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 811-3420
Oppenheimer Bond 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: December 31
Date of reporting period: January 1, 2004 - December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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CORPORATE BONDS & NOTES--TOP TEN INDUSTRIES
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Insurance 3.9%
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Electric Utilities 3.9
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Media 3.5
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Diversified Financial Services 3.0
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Automobiles 2.9
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Diversified Telecommunication Services 2.6
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Real Estate 1.7
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Food & Staples Retailing 1.6
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Food Products 1.3
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Oil & Gas 1.2
Portfolio's holdings and allocations are subject to change. Percentages are as
of December 31, 2004, and are based on net assets.
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CREDIT ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Treasury 5.7%
Agency 42.4
AAA 18.7
AA 2.9
A 8.3
BBB 17.0
BB 2.6
B 0.1
Not Rated 2.3
Portfolio's holdings and allocations are subject to change. Percentages are as
of December 31, 2004, and are based on total investments.
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10 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED DECEMBER 31, 2004, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Core Bond Fund
delivered a favorable, competitive yield and total return for the 12-month
period ended December 31, 2004, largely due to sector decisions and individual
security selection among both corporate bonds and mortgage-related securities,
with a small contribution from interest rate decisions. Throughout the period,
we maintained a healthy risk exposure to corporate, mortgage, and agency
securities. This increased exposure performed well for us since these securities
benefited for the year as demand continued to be robust and spreads versus
treasuries tightened over the year. Specifically, our individual security
selection within each of our sector allocations added to performance. For
example, within our mortgage-backed securities (MBS) holdings, our emphasis on
older, higher-coupon issues gave the Fund a clear advantage over the outstanding
mortgage universe, which generally emphasizes pools of lower-coupon mortgages
issued in the low interest-rate environment of the past few years. Their lower
coupon/yield offerings made those securities less and less appealing to
investors as rates began their ascent, and consequently, they underperformed
higher-coupon mortgages. While we did hold lower-coupon mortgages, we believed
it prudent to maintain a diversified mix of mortgage securities while
emphasizing one segment of the sector, as a way to better insulate the Fund from
unforeseen volatility.
The second most significant benefit to Fund performance this fiscal year
came from our security selection within, as well as our overall emphasis on, the
corporate credit sector. Among corporate credits, our specific emphasis on
BBB-rated, or lower quality, corporate issues substantially supported
performance, as this segment of the corporate market outperformed the
higher-rated segments of the investment-grade credit universe. We enjoyed
particularly good performance from many of our media- and automotive-related
bonds, with these sectors generally leading the triple-B rated segment's rally.
Finally, our tactical allocation to high-yield, or "junk" bonds (3.3% of
assets), helped Fund performance, as these bonds not only gave a boost to the
Fund's yield, but continued to perform well in 2004.
Active management of the Fund's interest-rate sensitivity, or duration,
also made a positive contribution to performance over the course of the year.
Twice during the period we repositioned the Portfolio from a neutral yield curve
stance to one that would benefit from a subsequent rise in interest rates. In
both instances our interest rate view was vindicated.
11 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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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 December 31, 2004. In the case of Class A and Class B shares,
performance is measured over a ten-fiscal-year period. In the case of Class C
shares, performance is measured from inception of the Class on July 11, 1995. In
the case of Class N shares, performance is measured from inception of the Class
on March 1, 2001. In the case of Class Y shares, performance is measured from
inception of the Class on April 27, 1998. 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. Past performance
cannot guarantee future results.
Beginning January 21, 2005, the Fund changed its primary benchmark index
from the Lehman Brothers Credit Index to the Citigroup Broad Investment Grade
Bond Index ("Citigroup Index") because the Fund believes that the Citigroup
Index is a more appropriate benchmark reflecting the types of securities in
which the Fund invests. The Citigroup Index consists of securities having a
higher grade and a lower modified duration than the securities in the Lehman
Brothers Credit Index.
The Fund's performance is compared to the performance of its former
primary benchmark, the Lehman Brothers Credit Index, a broad-based, unmanaged
index of publicly-issued non-convertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate corporate bond
market. Performance is also compared to its new primary benchmark, the Citigroup
Broad Investment Grade Bond Index, a market-capitalization weighted index that
includes fixed-rate Treasury, government-sponsored, corporate and mortgage
securities. The Fund has also added a secondary benchmark, the Lehman Brothers
Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds,
to which its performance is compared. Index performance reflects the
reinvestment of income but does not consider the effect of transaction costs,
and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of the Fund's 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
investments in the index.
12 | OPPENHEIMER CORE BOND FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class A)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers Citigroup Broad
Core Bond Fund Lehman Brothers Aggregate Investment Grade
(Class A) Credit Index Bond Index Bond Index
12/31/1994 9,525 10,000 10,000 10,000
03/31/1995 9,997 10,592 10,504 10,506
06/30/1995 10,621 11,380 11,144 11,149
09/30/1995 10,720 11,649 11,363 11,360
12/31/1995 11,138 12,225 11,847 11,853
03/31/1996 10,991 11,909 11,637 11,646
06/30/1996 11,045 11,962 11,704 11,703
09/30/1996 11,294 12,202 11,920 11,922
12/31/1996 11,680 12,626 12,278 12,282
03/31/1997 11,663 12,499 12,209 12,218
06/30/1997 12,112 13,014 12,657 12,658
09/30/1997 12,544 13,524 13,078 13,079
12/31/1997 12,863 13,918 13,463 13,465
03/31/1998 13,083 14,131 13,672 13,682
06/30/1998 13,354 14,495 13,992 13,999
09/30/1998 13,579 15,021 14,583 14,579
12/31/1998 13,584 15,111 14,632 14,639
03/31/1999 13,523 15,004 14,560 14,571
06/30/1999 13,349 14,769 14,432 14,436
09/30/1999 13,300 14,811 14,530 14,540
12/31/1999 13,361 14,816 14,512 14,517
03/31/2000 13,482 15,028 14,832 14,835
06/30/2000 13,595 15,213 15,091 15,086
09/30/2000 13,855 15,680 15,546 15,547
12/31/2000 14,135 16,207 16,199 16,200
03/31/2001 14,695 16,900 16,691 16,699
06/30/2001 14,845 17,079 16,785 16,785
09/30/2001 15,386 17,734 17,559 17,577
12/31/2001 15,131 17,893 17,567 17,580
03/31/2002 15,069 17,845 17,584 17,592
06/30/2002 15,500 18,362 18,233 18,211
09/30/2002 16,269 19,186 19,069 19,049
12/31/2002 16,654 19,776 19,369 19,353
03/31/2003 16,939 20,250 19,638 19,625
06/30/2003 17,434 21,222 20,130 20,128
09/30/2003 17,508 21,191 20,100 20,094
12/31/2003 17,631 21,297 20,164 20,167
03/31/2004 18,097 21,994 20,700 20,708
06/30/2004 17,675 21,241 20,194 20,203
09/30/2004 18,273 22,133 20,839 20,862
12/31/2004 18,494 22,414 21,038 21,070
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
12/31/04
1-Year -0.08% 5-Year 5.69% 10-Year 6.34%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class B)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers Citigroup Broad
Core Bond Fund Lehman Brothers Aggregate Investment Grade
(Class B) Credit Index Bond Index Bond Index
12/31/1994 10,000 10,000 10,000 10,000
03/31/1995 10,477 10,592 10,504 10,506
06/30/1995 11,109 11,380 11,144 11,149
09/30/1995 11,191 11,649 11,363 11,360
12/31/1995 11,605 12,225 11,847 11,853
03/31/1996 11,419 11,909 11,637 11,646
06/30/1996 11,465 11,962 11,704 11,703
09/30/1996 11,702 12,202 11,920 11,922
12/31/1996 12,068 12,626 12,278 12,282
03/31/1997 12,040 12,499 12,209 12,218
06/30/1997 12,479 13,014 12,657 12,658
09/30/1997 12,901 13,524 13,078 13,079
12/31/1997 13,203 13,918 13,463 13,465
03/31/1998 13,404 14,131 13,672 13,682
06/30/1998 13,655 14,495 13,992 13,999
09/30/1998 13,859 15,021 14,583 14,579
12/31/1998 13,839 15,111 14,632 14,639
03/31/1999 13,750 15,004 14,560 14,571
06/30/1999 13,535 14,769 14,432 14,436
09/30/1999 13,473 14,811 14,530 14,540
12/31/1999 13,495 14,816 14,512 14,517
03/31/2000 13,605 15,028 14,832 14,835
06/30/2000 13,694 15,213 15,091 15,086
09/30/2000 13,929 15,680 15,546 15,547
12/31/2000 14,192 16,207 16,199 16,200
03/31/2001 14,754 16,900 16,691 16,699
06/30/2001 14,905 17,079 16,785 16,785
09/30/2001 15,448 17,734 17,559 17,577
12/31/2001 15,192 17,893 17,567 17,580
03/31/2002 15,129 17,845 17,584 17,592
06/30/2002 15,562 18,362 18,233 18,211
09/30/2002 16,335 19,186 19,069 19,049
12/31/2002 16,721 19,776 19,369 19,353
03/31/2003 17,007 20,250 19,638 19,625
06/30/2003 17,504 21,222 20,130 20,128
09/30/2003 17,579 21,191 20,100 20,094
12/31/2003 17,702 21,297 20,164 20,167
03/31/2004 18,169 21,994 20,700 20,708
06/30/2004 17,746 21,241 20,194 20,203
09/30/2004 18,347 22,133 20,839 20,862
12/31/2004 18,570 22,414 21,038 21,070
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
12/31/04
1-Year -0.79% 5-Year 5.62% 10-Year 6.39%
14 | OPPENHEIMER CORE BOND FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class C)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers Citigroup Broad
Core Bond Fund Lehman Brothers Aggregate Investment Grade
(Class C) Credit Index Bond Index Bond Index
07/11/1995 10,000 10,000 10,000 10,000
09/30/1995 10,007 10,236 10,196 10,189
12/31/1995 10,376 10,742 10,631 10,631
03/31/1996 10,212 10,464 10,442 10,445
06/30/1996 10,243 10,512 10,502 10,496
09/30/1996 10,464 10,722 10,696 10,693
12/31/1996 10,791 11,095 11,017 11,016
03/31/1997 10,766 10,983 10,955 10,959
06/30/1997 11,158 11,436 11,358 11,354
09/30/1997 11,535 11,883 11,735 11,731
12/31/1997 11,805 12,230 12,080 12,077
03/31/1998 11,984 12,417 12,268 12,272
06/30/1998 12,208 12,737 12,555 12,556
09/30/1998 12,391 13,199 13,086 13,076
12/31/1998 12,373 13,279 13,130 13,129
03/31/1999 12,294 13,184 13,065 13,069
06/30/1999 12,102 12,978 12,950 12,948
09/30/1999 12,046 13,015 13,038 13,041
12/31/1999 12,067 13,019 13,022 13,020
03/31/2000 12,165 13,205 13,309 13,305
06/30/2000 12,232 13,368 13,541 13,531
09/30/2000 12,455 13,778 13,949 13,944
12/31/2000 12,683 14,241 14,536 14,530
03/31/2001 13,148 14,850 14,977 14,978
06/30/2001 13,271 15,008 15,061 15,055
09/30/2001 13,714 15,583 15,756 15,765
12/31/2001 13,462 15,723 15,763 15,768
03/31/2002 13,382 15,681 15,778 15,778
06/30/2002 13,753 16,135 16,361 16,333
09/30/2002 14,411 16,859 17,110 17,085
12/31/2002 14,709 17,378 17,380 17,358
03/31/2003 14,950 17,794 17,622 17,602
06/30/2003 15,343 18,648 18,062 18,053
09/30/2003 15,393 18,621 18,036 18,023
12/31/2003 15,471 18,714 18,093 18,088
03/31/2004 15,850 19,327 18,574 18,574
06/30/2004 15,452 18,665 18,120 18,121
09/30/2004 15,945 19,449 18,699 18,711
12/31/2004 16,108 19,696 18,878 18,898
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
12/31/04
1-Year 3.12% 5-Year 5.95% Since Inception (7/11/95) 5.16%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class N)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers Citigroup Broad
Core Bond Fund Lehman Brothers Aggregate Investment Grade
(Class N) Credit Index Bond Index Bond Index
03/01/2001 10,000 10,000 10,000 10,000
03/31/2001 10,025 10,062 10,050 10,052
06/30/2001 10,136 10,169 10,107 10,104
09/30/2001 10,496 10,559 10,573 10,580
12/31/2001 10,318 10,653 10,578 10,582
03/31/2002 10,268 10,625 10,588 10,589
06/30/2002 10,567 10,932 10,979 10,962
09/30/2002 11,088 11,423 11,482 11,467
12/31/2002 11,321 11,775 11,663 11,650
03/31/2003 11,519 12,057 11,825 11,814
06/30/2003 11,833 12,635 12,121 12,116
09/30/2003 11,883 12,617 12,103 12,096
12/31/2003 11,944 12,680 12,141 12,140
03/31/2004 12,261 13,095 12,464 12,466
06/30/2004 11,968 12,647 12,159 12,162
09/30/2004 12,365 13,178 12,548 12,558
12/31/2004 12,507 13,345 12,668 12,683
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
12/31/04
1-Year 3.71% 5-Year N/A Since Inception (3/1/01) 6.01%
16 | OPPENHEIMER CORE BOND FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class Y)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers Citigroup Broad
Core Bond Fund Lehman Brothers Aggregate Investment Grade
(Class Y) Credit Index Bond Index Bond Index
04/27/1998 10,000 10,000 10,000 10,000
06/30/1998 10,254 10,193 10,180 10,179
09/30/1998 10,436 10,563 10,611 10,601
12/31/1998 10,440 10,627 10,647 10,644
03/31/1999 10,405 10,551 10,594 10,595
06/30/1999 10,272 10,386 10,501 10,497
09/30/1999 10,250 10,416 10,572 10,573
12/31/1999 10,297 10,419 10,559 10,556
03/31/2000 10,380 10,568 10,792 10,787
06/30/2000 10,471 10,698 10,980 10,970
09/30/2000 10,667 11,026 11,311 11,304
12/31/2000 11,031 11,397 11,787 11,779
03/31/2001 11,464 11,884 12,145 12,143
06/30/2001 11,594 12,011 12,213 12,205
09/30/2001 12,027 12,471 12,776 12,780
12/31/2001 11,836 12,583 12,782 12,783
03/31/2002 11,797 12,550 12,794 12,791
06/30/2002 12,163 12,913 13,267 13,242
09/30/2002 12,784 13,492 13,874 13,851
12/31/2002 13,088 13,907 14,093 14,072
03/31/2003 13,340 14,241 14,289 14,270
06/30/2003 13,732 14,924 14,646 14,636
09/30/2003 13,820 14,902 14,625 14,611
12/31/2003 13,920 14,976 14,671 14,664
03/31/2004 14,316 15,467 15,061 15,058
06/30/2004 13,992 14,937 14,693 14,690
09/30/2004 14,477 15,565 15,163 15,169
12/31/2004 14,657 15,762 15,308 15,320
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 12/31/04
1-Year 5.30% 5-Year 7.32% Since Inception (4/27/98) 5.89%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
17 | OPPENHEIMER CORE BOND FUND
NOTES
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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.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND
OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S
PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE
OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR
VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention
of specific fund holdings does not constitute a recommendation by
OppenheimerFunds, Inc.
CLASS A shares of the Fund were first publicly offered on 4/15/88. The
Fund's maximum sales charge for Class A shares was lower prior to 3/29/91,
so actual performance may have been higher. Unless otherwise noted, Class
A returns include the current maximum initial sales charge of 4.75%.
CLASS B shares of the Fund were first publicly offered on 5/3/93. 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 "10-year"
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 7/11/95. Unless
otherwise noted, Class C returns include the contingent deferred sales
charge of 1% for the 1-year period. Class C shares are subject to an
annual 0.75% asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N
shares are offered only through retirement plans. Unless otherwise noted,
Class N returns include the contingent deferred sales charge of 1% for the
1-year period. Class N shares are subject to an annual 0.25% asset-based
sales charge.
18 | OPPENHEIMER CORE BOND FUND
CLASS Y shares of the Fund were first publicly offered on 4/27/98. Class Y
shares are offered only to certain institutional investors under special
agreements with the Distributor.
An explanation of the calculation of performance is in the Fund's
Statement of Additional Information.
19 | OPPENHEIMER CORE BOND FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, which may include sales charges (loads) on purchase
payments, contingent deferred sales charges on redemptions; and redemption
fees, if any; and (2) ongoing costs, including management fees;
distribution and service fees; and other Fund expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the
beginning of the period and held for the entire 6-month period ended
December 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on
this line for the class of shares you hold, together with the amount you
invested, to estimate the expense that you paid over the period. Simply
divide your account value by $1,000.00 (for example, an $8,600.00 account
value divided by $1,000.00 = 8.60), then multiply the result by the number
in the "actual" line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of
the table provide information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio for each
class of shares, and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in the Fund and other funds. To
do so, compare this 5% hypothetical example for the class of shares you
hold with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such
as front-end or contingent deferred sales charges (loads), or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to
exceptions described in the Statement of Additional Information).
Therefore, the "hypothetical" lines of
20 | OPPENHEIMER CORE BOND FUND
the table are useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would
have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(7/1/04) (12/31/04) DECEMBER 31, 2004
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,046.40 $4.64
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,020.61 4.58
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,042.50 8.51
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,016.84 8.40
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,042.50 8.51
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,016.84 8.40
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,045.10 5.93
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,019.36 5.85
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,047.50 3.45
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.77 3.41
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended December 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- --------------------------------------
Class A 0.90%
- --------------------------------------
Class B 1.65
- --------------------------------------
Class C 1.65
- --------------------------------------
Class N 1.15
- --------------------------------------
Class Y 0.67
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
21 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS December 31, 2004
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--12.5%
- ---------------------------------------------------------------------------------------------------------------------
Bank One Auto Securitization Trust, Automobile Receivable Certificates,
Series 2003-1, Cl. A2, 1.29%, 8/21/06 $ 1,368,308 $ 1,365,878
- ---------------------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates,
Series 2004-A, Cl. A2, 1.88%, 10/25/06 3,482,827 3,471,658
- ---------------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.,
Series 2004-2, Cl. A3, 3.58%, 1/15/09 2,850,000 2,846,438
- ---------------------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2003-C, Cl. AF1, 2.14%, 7/25/18 397,815 397,372
Series 2004-A, Cl. AF1, 2.03%, 6/25/19 848,582 845,315
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 1 1,480,930 1,476,129
- ---------------------------------------------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed Certificates,
Home Equity Mtg. Obligations:
Series 2002-4, Cl. 1A3, 3.44%, 4/25/23 468,681 468,712
Series 2003-1, Cl. 1A3, 3.14%, 7/25/23 1,362,177 1,361,468
Series 2003-4, Cl. 1A1, 2.538%, 9/25/17 2 369,857 370,056
Series 2003-4, Cl. 1A2, 2.138%, 7/25/18 1,140,000 1,136,171
- ---------------------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust,
Automobile Loan Pass-Through Certificates:
Series 2002-A, Cl. A4, 4.24%, 9/15/08 718,735 723,232
Series 2003-B, Cl. A2, 1.28%, 3/15/06 393,946 393,727
- ---------------------------------------------------------------------------------------------------------------------
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 1 2,360,000 2,349,954
- ---------------------------------------------------------------------------------------------------------------------
CitiFinancial Mortgage Securities, Inc.,
Home Equity Collateralized Mtg. Obligations:
Series 2003-2, Cl. AF1, 2.518%, 5/25/33 2 218,559 218,700
Series 2003-3, Cl. AF1, 2.538%, 8/25/33 2 918,390 919,005
- ---------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc., Home Equity Mtg. Obligations,
Series 2004-OPT1, Cl. A1B, 2.388%, 9/1/34 1 574,247 573,529
- ---------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Inc.,
Home Equity Asset-Backed Certificates, Series 2002-4, Cl. A1, 2.788%, 2/25/33 2 528,170 531,557
- ---------------------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates:
Series 2003-A, Cl. A2, 1.52%, 12/8/05 1,145,579 1,145,462
Series 2003-B, Cl. A2, 1.61%, 7/10/06 4,328,023 4,320,749
Series 2004-B, Cl. A2, 2.48%, 2/8/07 1 1,200,000 1,197,122
Series 2004-C, Cl. A2, 2.62%, 6/8/07 4,240,000 4,226,984
- ---------------------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates,
Series 2004-A, Cl. A2, 2.13%, 10/15/06 2,000,000 1,992,213
- ---------------------------------------------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.,
Series 2003-3, Cl. A1, 1.50%, 1/15/08 2,576,136 2,567,035
- ---------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations:
Series 2003-3, Cl. A2, 1.52%, 4/21/06 2,714,067 2,709,521
Series 2003-4, Cl. A2, 1.58%, 7/17/06 3,532,235 3,524,355
22 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- ---------------------------------------------------------------------------------------------------------------------
Household Automotive Trust, Automobile Loan Certificates,
Series 2003-2, Cl. A2, 1.56%, 12/18/06 $ 1,462,954 $ 1,460,064
- ---------------------------------------------------------------------------------------------------------------------
Lease Investment Flight Trust, Collateralized Aviation Obligations,
Series 1A, Cl. D2, 8%, 7/15/31 1 2,884,389 270,411
- ---------------------------------------------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 1 2,188,366 2,260,801
- ---------------------------------------------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile Loan Certificates:
Series 2002-1, Cl. A3, 2.49%, 10/22/07 1,545,143 1,544,928
Series 2003-1, Cl. A2, 1.60%, 7/20/06 2,370,037 2,366,616
- ---------------------------------------------------------------------------------------------------------------------
National City Auto Receivables Trust, Automobile Receivable Obligations,
Series 2004-A, Cl. A2, 1.50%, 2/15/07 1,400,107 1,395,180
- ---------------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I, Cl. ECFD,
8.75%, 1/25/29 1 1,750,658 467,207
- ---------------------------------------------------------------------------------------------------------------------
Nissan Auto Lease Trust, Automobile Lease Obligations:
Series 2003-A, Cl. A2, 1.69%, 12/15/05 222,243 222,243
Series 2004-A, Cl. A2, 2.55%, 1/15/07 2,020,000 2,018,629
- ---------------------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.,
Series 2002-A, Cl. A4, 4.28%, 10/16/06 570,216 573,092
- ---------------------------------------------------------------------------------------------------------------------
Option One Mortgage Loan Trust, Home Equity Mtg. Obligations,
Series 2004-3, Cl. A2, 2.568%, 11/25/34 1, 2 1,438,783 1,439,709
- ---------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through
Certificates, Series 2004-5, Cl. A F2, 3.735%, 11/10/34 1 780,000 777,404
- ---------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Authority, Asset-Backed Securities,
Series 2001-A, 6.79%, 6/1/10 1,285,000 1,281,453
- ---------------------------------------------------------------------------------------------------------------------
Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed Obligations:
Series 2002-B, Cl. A3, 3.76%, 6/15/06 260,366 260,742
Series 2003-B, Cl. A2, 1.43%, 2/15/06 1,002,452 1,001,840
- ---------------------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
Series 2001-2, Cl. A4, 3.91%, 4/16/07 556,513 557,626
Series 2002-1, Cl. A3, 2.41%, 10/16/06 632,641 632,619
Series 2004-2, Cl. A2, 2.41%, 2/15/07 2,750,000 2,741,311
Series 2004-3, Cl. A2, 2.79%, 6/15/07 1,960,000 1,956,133
- ---------------------------------------------------------------------------------------------------------------------
Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities,
Series 2004-A, Cl. A2, 2.47%, 1/22/07 2,780,000 2,767,295
- ---------------------------------------------------------------------------------------------------------------------
Volkswagen Auto Loan Enhanced Trust,
Automobile Loan Receivable Certificates:
Series 2003-1, Cl. A2, 1.11%, 12/20/05 163,265 163,210
Series 2003-2, Cl. A2, 1.55%, 6/20/06 1,920,457 1,916,727
- ---------------------------------------------------------------------------------------------------------------------
Wachovia Auto Owner Trust, Automobile Receivable Nts.,
Series 2004-B, Cl. A2, 2.40%, 5/21/07 1,940,000 1,932,016
23 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- ---------------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations,
Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 $ 4,026,292 $ 4,007,006
- ---------------------------------------------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile Loan Receivable Certificates:
Series 2003-1, Cl. A2A, 1.40%, 4/15/06 2,439,461 2,434,887
Series 2004-1, Cl. A2A, 2.59%, 5/15/07 2,550,000 2,540,616
--------------
Total Asset-Backed Securities (Cost $83,432,803) 80,122,107
- ---------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--58.9%
- ---------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--47.7%
- ---------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--47.4%
Fannie Mae Whole Loan, Collateralized Mtg. Obligations Pass-Through
Certificates, Trust 2004-W9, Cl. 2A2, 7%, 2/25/44 3 3,382,682 3,586,691
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5%, 1/1/35 3 2,444,000 2,427,198
5.50%, 1/1/35 3 4,545,000 4,617,438
6%, 7/1/24 677,303 704,240
6.50%, 7/1/28-4/1/34 1,926,044 2,024,701
7%, 3/1/31-11/1/34 21,161,977 22,443,664
7%, 4/1/32-1/1/35 3 4,854,000 5,142,206
8%, 4/1/16 1,367,361 1,451,876
9%, 3/1/17-5/1/25 392,464 436,389
12.50%, 4/1/14 2,516 2,858
13.50%, 11/1/10 6,269 7,105
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Pass-Through Participation Certificates, Series 151, Cl. F, 9%,
5/15/21 72,045 72,086
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 2075, Cl. D , 6.50%, 8/15/28 859,583 894,825
Series 2500, Cl. FD , 2.903%, 3/15/32 2 900,105 903,636
Series 2526, Cl. FE , 2.803%, 6/15/29 2 1,165,072 1,169,265
Series 2551, Cl. FD , 2.803%, 1/15/33 2 935,478 941,889
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 176, Cl. IO, (0.21)%, 6/1/26 4 1,452,554 271,199
Series 183, Cl. IO, (1.41)%, 4/1/27 4 2,313,094 448,455
Series 184, Cl. IO , 1.83%, 12/1/26 4 2,354,574 437,836
Series 192, Cl. IO , 3.27%, 2/1/28 4 568,246 105,603
Series 200, Cl. IO , 2.89%, 1/1/29 4 694,329 133,114
Series 206, Cl. IO, (16.54)%, 12/1/29 4 901,409 163,865
Series 2130, Cl. SC , 12.38%, 3/15/29 4 1,570,167 164,027
Series 2134, Cl. SB , 5.30%, 3/15/29 4 1,734,724 158,893
Series 2796, Cl. SD , 19.10%, 7/15/26 4 2,414,325 244,044
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security, Series 176, Cl. PO, 6.97%, 6/1/26 5 616,103 537,514
24 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn.:
4.50%, 1/1/20 3 $ 15,658,000 $ 15,609,069
5%, 1/1/20-1/1/35 3 49,846,000 49,779,769
5.50%, 3/1/33-1/1/34 16,942,597 17,220,350
5.50%, 1/1/35 3 31,287,000 31,766,067
6%, 8/1/24-9/1/24 9,655,550 10,049,582
6%, 1/1/35 3 28,542,000 29,514,198
6.50%, 1/1/35 3 48,582,000 50,950,373
7%, 1/1/09-8/1/34 17,847,776 18,934,133
7%, 1/1/35 3 6,829,000 7,236,609
7.50%, 2/1/08-3/1/08 33,490 34,789
8%, 8/1/17 17,268 18,173
8.50%, 7/1/32 208,511 226,521
- ---------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Trust 2002-T1, Cl. A2, 7%, 11/25/31 3,531,303 3,744,276
- ---------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 57,374 59,313
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 662,449 695,602
Trust 2001-70, Cl. LR, 6%, 9/25/30 1,321,148 1,347,050
Trust 2001-72, Cl. NH, 6%, 4/25/30 1,063,068 1,087,176
Trust 2001-74, Cl. PD, 6%, 5/25/30 449,338 455,435
Trust 2002-50, Cl. PD, 6%, 9/25/27 737,203 737,697
Trust 2002-77, Cl. WF, 2.81%, 12/18/32 2 1,500,802 1,509,668
Trust 2003-81, Cl. PA, 5%, 2/25/12 685,221 687,741
Trust 2004-101, Cl. BG, 5%, 1/25/20 2,417,000 2,438,149
- ---------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security:
Trust 319, Cl. 2, (3.08)%, 2/1/32 4 1,162,379 223,423
Trust 2002-38, Cl. SO, 19.60%, 4/25/32 4 817,786 65,750
Trust 2002-47, Cl. NS, 9.28%, 4/25/32 4 3,117,170 326,712
Trust 2002-51, Cl. S, 9.56%, 8/25/32 4 2,862,235 300,297
Trust 2002-77, Cl. IS, 15.90%, 12/18/32 4 1,393,265 146,895
- ---------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 222, Cl. 2, (2.13)%, 6/1/23 4 4,452,564 829,579
Trust 240, Cl. 2, (1.13)%, 9/1/23 4 5,131,662 977,277
Trust 252, Cl. 2, (3.44)%, 11/1/23 4 3,544,545 696,285
Trust 254, Cl. 2, (0.11)%, 1/1/24 4 1,746,204 360,839
Trust 273, Cl. 2, 0.09%, 7/1/26 4 1,054,530 194,839
Trust 301, Cl. 2, (3.70)%, 4/1/29 4 2,947,428 559,433
Trust 303, Cl. IO, (13.36)%, 11/1/29 4 385,187 75,237
Trust 321, Cl. 2, (5.55)%, 3/1/32 4 6,722,616 1,335,954
Trust 324, Cl. 2, (9.38)%, 6/1/32 4 5,990,626 1,219,696
Trust 333, Cl. 2, 1.93%, 3/1/33 4 4,856,308 1,050,278
Trust 334, Cl. 17, (16.18)%, 2/1/33 4 474,536 95,132
Trust 2001-81, Cl. S, 13.68%, 1/25/32 4 1,262,236 153,950
Trust 2002-52, Cl. SD, 8.85%, 9/25/32 4 3,649,528 377,343
Trust 2002-77, Cl. SH, 21.15%, 12/18/32 4 1,584,246 160,434
Trust 2004-54, Cl. DS, 20.40%, 11/25/30 4 569,816 51,928
25 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M, 9.71%, 9/25/23 5 $ 1,224,260 $ 1,060,232
--------------
303,853,870
- ---------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.3%
Government National Mortgage Assn.:
3.75%, 7/20/25-7/20/27 46,877 47,583
7%, 7/15/09 33,761 35,717
8%, 6/15/05-10/15/06 35,194 36,016
8.50%, 8/15/17-12/15/17 487,544 537,050
9%, 2/15/09-6/15/09 22,669 24,626
10%, 11/15/09 24,751 26,882
10.50%, 12/15/17-5/15/21 59,351 66,870
11%, 10/20/19 87,087 97,763
12%, 5/15/14 713 813
- ---------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 14.94%, 1/16/27 4 2,811,532 268,898
Series 2002-15, Cl. SM, 9.39%, 2/16/32 4 2,804,382 270,380
Series 2002-76, Cl. SY, 9.35%, 12/16/26 4 1,137,976 116,082
Series 2004-11, Cl. SM, 10.64%, 1/17/30 4 451,467 40,594
--------------
1,569,274
- ---------------------------------------------------------------------------------------------------------------------
PRIVATE--11.2%
- ---------------------------------------------------------------------------------------------------------------------
COMMERCIAL--10.8%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates,
Series 1996-MD6, Cl. A3, 7.405%, 11/13/29 2 800,000 865,832
- ---------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security
Collateralized Mtg. Obligations, Series 1997-D4, Cl. PS1, 5.54%, 4/14/29 4 42,978,868 1,596,437
- ---------------------------------------------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through
Certificates, Series 2004-6, Cl. A3, 4.512%, 12/10/42 2,160,000 2,160,000
- ---------------------------------------------------------------------------------------------------------------------
Bank of America Mortgage Securities, Inc., Collateralized Mtg. Obligations
Pass-Through Certificates:
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 4,112,714 4,201,760
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 3,437,461 3,571,738
Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 2,403,778 2,405,296
Series 2004-G, Cl. 2A1, 2.469%, 8/25/34 1,657,862 1,654,594
- ---------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed
Pass-Through Certificates, Series 1997-CTL1, 9.22%, 6/22/24 4 10,695,219 405,849
- ---------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2004-J9, Cl. 1A1, 2.598%, 10/25/34 2 3,178,148 3,181,804
- ---------------------------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., Commercial Mtg. Obligations,
Series 1996-CF1, Cl. A3, 7.904%, 3/13/28 2 711,193 723,130
- ---------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 1,770,000 1,904,098
26 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations,
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 $ 1,730,000 $ 1,752,974
- ---------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Obligations, Series 2004-C3, Cl. A4, 4.547%, 12/10/41 1,410,000 1,413,710
- ---------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 1,390,121 1,471,539
- ---------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 2004-C1, Cl. A1, 3.659%, 10/10/28 1,618,799 1,601,204
Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 1,100,000 1,122,312
- ---------------------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust, Collateralized Mtg. Obligations,
Series 04-12, Cl. 3A1, 4.593%, 12/25/34 1,2 4,821,147 4,827,787
- ---------------------------------------------------------------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp., Commercial Mtg.
Obligations, Series 2000-C9, Cl. A2, 7.77%, 10/15/32 5,000,000 5,734,263
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 9.87%, 2/18/30 4 12,463,811 402,060
- ---------------------------------------------------------------------------------------------------------------------
Lehman Structured Securities Corp., Collateralized Mtg. Obligations,
Series 2002-GE1, Cl. A, 2.514%, 7/26/24 1 282,801 260,618
- ---------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg. Obligations,
Series 2004-6, Cl. 10A1, 6%, 7/25/34 4,461,714 4,607,130
- ---------------------------------------------------------------------------------------------------------------------
Mastr Asset Securitization Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-9, Cl. A3, 4.70%, 8/25/34 3,427,696 3,430,472
- ---------------------------------------------------------------------------------------------------------------------
Mastr Seasoned Securities Trust, Collateralized Mtg. Obligations,
Series 2004-2, Cl. PT65, 6.50%, 12/1/34 3 6,351,000 6,540,538
- ---------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 2,010,000 2,175,394
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial
Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, 7.79%, 5/18/32 4 253,290,634 1,025,548
- ---------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage Backed Securities Trust, Collateralized Mtg. Obligations:
Series 2004-DD, Cl. 2A1, 4.548%, 1/25/35 3,220,000 3,225,283
Series 2004-N, Cl. A10, 3.803%, 8/25/34 1 4,325,048 4,339,274
Series 2004-W, Cl. A2, 4.635%, 11/25/34 2 2,495,639 2,502,529
--------------
69,103,173
- ---------------------------------------------------------------------------------------------------------------------
OTHER--0.0%
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2003-EF1, Cl. A2, 1.49%, 12/20/05 246,967 247,017
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. B, (11.79)%, 10/23/17 4 24,848 5,917
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped
Mtg.-Backed Security, Series1987-3, Cl. A, 2.28%, 10/23/17 5 36,775 33,828
--------------
286,762
27 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.4%
Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1996-B, Cl. 1, 4.357%, 4/25/26 1,2 $ 28,840 $ 26,622
- ---------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations
Pass-Through Certificates, Series 2002-AL1, Cl. B2, 3.45%, 2/25/32 2,842,033 2,529,899
--------------
2,556,521
--------------
Total Mortgage-Backed Obligations (Cost $376,427,879) 377,369,600
- ---------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--17.7%
- ---------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
6.625%, 9/15/09 6,855,000 7,674,035
6.875%, 9/15/10 7,600,000 8,686,526
- ---------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
2.50%, 6/15/06 3,055,000 3,029,097
3.01%, 6/2/06 6,600,000 6,573,019
4.25%, 7/15/07 6,690,000 6,834,290
6.625%, 9/15/09 7,630,000 8,528,143
7.25%, 5/15/30 2,180,000 2,796,314
- ---------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
5.375%, 11/13/08 2,000,000 2,122,864
7.125%, 5/1/30 2,689,000 3,355,705
Series A, 6.79%, 5/23/12 14,531,000 16,756,626
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
5.375%, 2/15/31 2,739,000 2,962,615
5.50%, 8/15/28 6 13,954,000 15,107,396
8.875%, 8/15/17 6,664,000 9,445,700
STRIPS, 2.99%, 2/15/10 7 2,490,000 2,063,067
STRIPS, 3.29%, 2/15/11 7 13,121,000 10,335,254
STRIPS, 3.86%, 2/15/13 7 5,360,000 3,812,991
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
4.25%, 11/15/13-11/15/14 1,372,000 1,376,575
5.75%, 8/15/10 1,885,000 2,075,932
--------------
Total U.S. Government Obligations (Cost $114,190,817) 113,536,149
- ---------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.4%
- ---------------------------------------------------------------------------------------------------------------------
United Mexican States Nts., 7.50%, 1/14/12 (Cost $2,390,219) 2,370,000 2,693,505
- ---------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--36.3%
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--10.7%
- ---------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--1.0%
Delphi Automotive Systems Corp., 6.50% Nts., 5/1/09 3,045,000 3,132,696
- ---------------------------------------------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 2,660,000 3,019,645
--------------
6,152,341
28 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--2.9%
American Honda Finance Corp., 3.85% Nts., 11/6/08 8 $ 1,970,000 $ 1,966,245
- ---------------------------------------------------------------------------------------------------------------------
DaimlerChrysler North America Holding Corp., 4.75% Unsec. Nts., 1/15/08 3,895,000 3,980,951
- ---------------------------------------------------------------------------------------------------------------------
Ford Holdings, Inc., 9.30% Unsec. Unsub. Debs., 3/1/30 590,000 693,786
- ---------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 7.375% Nts., 10/28/09 620,000 669,452
- ---------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 7.25% Nts., 3/2/11 1,500,000 1,572,387
- ---------------------------------------------------------------------------------------------------------------------
General Motors Corp., 8.375% Sr. Unsec. Debs., 7/15/33 2,335,000 2,425,953
- ---------------------------------------------------------------------------------------------------------------------
Hertz Corp. (The), 6.35% Nts., 6/15/10 3,750,000 3,847,718
- ---------------------------------------------------------------------------------------------------------------------
Volkswagen Credit, Inc., 2.33% Nts., 7/21/05 2,8 3,270,000 3,270,275
--------------
18,426,767
- ---------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.9%
Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 1,200,000 1,305,902
- ---------------------------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 1,015,000 1,087,319
- ---------------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 3,269,000 3,473,682
--------------
5,866,903
- ---------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.1%
Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts., 5/15/11 1,685,000 1,845,075
- ---------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 6.125% Nts., 1/15/14 1,660,000 1,718,100
- ---------------------------------------------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 1,535,000 1,628,194
- ---------------------------------------------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 1,685,000 1,870,350
--------------
7,061,719
- ---------------------------------------------------------------------------------------------------------------------
MEDIA--3.5%
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 3,070,000 3,449,817
- ---------------------------------------------------------------------------------------------------------------------
Cox Communications, Inc., 7.875% Unsec. Nts., 8/15/09 2,050,000 2,328,991
- ---------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 3.50% Nts., 9/25/06 1,810,000 1,800,688
- ---------------------------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 2,990,000 3,859,271
- ---------------------------------------------------------------------------------------------------------------------
Time Warner Cos., Inc., 9.125% Debs., 1/15/13 3,080,000 3,965,408
- ---------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 1,037,000 1,362,309
- ---------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc.:
2.875% Sr. Unsec. Nts., 10/15/06 433,000 427,448
3.50% Sr. Unsec. Nts., 10/15/07 2,255,000 2,229,852
- ---------------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 5.375% Sr. Unsec. Nts., 6/1/07 3,140,000 3,265,886
--------------
22,689,670
- ---------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--1.0%
Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 2,165,000 2,358,819
- ---------------------------------------------------------------------------------------------------------------------
J.C. Penney Co., Inc., 8% Nts., 3/1/10 3,085,000 3,540,038
29 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL Continued
May Department Stores Co., 3.95% Nts., 7/15/07 $ 216,000 $ 216,494
--------------
6,115,351
- ---------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--0.3%
Gap, Inc. (The):
6.90% Nts., 9/15/07 1 1,268,000 1,369,440
10.55% Unsub. Nts., 12/15/08 507,000 619,808
--------------
1,989,248
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--2.9%
- ---------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.6%
Food Lion, Inc., 7.55% Nts., 4/15/07 2,125,000 2,308,912
- ---------------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 7.80% Sr. Nts., 8/15/07 4,645,000 5,097,149
- ---------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09 1,9,10,11 476,601 --
- ---------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 3,060,000 3,134,327
--------------
10,540,388
- ---------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--1.3%
ConAgra Foods, Inc., 6% Nts., 9/15/06 1,615,000 1,682,215
- ---------------------------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts., 11/30/07 2,515,000 2,524,761
- ---------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts., 6/1/07 3,835,000 3,974,824
--------------
8,181,800
- ---------------------------------------------------------------------------------------------------------------------
ENERGY--1.2%
- ---------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.0%
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 200,000 207,000
- ---------------------------------------------------------------------------------------------------------------------
OIL & GAS--1.2%
Chesapeake Energy Corp., 7.50% Sr. Nts., 6/15/14 1,665,000 1,827,338
- ---------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 1,880,000 2,069,594
- ---------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 9.50% Sr. Sub. Nts., 9/15/27 1,570,000 1,974,275
- ---------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 8 1,622,225 1,575,140
--------------
7,446,347
- ---------------------------------------------------------------------------------------------------------------------
FINANCIALS--9.2%
- ---------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--0.3%
Bank of America Corp., 4.875% Sr. Unsec. Nts., 1/15/13 41,000 41,781
- ---------------------------------------------------------------------------------------------------------------------
National City Bank, 6.20% Sub. Nts., 12/15/11 216,000 237,797
- ---------------------------------------------------------------------------------------------------------------------
SunTrust Banks, Inc.:
4% Nts., 10/15/08 1,680,000 1,696,961
7.75% Unsec. Sub. Nts., 5/1/10 150,000 174,407
--------------
2,150,946
30 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--0.3%
Household Finance Corp., 8.875% Sr. Unsec. Nts., 2/15/06 $ 1,815,000 $ 1,921,840
- ---------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.0%
American Express Centurion Bank, 4.375% Nts., 7/30/09 1,155,000 1,174,598
- ---------------------------------------------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 3,205,000 3,799,169
- ---------------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts., 4/15/08 1,500,000 1,497,602
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 7% Nts., 2/1/08 2,030,000 2,219,494
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 325,000 351,146
- ---------------------------------------------------------------------------------------------------------------------
MBNA America Bank NA, 5.375% Nts., 1/15/08 2,488,000 2,600,371
- ---------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 4.125% Nts., 9/10/09 3,310,000 3,311,228
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 3,580,000 3,998,649
--------------
18,952,257
- ---------------------------------------------------------------------------------------------------------------------
INSURANCE--3.9%
Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08 8 635,000 643,019
- ---------------------------------------------------------------------------------------------------------------------
Allstate Life Global Funding II, 3.50% Nts., 7/30/07 860,000 856,895
- ---------------------------------------------------------------------------------------------------------------------
AXA, 8.60% Unsec. Sub. Nts., 12/15/30 2,730,000 3,596,262
- ---------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 2.375% Nts., 6/1/06 1,275,000 1,252,118
- ---------------------------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 7.90% Nts., 7/2/10 8 2,487,000 2,915,276
- ---------------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 5.375% Nts., 7/15/14 647,000 633,322
- ---------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc., 5.90% Nts., 7/1/12 2,985,000 3,156,820
- ---------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 8 4,820,000 6,136,487
- ---------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 8 4,680,000 5,992,745
--------------
25,182,944
- ---------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.7%
EOP Operating LP, 6.763% Sr. Unsec. Nts., 6/15/07 560,000 596,060
- ---------------------------------------------------------------------------------------------------------------------
iStar Financial, Inc.:
4.875% Sr. Unsec. Nts., Series B, 1/15/09 1,445,000 1,468,032
8.75% Sr. Unsec. Nts., 8/15/08 1,060,000 1,209,691
- ---------------------------------------------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 1,625,000 1,672,707
- ---------------------------------------------------------------------------------------------------------------------
Spieker Properties LP, 6.75% Unsec. Unsub. Nts., 1/15/08 2,400,000 2,603,052
- ---------------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 3,160,000 3,282,668
- ---------------------------------------------------------------------------------------------------------------------
10,832,210
- ---------------------------------------------------------------------------------------------------------------------
HEALTH CARE--1.1%
- ---------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.1%
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 3,200,000 3,332,189
- ---------------------------------------------------------------------------------------------------------------------
CIGNA Corp., 7.40% Unsec. Nts., 5/15/07 3,750,000 4,030,901
--------------
7,363,090
31 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--3.2%
- ---------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.6%
Boeing Capital Corp., 5.65% Sr. Unsec. Nts., 5/15/06 $ 451,000 $ 465,206
- ---------------------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp., 6.875% Unsec. Unsub. Nts., 11/1/06 429,000 454,290
- ---------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 2,270,000 2,608,359
- ---------------------------------------------------------------------------------------------------------------------
Raytheon Co., 6.50% Unsec. Nts., 7/15/05 224,000 228,031
--------------
3,755,886
- ---------------------------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.5%
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 3,490,000 3,420,036
- ---------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.8%
Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 1,570,000 1,687,750
- ---------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 1 150,000 151,875
- ---------------------------------------------------------------------------------------------------------------------
Protection One, Inc./Protection One Alarm Monitoring, Inc.,
7.375% Sr. Unsec. Nts., 8/15/05 100,000 101,500
- ---------------------------------------------------------------------------------------------------------------------
Waste Management, Inc.:
7% Sr. Nts., 7/15/28 700,000 791,932
7.125% Sr. Unsec. Nts., 10/1/07 1,890,000 2,054,005
--------------
4,787,062
- ---------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.9%
Hutchison Whampoa International Ltd., 7.45% Sr. Bonds, 11/24/33 8 1,765,000 1,963,698
- ---------------------------------------------------------------------------------------------------------------------
Tyco International Group SA:
6.375% Sr. Unsec. Unsub. Nts., 2/15/06 2,225,000 2,299,753
6.75% Sr. Unsub. Nts., 2/15/11 1,140,000 1,279,316
--------------
5,542,767
- ---------------------------------------------------------------------------------------------------------------------
MARINE--0.0%
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07 1,9,10 300,000 226,875
- ---------------------------------------------------------------------------------------------------------------------
ROAD & RAIL--0.4%
Canadian National Railway Co., 4.25% Nts., 8/1/09 434,000 437,903
- ---------------------------------------------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts., 10/15/08 2,175,000 2,347,012
--------------
2,784,915
- ---------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.0%
- ---------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.0%
Orion Network Systems, Inc., 12.50% Sr. Unsub. Disc. Nts., 1/15/07 1,9,10 200,000 105,000
- ---------------------------------------------------------------------------------------------------------------------
MATERIALS--0.2%
- ---------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.0%
Morton International, Inc., 9.65% Credit Sensitive Nts., 6/1/20 85,000 120,152
- ---------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.2%
Weyerhaeuser Co., 5.50% Unsec. Unsub. Nts., 3/15/05 943,000 947,388
32 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.1%
- ---------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.6%
British Telecommunications plc:
7.875% Nts., 12/15/05 $ 2,740,000 $ 2,858,442
8.125% Nts., 12/15/10 550,000 661,267
- ---------------------------------------------------------------------------------------------------------------------
Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 1,029,000 1,209,075
- ---------------------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10 2,800,000 3,339,568
- ---------------------------------------------------------------------------------------------------------------------
France Telecom SA:
7.95% Sr. Unsec. Nts., 3/1/06 1,675,000 1,759,179
9.25% Sr. Unsec. Nts., 3/1/31 2 1,270,000 1,726,692
- ---------------------------------------------------------------------------------------------------------------------
Sprint Capital Corp.:
7.125% Sr. Unsec. Nts., 1/30/06 1,595,000 1,659,412
8.75% Nts., 3/15/32 1,410,000 1,884,338
- ---------------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.50% Nts., 11/19/08 1,905,000 1,922,457
--------------
17,020,430
- ---------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.5%
AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 2,745,000 2,983,107
- ---------------------------------------------------------------------------------------------------------------------
UTILITIES--4.7%
- ---------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.9%
CenterPoint Energy, Inc.:
5.875% Sr. Nts., 6/1/08 2,655,000 2,780,300
8.125% Unsec. Nts., Series B, 7/15/05 840,000 862,237
- ---------------------------------------------------------------------------------------------------------------------
Conectiv, Inc., 5.30% Unsec. Unsub. Nts., Series B, 6/1/05 460,000 463,782
- ---------------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 3,175,000 3,741,277
- ---------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 1,035,000 1,077,797
- ---------------------------------------------------------------------------------------------------------------------
Duke Capital LLC, 5.668% Nts., 8/15/14 1,650,000 1,705,701
- ---------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A, 11/15/06 1,260,000 1,301,307
7.375% Sr. Unsub. Nts., Series C, 11/15/31 1,455,000 1,666,803
- ---------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 1,2 1,435,000 1,621,550
- ---------------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Unsec. Nts., 10/1/12 3,975,000 4,218,632
- ---------------------------------------------------------------------------------------------------------------------
PSEG Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 1 1,810,000 1,923,125
- ---------------------------------------------------------------------------------------------------------------------
TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07 1,795,000 2,077,713
- ---------------------------------------------------------------------------------------------------------------------
TXU Corp., 4.80% Nts., 11/15/09 8 1,480,000 1,484,242
--------------
24,924,466
- ---------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.8%
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10 4,230,000 4,978,666
--------------
Total Corporate Bonds and Notes (Cost $225,097,369) 232,677,571
33 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--0.0%
- ---------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. 181 $ 2,987
- ---------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., Series B, Escrow Shares 1,10,12 25 --
--------------
Total Common Stocks (Cost $109) 2,987
- ---------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ---------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07 1,10 50 --
- ---------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05 1,10 300 3
- ---------------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/09 1,10 1,063 11
- ---------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 1,10 1,980 20
- ---------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08 1,10 150 --
- ---------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07 1,10 200 2
- ---------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10 10 2,028 406
--------------
Total Rights, Warrants and Certificates (Cost $25,015) 442
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--2.3%
- ---------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, COUNTS Corp. Sec. Credit Linked Nts., Series 2003-1,
3.78%, 1/7/05 1,2 (Cost $14,500,000) $ 14,500,000 14,456,500
- ---------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.8%
- ---------------------------------------------------------------------------------------------------------------------
Undivided interest of 0.37% in joint repurchase agreement (Principal
Amount/Value $1,443,703,000, with a maturity value of $1,443,962,867) with UBS
Warburg LLC, 2.16%, dated 12/31/04, to be repurchased at $5,389,970 on 1/3/05,
collateralized by Federal National Mortgage Assn.,
5%--6%, 4/1/34--10/1/34, with a value of $1,474,609,071 (Cost $5,389,000) 5,389,000 5,389,000
- ---------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased
with Cash Collateral from Securities Loaned) (Cost $821,453,211) 826,247,861
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--7.3%
- ---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED FLOATING NOTES--0.8%
Money Market Trust, Series A-2, 2.478% Nts., 1/18/05 13 2,000,000 2,000,000
- ---------------------------------------------------------------------------------------------------------------------
Whitehawk CDO Funding Corp., 2.56%, 3/15/05 13 3,000,000 3,000,000
--------------
5,000,000
- ---------------------------------------------------------------------------------------------------------------------
FUNDING AGREEMENT/GIC--0.6%
Allstate Life Insurance, 2.47%, 1/3/05 13 2,000,000 2,000,000
- ---------------------------------------------------------------------------------------------------------------------
Protective Life Insurance Co., 2.25%, 1/31/05 13 2,000,000 2,000,000
--------------
4,000,000
- ---------------------------------------------------------------------------------------------------------------------
MASTER FLOATING NOTES--0.6%
Bear Stearns, 2.493%, 1/3/05 13 4,000,000 4,000,000
34 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FLOATING NOTES--0.6%
American Express Credit Corp., 2.432% Sr. Nts., 1/18/05 13 $ 1,902,676 $ 1,902,676
- ---------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--5.0%
Undivided interest of 4.64% in joint repurchase agreement (Principal
Amount/Value $155,205,723, with a maturity value of $155,232,367) with Credit
Suisse First Boston LLC, 2.06%, dated 12/31/04, to be repurchased at $7,205,076
on 1/3/05, collateralized by AA Corporate Bonds, 0%-15.73%,
1/1/06-7/16/44, with a value of $158,312,640 13 7,203,839 7,203,839
- ---------------------------------------------------------------------------------------------------------------------
Undivided interest of 0.89% in joint repurchase agreement (Principal
Amount/Value $2,800,000,000, with a maturity value of $2,800,550,669) with
Nomura Securities, 2.36%, dated 12/31/04, to be repurchased at
$24,925,743 on 1/3/05, collateralized by U.S. Government Mortgage
Agencies, 2.58%-7.50%, 1/15/08-10/15/44, with a value of $2,908,566,289 13 24,920,842 24,920,842
--------------
32,124,681
--------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $47,027,357) 47,027,357
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $868,480,568) 136.2% 873,275,218
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (36.2) (232,159,218)
------------------------------
NET ASSETS 100.0% $ 641,116,000
===============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Illiquid or restricted security. The aggregate value of illiquid or
restricted securities as of December 31, 2004 was $40,120,968, which represents
6.26% of the Fund's net assets, none of which is considered restricted. See Note
8 of Notes to Financial Statements.
2. Represents the current interest rate for a variable or increasing rate
security.
3. When-issued security or forward commitment to be delivered and settled after
December 31, 2004. See Note 1 of Notes to Financial Statements.
4. 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 $15,460,082 or 2.41% of the Fund's net assets
as of December 31, 2004.
5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $1,631,574 or 0.25% of the Fund's net assets as of
December 31, 2004.
6. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts with an aggregate
market value of $757,860. See Note 5 of Notes to Financial Statements.
7. Zero coupon bond reflects effective yield on the date of purchase.
8. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $25,947,127 or 4.05% of the Fund's net
assets as of December 31, 2004.
35 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
9. Issue is in default. See Note 1 of Notes to Financial Statements.
10. Non-income producing security.
11. Interest or dividend is paid-in-kind.
12. Received as the result of issuer reorganization.
13. The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 9 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER CORE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES December 31, 2004
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $94,771,672)
(cost $868,480,568)--see accompanying statement of investments
$ 873,275,218
- ----------------------------------------------------------------------------------------
Cash 810,036
- ----------------------------------------------------------------------------------------
Collateral for securities loaned 49,436,365
- ----------------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 11,788
- ----------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold on a when-issued basis or forward commitment 79,045,414
Interest 6,459,288
Shares of beneficial interest sold 938,764
Futures margins 154,297
Other 10,730
---------------
Total assets 1,010,141,900
- ----------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------
Return of collateral for securities loaned 96,463,722
- ----------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis or forward commitment 271,135,027
Shares of beneficial interest redeemed 731,066
Distribution and service plan fees 375,810
Transfer and shareholder servicing agent fees 159,419
Shareholder communications 109,157
Trustees' compensation 14,249
Other 37,450
---------------
Total liabilities 369,025,900
- ----------------------------------------------------------------------------------------
NET ASSETS $ 641,116,000
===============
- ----------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 61,418
- ----------------------------------------------------------------------------------------
Additional paid-in capital 639,532,264
- ----------------------------------------------------------------------------------------
Accumulated net investment loss (1,366,730)
- ----------------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,584,773)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation on investments 5,473,821
---------------
NET ASSETS $ 641,116,000
===============
37 | OPPENHEIMER CORE BOND 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
$344,205,598 and 32,970,332 shares of beneficial interest outstanding) $10.44
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $10.96
- -----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $148,444,668 and
14,225,317 shares of beneficial interest outstanding) $10.44
- -----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $84,695,628
and 8,107,638 shares of beneficial interest outstanding) $10.45
- -----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $25,579,594
and 2,451,078 shares of beneficial interest outstanding) $10.44
- -----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $38,190,512 and 3,663,197 shares of beneficial interest outstanding) $10.43
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER CORE BOND FUND
STATEMENT OF OPERATIONS For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 24,883,635
- --------------------------------------------------------------------------------
Fee Income 5,650,959
- --------------------------------------------------------------------------------
Portfolio lending fees 141,160
- --------------------------------------------------------------------------------
Dividends 31
-------------
Total investment income 30,675,785
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 3,796,106
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 870,851
Class B 1,677,194
Class C 860,147
Class N 106,918
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 866,756
Class B 480,055
Class C 223,066
Class N 90,624
Class Y 27,705
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 106,590
Class B 73,187
Class C 25,779
Class N 2,823
- --------------------------------------------------------------------------------
Custodian fees and expenses 39,054
- --------------------------------------------------------------------------------
Trustees' compensation 17,176
- --------------------------------------------------------------------------------
Other 38,781
-------------
Total expenses 9,302,812
Less reduction to custodian expenses (12,985)
Less payments and waivers of expenses (1,182,607)
-------------
Net expenses 8,107,220
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 22,568,565
39 | OPPENHEIMER CORE BOND FUND
STATEMENT OF OPERATIONS For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments $11,031,252
Closing of futures contracts 2,349,123
Swap contracts 407,953
------------
Net realized gain 13,788,328
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (6,637,878)
Futures contracts (40,038)
Swap contracts (2,517)
------------
Net change in unrealized appreciation (6,680,433)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $29,676,460
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40 | OPPENHEIMER CORE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003
- -----------------------------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------
Net investment income $ 22,568,565 $ 23,088,580
- -----------------------------------------------------------------------------------------------------------------
Net realized gain 13,788,328 22,128,287
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (6,680,433) (4,851,650)
-------------------------------
Net increase in net assets resulting from operations 29,676,460 40,365,217
- -----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------
Dividends from net investment
income:
Class A (14,770,071) (12,883,312)
Class B (5,647,015) (5,633,516)
Class C (2,956,677) (2,529,340)
Class N (870,216) (458,521)
Class Y (2,000,794) (1,457,612)
- -----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A (40,358,244) 17,502,933
Class B (50,192,314) (24,959,463)
Class C (6,332,036) (2,398,431)
Class N 7,706,597 6,099,045
Class Y (5,409,686) 17,894,037
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Total increase (decrease) (91,153,996) 31,541,037
- -----------------------------------------------------------------------------------------------------------------
Beginning of period 732,269,996 700,728,959
-------------------------------
End of period (including accumulated net investment
loss of $1,366,730 and $153,625, respectively) $641,116,000 $732,269,996
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.38 $ 10.14 $ 9.74 $ 9.79 $ 9.97
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .38 1 .35 .54 .73 .73
Net realized and unrealized gain (loss) .12 .24 .40 (.05) (.18)
---------------------------------------------------------------------
Total from investment operations .50 .59 .94 .68 .55
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.44) (.35) (.54) (.73) (.73)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.44 $ 10.38 $ 10.14 $ 9.74 $ 9.79
=====================================================================
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.90% 5.87% 10.06% 7.05% 5.80%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $344,205 $382,966 $356,480 $280,132 $202,833
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $353,046 $382,420 $316,279 $237,232 $205,883
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.63% 3.39% 5.47% 7.31% 7.48%
Total expenses 1.10% 1.10% 1.10% 1.23% 1.31%
Expenses after payments and waivers and
reduction to custodian expenses 0.93% N/A 4,5 N/A 4 N/A 4 N/A 4
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 6 111% 151% 162% 255%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
6. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$3,447,306,025 and $3,473,854,068, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42 | OPPENHEIMER CORE BOND FUND
CLASS B YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.37 $ 10.13 $ 9.73 $ 9.79 $ 9.96
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 1 .27 .47 .65 .66
Net realized and unrealized gain (loss) .13 .24 .40 (.05) (.17)
--------------------------------------------------------------------
Total from investment operations .43 .51 .87 .60 .49
- -----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.27) (.47) (.66) (.66)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.44 $ 10.37 $ 10.13 $ 9.73 $ 9.79
====================================================================
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.21% 5.05% 9.26% 6.14% 5.11%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $148,445 $197,774 $217,789 $161,998 $83,637
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $167,685 $216,853 $187,343 $118,521 $83,394
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.86% 2.61% 4.68% 6.60% 6.71%
Total expenses 1.91% 1.87% 1.85% 1.99% 2.07%
Expenses after payments and waivers
and reduction to custodian expenses 1.69% N/A 4,5 N/A 4 N/A 4 N/A 4
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 6 111% 151% 162% 255%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
6. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$3,447,306,025 and $3,473,854,068, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.39 $ 10.14 $ 9.74 $ 9.80 $ 9.97
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 1 .27 .47 .65 .66
Net realized and unrealized gain (loss) .12 .25 .40 (.05) (.17)
--------------------------------------------------------------
Total from investment operations .42 .52 .87 .60 .49
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.27) (.47) (.66) (.66)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.45 $ 10.39 $ 10.14 $ 9.74 $ 9.80
==============================================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.12% 5.18% 9.26% 6.14% 5.11%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $84,696 $90,583 $90,800 $57,049 $24,303
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $86,020 $96,361 $75,531 $36,886 $22,605
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.87% 2.64% 4.61% 6.65% 6.71%
Total expenses 1.87% 1.84% 1.83% 1.98% 2.07%
Expenses after payments and waivers and
reduction to custodian expenses 1.68% N/A 4,5 N/A 4 N/A 4 N/A 4
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 6 111% 151% 162% 255%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
6. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$3,447,306,025 and $3,473,854,068, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 | OPPENHEIMER CORE BOND FUND
CLASS N YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.37 $ 10.13 $ 9.73 $10.02
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 2 .31 .51 .61
Net realized and unrealized gain (loss) .13 .24 .40 (.29)
--------------------------------------------------
Total from investment operations .48 .55 .91 .32
- -----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.41) (.31) (.51) (.61)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.44 $ 10.37 $ 10.13 $ 9.73
==================================================
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 4.71% 5.51% 9.73% 3.18%
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $25,580 $17,732 $11,302 $2,176
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,411 $15,338 $ 7,071 $ 768
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.38% 3.03% 4.76% 7.87%
Total expenses 1.51% 1.50% 1.44% 1.37%
Expenses after payments and waivers
and reduction to custodian expenses 1.20% 1.44% N/A 5 N/A 5
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 6 111% 151% 162%
1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$3,447,306,025 and $3,473,854,068, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.36 $ 10.12 $ 9.72 $ 9.78 $9.95
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .41 1 .39 .59 .76 .85
Net realized and unrealized gain (loss) .13 .24 .40 (.05) (.18)
-------------------------------------------------------------
Total from investment operations .54 .63 .99 .71 .67
- ----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.47) (.39) (.59) (.77) (.84)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.43 $ 10.36 $ 10.12 $ 9.72 $9.78
=============================================================
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.30% 6.35% 10.58% 7.30% 7.13%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $38,190 $43,215 $24,358 $4,067 $877
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $45,333 $38,398 $10,243 $2,286 $340
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.92% 3.80% 5.53% 7.85% 7.92%
Total expenses 0.64% 0.63% 0.63% 0.94% 0.83%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4 N/A 4 0.92% N/A 4
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 5 111% 151% 162% 255%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$3,447,306,025 and $3,473,854,068, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Bond Fund (the Fund) is a separate fund of Oppenheimer Integrity
Funds, an open-end management investment company registered under the Investment
Company Act of 1940, as amended. During the reporting period, the Fund's
investment objective was to seek a high level of current income by investing
mainly in debt instruments. On January 14, 2005, shareholders of the Fund
approved a modification to the Fund's investment objective. Effective January
21, 2005, the Fund's investment objective is to seek total return by investing
mainly in debt instruments. Also effective January 21, 2005, the Fund changed
its name to Oppenheimer Core Bond Fund. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic or foreign exchanges are
valued based on the last sale price of the security traded on that exchange
prior to the time when the Fund's assets are valued. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ prior to the time when
the Fund's assets are valued. In the absence of a sale, the security is valued
at the last sale price on the prior trading day, if it is within the spread of
the closing bid and asked prices, and if not, at the closing bid price.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities may be valued primarily
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued
47 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
at their fair value. Foreign and domestic securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. 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 December 31, 2004, the market value
of these securities comprised 2.3% of the Fund's net assets and resulted in
unrealized cumulative losses of $43,500.
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of December 31, 2004, the Fund had purchased
$271,135,027 of securities on a when-issued basis or forward commitment and sold
$79,045,414 of securities issued on a when-issued basis or forward commitment.
In connection with its ability to purchase or sell 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 or as fee income in the case
of such
48 | OPPENHEIMER CORE BOND FUND
transactions that have an associated fee in lieu of a difference in the forward
purchase and sale price.
Risks of entering into forward roll transactions include the potential
inability of the coun-terparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the potential
pay down speed variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of December 31, 2004, securities with an
aggregate market value of $331,875, representing 0.05% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
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.
49 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1, 2, 3 TAX PURPOSES
---------------------------------------------------------------------------
$-- $ -- $2,007,359 $ 3,755,268
1. As of December 31, 2004, the Fund had $2,007,359 of net capital loss
carryforward available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2004,
details of the capital loss carryforward were as follows:
EXPIRING
----------------------------
2010 $2,007,359
2. During the fiscal year ended December 31, 2004, the Fund utilized $10,865,230
of capital loss carryforward to offset capital gains realized in that fiscal
year.
3. During the fiscal year ended December 31, 2003, the Fund utilized $21,308,857
of capital loss carryforward to offset capital gains realized in that fiscal
year.
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 December 31, 2004. Net assets of
the Fund were unaffected by the reclassifications.
INCREASE TO
REDUCTION TO ACCUMULATED NET
REDUCTION TO ACCUMULATED NET REALIZED LOSS
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS
--------------------------------------------------------------
$224,737 $2,463,103 $2,238,366
The tax character of distributions paid during the years ended December 31, 2004
and December 31, 2003 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
---------------------------------------------------------------------
Distributions paid from:
Ordinary income $26,244,773 $22,962,301
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 December 31, 2004 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.
50 | OPPENHEIMER CORE BOND FUND
Federal tax cost of securities $ 869,428,376
Federal tax cost of other investments (112,353,044)
--------------
Total federal tax cost $ 757,075,332
==============
Gross unrealized appreciation $ 11,686,463
Gross unrealized depreciation (7,931,195)
--------------
Net unrealized appreciation $ 3,755,268
==============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
51 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 9,562,646 $ 99,724,382 17,721,848 $ 181,436,083
Dividends and/or
distributions reinvested 1,163,350 12,097,690 1,002,817 10,309,580
Redeemed (14,652,987) (152,180,316) (16,990,568) (174,242,730)
------------------------------------------------------------------
Net increase (decrease) (3,926,991) $ (40,358,244) 1,734,097 $ 17,502,933
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 2,207,444 $ 22,976,953 6,543,598 $ 66,993,404
Dividends and/or
distributions reinvested 432,832 4,499,401 416,679 4,280,170
Redeemed (7,478,492) (77,668,668) (9,390,171) (96,233,037)
------------------------------------------------------------------
Net decrease (4,838,216) $ (50,192,314) (2,429,894) $ (24,959,463)
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 2,121,902 $ 22,129,587 4,137,840 $ 42,416,735
Dividends and/or
distributions reinvested 235,133 2,447,087 188,926 1,943,214
Redeemed (2,971,439) (30,908,710) (4,556,213) (46,758,380)
------------------------------------------------------------------
Net decrease (614,404) $ (6,332,036) (229,447) $ (2,398,431)
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 1,560,717 $ 16,256,014 1,180,184 $ 12,109,063
Dividends and/or
distributions reinvested 79,094 822,229 43,725 449,358
Redeemed (897,845) (9,371,646) (630,145) (6,459,376)
------------------------------------------------------------------
Net increase 741,966 $ 7,706,597 593,764 $ 6,099,045
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 4,235,213 $ 44,071,154 2,667,388 $ 27,169,896
Dividends and/or
distributions reinvested 72,990 761,028 22,711 233,571
Redeemed (4,815,194) (50,241,868) (926,456) (9,509,430)
------------------------------------------------------------------
Net increase (decrease) (506,991) $ (5,409,686) 1,763,643 $ 17,894,037
==================================================================
52 | OPPENHEIMER CORE BOND FUND
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the year ended
December 31, 2004, were $377,213,164 and $365,370,445, respectively. There were
purchases of $177,210,506 and sales of $255,586,634 of U.S. government and
government agency obligations for the year ended December 31, 2004. In addition,
there were purchases of $3,447,306,025 and sales of $3,473,854,068 of To Be
Announced (TBA) mortgage-related securities for the year ended December 31,
2004.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at annual
rate of 0.60% of the first $200 million of average annual net assets of the
Fund, 0.57% of the next $200 million, 0.54% of the next $200 million, 0.51% of
the next $200 million, 0.45% of the next $200 million and 0.35% of average
annual net assets in excess of $1 billion.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
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 December 31, 2004, the Fund paid
$1,672,747 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 for
assets of $10 million or more. The Class Y shares are subject to the minimum
fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
53 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of up to 0.25% per year under each plan. If either
the Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at December 31,
2004 for Class B, Class C and Class N shares were $3,522,475, $1,649,652 and
$447,604, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------------
December 31, 2004 $399,216 $5,067 $600,703 $15,640 $26,286
- ------------------------------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. Effective March 1, 2004, the Manager has
voluntarily undertaken to limit the "Total Annual Operating Expenses" for all
classes of shares so that "Total Annual Operating Expenses," as percentages of
average daily net assets, will not exceed the following annual rates: 0.90% for
the Class A shares; 1.65% for the Class B and Class C shares, respectively;
1.15% for the Class N shares and 0.65% for the Class Y shares. During the year
ended December 31, 2004, the Manager reimbursed the Fund $595,195, $361,818,
$157,462 and $53,019 for Class A, Class B, Class C and Class N, respectively.
The Manager may terminate this voluntary expense limitation arrangement at any
time without notice to shareholders.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the year ended December 31, 2004, OFS waived $15,113 for Class N shares,
respectively. This undertaking may be amended or withdrawn at any time.
54 | OPPENHEIMER CORE BOND FUND
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of December 31, 2004, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATE CONTRACTS DECEMBER 31, 2004 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 3/21/05 367 $ 41,287,500 $646,060
U.S. Treasury Nts., 10 yr. 3/21/05 118 13,208,625 19,211
---------
665,271
---------
CONTRACTS TO SELL
U.S. Treasury Nts., 2 yr. 3/31/05 483 101,233,781 90,456
U.S. Treasury Nts., 5 yr. 3/21/05 600 65,718,750 (88,344)
---------
2,112
---------
$667,383
=========
55 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. CREDIT SWAP CONTRACTS
The Fund may enter into a credit 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 a notional principal amount. The Fund records an increase or
decrease to unrealized gain (loss), in the amount due to or owed by the Fund at
termination or settlement. Credit swaps are subject to credit risks (if the
counterparty fails to meet its obligations). The Fund pays an annual interest
fee on the notional amount in exchange for the counterparty paying in a
potential credit event.
During the year ended December 31, 2004, the Fund entered into transactions to
hedge credit risk. Information regarding the credit swaps is as follows:
EXPIRATION NOTIONAL VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE AMOUNT DECEMBER 31, 2004 DEPRECIATION
- -----------------------------------------------------------------------------------------------------------
Morgan Stanley Capital Services, Inc. 3/20/10 $21,000,000 $(61,129) $61,129
- -----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. TOTAL RETURN SWAP CONTRACTS
The Fund may enter into a total return swap transaction to maintain a total
return on a particular investment, or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. The Fund records an increase or decrease to unrealized
gain (loss), in the amount due to or owed by the Fund at termination or
settlement. Total return swaps are subject to risks (if the counterparty fails
to meet its obligations).
As of December 31, 2004, the Fund had entered into the following total return
swap agreements:
PAID BY RECEIVED BY
THE FUND AT THE FUND AT
NOTIONAL DECEMBER 31, DECEMBER 31, TERMINATION UNREALIZED
SWAP COUNTERPARTY AMOUNT 2004 2004 DATES APPRECIATION
- ------------------------------------------------------------------------------------------------------
Value of
One-Month total return of
LIBOR less 50 Lehman Brothers
Deutsche Bank AG $7,850,000 basis points CMBS Index 1/1/05 $39,109
Value of
total return of
Goldman Sachs One-Month Lehman Brothers
Capital Markets LP 7,850,000 LIBOR flat CMBS Index 3/31/05 33,808
-------
$72,917
=======
Index abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities Markets
LIBOR London-Interbank Offered Rate
56 | OPPENHEIMER CORE BOND FUND
- --------------------------------------------------------------------------------
8. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 2004, 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 Trustees 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 will not invest 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.
Information concerning restricted securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATE COST DECEMBER 31, 2004 DEPRECIATION
- --------------------------------------------------------------------------------------------
Geotek Communications, Inc.,
Series B, Escrow Shares 1/4/01 $100 $-- $100
- --------------------------------------------------------------------------------
9. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund also continues to receive
interest or dividends paid on the securities loaned. As of December 31, 2004,
the Fund had on loan securities valued at $94,771,672. Cash of $96,463,722 was
received as collateral for the loans, of which $47,027,357 was invested in
approved instruments.
- --------------------------------------------------------------------------------
10. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor (collectively, the
"Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal
Defendants") including the Fund, 31 present and former Directors or Trustees and
9 present and former officers of the funds. This complaint, filed in the U.S.
District Court for the Southern District of New York on January 10, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged
57 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. LITIGATION Continued
excessive fees for distribution and other costs, improperly used assets of the
funds in the form of directed brokerage commissions and 12b-1 fees to pay
brokers to promote sales of the funds, and failed to properly disclose the use
of assets of the funds to make those payments in violation of the Investment
Company Act of 1940 and the Investment Advisers Act of 1940. Also, like those
prior complaints, the complaint further alleges that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers breached
their fiduciary duties to shareholders of the funds under the Investment Company
Act of 1940 and at common law. The complaint seeks unspecified compensatory and
punitive damages, rescission of the funds' investment advisory agreements, an
accounting of all fees paid, and an award of attorneys' fees and litigation
expenses.
The Oppenheimer defendants believe that the allegations contained in the
Complaints are without merit and that they, the funds named as Nominal
Defendants, and the Directors/Trustees of those funds have meritorious defenses
against the claims asserted. The Oppenheimer defendants intend to defend these
lawsuits vigorously and to contest any claimed liability, and they have retained
legal counsel to defend such suits. The Oppenheimer defendants believe that it
is premature to render any opinion as to the likelihood of an outcome
unfavorable to them and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
58 | OPPENHEIMER CORE BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER CORE BOND FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Core Bond Fund, formerly known as Oppenheimer Bond Fund, a series of
Oppenheimer Integrity Funds, including the statement of investments, as of
December 31, 2004, 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 the periods presented. 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 the standards of the Public
Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also 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
December 31, 2004, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
Additionally, an audit 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 Core Bond Fund as of December 31, 2004, 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 the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 11, 2005
59 | OPPENHEIMER CORE BOND FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
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; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file 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 Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
60 | OPPENHEIMER CORE BOND FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, CO
TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek Mortgage
Chairman of the Board of Company (since 1991), Centennial State Mortgage Company (since 1994), The El Paso
Trustees (since 2003) and Mortgage Company (since 1993), Transland Financial Services, Inc. (since 1997);
Trustee (since 1999) Chairman of the following private companies: Great Frontier Insurance (insurance
Age: 67 agency) (since 1995), Ambassador Media Corporation and Broadway Ventures (since
1984); a director of the following public companies: Helmerich & Payne, Inc. (oil and
gas drilling/production company) (since 1992) and UNUMProvident (insurance company)
(since 1991). Mr. Armstrong is also a Director/Trustee of Campus Crusade for Christ
and the Bradley Foundation. Formerly a director of the following: Storage Technology
Corporation (a publicly-held computer equipment company) (1991-February 2003), and
International Family Entertainment (television channel) (1992-1997), Frontier Real
Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier Title
(title insurance agency) (1995-June 1999); a U.S. Senator (January 1979-January
1991). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner of
Trustee (since 1993) private equity funds) (until February 2001); Chairman, President and Chief Executive
Age: 73 Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice Chairman and Director
of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons, Inc. (its brokerage
company subsidiary) (until March 1999); Chairman of A.G. Edwards Trust Company and
A.G.E. Asset Management (investment advisor) (until March 1999); and a Director
(until March 2000) of A.G. Edwards & Sons and A.G. Edwards Trust Company. Oversees 38
portfolios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Formerly Assistant Secretary and a director (December 1991-April 1999) of Centennial
Trustee (since 2001) Asset Management Corporation; President, Treasurer and a director (June 1989-April
Age: 68 1999) of Centennial Capital Corporation; Chief Executive Officer and a director of
MultiSource Services, Inc. (March 1996-April 1999). Until April 1999 Mr. Bowen held
several positions in subsidiary or affiliated companies of the Manager. Oversees 38
portfolios in the OppenheimerFunds complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June
Trustee (since 2001) 2000). Formerly Director (March 2001-May 2002) of Genetic ID, Inc. and its
Age: 66 subsidiaries (a privately held biotech company); a partner (July 1974-June 1999) with
PricewaterhouseCoopers LLP (an accounting firm); and Chairman (July 1994-June 1998)
of Price Waterhouse LLP Global Investment Management Industry Services Group.
Oversees 38 portfolios in the OppenheimerFunds complex.
61 | OPPENHEIMER CORE BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a not-for-profit
Trustee (since 1990) foundation); a director (since 1997) of Putnam Lovell Finance (finance company); a
Age: 62 director (since June 2002) of UNUMProvident (an insurance company). Formerly a
director (October 1999-October 2003) of P.R. Pharmaceuticals (a privately held
company); Chairman and a director (until October 1996) and President and Chief
Executive Officer (until October 1995) of the Manager; President, Chief Executive
Officer and a director (until October 1995) of Oppenheimer Acquisition Corp.,
Shareholders Services Inc. and Shareholder Financial Services, Inc. Oversees 38
portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly
Trustee (since 1996) (until October 1994) Mr. Freedman held several positions in subsidiary or affiliated
Age: 64 companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since
Trustee (since 2002) February 2000); a director of The California Endowment (a philanthropic organization)
Age: 58 (since April 2002) and of Community Hospital of Monterey Peninsula (educational
organization) (since February 2002); a director of America Funds Emerging Markets
Growth Fund (since October 1991) (an investment company); an advisor to Credit Suisse
First Boston's Sprout venture capital unit. Mrs. Hamilton also is a member of the
investment committees of the Rockefeller Foundation and of the University of
Michigan. Formerly, Trustee of MassMutual Institutional Funds (open-end investment
company) (1996-May 2004); a director of MML Series Investment Fund (April 1989-May
2004) and MML Services (April 1987-May 2004) (investment companies); member of the
investment committee (2000-2003) of Hartford Hospital; an advisor (2000-2003) to
Unilever (Holland)'s pension fund; and President (February 1991-April 2000) of ARCO
Investment Management Company. Oversees 37 portfolios in the OppenheimerFunds
complex.
ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank (a
Trustee (since 2002) commercial banking entity) (since August 2003); director of Colorado UpLIFT (a
Age: 60 non-profit organization) (since 1986); trustee (since 2000) of the Gallagher Family
Foundation (non-profit organization). Formerly, Chairman of U.S. Bank-Colorado (a
subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April 1,
1999), a director of: Commercial Assets, Inc. (a REIT) (1993-2000), Jones Knowledge,
Inc. (a privately held company) (2001-July 2004) and U.S. Exploration, Inc. (oil and
gas exploration) (1997-February 2004). Oversees 37 portfolios in the OppenheimerFunds
complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment Fund
Trustee (since 2001) (since 1987) (both open-end investment companies) and the Springfield Library and
Age: 62 Museum Association (since 1995) (museums) and the Community Music School of
Springfield (music school) (since 1996); Trustee (since 1987), Chairman of the Board
(since 2003) and Chairman of the investment committee (since 1994) for the Worcester
Polytech Institute (private university); and President and Treasurer (since January
1999) of the SIS Fund (a private not for profit charitable fund). Formerly, member of
the investment committee of the Community Foundation of Western Massachusetts (1998-
2003); Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS
Bank) (commercial bank); and Executive Vice President (January 1999-July 1999) of
Peoples Heritage Financial Group, Inc. (commercial bank). Oversees 38 portfolios in
the OppenheimerFunds complex.
62 | OPPENHEIMER CORE BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225
AND OFFICER LIBERTY STREET, 11TH FLOOR, 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 (since June 2001) and President (since
President and Trustee September 2000) of the Manager; President and a director or trustee of other
(since 2001) Oppenheimer funds; President and a director (since July 2001) of Oppenheimer
Age: 55 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 following
investment advisory subsidiaries of the Manager: OFI Institutional Asset Management,
Inc., Centennial Asset Management Corporation, Trinity Investment Management
Corporation and Tremont Capital Management, Inc. (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.; 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 Babson Capital Management LLC); a member of the Investment Company
Institute's Board of Governors (elected to serve from October 3, 2003 through
September 30, 2006). 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
62 portfolios as Trustee/Director and 21 additional portfolios as Officer in the
OppenheimerFunds complex.
- ----------------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. MANIOUDAKIS
AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY
10281-1008, FOR MESSRS. VANDEHEY AND 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.
ANGELO MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President and Portfolio Management Corporation (since April, 2002 and of OFI Institutional Asset Management,
Manager (since 2002) Inc. (since June 2002); an officer of 15 portfolios in the OppenheimerFunds complex.
Age: 38 Formerly Executive Director and portfolio manager for Miller, Anderson & Sherrerd, a
division of Morgan Stanley Investment Management (August 1993-April 2002).
BENJAMIN GORD, Vice President of the Manager (since April 2002), of HarbourView Asset Management
Portfolio Manager (since 2003) Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (as of
Age: 42 June 2002); an officer of 1 portfolio in the OppenheimerFunds complex. Formerly an
executive director and senior fixed income analyst at Miller Anderson & Sherrerd, a
division of Morgan Stanley Investment Management (April 1992-March 2002).
63 | OPPENHEIMER CORE BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
CHARLES MOON, Vice President of the Manager (since April 2002, of HarbourView Asset Management
Portfolio Manager (since 2003) Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (since
Age: 37 June 2002); an officer of 1 portfolio in the OppenheimerFunds complex. Formerly
executive director and portfolio manager at Miller Anderson & Sherrerd, a division of
Morgan Stanley Investment Management (June 1999-March 2002); Vice President of
Citicorp Securities Inc. (June 1993-May 1999).
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of
Treasurer (since 1999) HarbourView Asset Management Corporation, Shareholder Financial Services, Inc.,
Age: 45 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management, Inc.
(since November 2000), and of OppenheimerFunds Legacy Program (a Colorado non-profit
corporation) (since June 2003); Treasurer and Chief Financial Officer (since May
2000) of OFI Trust Company (a trust company subsidiary of the Manager); Assistant
Treasurer (since March 1999) of Oppenheimer Acquisition Corp. Formerly Assistant
Treasurer of Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating
Officer (March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services
Division. An officer of 83 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February
Vice President and 2002) of the Manager; General Counsel and a director (since November 2001) of the
Secretary (since 2001) Distributor; General Counsel (since November 2001) of Centennial Asset Management
Age: 56 Corporation; Senior Vice President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and General Counsel (since
November 2001) of Oppenheimer Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc;
Vice President and a director (since November 2001) of Oppenheimer Partnership
Holdings, Inc.; a director (since November 2001) of Oppenheimer Real Asset
Management, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Financial Services, Inc., Shareholder Services, Inc.,
OFI Private Investments, Inc. and OFI Trust Company; Vice President (since November
2001) of OppenheimerFunds Legacy Program; Senior Vice President and General Counsel
(since November 2001) of OFI Institutional Asset Management, Inc.; a director (since
June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May
1985-December 2003), 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); and OppenheimerFunds International Ltd.
(October 1997-November 2001). An officer of 83 portfolios in the OppenheimerFunds
complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Manager;
Vice President and Chief Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial
Compliance Officer Asset Management Corporation and Shareholder Services, Inc. Formerly (until February
(since 2004) 2004) Vice President and Director of Internal Audit of OppenheimerFunds, Inc. An
Age: 54 officer of 83 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY
CALLING 1.800.525.7048.
64 | OPPENHEIMER CORE BOND FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that Edward L.
Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a
member of the Board's Audit Committee, possess the technical attributes
identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit
committee financial experts," and has designated Messrs. Cameron and Bowen as
the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $17,500 in fiscal 2004 and $16,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $35,859
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $5,548
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: tax compliance, tax planning and tax advice. Tax
compliance generally involves preparation of original and amended
tax returns, claims for a refund and tax payment-planning services.
Tax planning and tax advice includes assistance with tax audits and
appeals, tax advice related to mergers and acquisitions and requests
for rulings or technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe
waived provided that: 1) the aggregate amount of all such services
provided constitutes no more than five percent of the total amount
of fees paid by the registrant to it principal accountant during the
fiscal year in which services are provided 2) such services were not
recognized by the registrant at the time of engagement as non-audit
services and 3) such services are promptly brought to the attention
of the audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $41,407
in fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not include
any prohibited non-audit services as defined by the Securities
Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant's Board of Trustees has established a Governance Committee,
one function of which is to create and oversee the process by which shareholders
can submit nominees for positions on the Board. The Governance Committee has not
yet adopted a charter, but anticipates that it will do so by the end of this
calendar year. The Committee has temporarily adopted the process previously
adopted by the Audit Committee regarding shareholder submission of nominees for
board positions. Shareholders may submit names of individuals, accompanied by
complete and properly supported resumes, for the Governance Committee's
consideration by mailing such information to the Committee in care of the Fund.
The Committee may consider such persons at such time as it meets to consider
possible nominees. The Committee, however, reserves solo discretion to determine
the candidates for trustees and independent trustees to recommend to the Board
and/or shareholders and may identify candidates other than those submitted by
Shareholders. The Committee may, but need not, consider the advice and
recommendation of the Manager and its affiliates in selecting nominees. The full
Board elects new trustees except for those instances when a shareholder vote is
required.
Shareholders who desire to communicate with the Board should address
correspondence to the Board of Trustees of the registrant, or to an individual
Trustee c/o the Secretary of the Fund at 6803 South Tucson Way, Centennial,
Colorado 80112 and may submit their correspondence electronically at
WWW.OPPENHEIMERFUNDS.COM under the caption "contact us." If your correspondence
is intended for a particular Trustee, please indicate the name of the Trustee
for whom it is intended. The sender should indicate in the address whether it is
intended for the entire board, the Independent Trustees as group, or to an
individual Trustee. The Governance Committee will consider if a different
process should be recommended to the Board.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-3(c)) as of December 31, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and communicated
to registrant's management, including its principal executive
officer and principal financial officer, to allow timely decisions
regarding required disclosure, and (b) is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms adopted by the U.S. Securities and Exchange
Commission.
(b) TThere have been no changes in registrant's internal controls over
financial reporting that occurred during the registrant's last
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)