struggling. By contrast, we maintained a relatively modest weighting
in the more-speculative technology sector. This positioning contributed to the
Fund's results during the first part of the period. But as the period went on
and the stock market gained ground, being overweighted in health care and
underweighted in technology, while still adding to overall returns, hurt the
Fund's relative performance in an environment in which investors preferred
high-risk names with significant growth potential. Not all of the Fund's health
care stocks were relative disappointments, however; biotechnology companies
Genentech, Inc. and Gilead Sciences, Inc. both made major positive contributions
to results.
In managing the Fund's bond portfolio, we looked especially to corporate
bonds. After the accounting and governance scandals of the past several years,
many companies sought to strengthen their balance sheets. These efforts helped
the corporate bond market, as investors became more confident in the ability of
issuers to pay the interest on their bonds. In this area of the market, we
focused on high-quality corporate bonds but also maintained a small allocation
to the high-yield market, both of which helped performance during the period.
7 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FUND PERFORMANCE DISCUSSION
We also emphasized high-coupon mortgage-backed debt securities. Because of
fears of prepayments, mortgage-backed debt securities with high interest rates
were priced more cheaply than their low-rate counterparts. Although we were
mindful of the risks, we believed these fears may have been overdone. We also
knew these bonds would become more valuable if rates were to rise from their
lows. For much of the period, this type of debt security performed relatively
poorly because interest rates continued to fall. Beginning in June, however,
rates reversed course, and the Fund's high-coupon mortgage-backed debt
securities recovered its losses and added to performance.
Comparing the Fund's Performance to the Market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until October 31, 2003. In the case of Class A shares, performance is
measured over a 10-year period. In the case of Class B, performance is measured
from inception of the class on October 2, 1995. In the case of Class C,
performance is measured from inception of the class on May 1, 1996. In the case
of Class N shares, performance is measured from inception of the Class on March
1, 2001.The Fund's performance reflects the deduction of the maximum initial
sales charge on Class A shares, the applicable contingent deferred sales charge
on Class B, Class C and Class N shares and reinvestments of all dividends and
capital gains distributions.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
The Fund's performance is also compared to Merrill Lynch Corporate/Government
Master Index, a broad-based index of U.S. Treasury and government agency
securities, corporate and Yankee bonds regarded as a general measurement
of the performance of the domestic debt securities market.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
in the graphs shows the effect of taxes. The Fund's performance reflects the
effects of Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in the indices.
8 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class A)
S&P 500 Index
Merrill Lynch Corporate/Government Master Index
[LINE CHART]
Value of Investment S&P 500 Index Merrill Lynch Corporate
Date In Fund Reinvested Monthly Gov't Master Index
12/31/1993 $9,425 $10,000 $10,000
03/31/1994 9,185 9,621 9,706
06/30/1994 9,028 9,662 9,590
09/30/1994 9,281 10,133 9,632
12/31/1994 9,226 10,131 9,673
03/31/1995 9,789 11,117 10,145
06/30/1995 10,430 12,176 10,801
09/30/1995 10,909 13,143 11,000
12/31/1995 11,436 13,934 11,510
03/31/1996 11,628 14,682 11,256
06/30/1996 11,707 15,340 11,303
09/30/1996 11,933 15,814 11,499
10/31/1996 1 12,153 16,250 11,763
01/31/1997 12,818 18,201 11,867
04/30/1997 12,854 18,641 11,933
07/31/1997 14,571 22,303 12,552
10/31/1997 14,441 21,466 12,818
01/31/1998 14,719 23,097 13,200
04/30/1998 15,716 26,295 13,275
07/31/1998 15,296 26,609 13,575
10/31/1998 15,296 26,191 14,140
01/31/1999 16,523 30,606 14,353
04/30/1999 16,579 32,035 14,126
07/31/1999 16,299 31,985 13,890
10/31/1999 15,697 32,913 14,035
01/31/2000 15,401 33,771 13,954
04/30/2000 16,270 35,278 14,266
07/31/2000 16,381 34,852 14,679
10/31/2000 16,996 34,913 15,047
01/31/2001 17,188 33,467 15,856
04/30/2001 16,190 30,704 15,977
07/31/2001 16,200 29,861 16,553
10/31/2001 15,276 26,224 17,360
01/31/2002 15,595 28,067 17,042
04/30/2002 15,472 26,830 17,168
07/31/2002 14,237 22,809 17,723
10/31/2002 14,381 22,265 18,327
01/31/2003 14,293 21,610 18,787
04/30/2003 14,832 23,260 19,283
07/31/2003 15,823 25,235 18,945
10/31/2003 16,418 26,893 19,400
Average Annual Total Returns of Class A Shares of the Fund at 10/31/03 2
1-Year 7.60% 5-Year 0.23% 10-Year 5.08%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class B)
S&P 500 Index
Merrill Lynch Corporate/Government Master Index
[LINE CHART]
Value of Investment S&P 500 Index Merrill Lynch Corporate
Date In Fund Reinvested Monthly Gov't Master Index
10/02/1995 $10,000 $10,000 $10,000
12/31/1995 10,493 10,602 10,463
03/31/1996 10,647 11,170 10,232
06/30/1996 10,697 11,671 10,275
09/30/1996 10,880 12,032 10,453
10/31/1996 1 11,072 12,364 10,693
01/31/1997 11,651 13,848 10,788
04/30/1997 11,664 14,183 10,848
07/31/1997 13,198 16,969 11,411
10/31/1997 13,060 16,332 11,652
01/31/1998 13,283 17,573 11,999
04/30/1998 14,159 20,007 12,068
07/31/1998 13,749 20,245 12,341
10/31/1998 13,726 19,928 12,854
01/31/1999 14,805 23,286 13,048
04/30/1999 14,821 24,374 12,841
07/31/1999 14,546 24,335 12,627
10/31/1999 13,978 25,041 12,758
01/31/2000 13,687 25,694 12,685
04/30/2000 14,437 26,841 12,968
07/31/2000 14,507 26,517 13,344
10/31/2000 15,023 26,563 13,678
01/31/2001 15,171 25,463 14,414
04/30/2001 14,259 23,360 14,524
07/31/2001 14,239 22,719 15,047
10/31/2001 13,407 19,952 15,781
01/31/2002 13,686 21,354 15,492
04/30/2002 13,579 20,413 15,606
07/31/2002 12,495 17,354 16,111
10/31/2002 12,621 16,940 16,660
01/31/2003 12,544 16,442 17,079
04/30/2003 13,017 17,697 17,529
07/31/2003 13,887 19,200 17,222
10/31/2003 14,409 20,461 17,635
Average Annual Total Returns of Class B Shares of the Fund at 10/31/03 2
1-Year 8.21% 5-Year 0.30% Since Inception 4.62%
1. The Fund changed its fiscal year end from 12/31 to 10/31.
2. See Notes on page 11 for further details.
The performance information for both indices in the graphs begins on 12/31/93
for Class A, 9/30/95 for Class B, 4/30/96 for Class C and 2/28/01 for Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
9 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FUND PERFORMANCE DISCUSSION
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class C)
S&P 500 Index
Merrill Lynch Corporate/Government Master Index
[LINE CHART]
Value of Investment S&P 500 Index Merrill Lynch Corporate
Date In Fund Reinvested Monthly Gov't Master Index
05/01/1996 $10,000 $10,000 $10,000
06/30/1996 10,062 10,297 10,113
09/30/1996 10,225 10,615 10,288
10/31/1996 1 10,408 10,908 10,524
01/31/1997 10,955 12,217 10,618
04/30/1997 10,965 12,512 10,677
07/31/1997 12,406 14,971 11,231
10/31/1997 12,274 14,409 11,469
01/31/1998 12,489 15,503 11,810
04/30/1998 13,304 17,650 11,878
07/31/1998 12,921 17,861 12,146
10/31/1998 12,901 17,581 12,651
01/31/1999 13,912 20,544 12,842
04/30/1999 13,927 21,503 12,639
07/31/1999 13,664 21,469 12,428
10/31/1999 13,138 22,092 12,557
01/31/2000 12,858 22,668 12,485
04/30/2000 13,561 23,679 12,764
07/31/2000 13,628 23,394 13,134
10/31/2000 14,115 23,435 13,463
01/31/2001 14,248 22,464 14,187
04/30/2001 13,400 20,609 14,295
07/31/2001 13,373 20,043 14,810
10/31/2001 12,596 17,602 15,533
01/31/2002 12,835 18,839 15,248
04/30/2002 12,704 18,009 15,360
07/31/2002 11,666 15,310 15,857
10/31/2002 11,760 14,945 16,397
01/31/2003 11,658 14,505 16,809
04/30/2003 12,073 15,613 17,253
07/31/2003 12,856 16,939 16,951
10/31/2003 13,310 18,051 17,357
Average Annual Total Returns of Class C Shares of the Fund at 10/31/03 2
1-Year 12.18% 5-Year 0.63% Since Inception 3.89%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class N)
S&P 500 Index
Merrill Lynch Corporate/Government Master Index
[LINE CHART]
Value of Investment S&P 500 Index Merrill Lynch Corporate
Date In Fund Reinvested Monthly Gov't Master Index
03/01/2001 10,000 10,000 10,000
04/30/2001 9,793 10,094 9,968
07/31/2001 9,785 9,817 10,328
10/31/2001 9,210 8,621 10,831
01/31/2002 9,399 9,227 10,633
04/30/2002 9,317 8,821 10,711
07/31/2002 8,570 7,499 11,058
10/31/2002 8,642 7,320 11,435
01/31/2003 8,581 7,104 11,722
04/30/2003 8,897 7,647 12,031
07/31/2003 9,484 8,296 11,820
10/31/2003 9,835 8,841 12,104
Average Annual Total Returns of Class N Shares of the Fund at 10/31/03 2
1-Year 12.81% Since Inception -0.62%
1. The Fund changed its fiscal year end from 12/31 to 10/31.
2. See Notes on page 11 for further details.
The performance information for both indices in the graphs begins on 12/31/93
for Class A, 9/30/95 for Class B, 4/30/96 for Class C and 2/28/01 for Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
10 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES
In reviewing performance please remember that past performance cannot guarantee
future results. Investment return and principal value of an investment in the
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than the original cost. Because of ongoing market volatility, the
Fund's performance may be subject to substantial fluctuations, and current
performance may be more or less than the results shown. For updates on the
Fund's performance, visit our website at www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.
Class A shares of the Fund were first publicly offered on 9/16/85. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
Class B shares of the Fund were first publicly offered on 10/2/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 5/1/96. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the one-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 one-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 DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS October 31, 2003
Market Value
Shares See Note 1
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Common Stocks--65.8%
- --------------------------------------------------------------------------------
Consumer Discretionary--10.1%
- --------------------------------------------------------------------------------
Automobiles--0.2%
Harley-Davidson, Inc. 5,500 $ 260,755
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--0.8%
McDonald's Corp. 38,700 967,887
- --------------------------------------------------------------------------------
Internet & Catalog Retail--1.8%
Amazon.com, Inc. 1 5,000 272,100
- --------------------------------------------------------------------------------
eBay, Inc. 1 3,000 167,820
- --------------------------------------------------------------------------------
InterActiveCorp 1 45,000 1,651,950
-------------
2,091,870
- --------------------------------------------------------------------------------
Media--4.6%
EchoStar Communications Corp., Cl. A 1 50,600 1,938,992
- --------------------------------------------------------------------------------
Liberty Media Corp., Cl. A 1 232,300 2,343,907
- --------------------------------------------------------------------------------
UGC Europe, Inc. 1 800 53,600
- --------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A 1 29,600 209,568
- --------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A 1 27,000 916,650
-------------
5,462,717
- --------------------------------------------------------------------------------
Multiline Retail--0.5%
Target Corp. 16,000 635,840
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Specialty Retail--1.8%
Bed Bath & Beyond, Inc. 1 23,126 976,842
- --------------------------------------------------------------------------------
Gap, Inc. (The) 11,000 209,880
- --------------------------------------------------------------------------------
OfficeMax, Inc. 1 100,700 964,706
-------------
2,151,428
- --------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods--0.4%
Nike, Inc., Cl. B 7,700 492,030
- --------------------------------------------------------------------------------
Consumer Staples--4.3%
- --------------------------------------------------------------------------------
Beverages--0.4%
Constellation Brands, Inc., Cl. A 1 17,200 539,564
- --------------------------------------------------------------------------------
Food & Staples Retailing--2.1%
Costco Wholesale Corp. 1 40,100 1,418,337
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 18,600 1,096,470
-------------
2,514,807
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Personal Products--0.4%
Avon Products, Inc. 6,200 421,352
- --------------------------------------------------------------------------------
Tobacco--1.4%
Altria Group, Inc. 36,600 1,701,900
12 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Energy--2.7%
- --------------------------------------------------------------------------------
Energy Equipment & Services--0.5%
Halliburton Co. 20,400 $ 487,152
- --------------------------------------------------------------------------------
Talisman Energy, Inc. 2,100 102,480
-------------
589,632
- --------------------------------------------------------------------------------
Oil & Gas--2.2%
BP plc, ADR 54,200 2,296,996
- --------------------------------------------------------------------------------
Pioneer Natural Resources Co. 1 4,400 116,380
- --------------------------------------------------------------------------------
Spinnaker Exploration Co. 1 5,000 127,950
- --------------------------------------------------------------------------------
Westport Resources Corp. 1 4,000 95,760
-------------
2,637,086
- --------------------------------------------------------------------------------
Financials--14.0%
- --------------------------------------------------------------------------------
Capital Markets--0.7%
Bank of New York Co., Inc. (The) 27,300 851,487
- --------------------------------------------------------------------------------
Commercial Banks--2.5%
SunTrust Banks, Inc. 21,000 1,408,470
- --------------------------------------------------------------------------------
Wachovia Corp. 20,200 926,574
- --------------------------------------------------------------------------------
Wells Fargo & Co. 12,800 720,896
-------------
3,055,940
- --------------------------------------------------------------------------------
Diversified Financial Services--5.5%
Citigroup, Inc. 45,277 2,146,130
- --------------------------------------------------------------------------------
Franklin Resources, Inc. 14,900 706,558
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 7,600 449,920
- --------------------------------------------------------------------------------
Morgan Stanley 34,900 1,914,963
- --------------------------------------------------------------------------------
SLM Corp. 32,180 1,260,169
-------------
6,477,740
- --------------------------------------------------------------------------------
Insurance--5.0%
American International Group, Inc. 15,200 924,616
- --------------------------------------------------------------------------------
Chubb Corp. 23,000 1,536,630
- --------------------------------------------------------------------------------
MBIA, Inc. 9,400 560,334
- --------------------------------------------------------------------------------
Platinum Underwriters Holdings Ltd. 29,400 844,956
- --------------------------------------------------------------------------------
Prudential Financial, Inc. 35,700 1,379,448
- --------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. B 28,344 463,991
- --------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 3,300 229,350
-------------
5,939,325
- --------------------------------------------------------------------------------
Thrifts & Mortgage Finance--0.3%
Radian Group, Inc. 8,000 423,200
13 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Health Care--11.0%
- --------------------------------------------------------------------------------
Biotechnology--5.0%
Amgen, Inc. 1 34,000 $ 2,099,840
- --------------------------------------------------------------------------------
Genentech, Inc. 1 23,200 1,901,704
- --------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 33,200 1,812,056
- --------------------------------------------------------------------------------
Medimmune, Inc. 1 4,600 122,636
-------------
5,936,236
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies--2.7%
Boston Scientific Corp. 1 11,300 765,236
- --------------------------------------------------------------------------------
Medtronic, Inc. 15,800 720,006
- --------------------------------------------------------------------------------
Stryker Corp. 10,400 843,544
- --------------------------------------------------------------------------------
Varian Medical Systems, Inc. 1 14,900 952,706
-------------
3,281,492
- --------------------------------------------------------------------------------
Health Care Providers & Services--1.1%
Aetna, Inc. 18,800 1,079,308
- --------------------------------------------------------------------------------
Service Corp. International 1 37,000 179,450
-------------
1,258,758
- --------------------------------------------------------------------------------
Pharmaceuticals--2.2%
Eli Lilly & Co. 7,200 479,664
- --------------------------------------------------------------------------------
Mylan Laboratories, Inc. 23,550 568,733
- --------------------------------------------------------------------------------
Schering-Plough Corp. 44,800 684,096
- --------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.,
Sponsored ADR 16,100 915,929
-------------
2,648,422
- --------------------------------------------------------------------------------
Industrials--6.3%
- --------------------------------------------------------------------------------
Aerospace & Defense--2.5%
Boeing Co. 22,700 873,723
- --------------------------------------------------------------------------------
Raytheon Co. 81,300 2,152,824
-------------
3,026,547
- --------------------------------------------------------------------------------
Commercial Services & Supplies--2.5%
Cendant Corp. 1 124,300 2,539,449
- --------------------------------------------------------------------------------
ChoicePoint, Inc. 1 13,100 459,024
-------------
2,998,473
- --------------------------------------------------------------------------------
Industrial Conglomerates--0.9%
General Electric Co. 7,000 203,070
- --------------------------------------------------------------------------------
Tyco International Ltd. 44,500 929,160
-------------
1,132,230
- --------------------------------------------------------------------------------
Road & Rail--0.4%
CNF Transportation, Inc. 12,200 427,244
14 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Information Technology--11.7%
- --------------------------------------------------------------------------------
Communications Equipment--1.3%
Cisco Systems, Inc. 1 5,000 $ 104,900
- --------------------------------------------------------------------------------
Geotek Communications, Inc., Series B,
Escrow Shares 1,3,9 100 --
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 17,300 821,750
- --------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 20,400 603,840
-------------
1,530,490
- --------------------------------------------------------------------------------
Computers & Peripherals--3.2%
Dell, Inc. 1 53,500 1,932,420
- --------------------------------------------------------------------------------
EMC Corp. 1 36,600 506,544
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 64,800 1,445,688
-------------
3,884,652
- --------------------------------------------------------------------------------
Electronic Equipment & Instruments--0.9%
California Amplifier, Inc. 1 24 238
- --------------------------------------------------------------------------------
Flextronics International Ltd. 1 48,200 674,800
- --------------------------------------------------------------------------------
Thermo Electron Corp. 1 19,000 417,620
-------------
1,092,658
- --------------------------------------------------------------------------------
Internet Software & Services--1.3%
Yahoo!, Inc. 1 34,600 1,512,020
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment--0.9%
Intel Corp. 19,300 637,865
- --------------------------------------------------------------------------------
National Semiconductor Corp. 1 4,700 190,961
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 8,000 231,360
-------------
1,060,186
- --------------------------------------------------------------------------------
Software--4.1%
Microsoft Corp. 63,300 1,655,295
- --------------------------------------------------------------------------------
Oracle Corp. 1 75,400 901,784
- --------------------------------------------------------------------------------
Symantec Corp. 1 25,700 1,712,905
- --------------------------------------------------------------------------------
Veritas Software Corp. 1 17,700 639,855
-------------
4,909,839
- --------------------------------------------------------------------------------
Materials--1.8%
- --------------------------------------------------------------------------------
Chemicals--1.0%
Dow Chemical Co. 32,500 1,224,925
- --------------------------------------------------------------------------------
Containers & Packaging--0.2%
Smurfit-Stone Container Corp. 1 14,900 230,950
- --------------------------------------------------------------------------------
Paper & Forest Products--0.6%
Sappi Ltd., Sponsored ADR 54,600 698,880
- --------------------------------------------------------------------------------
Telecommunication Services--1.8%
- --------------------------------------------------------------------------------
Diversified Telecommunication Services--0.5%
IDT Corp., Cl. B 1 33,200 634,784
15 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Wireless Telecommunication Services--1.3%
AT&T Corp. 49,900 $ 927,641
- --------------------------------------------------------------------------------
Price Communications Corp. 1 1,355 17,032
- --------------------------------------------------------------------------------
Vodafone Group plc, Sponsored ADR 28,900 611,235
-------------
1,555,908
- --------------------------------------------------------------------------------
Utilities--2.1%
- --------------------------------------------------------------------------------
Electric Utilities--1.7%
AES Corp. (The) 1 115,200 1,008,000
- --------------------------------------------------------------------------------
Dominion Resources, Inc. 10,300 634,480
- --------------------------------------------------------------------------------
PG&E Corp. 1 19,500 476,775
-------------
2,119,255
- --------------------------------------------------------------------------------
Multi-Utilities & Unregulated Power--0.4%
Equitable Resources, Inc. 11,100 457,320
-------------
Total Common Stocks (Cost $67,475,956) 78,835,829
- --------------------------------------------------------------------------------
Other Securities--1.3%
Nasdaq-100 Unit Investment Trust 1
(Cost $1,098,130) 43,400 1,526,812
Units
- --------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
Concentric Network Corp. Wts., Exp. 12/15/07 1,3 100 --
- --------------------------------------------------------------------------------
Microcell Telecommunications, Inc.,
Cl. A Wts., Exp. 5/1/05 1 21 22
- --------------------------------------------------------------------------------
Microcell Telecommunications, Inc.,
Cl. B Wts., Exp. 5/1/08 1 35 57
-------------
Total Rights, Warrants and Certificates (Cost $4,293) 79
Principal
Amount
- --------------------------------------------------------------------------------
Asset-Backed Securities--9.3%
Bank One Auto Securitization Trust,
Automobile Receivables, Series 2003-1,
Cl A2, 1.29%, 8/21/06 $ 240,000 239,391
- --------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile
Loan Certificates, Series 2003-A,
Cl. A2, 1.45%, 11/25/05 410,000 410,405
- --------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust,
Automobile Mtg.-Backed Nts.,
Series 2002-4, Cl. A2B, 1.74%, 1/17/05 221,200 221,599
- --------------------------------------------------------------------------------
Caterpillar Financial Asset Trust,
Equipment Loan Pass-Through
Certificates, Series 2003-A,
Cl. A2, 1.25%, 10/25/05 170,000 169,975
- --------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home
Equity Loan Asset-Backed Certificates:
Series 2003-B, Cl. AF1, 1.64%, 2/25/18 87,777 87,718
Series 2003-C, Cl. AF1, 2.14%, 7/25/18 3 276,202 276,839
- --------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed
Certificates, Home Equity Mtg. Obligations:
Series 2003-3, Cl. 1A1, 1.20%, 8/25/17 4 137,652 137,646
Series 2003-4, Cl. 1A1, 1.24%, 9/25/17 3,4 290,573 290,597
16 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Asset-Backed Securities Continued
Chase Manhattan Auto Owner Trust, Automobile
Loan Pass-Through Certificates:
Series 2003-A, Cl. A2, 1.26%, 1/16/06 $110,000 $ 109,948
Series 2003-B, Cl. A2, 1.287%, 3/15/06 140,000 139,893
- --------------------------------------------------------------------------------
CitiFinancial Mortgage Securities, Inc.,
Home Equity Collateralized Mtg. Obligations:
Series 2002-1, Cl. AF1, 2.474%, 9/25/32 98,839 99,165
Series 2003-2, Cl. AF1, 1.22%, 5/25/33 4 152,427 152,407
Series 2003-3, Cl. AF1, 1.24%, 8/25/33 3,4 221,244 221,242
- --------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile
Loan Pass-Through Certificates:
Series 2002-B, Cl. A2, 2.20%, 4/6/05 118,962 119,234
Series 2003-A, Cl. A2, 1.52%, 12/8/05 3 410,000 410,415
- --------------------------------------------------------------------------------
Ford Credit Auto Owner Trust,
Automobile Installment Sales,
Series 2003-A, Cl. A2A, 1.62%, 8/15/05 200,819 201,156
- --------------------------------------------------------------------------------
Ford Credit Auto Owner Trust,
Automobile Loan Certificates,
Series 2002-D, Cl. A2A, 2.10%, 3/15/05 267,878 268,673
- --------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust,
Motorcycle Receivable Nts.:
Series 2002-2, Cl. A1, 1.91%, 4/16/07 251,497 252,333
Series 2003-3, Cl. A1, 1.50%, 1/15/08 398,648 399,049
- --------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust,
Automobile Receivables Obligations:
Series 2002-3, Cl. A2, 2.26%, 12/18/04 123,706 123,947
Series 2002-4, Cl. A2, 1.66%, 6/15/05 790,937 792,321
Series 2003-3, Cl. A2, 1.52%, 4/21/06 3 460,000 460,359
Series 2003-4, Cl. A2, 1.52%, 7/17/06 410,000 409,872
- --------------------------------------------------------------------------------
Household Automotive Trust, Automobile
Loan Certificates,
Series 2002-2, Cl. A2, 2.15%, 12/19/05 121,302 121,595
- --------------------------------------------------------------------------------
Litigation Settlement Monetized Fee
Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 3 784,885 756,679
- --------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile Loan
Certificates, Series 2002-1,
Cl. A2, 1.95%, 7/20/05 56,229 56,312
- --------------------------------------------------------------------------------
MMCA Auto Lease Trust, Auto Retail
Installment Contracts,
Series 2002-A, Cl. A2, 1.29%, 5/16/05 4,5 147,021 147,136
- --------------------------------------------------------------------------------
Nissan Auto Lease Trust, Auto Lease Obligations:
Series 2002-A, Cl. A2, 1.86%, 11/15/04 5 219,753 220,019
Series 2003-A, Cl. A2, 1.69%, 12/15/05 270,000 270,035
- --------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust,
Automobile Receivable Nts.:
Series 2002-C, Cl. A2, 1.94%, 9/15/04 78,797 78,867
Series 2003-B, Cl. A2, 1.20%, 11/15/05 420,000 419,660
- --------------------------------------------------------------------------------
Salomon Smith Barney Auto Loan Trust,
Asset-Backed Auto Loan Obligations,
Series 2002-1, Cl. A2, 1.83%, 9/15/05 171,322 171,702
- --------------------------------------------------------------------------------
Toyota Auto Receivables Owner Trust,
Automobile Mtg.-Backed Obligations:
Series 2002-B, Cl. A3, 3.76%, 6/15/06 128,387 130,195
Series 2003-A, Cl. A2, 1.28%, 8/15/05 470,000 470,113
Series 2003-B, Cl. A2, 1.43%, 2/15/06 3 310,000 309,860
- --------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan
Asset-Backed Nts.:
Series 2002-1, Cl. A2, 1.95%, 3/15/05 19,981 20,001
Series 2002-1, Cl. A3, 2.41%, 10/16/06 190,000 191,432
Series 2003-1, Cl. A2, 1.22%, 4/17/06 250,000 249,797
17 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Asset-Backed Securities Continued
Volkswagen Auto Lease Trust, Automobile
Lease Asset-Backed Securities,
Series 2002-A, Cl. A2, 1.77%, 2/20/05 $ 270,120 $ 270,652
- --------------------------------------------------------------------------------
Volkswagen Auto Loan Enhanced Trust,
Automobile Loan Receivables:
Series 2003-1, Cl. A2, 1.11%, 12/20/05 176,000 175,710
Series 2003-2, Cl. A2, 1.55%, 6/20/06 240,000 239,888
- --------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile Loan Receivables:
Series 2002-1, Cl. A2, 1.88%, 6/15/05 411,849 413,028
Series 2003-1, Cl. A2A, 1.40%, 4/15/06 440,000 439,916
------------
Total Asset-Backed Securities (Cost $11,168,113) 11,146,781
- --------------------------------------------------------------------------------
Mortgage-Backed Obligations--20.3%
CIT Equipment Collateral, Equipment
Receivable-Backed Nts.,
Series 2003-EF1, Cl. A2, 1.49%, 12/20/05 3 120,000 119,850
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5%, 11/1/33 2 622,000 612,281
7%, 9/1/33 279,793 294,427
8%, 4/1/16 200,019 216,285
9%, 8/1/22-5/1/25 54,776 61,064
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 2500, Cl. FD, 1.62%, 3/15/32 4 117,021 117,409
Series 2526, Cl. FE, 1.52%, 6/15/29 4 121,867 121,643
Series 2551, Cl. FD, 1.52%, 1/15/33 4 106,771 107,223
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Structured Pass-Through Securities,
Collateralized Mtg. Obligations:
Series H003, Cl. A2, 1.88%, 1/15/07 32,453 32,467
Series T-42, Cl. A2, 5.50%, 2/25/42 60,719 61,868
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5%, 11/1/33 2 799,000 788,263
5.50%, 11/14/33 2 2,964,000 2,991,788
6.50%, 3/1/26 99,062 103,261
6.50%, 11/25/33 2 8,249,000 8,571,222
7%, 2/25/22-11/1/33 718,972 757,384
7%, 11/25/33 2 7,182,000 7,563,544
7.50%, 1/1/08-6/1/08 70,793 75,365
8.50%, 7/1/32 47,892 51,556
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Collateralized Mtg. Obligations, Gtd.
Real Estate Mtg. Investment Conduit
Pass-Through Certificates,
Trust 2002-77, Cl. WF, 1.52%, 12/18/32 4 186,844 187,417
- --------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only
Stripped Mtg.-Backed Security:
Trust 1993-223, Cl. PM, 1.984%, 10/25/23 6 193,300 20,586
Trust 222, Cl. 2, 1.25%, 6/1/23 6 358,401 59,282
Trust 240, Cl. 2, 1.073%, 9/1/23 6 142,525 24,796
Trust 321, Cl. 2, (4.745)%, 3/1/32 6 184,619 30,758
- --------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 4/15/09-2/15/24 262,848 280,269
7.50%, 3/15/09 132,364 142,059
8%, 5/15/17 70,524 77,144
8.50%, 8/15/17-12/15/17 65,322 72,261
18 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Mortgage-Backed Obligations Continued
Norwest Asset Securities Corp.,
Collateralized Mtg. Obligations
Pass-Through Certificates, Series
1999-18, Cl. A2, 6%, 7/25/29 $ 228,170 $ 228,060
- --------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II
LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1,
Cl. A2, 7.306%, 10/6/15 192,000 220,792
- --------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp.,
Collateralized Mtg. Obligations Pass-Through
Certificates, Series 2003-AR7, Cl. A1,
1.51%, 8/25/33 4 273,965 273,584
-------------
Total Mortgage-Backed Obligations (Cost $24,108,874) 24,263,908
- --------------------------------------------------------------------------------
U.S. Government Obligations--3.6%
Federal Home Loan Mortgage Corp. Unsec. Nts.:
4.50%, 1/15/13-7/15/13 130,000 127,901
5.50%, 7/15/06 7 1,600,000 1,725,621
- --------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
6.375%, 6/15/09 70,000 79,024
7.25%, 1/15/10 1,050,000 1,236,162
- --------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
5.375%, 11/13/08 122,000 131,826
7.125%, 5/1/30 128,000 155,089
- --------------------------------------------------------------------------------
U.S. Treasury Bonds:
4.25%, 8/15/13 343,000 341,714
5.375%, 2/15/31 160,000 165,394
STRIPS, 2.99%, 2/15/10 8 125,000 98,428
STRIPS, 4.96%, 2/15/16 8 171,000 92,339
STRIPS, 5.48%, 11/15/27 8 97,000 25,482
- --------------------------------------------------------------------------------
U.S. Treasury Nts., 3.125%, 9/15/08 190,000 189,191
-------------
Total U.S. Government Obligations (Cost $4,395,998) 4,368,171
- --------------------------------------------------------------------------------
Foreign Government Obligations--0.1%
United Mexican States Nts., 7.50%, 1/14/12
(Cost $111,094) 110,000 123,200
- --------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes--10.3%
AEP Resources, Inc., 6.50% Sr. Nts., 12/1/03 5 180,000 180,576
- --------------------------------------------------------------------------------
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 75,000 82,883
- --------------------------------------------------------------------------------
Allied Waste North America, Inc., 10%
Sr. Unsec. Sub. Nts., Series B, 8/1/09 85,000 92,863
- --------------------------------------------------------------------------------
American Honda Finance Corp., 3.85% Nts.,
11/6/08 2 60,000 59,994
- --------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 7.50% Sr.
Unsec. Nts., 5/1/07 175,000 196,475
- --------------------------------------------------------------------------------
AXA Group, 8.60% Unsec. Sub. Nts., 12/15/30 190,000 234,971
- --------------------------------------------------------------------------------
Bankers Trust Corp., 7.375% Unsec. Sub.
Nts., 5/1/08 20,000 22,890
- --------------------------------------------------------------------------------
Boeing Capital Corp., 7.375% Sr. Nts., 9/27/10 290,000 330,071
- --------------------------------------------------------------------------------
British Sky Broadcasting Group plc, 8.20%
Sr. Unsec. Nts., 7/15/09 95,000 110,835
- --------------------------------------------------------------------------------
British Telecommunications plc, 7.875% Nts.,
12/15/05 155,000 171,724
- --------------------------------------------------------------------------------
Cardinal Health, Inc., 4.45% Nts., 6/30/05 160,000 166,310
- --------------------------------------------------------------------------------
CenterPoint Energy, Inc., 5.875% Nts., 6/1/08 5 135,000 139,074
- --------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts.,
4/2/12 120,000 140,270
- --------------------------------------------------------------------------------
Citigroup, Inc., 6.625% Unsec. Sub. Nts.,
6/15/32 350,000 379,965
- --------------------------------------------------------------------------------
Citizens Communications Co., 9.25% Sr. Nts.,
5/15/11 115,000 143,779
19 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes Continued
Credit Suisse First Boston, Inc. (USA),
6.125% Nts., 11/15/11 $ 230,000 $ 248,955
- --------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts., 10/15/08 120,000 131,860
- --------------------------------------------------------------------------------
DaimlerChrysler NA Holding Corp., 6.40% Nts.,
5/15/06 225,000 240,664
- --------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs.,
4/15/31 165,000 186,863
- --------------------------------------------------------------------------------
Delphi Corp., 6.55% Nts., 6/15/06 135,000 143,935
- --------------------------------------------------------------------------------
Deutsche Telekom International Finance BV,
8.50% Unsub. Nts., 6/15/10 155,000 186,836
- --------------------------------------------------------------------------------
Dime Capital Trust I, 9.33% Capital Securities,
Series A, 5/6/27 240,000 281,759
- --------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr.
Unsub. Nts., 6/15/10 135,000 161,674
- --------------------------------------------------------------------------------
DTE Energy Co., 6.375% Sr. Nts., 4/15/33 125,000 124,994
- --------------------------------------------------------------------------------
El Paso Natural Gas Co., 6.75% Unsec.
Unsub. Nts., 11/15/03 3 30,000 30,000
- --------------------------------------------------------------------------------
EOP Operating LP, 7.75% Unsec. Nts., 11/15/07 145,000 166,229
- --------------------------------------------------------------------------------
Farmers Insurance Exchange, 8.625% Nts.,
5/1/24 5 300,000 310,654
- --------------------------------------------------------------------------------
Ford Motor Co., 7.45% Bonds, 7/16/31 70,000 63,053
- --------------------------------------------------------------------------------
France Telecom SA:
8.45% Sr. Unsec. Nts., 3/1/06 80,000 89,651
9% Sr. Unsec. Nts., 3/1/11 80,000 96,674
9.75% Sr. Unsec. Nts., 3/1/31 4 45,000 59,596
- --------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts., 4/15/08 80,000 79,854
- --------------------------------------------------------------------------------
Gap, Inc. (The), 6.90% Nts., 9/15/07 100,000 109,250
- --------------------------------------------------------------------------------
General Electric Capital Corp., 2.75% Nts.,
Series A, 9/25/06 15,000 15,015
- --------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.875% Unsec.
Unsub. Nts., 8/28/12 340,000 349,097
- --------------------------------------------------------------------------------
General Motors Corp., 8.375% Sr. Unsec. Debs.,
7/15/33 150,000 158,707
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The),
2.375% Nts., 6/1/06 70,000 69,288
- --------------------------------------------------------------------------------
Health Net, Inc., 8.375% Sr. Unsec. Unsub. Nts.,
4/15/11 95,000 112,511
- --------------------------------------------------------------------------------
Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12 360,000 362,438
- --------------------------------------------------------------------------------
Household Finance Corp., 7% Nts., 5/15/12 160,000 182,005
- --------------------------------------------------------------------------------
Hutchison Whampoa International Ltd., 6.50%
Nts., 2/13/13 5 155,000 161,776
- --------------------------------------------------------------------------------
John Hancock Global Funding II:
5% Nts., 7/27/07 5 165,000 174,514
7.90% Nts., 7/2/10 5 105,000 124,764
- --------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts.,
9/1/12 150,000 165,485
- --------------------------------------------------------------------------------
Kroger Co. (The), 7.80% Sr. Nts., 8/15/07 180,000 207,023
- --------------------------------------------------------------------------------
Liberty Media Corp., 3.50% Nts., 9/25/06 110,000 108,723
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 3.375% Nts.,
Series B, 9/14/07 135,000 135,691
- --------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr.
Nts., 10/1/12 265,000 274,664
- --------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 155,000 172,871
- --------------------------------------------------------------------------------
Nationwide Financial Services, Inc.,
5.90% Nts., 7/1/12 125,000 130,128
- --------------------------------------------------------------------------------
News America Holdings, Inc., 7.75% Sr.
Unsec. Debs., 12/1/45 165,000 189,882
- --------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 5.375% Sr.
Unsec. Nts., 10/1/04 75,000 77,425
- --------------------------------------------------------------------------------
NiSource Finance Corp., 7.875% Sr. Unsec.
Nts., 11/15/10 190,000 225,127
- --------------------------------------------------------------------------------
NorAm Energy Corp., 6.375% Unsec. Term
Enhanced Remarketable Nts., 11/1/03 6,000 6,000
- --------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125% Sr. Nts.,
2/15/11 140,000 161,107
20 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes Continued
Petroleos Mexicanos, 9.50% Sr. Sub. Nts.,
9/15/27 $ 70,000 $ 81,725
- --------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr.
Nts., Series B, 6/1/13 5 75,000 73,051
- --------------------------------------------------------------------------------
Progress Energy, Inc., 6.55% Sr. Unsec. Nts.,
3/1/04 225,000 228,661
- --------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds,
Series C, 12/18/23 5 195,000 236,526
- --------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30%
Nts., 7/1/25 5 260,000 316,893
- --------------------------------------------------------------------------------
Pulte Homes, Inc., 8.375% Sr. Nts., 8/15/04 45,000 46,584
- --------------------------------------------------------------------------------
Raytheon Co., 5.70% Sr. Unsec. Nts., 11/1/03 275,000 275,000
- --------------------------------------------------------------------------------
Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 170,000 177,382
- --------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 3.03% Nts.,
Series VII, 2/25/04 4 55,000 55,104
- --------------------------------------------------------------------------------
Shopping Center Associates, 6.75% Sr. Unsec.
Nts., 1/15/04 5 40,000 40,406
- --------------------------------------------------------------------------------
Sprint Capital Corp., 8.75% Nts., 3/15/32 180,000 205,433
- --------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec.
Debs., 2/1/12 290,000 377,293
- --------------------------------------------------------------------------------
Telefonos de Mexico SA, 8.25% Sr. Unsec.
Nts., 1/26/06 95,000 105,569
- --------------------------------------------------------------------------------
Time Warner Cos., Inc., 9.125% Debs., 1/15/13 130,000 162,981
- --------------------------------------------------------------------------------
Time Warner Entertainment Co. LP:
8.375% Sr. Debs., 3/15/23 35,000 42,718
10.15% Sr. Nts., 5/1/12 65,000 86,269
- --------------------------------------------------------------------------------
Tyco International Group SA, 6.75% Sr.
Unsub. Nts., 2/15/11 375,000 400,781
- --------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec.
Unsub. Nts., 6/15/07 135,000 142,705
- --------------------------------------------------------------------------------
Walt Disney Co. (The), 6.75% Sr. Nts., 3/30/06 145,000 158,309
- --------------------------------------------------------------------------------
Waste Management, Inc., 7% Sr. Nts., 7/15/28 90,000 96,704
- --------------------------------------------------------------------------------
Weyerhaeuser Co., 5.50% Unsec. Unsub.
Nts., 3/15/05 175,000 182,396
- --------------------------------------------------------------------------------
Wyeth, 5.875% Nts., 3/15/04 165,000 167,753
-------------
Total Non-Convertible Corporate Bonds and
Notes (Cost $11,637,210) 12,389,665
- --------------------------------------------------------------------------------
Structured Notes--2.7%
Deutsche Bank AG, COUNTS Corp. Sec.
Credit Linked Nts., Series 2003-1,
2.89%, 1/7/05 3,4 950,000 936,605
- --------------------------------------------------------------------------------
JPMorgan Chase Bank, High Yield Index
BB Linked Nts., 6.40%, 6/20/08 1,350,000 1,346,625
- --------------------------------------------------------------------------------
UBS AG, High Grade Credit Linked Nts.,
2.783%, 12/10/04 4 950,000 954,750
-------------
Total Structured Notes (Cost $3,268,482) 3,237,980
- --------------------------------------------------------------------------------
Joint Repurchase Agreements--3.7%
Undivided interest of 13.45% in joint
repurchase agreement (Principal
Amount/Market Value $33,038,000, with
a maturity value of $33,040,671) with
Zions Bank/Capital Markets Group, 0.97%,
dated 10/31/03, to be repurchased at
$4,443,359 on 11/3/03, collateralized
by U.S. Treasury Bonds, 1.625%, 1/31/05,
with a value of $33,755,317 (Cost $4,443,000) 4,443,000 4,443,000
- --------------------------------------------------------------------------------
Total Investments, at Value (Cost $127,711,150) 117.1% 140,335,425
- --------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (17.1) (20,497,838)
--------------------------
Net Assets 100.0% $119,837,587
==========================
21 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF INVESTMENTS Continued
Footnotes to Statement of Investments
1. Non-income producing security.
2. When-issued security to be delivered and settled after October 31, 2003. See
Note 1 of Notes to Financial Statements.
3. Identifies issues considered to be illiquid or restricted. See Note 8 of
Notes to Financial Statements.
4. Represents the current interest rate for a variable or increasing rate
security.
5. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $2,125,389 or 1.77% of the Fund's net
assets as of October 31, 2003.
6. 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 $135,422 or 0.11% of the Fund's net assets as
of October 31, 2003.
7. Securities with an aggregate market value of $129,422 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Received as the result of issuer reorganization. Currently has minimal market
value.
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2003
- -------------------------------------------------------------------------------------------------------------
Assets
Investments, at value (cost $127,711,150)--see accompanying statement $140,335,425
- -------------------------------------------------------------------------------------------------------------
Cash 6,869
- -------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $1,074,309 sold on a when-issued basis) 1,213,679
Interest, dividends and principal paydowns 544,246
Shares of capital stock sold 103,882
Futures margins 26,513
Swap contract 21,596
Other 390
-------------
Total assets 142,252,600
- -------------------------------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased (including $21,686,570 purchased on a when-issued basis) 22,191,440
Shareholder reports 66,638
Shares of capital stock redeemed 50,211
Transfer and shareholder servicing agent fees 25,400
Distribution and service plan fees 25,065
Directors' compensation 24,380
Other 31,879
-------------
Total liabilities 22,415,013
- -------------------------------------------------------------------------------------------------------------
Net Assets $119,837,587
=============
- -------------------------------------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of capital stock $ 9,178
- -------------------------------------------------------------------------------------------------------------
Additional paid-in capital 130,589,388
- -------------------------------------------------------------------------------------------------------------
Undistributed net investment income 170,158
- -------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (23,523,270)
- -------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 12,592,133
-------------
Net Assets $119,837,587
=============
23 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- -------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $100,032,147 and 7,670,718 shares of capital stock outstanding) $13.04
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $13.84
- -------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net
assets of $14,747,074 and 1,114,743 shares of capital stock outstanding) $13.23
- -------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net
assets of $4,666,100 and 362,249 shares of capital stock outstanding) $12.88
- -------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net
assets of $392,266 and 30,169 shares of capital stock outstanding) $13.00
See accompanying Notes to Financial Statements.
24 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2003
- ----------------------------------------------------------------------------------------------------------------
Investment Income
Interest $ 2,001,467
- ----------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $7,730) 711,899
-------------
Total investment income 2,713,366
- ----------------------------------------------------------------------------------------------------------------
Expenses
Management fees 698,136
- ----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 234,550
Class B 127,687
Class C 38,009
Class N 1,706
- ----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 225,317
Class B 48,680
Class C 15,078
Class N 2,635
- ----------------------------------------------------------------------------------------------------------------
Shareholder reports 107,603
- ----------------------------------------------------------------------------------------------------------------
Accounting service fees 15,000
- ----------------------------------------------------------------------------------------------------------------
Directors' compensation 1,301
- ----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 692
- ----------------------------------------------------------------------------------------------------------------
Other 35,897
-------------
Total expenses 1,552,291
Less reduction to custodian expenses (692)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (2,584)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (5,235)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (2,016)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (1,586)
-------------
Net expenses 1,540,178
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 1,173,188
- ----------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 1,674,168
Closing of futures contracts (222,469)
Foreign currency transactions (248)
-------------
Net realized gain 1,451,451
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 11,836,685
Translation of assets and liabilities denominated in foreign currencies 365
Futures contracts 107,054
-------------
Net change in unrealized appreciation 11,944,104
- ----------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $14,568,743
=============
See accompanying Notes to Financial Statements.
25 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended October 31, 2003 2002
- -------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 1,173,188 $ 1,967,602
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,451,451 (10,767,199)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 11,944,104 1,737,908
-----------------------------------
Net increase (decrease) in net assets resulting from operations 14,568,743 (7,061,689)
- -------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (1,140,244) (2,252,545)
Class B (45,309) (179,379)
Class C (15,476) (40,660)
Class N (2,774) (3,372)
- -------------------------------------------------------------------------------------------------------------
Capital Stock Transactions
Net increase (decrease) in net assets resulting from capital stock
transactions:
Class A (4,085,561) (11,878,838)
Class B 1,001,740 (1,491,347)
Class C 1,212,712 322,450
Class N 109,096 276,606
- -------------------------------------------------------------------------------------------------------------
Net Assets
Total increase (decrease) 11,602,927 (22,308,774)
- -------------------------------------------------------------------------------------------------------------
Beginning of period 108,234,660 130,543,434
-----------------------------------
End of period [including undistributed net investment income
of $170,158 and $176,788, respectively] $119,837,587 $108,234,660
===================================
See accompanying Notes to Financial Statements.
26 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS
Class A Year Ended October 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $11.56 $12.54 $14.23 $15.03 $15.45
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .14 .22 .26 .44 .44
Net realized and unrealized gain (loss) 1.48 (.94) (1.69) .68 (.01)
---------------------------------------------------------
Total from investment operations 1.62 (.72) (1.43) 1.12 .43
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.14) (.26) (.26) (.44) (.44)
Distributions from net realized gain -- -- -- (1.48) (.41)
---------------------------------------------------------
Total dividends and/or distributions
to shareholders (.14) (.26) (.26) (1.92) (.85)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.04 $11.56 $12.54 $14.23 $15.03
=========================================================
- -------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 14.17% (5.86)% (10.12)% 8.27% 2.62%
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $100,032 $ 92,806 $112,864 $144,244 $258,159
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 94,811 $104,415 $128,477 $172,514 $293,677
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.18% 1.73% 1.88% 2.88% 2.72%
Total expenses 1.26% 3,4 1.21% 3,4 1.19% 3 1.11% 3 1.04% 3
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 275% 193% 164% 34% 122%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
See accompanying Notes to Financial Statements.
27 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued
Class B Year Ended October 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $11.73 $ 12.72 $ 14.43 $15.20 $15.62
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .04 .11 .15 .30 .31
Net realized and unrealized gain (loss) 1.50 (.94) (1.70) .73 --
-----------------------------------------------------
Total from investment operations 1.54 (.83) (1.55) 1.03 .31
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.04) (.16) (.16) (.32) (.32)
Distributions from net realized gain -- -- -- (1.48) (.41)
-----------------------------------------------------
Total dividends and/or distributions
to shareholders (.04) (.16) (.16) (1.80) (.73)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.23 $11.73 $12.72 $14.43 $15.20
=====================================================
- -------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 13.21% (6.61)% (10.79)% 7.48% 1.84%
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $14,747 $12,204 $14,770 $17,892 $23,522
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $12,776 $13,639 $16,569 $19,643 $24,648
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.31% 0.94% 1.14% 2.12% 1.97%
Total expenses 2.15% 2.00% 1.94% 1.87% 1.80%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses 2.11% N/A 3,4 N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 275% 193% 164% 34% 122%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
See accompanying Notes to Financial Statements.
28 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Class C Year Ended October 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 11.43 $ 12.41 $ 14.08 $14.88 $15.31
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .13 .13 .28 .32
Net realized and unrealized gain (loss) 1.43 (.94) (1.64) .72 (.01)
------------------------------------------------------
Total from investment operations 1.50 (.81) (1.51) 1.00 .31
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.05) (.17) (.16) (.32) (.33)
Distributions from net realized gain -- -- -- (1.48) (.41)
------------------------------------------------------
Total dividends and/or distributions
to shareholders (.05) (.17) (.16) (1.80) (.74)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.88 $11.43 $12.41 $14.08 $14.88
======================================================
- -------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 13.18% (6.64)% (10.76)% 7.44% 1.84%
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,666 $2,984 $2,893 $3,931 $5,719
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,806 $2,961 $3,280 $4,255 $5,876
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.29% 0.93% 1.14% 2.13% 1.97%
Total expenses 2.17% 2.00% 1.94% 1.86% 1.80%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses 2.12% N/A 3,4 N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 275% 193% 164% 34% 122%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
See accompanying Notes to Financial Statements.
29 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued
Class N Year Ended October 31, 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 11.52 $ 12.52 $ 13.74
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .12 .16 .12
Net realized and unrealized gain (loss) 1.46 (.91) (1.20)
--------------------------------
Total from investment operations 1.58 (.75) (1.08)
- -----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.10) (.25) (.14)
Distributions from net realized gain -- -- --
--------------------------------
Total dividends and/or distributions to shareholders (.10) (.25) (.14)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $13.00 $11.52 $12.52
================================
- -----------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 13.81% (6.17)% (7.90)%
- -----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $392 $241 $2
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $342 $160 $1
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.79% 1.28% 1.04%
Total expenses 2.04% 1.60% 1.68%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses 1.58% N/A 4,5 N/A 4
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 275% 193% 164%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year. 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%.
See accompanying Notes to Financial Statements.
30 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Disciplined Allocation Fund (the Fund), a series of Oppenheimer
Series Fund, Inc. (the Company), is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund's
investment objective is to seek to maximize total investment return (including
capital appreciation and income) principally by allocating its assets among
stocks, corporate bonds, U.S. government securities and money market
instruments, according to changing market conditions. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A shares
are sold at their offering price, which is normally net asset value plus a
front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C and N
have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. 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. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Directors, or at their fair value. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Directors. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in index-linked structured notes whose
principal and/or interest depend on the performance of an underlying index. The
structured notes are leveraged, which increases the volatility of each note's
market value relative to the change in the underlying index. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying financial statements. The Fund records a realized gain or loss
when a structured note is sold or matures. As of October 31, 2003, the market
value of these securities comprised 2.7% of the Fund's net assets, and resulted
in unrealized losses of $30,502.
31 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Securities on a When-Issued Basis. Delivery and payment for securities that
have been purchased by the Fund on a when-issued basis can take place a month
or more after the trade date. Normally the settlement date occurs within six
months after the trade date; however, the Fund may, from time to time, purchase
securities whose settlement date extends six months or more beyond trade date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains segregated assets with a market value equal to or greater than
the amount of its purchase commitments. The purchase of securities on a
when-issued basis may increase the volatility of the Fund's net asset value to
the extent the Fund executes such purchases while remaining substantially fully
invested. As of October 31, 2003, the Fund had entered into when-issued
purchase commitments of $21,686,570. Additionally, the Fund had when-issued
sale commitments of $1,074,309.
In connection with its ability to purchase securities on a when-issued
basis, the Fund may enter into forward roll transactions with respect to
mortgage-related securities. Forward roll transactions require the sale of
securities for delivery in the current month, and a simultaneous agreement with
the same counterparty to repurchase similar (same type, coupon and maturity)
but not identical securities on a specified future date. The Fund records the
incremental difference between the forward purchase and sale of each forward
roll as realized gain (loss) on investments.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities to what was sold to the counterparty
at redelivery; counterparty credit risk; and the potential pay down speed
variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the 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. Secured by U.S. government securities, 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.
32 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
- --------------------------------------------------------------------------------
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.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years
and unrealized appreciation or depreciation of securities and other investments
for federal income tax purposes.
Net Unrealized
Appreciation
Undistributed Undistributed Accumulated Based on Cost of
Net Investment Long-Term Loss Securities for Federal
Income Gain Carryforward 1,2 Income Tax Purposes
-----------------------------------------------------------------------------------
$194,197 $-- $22,954,949 $12,023,811
1. As of October 31, 2003, the Fund had $22,954,949 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of October 31, 2003,
details of the capital loss carryforwards were as follows:
Expiring
----------------------
2009 $12,735,068
2010 10,219,881
-----------
Total $22,954,949
===========
2. During the fiscal year October 31, 2003, the Fund utilized $1,129,404 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year October 31, 2002, the Fund did not utilize any capital
loss carryforwards.
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. Accordingly,
the following amounts have been reclassified for October 31, 2003. Net assets
of the Fund were unaffected by the reclassifications.
To To Net
Ordinary Capital Tax Return Investment
Income Loss of Capital Loss
-------------------------------------------------------------
$23,985 $23,985 $-- $--
The tax character of distributions paid during the years ended October 31, 2003
and October 31, 2002 was as follows:
Year Ended Year Ended
October 31, 2003 October 31, 2002
- -----------------------------------------------------------------------
Distributions paid from:
Ordinary income $1,203,803 $2,475,956
33 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments
for federal income tax purposes as of October 31, 2003 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities
and other investments $133,128,480
============
Gross unrealized appreciation $ 13,813,222
Gross unrealized depreciation (1,789,411)
------------
Net unrealized appreciation $ 12,023,811
============
- --------------------------------------------------------------------------------
Directors' Compensation. The Fund has adopted an unfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
October 31, 2003, the Fund's projected benefit obligations were decreased by
$2,453 and payments of $3,931 were made to retired directors, resulting in an
accumulated liability of $24,040 as of October 31, 2003.
The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors to elect to defer receipt of all
or a portion of the annual compensation they are entitled to receive from the
Fund. Under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or are invested in other
Oppenheimer funds selected by the Director. Deferral of directors' fees under
the plan will not affect the net assets of the Fund, and will not materially
affect the Fund's assets, liabilities or net investment income per share.
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.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
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.
34 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
- --------------------------------------------------------------------------------
2. Shares of Capital Stock
The Fund has authorized 550 million shares of $0.001 par value capital stock.
Transactions in shares of capital stock were as follows:
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------
Class A
Sold 999,373 $ 12,060,988 628,916 $ 7,576,816
Dividends and/or
distributions reinvested 91,508 1,096,971 174,069 2,175,432
Redeemed (1,446,531) (17,243,520) (1,777,767) (21,631,086)
-------------------------------------------------------------------
Net decrease (355,650) $ (4,085,561) (974,782) $(11,878,838)
===================================================================
- -----------------------------------------------------------------------------------------------------
Class B
Sold 443,368 $ 5,482,870 220,549 $ 2,710,789
Dividends and/or
distributions reinvested 3,597 42,750 13,413 171,302
Redeemed (372,443) (4,523,880) (354,813) (4,373,438)
-------------------------------------------------------------------
Net increase (decrease) 74,522 $ 1,001,740 (120,851) $ (1,491,347)
===================================================================
- -----------------------------------------------------------------------------------------------------
Class C
Sold 186,268 $ 2,221,285 101,338 $ 1,207,406
Dividends and/or
distributions reinvested 1,273 14,766 3,185 39,488
Redeemed (86,326) (1,023,339) (76,698) (924,444)
-------------------------------------------------------------------
Net increase 101,215 $ 1,212,712 27,825 $ 322,450
===================================================================
- -----------------------------------------------------------------------------------------------------
Class N
Sold 21,478 $ 261,761 108,852 $ 1,331,998
Dividends and/or
distributions reinvested 230 2,766 134 1,621
Redeemed (12,426) (155,431) (88,230) (1,057,013)
-------------------------------------------------------------------
Net increase 9,282 $ 109,096 20,756 $ 276,606
===================================================================
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2003, were
$334,038,680 and $325,463,748, respectively.
35 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS 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 0.625% of the first $300 million of average annual net assets of
the Fund, 0.50% of the next $100 million, and 0.45% of average annual net
assets in excess of $400 million.
- --------------------------------------------------------------------------------
Accounting Fees. The Manager acts as the accounting agent for the Fund at an
annual fee of $15,000, plus out-of-pocket costs and expenses reasonably
incurred.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended October 31, 2003, the Fund
paid $280,964 to OFS for services to the Fund.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- -----------------------------------------------------------------------------------------------------------------------
October 31, 2003 $110,906 $54,405 $7,898 $75,513 $10,372 $2,258
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its
own resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- -------------------------------------------------------------------------------------------------------
October 31, 2003 $791 $70,283 $742 $567
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended October 31, 2003, expense under
the Class A Plan totaled $234,550, all of which were paid by the Distributor to
recipients, which included $1,229 retained by the Distributor and $182,977
which was paid to an affiliate of the Manager. Any unreimbursed expenses the
Distributor incurs with respect to Class A shares in any fiscal year cannot be
recovered in subsequent years.
36 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Distribution fees paid to the Distributor for the year ended October 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Uncompensated
Uncompensated Expenses as %
Total Expenses Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- ----------------------------------------------------------------------------------------------
Class B Plan $127,687 $92,375 $472,270 3.20%
Class C Plan 38,009 9,167 107,287 2.30
Class N Plan 1,706 1,510 3,586 0.91
- --------------------------------------------------------------------------------
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
forward transaction. Contracts closed or settled with the same broker are
recorded as net realized gain or loss. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of October 31, 2003, 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 stock and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
37 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
6. Futures Contracts Continued
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 contracts to gain exposure to market changes as it
may be more efficient or cost effective than actually buying fixed income
securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or 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 on the
Statement of Operations as closing and expiration of futures contracts. The net
change in unrealized appreciation and depreciation is reported on 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 October 31, 2003, the Fund had outstanding futures contracts as follows:
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts October 31, 2003 (Depreciation)
- ------------------------------------------------------------------------------------------------------
Contracts to Purchase
U.S. Long Bonds 12/19/03 19 $2,065,656 $(12,991)
U.S. Treasury Nts., 10 yr. 12/19/03 57 6,400,922 17,037
---------
4,046
---------
Contracts to Sell
U.S. Treasury Nts., 2 yr. 12/29/03 2 428,938 (39)
U.S. Treasury Nts., 5 yr. 12/19/03 29 3,242,563 (57,937)
---------
(57,976)
---------
$(53,930)
=========
- --------------------------------------------------------------------------------
7. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written,
38 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
the Fund receives a premium and becomes obligated to sell or purchase the
underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended October 31, 2003 was as follows:
Call Options
------------------------------
Number of Amount of
Contracts Premiums
- -------------------------------------------------------------
Options outstanding as of
October 31, 2002 2 $ 106
Options written 236 11,340
Options exercised (238) (11,446)
-----------------------------
Options outstanding as of
October 31, 2003 -- $ --
=============================
- --------------------------------------------------------------------------------
8. Illiquid or Restricted Securities
As of October 31, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Directors as reflecting fair value. A security may
also be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Fund intends to
invest no more than 10% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional
investors, are not subject to that limitation. The aggregate value of illiquid
or restricted securities subject to this limitation as of October 31, 2003 was
$3,812,446, which represents 3.18% of the Fund's net assets, of which zero is
considered restricted. Information concerning restricted securities is as
follows:
39 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
8. Illiquid or Restricted Securities Continued
Valuation as of Unrealized
Security Acquisition Date Cost Oct. 31, 2003 Depreciation
- ---------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Geotek Communications, Inc., Series B,
Escrow Shares 1/4/01 $400 $-- $400
- --------------------------------------------------------------------------------
9. 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 interest
income, 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).
As of October 31, 2003, the Fund had entered into the following total return
swap agreements:
Paid by Received by
Swap the Fund at the Fund at Termination Unrealized
Counterparty Notional Oct. 31, 2003 Oct. 31, 2003 Date Appreciation
- ---------------------------------------------------------------------------------------------------------------
Value of total
Six-Month return of Lehman
LIBOR less 40 Brothers CMBS
Deutsche Bank $871,000 basis points Index 12/31/03 $21,596
- --------------------------------------------------------------------------------
10. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Directors,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at October 31, 2003.
40 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Oppenheimer Series Fund, Inc.:
We have audited the accompanying statement of assets and liabilities including
the statement of investments of Oppenheimer Disciplined Allocation Fund (one of
the portfolios constituting the Oppenheimer Series Fund, Inc.) as of October
31, 2003, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of October 31, 2003, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Disciplined Allocation Fund as of October 31, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2003
41 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended October 31,
2003 which are not designated as capital gain distributions should be
multiplied by 50.69% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended October 31, 2003 which are not designated as capital gain distributions
are eligible for lower individual income tax rates to the extent that the Fund
has received qualified dividend income as stipulated by recent tax legislation.
$582,787 of the Fund's fiscal year taxable income may be eligible for the lower
individual income tax rates. In early 2004, shareholders of record will receive
information regarding the percentage of distributions that are eligible for
lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES 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 1.800.225.5677, (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 will be required to file new 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 first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
42 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
DIRECTORS AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
Name, Position(s) Held Principal Occupation(s) During Past 5 Years; Other
with Fund, Length of Trusteeships/Directorships Held by Director;
Service, Age Number of Portfolios in Fund Complex Currently
Overseen by Director
INDEPENDENT The address of each Director in the chart below is
DIRECTORS 6803 S. Tucson Way, Centennial, CO 80112-3924.
Each Director serves for an indefinite term, until
his or her resignation, retirement, death or
removal. Mr. Motley was elected as Director to the
Board I funds effective October 10, 2002 and did
not hold shares of Board I funds during the
calendar year ended December 31, 2002.
Clayton K. Yeutter, Of Counsel (since 1993), Hogan & Hartson (a law
Chairman of the Board firm). Other directorships: Weyerhaeuser Corp.
of Directors (since 2003), (since 1999) and Danielson Holding Corp. (since
Director (since 1991) 2002); formerly a director of Caterpillar, Inc.
Age: 72 (1993-December 2002). Oversees 25 portfolios in
the OppenheimerFunds complex.
Robert G. Galli, A trustee or director of other Oppenheimer funds.
Director (since 1996) Oversees 35 portfolios in the OppenheimerFunds
Age: 70 complex.
Phillip A. Griffiths, A director (since 1991) of the Institute for
Director (since 1999) Advanced Study, Princeton, N.J., a director (since
Age: 65 2001) of GSI Lumonics, a trustee (since 1983) of
Woodward Academy, a Senior Advisor (since 2001) of
The Andrew W. Mellon Foundation. A member of: the
National Academy of Sciences (since 1979),
American Academy of Arts and Sciences (since
1995), American Philosophical Society (since 1996)
and Council on Foreign Relations (since 2002).
Formerly a director of Bankers Trust New York
Corporation (1994-1999). Oversees 25 portfolios in
the OppenheimerFunds complex.
Joel W. Motley, Director (since 2002) Columbia Equity Financial
Director (since 2002) Corp. (privately-held financial adviser); Managing
Age: 51 Director (since 2002) Carmona Motley, Inc.
(privately-held financial adviser); Formerly he
held the following positions: Managing Director
(January 1998-December 2001), Carmona Motley
Hoffman Inc. (privately-held financial adviser);
Managing Director (January 1992-December 1997),
Carmona Motley & Co. (privately-held financial
adviser). Oversees 25 portfolios in the
OppenheimerFunds complex.
Kenneth A. Randall, A director of Dominion Resources, Inc. (electric
Director (since 1985) utility holding company) and Prime Retail, Inc.
Age: 76 (real estate investment trust); formerly a
director of Dominion Energy, Inc. (electric power
and oil & gas producer), President and Chief
Executive Officer of The Conference Board, Inc.
(international economic and business research) and
a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American
Manufacturers Mutual Insurance Company. Oversees
25 portfolios in the OppenheimerFunds complex.
Edward V. Regan, President, Baruch College, CUNY; a director of
Director (since 1993) RBAsset (real estate manager); a director of
Age: 73 OffitBank; formerly Trustee, Financial Accounting
Foundation (FASB and GASB), Senior Fellow of
Jerome Levy Economics Institute, Bard College,
Chairman of Municipal Assistance Corporation for
the City of New York, New York State Comptroller
and Trustee of New York State and Local Retirement
Fund. Oversees 25 investment companies in the
OppenheimerFunds complex.
Russell S. Reynolds, Jr., Chairman (since 1993) of The Directorship Search
Director (since 1989) Group, Inc. (corporate governance consulting and
Age: 71 executive recruiting); a life trustee of
International House (non-profit educational
organization), and a trustee (since 1996) of the
Greenwich Historical Society. Oversees 25
portfolios in the OppenheimerFunds complex.
43 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
DIRECTORS AND OFFICERS Unaudited/Continued
- --------------------------------------------------------------------------------
Donald W. Spiro, Chairman Emeritus (since January 1991) of the
Vice Chairman of the Manager. Formerly a director (January 1969-August
Board of Directors, 1999) of the Manager. Oversees 25 portfolios in
Director (since 1985) the OppenheimerFunds complex.
Age: 77
- --------------------------------------------------------------------------------
INTERESTED DIRECTOR The address of Mr. Murphy in the chart below is
AND OFFICER Two World Financial Center, 225 Liberty St., New
York, NY 10281-1008. Mr. Murphy serves for an
indefinite term, until his resignation, death or
removal.
John V. Murphy, Chairman, Chief Executive Officer and director
President and Director (since June 2001) and President (since September
(since 2001) 2000) of the Manager; President and a director or
Age: 54 trustee of other Oppenheimer funds; President and
a director (since July 2001) of Oppenheimer
Acquisition Corp. (the Manager's parent holding
company) and of Oppenheimer Partnership Holdings,
Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of
OppenheimerFunds Distributor, Inc. (a subsidiary
of the Manager); Chairman and a director (since
July 2001) of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and
a director (since July 2001) of OppenheimerFunds
Legacy Program (a charitable trust program
established by the Manager); a director of the
investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and
Centennial Asset Management Corporation (since
November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc.
(since July 2001); President (since November 1,
2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a
director (since November 2001) of Trinity
Investment Management Corp. and Tremont Advisers,
Inc. (investment advisory affiliates of the
Manager); Executive Vice President (since February
1997) of Massachusetts Mutual Life Insurance
Company (the Manager's parent company); a director
(since June 1995) of DLB Acquisition Corporation
(a holding company that owns the shares of David
L. Babson & Company, Inc.); formerly, Chief
Operating Officer (September 2000-June 2001) of
the Manager; President and trustee (November
1999-November 2001) of MML Series Investment Fund
and MassMutual Institutional Funds (open-end
investment companies); a director (September
1999-August 2000) of C.M. Life Insurance Company;
President, Chief Executive Officer and director
(September 1999-August 2000) of MML Bay State Life
Insurance Company; a director (June 1989-June
1998) of Emerald Isle Bancorp and Hibernia Savings
Bank (a wholly-owned subsidiary of Emerald Isle
Bancorp). Oversees 72 portfolios as
Trustee/Officer and 10 portfolios as officer in
the OppenheimerFunds complex.
- --------------------------------------------------------------------------------
OFFICERS OF THE FUND The address of the Officers in the chart below is
as follows: for Messrs. Ferreira, Leavy,
Manioudakis and Zack, Two World Financial Center,
225 Liberty St., New York, NY 10281-1008, for Mr.
Wixted, 6803 S. Tucson Way, Centennial, CO
80112-3924. Each Officer serves for an annual term
or until his or her earlier resignation, death or
removal.
Emmanuel Ferreira, Vice President of the Manager (since January
Vice President (since 2003) 2003). An officer of 2 portfolios in the
Age: 36 OppenheimerFunds complex. Formerly, Portfolio
Manager at Lashire Investments (July 1999-December
2002), and a Senior Analyst at Mark Asset
Management (July 1997-June 1999).
44 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
Christopher Leavy, Senior Vice President (since September 2000) of
Vice President and Portfolio the Manager; an officer of 7 portfolios in the
Manager (since 2001) OppenheimerFunds complex; prior to joining the
Age: 32 Manager in September 2000, he was a portfolio
manager of Morgan Stanley Dean Witter Investment
Management (1997 - September 2000).
Angelo Manioudakis, Senior Vice President of the Manager (since April
Vice President and 2002); an officer of 12 portfolios in the
Portfolio Manager OppenheimerFunds complex; formerly Executive
(since 2003) Director and portfolio manager for Miller,
Age: 36 Anderson & Sherrerd, a division of Morgan Stanley
Investment Management (August 1993-April 2002).
Brian W. Wixted, Senior Vice President and Treasurer (since March
Treasurer (since 1999) 1999) of the Manager; Treasurer (since March 1999)
Age: 44 of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Oppenheimer Real Asset
Management Corporation, Shareholder Financial
Services, Inc., Oppenheimer Partnership Holdings,
Inc., OFI Private Investments, Inc. (since March
2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI
Institutional Asset Management, Inc. (since
November 2000) (offshore fund management
subsidiaries of the Manager); Treasurer and Chief
Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the
Manager); Assistant Treasurer (since March 1999)
of Oppenheimer Acquisition Corp. and
OppenheimerFunds Legacy Program (since April
2000); formerly Principal and Chief Operating
Officer (March 1995-March 1999), Bankers Trust
Company-Mutual Fund Services Division. An officer
of 82 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General
Secretary (since 2001) Counsel (since February 2002) of the Manager;
Age: 55 General Counsel and a director (since November
2001) of OppenheimerFunds Distributor, Inc.;
Senior Vice President and General Counsel (since
November 2001) of HarbourView Asset Management
Corporation; Vice President and a director (since
November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General
Counsel and a director (since November 2001) of
Shareholder Services, Inc., Shareholder Financial
Services, Inc., OFI Private Investments, Inc.,
Oppenheimer Trust Company and OFI Institutional
Asset Management, Inc.; General Counsel (since
November 2001) of Centennial Asset Management
Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant
Secretary and a director (since November 2001) of
OppenheimerFunds International Ltd.; Vice
President (since November 2001) of
OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.;
formerly Acting General Counsel (November
2001-February 2002) and Associate General Counsel
(May 1981-October 2001) of the Manager; Assistant
Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001);
OppenheimerFunds International Ltd. and
OppenheimerFunds plc (October 1997-November 2001).
An officer of 82 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Directors and is available without charge upon request.
45 | OPPENHEIMER DISCIPLINED ALLOCATION FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Directors of the Fund has determined that Edward
V. Regan, the Chairman of the Board's Audit Committee, possesses the technical
attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as
an "audit committee financial expert," and has designated Mr. Regan as the Audit
Committee's financial expert. Mr. Regan is an "independent" Director pursuant to
paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of October 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure 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 significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)