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 811-21281
OPPENHEIMER PRINCIPAL PROTECTED TRUST
(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: August 31
Date of reporting period: August 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND(R) PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Equity 86.7%
Fixed Income 12.3
Cash Equivalents 1.0
The Fund seeks exposure to the equity markets by investing in the Oppenheimer
Main Street Fund(R). Information relating to the Oppenheimer Main Street
Fund's(R) portfolio holdings appears below.
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of investments.
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OPPENHEIMER MAIN STREET FUND(R) (UNDERLYING FUND) SECTOR ALLOCATION
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Financials 23.1%
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Information Technology 14.0
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Health Care 13.4
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Energy 13.3
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Industrials 9.7
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Consumer Staples 8.7
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Consumer Discretionary 8.6
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Utilities 3.6
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Telecommunication Services 3.4
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Materials 2.2
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of common stocks.
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7 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
TOP HOLDINGS AND ALLOCATIONS
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OPPENHEIMER MAIN STREET FUND(R) (UNDERLYING FUND)
TOP TEN COMMON STOCK INDUSTRIES
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Oil & Gas 12.7%
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Diversified Financial Services 8.5
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Commercial Banks 8.0
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Pharmaceuticals 6.5
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Insurance 5.1
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Industrial Conglomerates 4.1
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Computers & Peripherals 3.9
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Health Care Providers & Services 3.8
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Software 3.6
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Electric Utilities 3.4
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on net assets.
OPPENHEIMER MAIN STREET FUND(R) (UNDERLYING FUND)
TOP TEN COMMON STOCK HOLDINGS
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Exxon Mobil Corp. 4.2%
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General Electric Co. 3.2
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Microsoft Corp. 2.6
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Citigroup, Inc. 2.3
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Johnson & Johnson 2.1
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Bank of America Corp. 2.0
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Intel Corp. 2.0
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Pfizer, Inc. 1.9
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Chevron Corp. 1.8
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Altria Group, Inc. 1.4
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
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8 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET 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 AUGUST 31, 2005, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. For the fiscal year ending August 31,
2005, Oppenheimer Principal Protected Main Street Fund(R) Class A shares had a
total return of 6.98% which was below Standard & Poor's 500 Index's total return
of 12.55%. This underperformance was due to the strong overall stock market
performance, especially in the 2nd half of 2004. During periods of rising stock
markets, principal protected funds tend to lag behind pure stock market indices,
because they typically have less than 100% of their net assets invested in the
equity markets. For the fiscal year ending August 31, 2005, the Fund had an
average equity weight of 81%. The Fund's main goal is not to chase absolute
returns, but to preserve investor's capital, while staying competitive with its
peers.
The equity component of the Fund's portfolio is invested in Class Y shares
of the Oppenheimer Main Street Fund(R). The fixed income component is invested
primarily in Treasury STRIPS that mature on or around the end of the seven-year
Warranty Period. 3 The asset allocation of the Oppenheimer Principal Protected
Main Street Fund(R) will shift over time based on market factors such as
interest rates, stock market performance and certain volatility measures.
Additionally, there is a pre-defined algorithm that dictates the maximum
percentage the Fund can invest in equity securities. This algorithm is based in
part on current stock weightings and changes in the market environment
(including interest rates, stock market performance and volatility).
OppenheimerFunds' risk management team monitors the Fund's asset
allocation and keeps the Fund's equity percentage dynamically set, depending on
market conditions. In an up stock market, the Fund buys shares of the underlying
fund to take advantage of stock market growth potential. In a down market, the
Fund sells shares of the underlying fund and buys Treasury STRIPS to attempt to
cushion the Fund's share price from potential declines in stock prices. In a
sideways market, the algorithm allows the Fund "to stay still" in order to avoid
unnecessary trading costs.
The Fund began the Warranty Period (8/5/2003) with 60.0% of its net assets
invested in the equity component. As of 8/31/2005, 86.7% of the Fund's net
assets were invested
3. The Fund invests a significant portion of assets in treasury strips, which
are sold at a discount and accrue to par value at maturity. For taxable income
purposes the discount on these treasury strips is amortized into income daily
using a level yield method over the holding period of the security, thus
investors will have taxable income.
9 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FUND PERFORMANCE DISCUSSION
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in the equity component (through Oppenheimer Main Street(R) Class Y shares). The
other 12.3% and 1.0% were invested in fixed income and in cash equivalents,
respectively.
For the fiscal year ended August 31, 2005, Oppenheimer Main Street
Fund's(R) Class Y shares produced a total return of 12.15%, slightly lower than
the 12.55% return of its benchmark, the S&P 500 Index. Management of the
underlying fund, the Oppenheimer Main Street Fund(R), attributes this
underperformance to the fact that its quantitative models focused primarily on
mega-cap stocks during a time in which large-, mid- and small-cap stocks
provided higher returns.
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 August 31, 2005. In the case of Class A, Class B, Class C and
Class N shares, performance is measured from inception of the classes on June 2,
2003. 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.
The Fund's performance is compared to the performance of the S&P 500
Index. The S&P 500 Index is an unmanaged index of equity securities. 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.
OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND MAY NOT BE SUITABLE FOR
INVESTORS WHO NEED TO REDEEM SHARES PRIOR TO MATURITY, OR WHO NEED TO RECEIVE
DIVIDENDS IN CASH.
10 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Principal Protected Main Street Fund(R) (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Principal Protected
Main Street Fund(R) (Class A) S&P 500 Index
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06-02-2003 9,425 10,000
08-31-2003 9,689 10,507
11-30-2003 10,141 11,080
02-29-2004 10,773 12,040
05-31-2004 10,440 11,832
08-31-2004 10,354 11,710
11-30-2004 10,706 12,503
02-28-2005 10,951 12,879
05-31-2005 10,864 12,806
08-31-2005 11,077 13,180
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 0.83% Since Inception (6/2/03) 4.66%
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, IF REDEEMED PRIOR TO THE END OF THE WARRANTY
PERIOD (AUGUST 5, 2010), 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 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND CLASS N SHARES, THE
CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE PAGE 15 FOR
FURTHER INFORMATION.
11 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Principal Protected Main Street Fund(R) (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Principal Protected
Main Street Fund(R) (Class B) S&P 500 Index
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06-02-2003 10,000 10,000
08-31-2003 10,280 10,507
11-30-2003 10,730 11,080
02-29-2004 11,374 12,040
05-31-2004 11,012 11,832
08-31-2004 10,891 11,710
11-30-2004 11,243 12,503
02-28-2005 11,486 12,879
05-31-2005 11,364 12,806
08-31-2005 11,267 13,180
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 1.21% Since Inception (6/2/03) 5.45%
12 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Principal Protected Main Street Fund(R) (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Principal Protected
Main Street Fund(R) (Class C) S&P 500 Index
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06-02-2003 10,000 10,000
08-31-2003 10,280 10,507
11-30-2003 10,730 11,080
02-29-2004 11,375 12,040
05-31-2004 11,012 11,832
08-31-2004 10,892 11,710
11-30-2004 11,244 12,503
02-28-2005 11,480 12,879
05-31-2005 11,369 12,806
08-31-2005 11,572 13,180
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 5.24% Since Inception (6/2/03) 6.71%
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, IF REDEEMED PRIOR TO THE END OF THE WARRANTY
PERIOD (AUGUST 5, 2010), 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 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND CLASS N SHARES, THE
CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE PAGE 15 FOR
FURTHER INFORMATION.
13 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Principal Protected Main Street Fund(R) (Class N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Principal Protected
Main Street Fund(R) (Class N) S&P 500 Index
------------------------------- -------------
06-02-2003 10,000 10,000
08-31-2003 10,280 10,507
11-30-2003 10,750 11,080
02-29-2004 11,417 12,040
05-31-2004 11,064 11,832
08-31-2004 10,953 11,710
11-30-2004 11,326 12,503
02-28-2005 11,580 12,879
05-31-2005 11,478 12,806
08-31-2005 11,703 13,180
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 5.85% Since Inception (6/2/03) 7.25%
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, IF REDEEMED PRIOR TO THE END OF THE WARRANTY
PERIOD (AUGUST 5, 2010), 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 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND CLASS N SHARES, THE
CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE PAGE 15 FOR
FURTHER INFORMATION.
14 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET 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.
The Fund has entered into a warranty agreement with Merrill Lynch Bank USA, "the
warranty provider" to make sure that the value of each shareholder's account on
the maturity date (August 5, 2010) will be at least equal to a shareholder's
original investment (reduced by any adjustments to the warranty amount permitted
by the Warranty Agreement, and less any redemptions of Fund shares or
distributions taken in cash, sales charges, and extraordinary Fund expenses).
The warranty is solely the obligation of the warranty provider to the Fund, not
to shareholders. The warranty does not guarantee performance of the Fund. The
ability of the Fund to maintain the value of your original investment is
dependent on the ability of the warranty provider to make a payment to the Fund
on the maturity date.
The principal risks of an investment in the Fund during the Warranty Period and
the Post-Warranty Period are those generally attributable to investing in stocks
and debt securities. Because the Fund invests in both stocks and debt securities
during the Warranty Period, the Fund may underperform stock funds when stocks
are in favor and underperform bond funds when debt securities are in favor.
15 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES
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Shareholders could lose money by investing in this Fund. A shareholder's
warranted amount will be reduced, as more fully described in the prospectus, if
the shareholder takes any dividends or distributions in cash instead of
reinvesting them in additional shares of the Fund, redeems any shares before the
Maturity Date, if there are extraordinary expenses incurred by the Fund (as such
expenses are not covered by the Warranty Agreement), if the Fund or the Manager
fails to perform certain obligations under the Warranty Agreement, or if the
Warranty Provider fails to or is unable to meet its obligations under the
Warranty Agreement.
The warranty is solely the obligation of the warranty provider. It is possible
that the financial position of the warranty provider may deteriorate.
Shareholders could lose money if the warranty provider fails to or is unable to
perform its obligations under the warranty. The Fund's assets and the
obligations of the warranty provider are not guaranteed by Merrill Lynch & Co.,
Inc. (the warranty provider's parent company), the United States Government, the
Manager or any other entity or person. The lack of a guarantee of the warranty
provider's obligations under the warranty presents some risks to shareholders if
the warranty provider fails or is unable to honor its obligations to the Fund on
the Maturity Date under the warranty.
Distributions from the Fund are taxable whether or not you reinvest them in
additional shares of the Fund. The warranty provider's obligation to make
payment to the Fund is not guaranteed by any entity and the Fund is not
obligated to replace the warranty provider should it be unable to make the
payments necessary to support the warranted amount. The warranty agreement fees
increase the Fund's expenses that you pay and therefore the expenses of this
Fund will be higher than the expenses of a Fund that does not offer principal
protection.
The Fund offered its shares to the public from May 30, 2003 through July 31,
2003. From August 5, 2003, and until August 5, 2010, shares of the Fund will
only be issued upon reinvestment of dividends and distributions.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FUND EXPENSES
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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 August 31, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
17 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FUND EXPENSES
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the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/05) (8/31/05) AUGUST 31, 2005
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Class A Actual $1,000.00 $1,011.50 $5.34
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Class A Hypothetical 1,000.00 1,019.91 5.36
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Class B Actual 1,000.00 1,007.10 9.25
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Class B Hypothetical 1,000.00 1,016.03 9.29
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Class C Actual 1,000.00 1,007.90 9.15
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Class C Hypothetical 1,000.00 1,016.13 9.19
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Class N Actual 1,000.00 1,010.60 6.25
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Class N Hypothetical 1,000.00 1,019.00 6.28
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 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended August 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- ----------------------------
Class A 1.05%
- ----------------------------
Class B 1.82
- ----------------------------
Class C 1.80
- ----------------------------
Class N 1.23
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager 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.
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18 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
STATEMENT OF INVESTMENTS August 31, 2005
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VALUE
SHARES SEE NOTE 1
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INVESTMENTS IN AFFILIATED COMPANIES EQUITY FUNDS--87.0%
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Oppenheimer Main Street Fund, Cl. Y 1 (Cost $158,638,395) 5,428,525 $ 197,489,728
PRINCIPAL
AMOUNT
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U.S. GOVERNMENT OBLIGATIONS--12.3%
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U.S. Treasury Bonds, STRIPS, 4.14%, 5/15/10 2 $ 15,400,000 12,923,942
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U.S. Treasury Nts., STRIPS, 4.11%, 8/15/10 2 18,400,000 15,166,273
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Total U.S. Government Obligations (Cost $27,743,638) 28,090,215
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JOINT REPURCHASE AGREEMENTS--1.0%
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Undivided interest of 0.51% in joint repurchase agreement (Principal Amount/
Value $438,604,000, with a maturity value of $438,647,129) with UBS Warburg
LLC, 3.54%, dated 8/31/05, to be repurchased at $2,219,218 on 9/1/05,
collateralized by Federal National Mortgage Assn., 6%, 4/1/35, with
a value of $447,924,090 (Cost $2,219,000) 2,219,000 2,219,000
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TOTAL INVESTMENTS, AT VALUE (COST $188,601,033) 100.3% 227,798,943
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LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (781,241)
----------------------------------
NET ASSETS 100.0% $ 227,017,702
==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Affiliated company. Represents ownership of an affiliated fund, as defined in
the Investment Company Act of 1940, at or during the period ended August 31,
2005. The aggregate fair value of securities of affiliated companies held by the
Fund as of August 31, 2005 amounts to $197,489,728. Transactions during the
period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2004 ADDITIONS REDUCTIONS AUGUST 31, 2005
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Oppenheimer Main Street Fund, Cl. Y 5,250,414 4,397,829 (4,219,718) 5,428,525
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME LOSS
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y $ 197,489,728 $ 3,084,370 $ 1,848,864
2. Zero coupon bond reflects effective yield on the date of purchase.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2005
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ASSETS
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Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $29,962,638) $ 30,309,215
Affiliated companies (cost $158,638,395) 197,489,728
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227,798,943
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Cash 7,101
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Receivables and other assets:
Interest 218
Other 5,265
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Total assets 227,811,527
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LIABILITIES
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Payables and other liabilities:
Shares of beneficial interest redeemed 369,235
Warranty agreement fees 230,261
Distribution and service plan fees 97,520
Legal, auditing and other professional fees 48,220
Shareholder communications 22,144
Transfer and shareholder servicing agent fees 14,866
Trustees' compensation 5,432
Other 6,147
--------------
Total liabilities 793,825
- -------------------------------------------------------------------------------------------------------
NET ASSETS $ 227,017,702
==============
- -------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 19,871
- -------------------------------------------------------------------------------------------------------
Additional paid-in capital 190,344,512
- -------------------------------------------------------------------------------------------------------
Accumulated net investment loss (109,396)
- -------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,435,195)
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 39,197,910
--------------
NET ASSETS $ 227,017,702
==============
20 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $64,304,005 and
5,609,445 shares of beneficial interest outstanding) $11.46
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $12.16
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $117,057,007 and 10,265,361 shares
of beneficial interest outstanding) $11.40
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $41,332,364 and 3,618,688 shares
of beneficial interest outstanding) $11.42
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $4,324,326 and 377,542 shares of
beneficial interest outstanding) $11.45
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $ 3,084,370
- --------------------------------------------------------------------------------
Interest 1,832,262
--------------
Total investment income 4,916,632
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 327,588
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 170,609
Class B 1,208,196
Class C 461,307
Class N 23,249
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 47,054
Class B 96,708
Class C 32,627
Class N 864
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 13,304
Class B 26,742
Class C 8,222
Class N 213
- --------------------------------------------------------------------------------
Warranty agreement fees 1,442,329
- --------------------------------------------------------------------------------
Custodian fees and expenses 11,771
- --------------------------------------------------------------------------------
Trustees' compensation 8,563
- --------------------------------------------------------------------------------
Other 40,100
--------------
Total expenses 3,919,446
Less reduction to custodian expenses (11,329)
Less waivers and reimbursements of expenses (138,268)
--------------
Net expenses 3,769,849
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,146,783
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Unaffiliated companies 416,227
Affiliated companies (1,848,864)
--------------
Net realized loss (1,432,637)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 15,647,720
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,361,866
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2005 2004
- -----------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income $ 1,146,783 $ 298,549
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) (1,432,637) 733,006
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 15,647,720 16,062,701
-------------------------------
Net increase in net assets resulting from operations 15,361,866 17,094,256
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (740,479) (483,371)
Class B (334,234) (459,193)
Class C (60,042) (225,058)
Class N (37,650) (28,161)
- -----------------------------------------------------------------------------------------------
Tax return of capital distribution from net investment income:
Class A (26,368) (138,125)
Class B (46,339) (223,202)
Class C (17,685) (104,341)
Class N (1,785) (9,493)
- -----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (116,398) (132,440)
Class B (196,622) (206,129)
Class C (77,353) (99,883)
Class N (6,968) (9,001)
- -----------------------------------------------------------------------------------------------
Tax return of capital distribution from net realized gain:
Class A (243,697) --
Class B (428,267) --
Class C (163,449) --
Class N (16,502) --
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from beneficial
interest transactions:
Class A (10,988,559) (11,842,886)
Class B (11,713,778) (7,092,628)
Class C (13,016,364) (11,893,836)
Class N (1,038,745) (647,857)
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Total decrease (23,909,418) (16,501,348)
- -----------------------------------------------------------------------------------------------
Beginning of period 250,927,120 267,428,468
-------------------------------
End of period (including accumulated net investment loss of
$109,396 and $128,418, respectively) $ 227,017,702 $ 250,927,120
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2005 2004 2003 1
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.88 $ 10.28 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 2 .07 -- 3
Net realized and unrealized gain .65 .64 .28
--------------------------------------------
Total from investment operations .76 .71 .28
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.07) --
Tax return of capital distribution from net investment income -- 3 -- --
Dividends from net realized gain (.02) (.02) --
Tax return of capital distribution from net realized gain (.04) (.02) --
--------------------------------------------
Total dividends and/or distributions to shareholders (.18) (.11) --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.46 $ 10.88 $ 10.28
============================================
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.98% 6.87% 2.80%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 64,304 $ 71,666 $ 78,758
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 68,812 $ 78,668 $ 39,416
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 1.02% 0.65% 0.35%
Total expenses 1.10% 6 1.14% 6 1.13% 6
Less reimbursement of management fees during offering period -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.06)% (0.12)% --
--------------------------------------------
Net expenses 1.04% 1.02% 0.81% 7
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 179% 12%
1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
5. Annualized for periods of less than one full year.
6. Expenses paid including all underlying fund expenses was as follows:
Year Ended August 31, 2005 1.16%
Year Ended August 31, 2004 1.60%
Year Ended August 31, 2003 1.38%
7. For this period reduction to custodian expenses was zero.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS B YEAR ENDED AUGUST 31, 2005 2004 2003 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.82 $ 10.28 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .03 2 (.02) -- 3
Net realized and unrealized gain .64 .63 .28
-----------------------------------------------
Total from investment operations .67 .61 .28
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.03) (.03) --
Tax return of capital distribution from net investment income -- 3 -- --
Dividends from net realized gain (.02) (.02) --
Tax return of capital distribution from net realized gain (.04) (.02) --
-----------------------------------------------
Total dividends and/or distributions to shareholders (.09) (.07) --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.40 $ 10.82 $ 10.28
===============================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.21% 5.94% 2.80%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 117,057 $ 122,411 $ 122,968
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 120,928 $ 127,128 $ 64,461
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) 0.23% (0.14)% (0.20)%
Total expenses 1.86% 6 1.89% 6 1.88% 6
Less reimbursement of management fees during offering period -- -- (0.32)%
Less reimbursement to maintain yield -- -- (0.31)%
Payments and waivers and reduction to custodian expenses (0.06)% (0.12)% --
-----------------------------------------------
Net expenses 1.80% 1.77% 1.25% 7
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 179% 12%
1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
5. Annualized for periods of less than one full year.
6. Expenses paid including all underlying fund expenses was as follows:
Year Ended August 31, 2005 1.92%
Year Ended August 31, 2004 2.35%
Year Ended August 31, 2003 2.13%
7. For this period reduction to custodian expenses was zero.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2005 2004 2003 1
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.82 $ 10.28 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .03 2 (.02) -- 3
Net realized and unrealized gain .65 .64 .28
--------------------------------------------
Total from investment operations .68 .62 .28
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) (.04) --
Tax return of capital distribution from net investment income -- 3 -- --
Dividends from net realized gain (.02) (.02) --
Tax return of capital distribution from net realized gain (.04) (.02) --
--------------------------------------------
Total dividends and/or distributions to shareholders (.08) (.08) --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.42 $ 10.82 $ 10.28
============================================
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.24% 5.95% 2.80%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 41,333 $ 51,741 $ 60,271
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 46,152 $ 59,429 $ 31,946
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) 0.29% (0.10)% (0.20)%
Total expenses 1.85% 6 1.88% 6 1.88% 6
Less reimbursement of management fees during offering period -- -- (0.32)%
Less reimbursement to maintain yield -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.06)% (0.12)% --
--------------------------------------------
Net expenses 1.79% 1.76% 1.24% 7
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 179% 12%
1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
5. Annualized for periods of less than one full year.
6. Expenses paid including all underlying fund expenses was as follows:
Year Ended August 31, 2005 1.91%
Year Ended August 31, 2004 2.34%
Year Ended August 31, 2003 2.13%
7. For this period reduction to custodian expenses was zero.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS N YEAR ENDED AUGUST 31, 2005 2004 2003 1
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.86 $ 10.28 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 2 .05 -- 3
Net realized and unrealized gain .65 .63 .28
--------------------------------------------
Total from investment operations .74 .68 .28
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.06) --
Tax return of capital distribution from net investment income -- 3 -- --
Dividends from net realized gain (.02) (.02) --
Tax return of capital distribution from net realized gain (.04) (.02) --
--------------------------------------------
Total dividends and/or distributions to shareholders (.15) (.10) --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.45 $ 10.86 $ 10.28
============================================
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.85% 6.55% 2.80%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 4,324 $ 5,109 $ 5,432
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 4,659 $ 5,408 $ 3,713
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 0.77% 0.46% 0.06%
Total expenses 1.28% 6 1.34% 6 1.38% 6
Less reimbursement of management fees during offering period -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.06)% (0.12)% --
--------------------------------------------
Net expenses 1.22% 1.22% 1.06% 7
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 179% 12%
1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
5. Annualized for periods of less than one full year.
6. Expenses paid including all underlying fund expenses was as follows:
Year Ended August 31, 2005 1.34%
Year Ended August 31, 2004 1.80%
Year Ended August 31, 2003 1.63%
7. For this period reduction to custodian expenses was zero.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Principal Protected Main Street Fund (the Fund), a series of
Oppenheimer Principal Protected Trust, is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
During the Warranty Period, the Fund will seek capital preservation in order to
have a net asset value on the Maturity Date at least equal to the Warranty
Amount. The Fund seeks high total return as a secondary objective. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). Shares of the Fund
were offered during the Offering Period (May 30, 2003 to July 31, 2003). Shares
are not offered during the Warranty Period (August 5, 2003 to August 5, 2010) to
the Maturity Date (August 5, 2010) except in connection with reinvestment of
dividends and distributions. During the Warranty Period, the Fund will allocate
its assets between Oppenheimer Main Street Fund (the Underlying Fund) and
certain U.S. government securities. The Fund offered Class A, Class B, Class C
and Class N shares. Class A shares were 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 were sold without a front-end sales charge but may be subject to
a contingent deferred sales charge (CDSC). Class N shares were sold only through
retirement plans. Retirement plans that offer Class N shares may impose charges
on those accounts. All classes of shares have identical rights and voting
privileges with respect to the Fund in general and exclusive voting rights on
matters that affect that class alone. Earnings, net assets and net asset value
per share may differ due to each class having its own expenses, such as transfer
and shareholder servicing agent fees and shareholder communications, directly
attributable to that class. Class A, B, C and N have separate distribution
and/or service plans. Class B shares will automatically convert to Class A
shares 88 months after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
WARRANTY AGREEMENT. The Fund has entered into a Financial Warranty Agreement
with Merrill Lynch Bank USA (the Warranty Provider) to ensure that on the
Maturity Date each shareholder's account will be no less than the value of that
shareholder's account on the second business day after the end of the Offering
Period (the Warranty Amount). This value will include net income, if any, earned
by the Fund during the offering period and be reduced by adjustments permitted
under the Warranty Agreement, sales charges, applicable share of extraordinary
expenses and proportionately reduced for dividends and distributions paid in
cash and redemptions of Fund shares. To avoid a reduced Warranty Amount,
shareholders must reinvest all dividends and distributions received from the
Fund to purchase additional shares of the Fund and must not redeem any shares of
the Fund during the Warranty Period. If the value of the Fund's assets on the
Maturity Date is insufficient to result in the value of each shareholder's
account being at least equal to the shareholder's Warranty Amount, the Warranty
Provider will pay the Fund an amount equal to the excess of his or her Warranty
Amount over his or her account value. The Financial Warranty is solely the
obligation of the Warranty Provider.
28 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
It is possible that the financial position of the Warranty Provider may
deteriorate and it would be unable to satisfy its obligations under the
Financial Warranty. The Fund's assets and the obligations of the Warranty
Provider under the Warranty Agreement are not guaranteed by Merrill Lynch & Co.,
Inc. (the Warranty Provider's parent company), the United States Government, the
Manager, or any other entity or person. The Warranty Agreement requires the
Manager, on behalf of the Fund, to comply with certain agreed upon investment
parameters in an attempt to limit the Fund's risk. If the Manager fails to
comply with the agreed-upon investment parameters or otherwise fails to comply
with certain requirements set forth in the Warranty Agreement, the Warranty
Provider may terminate its Financial Warranty in certain limited circumstances.
The Warranty Provider may monitor the Fund's compliance with the Warranty
Agreement solely to protect the interests of the Warranty Provider and not the
Fund's shareholders.
The fee paid to the Warranty Provider is an annual fee of 0.60% of the
average daily net assets of the Fund. If the Fund is required to make a complete
and irreversible allocation of its assets to the debt portfolio, the Warranty
Fee will thereafter be reduced to 0.35% of the average daily net assets of the
Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The allocation of the Fund's assets between the debt
portfolio and the equity portfolio will vary over time based upon the Warranty
Formula. The formula is intended to allow the Fund to have a net asset value on
the Maturity Date at least equal to the Warranty Amount.
During the Warranty Period, the Fund will invest a portion of its assets,
and in certain circumstances, the Fund may invest all of its assets, in U.S.
government securities having maturities approximately equal to the period
remaining in the Warranty Period. Long-term debt securities having a remaining
maturity in excess of 60 days will be valued at the mean between the "bid" and
"asked" prices. Long-term and short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by 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).
The Fund invests the equity portfolio in Class Y shares of Oppenheimer
Main Street Fund (the Underlying Fund). The net asset value of the Underlying
Fund is determined 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. The net asset value per share is determined by dividing the value of
the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding.
- --------------------------------------------------------------------------------
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
29 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
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
------------------------------------------------------------------------
$-- $-- $2,027,310 $38,790,025
1. As of August 31, 2005, the Fund had $2,027,310 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2014.
2. During the fiscal year ended August 31, 2005, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended August 31, 2004, the Fund did not utilize any
capital loss carryforward.
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 August 31, 2005. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
REDUCTION TO NET INVESTMENT REALIZED LOSS
PAID-IN CAPITAL LOSS ON INVESTMENTS
--------------------------------------------------
$988,735 $136,821 $851,914
30 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
The tax character of distributions paid during the years ended August 31, 2005
and August 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
------------------------------------------------------------
Distributions paid from:
Ordinary income $ 1,172,405 $ 601,524
Long-term capital gain 397,341 1,041,712
Return of capital 944,092 475,161
---------------------------------
Total $ 2,513,838 $ 2,118,397
=================================
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 August 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 189,008,918
==============
Gross unrealized appreciation $ 38,996,054
Gross unrealized depreciation (206,029)
--------------
Net unrealized appreciation $ 38,790,025
==============
- --------------------------------------------------------------------------------
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 and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at
31 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
the fair market value of the securities received. Interest income, which
includes accretion of discount and amortization of premium, is accrued as
earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
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 AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS A
Sold -- $ -- -- $ --
Dividends and/or distributions reinvested 89,132 1,017,885 66,031 746,580
Redeemed (1,068,185) (12,006,444) (1,135,729) (12,589,466)
---------------------------------------------------------
Net decrease (979,053) $ (10,988,559) (1,069,698) $ (11,842,886)
=========================================================
- -----------------------------------------------------------------------------------------------------
CLASS B
Sold -- $ -- -- $ --
Dividends and/or distributions reinvested 74,867 854,981 65,445 719,894
Redeemed (1,121,129) (12,568,759) (719,209) (7,812,522)
---------------------------------------------------------
Net decrease (1,046,262) $ (11,713,778) (653,764) $ (7,092,628)
=========================================================
32 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS C
Sold -- $ -- -- $ --
Dividends and/or distributions reinvested 20,067 229,565 25,625 451,966
Redeemed (1,182,239) (13,245,929) (1,109,424) (12,345,802)
---------------------------------------------------------
Net decrease (1,162,172) $ (13,016,364) (1,083,799) $ (11,893,836)
=========================================================
- -----------------------------------------------------------------------------------------------------
CLASS N
Sold -- $ -- -- $ --
Dividends and/or distributions reinvested 5,502 62,890 4,395 48,349
Redeemed (98,232) (1,101,635) (62,448) (696,206)
---------------------------------------------------------
Net decrease (92,730) $ (1,038,745) (58,053) $ (647,857)
=========================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2005, were as
follows:
PURCHASES SALES
---------------------------------------------------------------------
Investment securities $ 154,241,925 $ 144,501,201
U.S. government and government
agency obligations 138,694,472 189,045,578
---------------------------------------------------------------------
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 an
annual rate of 0.50% of the average annual net assets of the Fund reduced by the
amount of advisory fees paid to the Manager by the Underlying Fund relating to
the Fund's assets invested in the Underlying Fund. However, the management fees
shall not be reduced below zero. Management fees will apply during the Warranty
Period and the Post-Warranty Period.
If during the Warranty Period 100% of the Fund's assets are completely and
irreversibly invested in the debt portfolio, the management fee will be at an
annual rate of 0.25% of the average annual net assets of the Fund, and if that
occurs the Manager will further reduce its management fee to the extent
necessary so that total annual operating expenses of the Fund (other than
Extraordinary Expenses such as litigation costs) do not exceed 1.30% for Class A
shares, 2.05% for Class B shares, 2.05% for Class C shares and 1.55% for Class N
shares. However, if this reduction in the management fee is not sufficient to
reduce total annual operating expenses to these limits, the Manager is not
required to subsidize Fund expenses to assure that expenses do not exceed those
limits. Furthermore, if expenses exceed these expense limits, the Warranty
Amount will be reduced by any expenses that exceed those limits. The Manager
voluntarily waived its management fee during the Offering Period. In addition,
during the Warranty Period the Manager has voluntarily agreed to reduce the
management fee payable by the Fund by
33 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
0.00833% per month in any month following a month where the Fund's average daily
equity allocation was less than 10%. Those voluntary undertakings may be amended
or eliminated at any time.
- --------------------------------------------------------------------------------
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 August 31, 2005, the Fund paid
$179,626 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 0.25% per year under each plan. If either the
Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at August 31, 2005
for Class B, Class C and Class N shares were $3,950,012, $738,951 and $94,174,
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,
34 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
as applicable. The sales charges retained by the Distributor from the sale of
shares and the CDSC retained by the Distributor on the redemption of shares is
shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------
August 31, 2005 $-- $1,195 $350,078 $44,714 $209
- ----------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily undertaken
to reimburse the Fund for expenses equal to the Underlying Fund expenses, other
than Underlying Fund management fees, paid by the Fund as a shareholder of the
Underlying Fund. That expense reimbursement will fluctuate as the Fund's
allocation between the Underlying Fund and the debt portfolio changes. During
the year ended August 31, 2005, the Manager reimbursed the Fund $138,268. This
voluntary undertaking may be amended or eliminated at any time.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005, and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
35 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
5. LITIGATION Continued
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The 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.
36 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Principal Protected Main Street Fund, a series of Oppenheimer
Principal Protected Trust, including the statement of investments, as of August
31, 2005, 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 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our 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, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. 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 Principal Protected Main Street Fund as of August 31, 2005, 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
October 17, 2005
37 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends and distributions of $0.1790, $0.0920, $0.0757 and $0.1533 per
share were paid to Class A, Class B, Class C and Class N shareholders,
respectively, on December 31, 2004, of which $0.0572 was designated as a
"capital gain distribution" for federal income tax purposes. Whether received in
stock or in cash, the capital gain distribution should be treated by
shareholders as a gain from the sale of the capital assets held for more than
one year (long-term capital gains).
Dividends, if any, paid by the Fund during the fiscal year ended August
31, 2005 which are not designated as capital gain distributions should be
multiplied by 100% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended August 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $1,114,635 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2006, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
38 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
39 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio managers and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board noted that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services and information the
Board received regarding the experience and professional qualifications of the
Manager's personnel and the size and functions of its staff. The Board members
also considered their experiences as directors or trustees of the Fund and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Fund's service agreements. The Board was aware that there are alternatives
to retaining the Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of the Fund's portfolio managers and the Manager's risk management
team, equity and balanced funds investment team and fixed income investment team
and analysts. The allocation of the Fund's assets between shares of Oppenheimer
Main Street Fund and fixed-income securities has been managed by Rudi Schadt
since the Fund commenced operations in June 2003. Mr. Schadt is a Vice President
of the Fund and a Vice President, Director of Research in Product Design and
Risk Management of the Manager and has
40 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
had over 12 years of risk management experience. The Fund's fixed-income
component has been managed by Angelo Manioudakis since the Fund commenced
operations in June 2003. Mr. Manioudakis is a Vice President of the Fund and a
Senior Vice President of the Manager and has had over 12 years of experience
managing fixed-income investments.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other balanced target maturity funds
including both funds advised by the Manager and funds advised by other
investment advisers. The Board also receives and reviews comparative performance
information regarding the Fund and other funds at each Board meeting. The Board
noted that the Fund's one-year and since inception performance were both better
than its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board reviewed information, including
comparative information, regarding the fees paid to the Manager and its
affiliates and the other expenses borne by the Fund. The independent consultant
provided comparative data in regard to the fees and expenses of the Fund and
other balanced target maturity funds with comparable asset levels and
distribution features. In addition, the Board evaluated the comparability of the
fees charged and the services provided to the Fund to the fees charged and
services provided to other types of entities advised by the Manager. The Board
noted that the Fund's management fees and total expenses are both lower than its
peer group average. The Board also considered that the Manager reimburses the
Fund for the full amount of its pro-rata share of the expenses, other than
extraordinary expenses, that it incurs from investing in shares of Oppenheimer
Main Street Fund. The Board also considered that the Manager has agreed to
reduce its fees, in certain circumstances, based on the percentage of the Fund's
assets that is invested in debt securities.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's management fee.
41 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and to the independent Trustees. Fund counsel and the independent
Trustees' counsel are both independent of the Manager within the meaning and
intent of the Securities and Exchange Commission Rules.
Based on its review of the information it received and its evaluations and
considerations described above, the Board, including a majority of the
independent Trustees, concluded that the nature, extent and quality of the
services provided to the Fund by the Manager are a benefit to the Fund and in
the best interest of the Fund's shareholders and that the amount and structure
of the compensation received by the Manager and its affiliates from the Fund are
reasonable in relation to the services provided. Accordingly, the Board elected
to continue the advisory agreement for another year. In arriving at this
decision, the Board did not single out any factor or factors as being more
important than others, but considered all of the factors together. The Board
judged the terms and conditions of the advisory agreement, including the
management fee, in light of all of the surrounding circumstances.
42 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD;
FUND, LENGTH OF SERVICE, AGE NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Chairman of the Board Mortgage Company (since 1991), Centennial State Mortgage Company (since 1994),
of Trustees (since 2003) and The El Paso Mortgage Company (since 1993); Chairman of the following
and Trustee (since 2003) private companies: Ambassador Media Corporation (since 1984) and Broadway
Age: 68 Ventures (since 1984); Director of the following: Helmerich & Payne, Inc. (oil
and gas drilling/production company) (since 1992), Campus Crusade for Christ (since
1991) and The Lynde and Harry Bradley Foundation, Inc. (non-profit organization)
(since 2002); former Chairman of the following: Transland Financial Services, Inc.
(private mortgage banking company) (1997-2003), Great Frontier Insurance (insurance
agency) (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage)
(1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director
of the following: UNUMProvident (insurance company) (1991-2004), Storage Technology
Corporation (computer equipment company) (1991-2003) and International Family
Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January
1991). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner of private
Trustee (since 2003) equity funds) (until February 2001); Chairman, President and Chief Executive
Age: 74 Officer of A.G. Edwards Capital, Inc. (until March 2000); Director of A.G. Edwards &
Sons, Inc. (brokerage company) (until 2000) and A.G. Edwards Trust Company
(investment adviser) (until 2000); Vice Chairman and Director of A.G. Edwards, Inc.
(until March 1999); Vice Chairman of A.G. Edwards & Sons, Inc. (until March 1999);
Chairman of A.G. Edwards Trust Company (until March 1999) and A.G.E. Asset Management
(investment adviser) (until March 1999). Oversees 38 portfolios in the
OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management Corporation
Trustee (since 2003) (December 1991-April 1999); President, Treasurer and Director of Centennial
Age: 69 Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director
of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several
positions with the Manager and with subsidiary or affiliated companies of the Manager
(September 1987-April 1999). Oversees 38 portfolios in the OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical site) (since
Trustee (since 2003) June 2000); Director of Genetic ID, Inc. (biotech company) (March 2001-May 2002);
Age: 67 Partner at PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999);
Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group
(July 1994-June 1998). Oversees 38 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director of
Trustee (since 2003) Northwestern Energy Corp. (public utility corporation) (since November 2004);
Age: 63 Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky
Mountain Elk Foundation (non-profit organization) (February 1998-February 2003);
Chairman and Director (until October 1996) and President and Chief Executive Officer
(until October 1995) of the Manager; President, Chief Executive Officer and Director
of the following: Oppenheimer Acquisition Corp.
43 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JON S. FOSSEL, ("OAC") (parent holding company of the Manager), Shareholders Services, Inc. and
Continued Shareholder Financial Services, Inc. (until October 1995). Oversees 38 portfolios in
the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (charitable organization) (since September 1984). Mr.
Trustee (since 2003) Freedman held several positions with the Manager and with subsidiary or affiliated
Age: 64 companies of the Manager (until October 1994). Oversees 38 portfolios in the
OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational organization)
Trustee (since 2003) (since February 2000); Director of The California Endowment (philanthropic
Age: 58 organization) (since April 2002); Director of Community Hospital of Monterey
Peninsula (since February 2002); Director of American Funds' Emerging Markets Growth
Fund, Inc. (mutual fund) (since October 1991); President of ARCO Investment
Management Company (February 1991-April 2000); Member of the investment committees of
The Rockefeller Foundation and The University of Michigan; Advisor at Credit Suisse
First Boston's Sprout venture capital unit (venture capital fund) (1994-January
2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June
2004); Trustee of MML Series Investment Fund (investment company) (April 1989-June
2004); Member of the investment committee of Hartford Hospital (2000-2003); and
Advisor to Unilever (Holland) pension fund (2000-2003). Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University (educational organization) (since August
Trustee (since 2003) 2005); Chairman, Chief Executive Officer and Director of Steele Street State Bank
Age: 61 (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable
organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit
organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S.
Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of
Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones
Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas
exploration) (1997-February 2004). Oversees 38 portfolios in the OppenheimerFunds
complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly Institutional Funds) (investment company)
Trustee (since 2003) (since 1996) and MML Series Investment Fund (investment company) (since 1996), the
Age: 63 Springfield Library and Museum Association (museums) (since 1995) and the Community
Music School of Springfield (music school) (since 1996); Chairman and Trustee (since
2003) and Chairman of the Investment Committee (since 1994) of the Worcester Polytech
Institute (private university); President and Treasurer of the SIS Funds (private
charitable fund) (since January 1999); Chairman of SIS & Family Bank, F.S.B.
(formerly SIS Bank) (commercial bank) (January 1999-July 1999); Member of the
Investment Committee of the Community Foundation of Western Massachusetts (1998-
2003); and Executive Vice President of Peoples Heritage Financial Group, Inc.
(commercial bank) (January 1999-July 1999). Oversees 40 portfolios in the
OppenheimerFunds complex.
44 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
- -----------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE
TERM, AND AS AN OFFICER FOR AN ANNUAL TERM, OR UNTIL HIS RESIGNATION, RETIREMENT,
DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH
OPPENHEIMER FUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President
President and (since September 2000) of the Manager; President and Director or Trustee of other
Principal Executive Officer Oppenheimer funds; President and Director of OAC and of Oppenheimer Partnership
(since 2001) Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001);
and Trustee Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since
(since 2003) November 2001); Chairman and Director of Shareholder Services, Inc. and of
Age: 56 Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager)
(since July 2001); President and Director of OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since July 2001); 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 2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts
Mutual Life Insurance Company (OAC's parent company) (since February 1997); Director
of DLB Acquisition Corporation (holding company parent of Babson Capital Management
LLC) (since June 1995); Member of the Investment Company Institute's Board of
Governors (since October 3, 2003); Chief Operating Officer of the Manager (September
2000-June 2001); President and Trustee of MML Series Investment Fund and MassMutual
Select Funds (open-end investment companies) (November 1999-November 2001); Director
of C.M. Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company (September
1999-August 2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees 87
portfolios as a Trustee or Director and officer in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND MANIOUDAKIS, SCHADT, 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 RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
ANGELO G. MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President Management Corporation (since April 2002) and of OFI Institutional Asset Management,
(since 2003) Inc. (since June 2002). Formerly Executive Director and portfolio manager for Miller,
Age: 38 Anderson & Sherrerd, a division of Morgan Stanley Investment Management (August
1993-April 2002). An officer of 14 portfolios in the OppenheimerFunds complex.
RUDI SCHADT, Vice President, Director of Research, Product Design and Risk Management of the
Vice President Manager. Prior to joining the Manager in February 2002 he was a Director and Senior
(since 2004) Quantitative Analyst (September 2000-April 2001) at UBS Asset Management prior to
Age: 47 which he was an Associate Director and Senior Researcher (June 1997-August 2000) at
State Street Global Investors. An officer of 2 portfolios in the OppenheimerFunds
complex.
45 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Chief Compliance Officer Corporation and Shareholder Services, Inc. (since June 1983); Vice President and
(since 2004) Director of Internal Audit of the Manager (1997-February 2004). An officer of 87
Age: 55 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer and the following: HarbourView Asset Management Corporation, Shareholder Financial
Principal Financial and Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Accounting Officer Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
(since 2003) Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
Age: 46 OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc.
(since November 2000), and OppenheimerFunds Legacy Program (since June 2003);
Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary
of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating
Officer of Bankers Trust Company-Mutual Fund Services Division (March 1995-March
1999). An officer of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002)
Vice President and Secretary of the Manager; General Counsel and Director of the Distributor (since December
(since 2003) 2001); General Counsel of Centennial Asset Management Corporation (since December
Age: 57 2001); Senior Vice President and General Counsel of HarbourView Asset Management
Corporation (since December 2001); Secretary and General Counsel of OAC (since
November 2001); Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since December
2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001);
Senior Vice President, General Counsel and Director of Shareholder Financial
Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice
President, General Counsel and Director of OFI Private Investments, Inc. and OFI
Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy
Program (since June 2003); Senior Vice President and General Counsel of OFI
Institutional Asset Management, Inc. (since November 2001); Director of
OppenheimerFunds (Asia) Limited (since December 2003); 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 the following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and OppenheimerFunds
International Ltd. (September 1997-November 2001). An officer of 87 portfolios in the
OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
46 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
FINANCIAL STATEMENTS FOR OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
49 Statement of Investments
61 Statement of Assets and Liabilities
63 Statement of Operations
65 Statements of Changes in Net Assets
66 Financial Highlights
71 Notes to Financial Statements
81 Report of Independent Registered Public Accounting Firm
48 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS August 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--99.2%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--8.5%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--0.0%
Autoliv, Inc. 16,400 $ 729,800
- --------------------------------------------------------------------------------
AUTOMOBILES--0.3%
Ford Motor Co. 3,000,426 29,914,247
- --------------------------------------------------------------------------------
Harley-Davidson, Inc. 79,200 3,901,392
-----------------
33,815,639
- --------------------------------------------------------------------------------
DISTRIBUTORS--0.0%
Genuine Parts Co. 82,600 3,784,732
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.5%
CBRL Group, Inc. 37,500 1,356,000
- --------------------------------------------------------------------------------
CEC Entertainment, Inc. 1 65,600 2,249,424
- --------------------------------------------------------------------------------
Choice Hotels International, Inc. 21,900 1,344,441
- --------------------------------------------------------------------------------
CKE Restaurants, Inc. 63,900 747,630
- --------------------------------------------------------------------------------
Darden Restaurants, Inc. 193,700 6,084,117
- --------------------------------------------------------------------------------
Hilton Hotels Corp. 185,100 4,288,767
- --------------------------------------------------------------------------------
International Game Technology 171,800 4,762,296
- --------------------------------------------------------------------------------
Isle of Capri Casinos, Inc. 1 7,700 169,323
- --------------------------------------------------------------------------------
Jack in the Box, Inc. 1 31,300 1,103,951
- --------------------------------------------------------------------------------
Marriott International, Inc., Cl. A 334,600 21,150,066
- --------------------------------------------------------------------------------
McDonald's Corp. 1,276,300 41,415,935
- --------------------------------------------------------------------------------
MGM Mirage, Inc. 1 776,800 32,827,568
- --------------------------------------------------------------------------------
Penn National Gaming, Inc. 1 97,800 3,333,024
- --------------------------------------------------------------------------------
Starbucks Corp. 1 19,400 951,376
- --------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 278,400 16,230,720
- --------------------------------------------------------------------------------
Wendy's International, Inc. 88,100 4,153,034
- --------------------------------------------------------------------------------
Yum! Brands, Inc. 579,400 27,451,972
-----------------
169,619,644
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.7%
American Greetings Corp., Cl. A 84,500 2,145,455
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
Black & Decker Corp. 40,800 $ 3,480,240
- --------------------------------------------------------------------------------
Cavco Industries, Inc. 1 13,540 453,996
- --------------------------------------------------------------------------------
Centex Corp. 60,100 4,071,775
- --------------------------------------------------------------------------------
D.R. Horton, Inc. 650,066 24,000,437
- --------------------------------------------------------------------------------
KB Home 42,200 3,129,552
- --------------------------------------------------------------------------------
Lennar Corp., Cl. A 177,900 11,047,590
- --------------------------------------------------------------------------------
MDC Holdings, Inc. 28,400 2,169,192
- --------------------------------------------------------------------------------
NVR, Inc. 1 5,900 5,221,500
- --------------------------------------------------------------------------------
Pulte Homes, Inc. 63,300 5,456,460
- --------------------------------------------------------------------------------
Ryland Group, Inc. (The) 101,100 7,315,596
- --------------------------------------------------------------------------------
Standard Pacific Corp. 48,000 2,108,640
- --------------------------------------------------------------------------------
Toll Brothers, Inc. 1 57,600 2,767,680
- --------------------------------------------------------------------------------
Tupperware Corp. 53,100 1,163,952
- --------------------------------------------------------------------------------
Whirlpool Corp. 34,600 2,631,330
-----------------
77,163,395
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.0%
eBay, Inc. 1 114,600 4,640,154
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--0.1%
Eastman Kodak Co. 139,100 3,389,867
- --------------------------------------------------------------------------------
Marvel Enterprises, Inc. 1 78,000 1,501,500
- --------------------------------------------------------------------------------
Nautilus, Inc. 2 87,500 2,251,375
-----------------
7,142,742
- --------------------------------------------------------------------------------
MEDIA--1.9%
Arbitron, Inc. 20,200 848,400
- --------------------------------------------------------------------------------
Catalina Marketing Corp. 21,200 507,528
- --------------------------------------------------------------------------------
Comcast Corp., Cl. A 1 903,255 27,775,091
- --------------------------------------------------------------------------------
Discovery Holding Co., Cl. A 1 37,740 571,384
- --------------------------------------------------------------------------------
Gannett Co., Inc. 74,000 5,381,280
- --------------------------------------------------------------------------------
Getty Images, Inc. 1 30,300 2,593,377
- --------------------------------------------------------------------------------
Liberty Media Corp., Cl. A 1 60,900 506,079
- --------------------------------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 472,400 22,779,128
- --------------------------------------------------------------------------------
News Corp., Inc., Cl. A 65,700 1,064,997
- --------------------------------------------------------------------------------
NTL, Inc. 1 6,400 408,832
49 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MEDIA Continued
R.H. Donnelley Corp. 1 12,000 $ 771,480
- --------------------------------------------------------------------------------
Time Warner, Inc. 4,721,500 84,609,280
- --------------------------------------------------------------------------------
Viacom, Inc., Cl. B 1,353,676 46,011,447
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 1,044,600 26,313,474
-----------------
220,141,777
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.4%
Dillard's, Inc., Cl. A 109,200 2,458,092
- --------------------------------------------------------------------------------
Federated Department Stores, Inc. 516,300 35,614,374
- --------------------------------------------------------------------------------
J.C. Penney Co., Inc. (Holding Co.) 690,200 33,564,426
- --------------------------------------------------------------------------------
Nordstrom, Inc. 581,900 19,540,202
- --------------------------------------------------------------------------------
Target Corp. 1,312,800 70,563,000
-----------------
161,740,094
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--2.4%
Abercrombie & Fitch Co., Cl. A 46,700 2,596,987
- --------------------------------------------------------------------------------
Advance Auto Parts, Inc. 1 82,000 4,996,260
- --------------------------------------------------------------------------------
American Eagle Outfitters, Inc. 196,000 5,611,480
- --------------------------------------------------------------------------------
AutoNation, Inc. 1 211,500 4,401,315
- --------------------------------------------------------------------------------
Barnes & Noble, Inc. 1 59,000 2,228,430
- --------------------------------------------------------------------------------
bebe stores, inc. 22,200 522,144
- --------------------------------------------------------------------------------
Bed Bath & Beyond, Inc. 1 547,400 22,197,070
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 498,100 23,739,446
- --------------------------------------------------------------------------------
Blockbuster, Inc., Cl. B 329,437 2,075,453
- --------------------------------------------------------------------------------
Borders Group, Inc. 57,300 1,308,159
- --------------------------------------------------------------------------------
Building Materials Holding Corp. 21,300 1,991,124
- --------------------------------------------------------------------------------
Children's Place Retail Stores, Inc. 1 38,300 1,566,853
- --------------------------------------------------------------------------------
Circuit City Stores, Inc./Circuit City Group 249,800 4,219,122
- --------------------------------------------------------------------------------
Electronics Boutique Holdings Corp. 1 51,800 3,320,380
- --------------------------------------------------------------------------------
Gap, Inc. (The) 909,500 17,289,595
- --------------------------------------------------------------------------------
Home Depot, Inc. 2,248,600 90,663,552
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SPECIALTY RETAIL Continued
Limited Brands, Inc. 27,600 $ 606,648
- --------------------------------------------------------------------------------
Lowe's Cos., Inc. 648,100 41,679,311
- --------------------------------------------------------------------------------
Men's Wearhouse, Inc. (The) 1 99,750 3,040,380
- --------------------------------------------------------------------------------
Michaels Stores, Inc. 168,800 6,127,440
- --------------------------------------------------------------------------------
Movie Gallery, Inc. 59,600 1,072,204
- --------------------------------------------------------------------------------
Office Depot, Inc. 1 145,100 4,353,000
- --------------------------------------------------------------------------------
Pacific Sunwear of California, Inc. 1 83,700 1,998,756
- --------------------------------------------------------------------------------
Sherwin-Williams Co. 37,700 1,747,772
- --------------------------------------------------------------------------------
Staples, Inc. 650,350 14,281,686
- --------------------------------------------------------------------------------
Tiffany & Co. 81,800 3,060,956
- --------------------------------------------------------------------------------
TJX Cos., Inc. (The) 612,400 12,805,284
- --------------------------------------------------------------------------------
Too, Inc. 1 50,300 1,340,998
- --------------------------------------------------------------------------------
Weight Watchers International, Inc. 1 33,400 1,890,774
- --------------------------------------------------------------------------------
Zale Corp. 1 77,700 2,167,830
-----------------
284,900,409
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.2%
Coach, Inc. 1 537,700 17,846,263
- --------------------------------------------------------------------------------
Nike, Inc., Cl. B 75,100 5,926,141
- --------------------------------------------------------------------------------
Timberland Co., Cl. A 1 128,400 4,235,916
-----------------
28,008,320
- --------------------------------------------------------------------------------
CONSUMER STAPLES--8.7%
- --------------------------------------------------------------------------------
BEVERAGES--2.2%
Anheuser-Busch Cos., Inc. 254,400 11,272,464
- --------------------------------------------------------------------------------
Brown-Forman Corp., Cl. B 14,000 792,820
- --------------------------------------------------------------------------------
Coca-Cola Co. (The) 2,594,300 114,149,200
- --------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc. 37,400 835,890
- --------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. (The) 287,900 8,487,292
- --------------------------------------------------------------------------------
PepsiCo, Inc. 2,269,530 124,483,721
-----------------
260,021,387
50 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.6%
7-Eleven, Inc. 1 63,300 $ 1,793,922
- --------------------------------------------------------------------------------
Albertson's, Inc. 2 182,900 3,681,777
- --------------------------------------------------------------------------------
Costco Wholesale Corp. 199,100 8,648,904
- --------------------------------------------------------------------------------
Kroger Co. (The) 1 663,200 13,091,568
- --------------------------------------------------------------------------------
Longs Drug Stores, Inc. 51,500 2,183,600
- --------------------------------------------------------------------------------
Safeway, Inc. 574,600 13,635,258
- --------------------------------------------------------------------------------
SUPERVALU, Inc. 156,100 5,432,280
- --------------------------------------------------------------------------------
Sysco Corp. 88,900 2,967,482
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,358,300 106,029,168
- --------------------------------------------------------------------------------
Walgreen Co. 685,100 31,740,683
- --------------------------------------------------------------------------------
Whole Foods Market, Inc. 3,800 491,188
-----------------
189,695,830
- --------------------------------------------------------------------------------
FOOD PRODUCTS--0.9%
Archer-Daniels-Midland Co. 1,733,600 39,023,336
- --------------------------------------------------------------------------------
Campbell Soup Co. 27,400 805,560
- --------------------------------------------------------------------------------
Chiquita Brands International, Inc. 92,700 2,336,040
- --------------------------------------------------------------------------------
Dean Foods Co. 1 35,100 1,296,594
- --------------------------------------------------------------------------------
General Mills, Inc. 530,100 24,448,212
- --------------------------------------------------------------------------------
Hershey Co. (The) 402,700 23,795,543
- --------------------------------------------------------------------------------
Kellogg Co. 33,600 1,523,088
- --------------------------------------------------------------------------------
Pilgrim's Pride Corp., Cl. B 134,200 4,549,380
- --------------------------------------------------------------------------------
Sara Lee Corp. 111,100 2,110,900
- --------------------------------------------------------------------------------
TreeHouse Foods, Inc. 1 7,020 211,302
-----------------
100,099,955
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.5%
Colgate-Palmolive Co. 188,700 9,906,750
- --------------------------------------------------------------------------------
Energizer Holdings, Inc. 1 112,800 7,320,720
- --------------------------------------------------------------------------------
Kimberly-Clark Corp. 360,300 22,453,896
- --------------------------------------------------------------------------------
Procter & Gamble Co. (The) 2,487,800 138,023,144
-----------------
177,704,510
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.9%
Avon Products, Inc. 168,500 $ 5,530,170
- --------------------------------------------------------------------------------
Gillette Co. 1,720,600 92,688,722
-----------------
98,218,892
- --------------------------------------------------------------------------------
TOBACCO--1.6%
Altria Group, Inc. 2,260,400 159,810,280
- --------------------------------------------------------------------------------
Loews Corp./Carolina Group 55,900 2,158,299
- --------------------------------------------------------------------------------
Reynolds American, Inc. 247,600 20,783,544
-----------------
182,752,123
- --------------------------------------------------------------------------------
ENERGY--13.2%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.5%
Baker Hughes, Inc. 180,000 10,575,000
- --------------------------------------------------------------------------------
Cal Dive International, Inc. 1 72,500 4,528,350
- --------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc. 102,000 6,024,120
- --------------------------------------------------------------------------------
GlobalSantaFe Corp. 89,500 4,195,760
- --------------------------------------------------------------------------------
Halliburton Co. 69,600 4,313,112
- --------------------------------------------------------------------------------
Helmerich & Payne, Inc. 98,800 5,870,696
- --------------------------------------------------------------------------------
Precision Drilling Corp. 1 109,500 5,135,306
- --------------------------------------------------------------------------------
Transocean, Inc. 1 364,500 21,520,080
- --------------------------------------------------------------------------------
Universal Compression Holdings, Inc. 1 8,800 362,560
-----------------
62,524,984
- --------------------------------------------------------------------------------
OIL & GAS--12.7%
Amerada Hess Corp. 168,800 21,454,480
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp. 551,600 50,123,892
- --------------------------------------------------------------------------------
Apache Corp. 539,400 38,631,828
- --------------------------------------------------------------------------------
Burlington Resources, Inc. 873,600 64,462,944
- --------------------------------------------------------------------------------
Cabot Oil & Gas Corp., Cl. A 21,100 911,309
- --------------------------------------------------------------------------------
Canadian Natural Resources Ltd. 426,240 20,995,116
- --------------------------------------------------------------------------------
Chesapeake Energy Corp. 211,200 6,676,032
- --------------------------------------------------------------------------------
Chevron Corp. 3,357,460 206,148,044
51 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
OIL & GAS Continued
ConocoPhillips 1,862,482 $ 122,812,063
- --------------------------------------------------------------------------------
CONSOL Energy, Inc. 47,000 3,275,900
- --------------------------------------------------------------------------------
Devon Energy Corp. 1,008,700 61,298,699
- --------------------------------------------------------------------------------
EOG Resources, Inc. 558,400 35,642,672
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 8,230,596 493,012,700
- --------------------------------------------------------------------------------
Forest Oil Corp. 1 43,100 1,937,345
- --------------------------------------------------------------------------------
Frontier Oil Corp. 74,300 2,723,095
- --------------------------------------------------------------------------------
Holly Corp. 32,900 1,853,586
- --------------------------------------------------------------------------------
Houston Exploration Co. 1 38,000 2,238,200
- --------------------------------------------------------------------------------
Kerr-McGee Corp. 350,109 30,820,095
- --------------------------------------------------------------------------------
Kinder Morgan, Inc. 168,100 16,048,507
- --------------------------------------------------------------------------------
Marathon Oil Corp. 743,100 47,788,761
- --------------------------------------------------------------------------------
Murphy Oil Corp. 218,500 11,941,025
- --------------------------------------------------------------------------------
Newfield Exploration Co. 1 121,800 5,751,396
- --------------------------------------------------------------------------------
Noble Energy, Inc. 51,500 4,539,210
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 640,800 53,205,624
- --------------------------------------------------------------------------------
Paramount Resources Ltd., Cl. A 1 1,170,900 28,467,355
- --------------------------------------------------------------------------------
Peabody Energy Corp. 21,500 1,540,905
- --------------------------------------------------------------------------------
Pogo Producing Co. 48,900 2,738,400
- --------------------------------------------------------------------------------
Premcor, Inc. 201,600 18,807,869
- --------------------------------------------------------------------------------
Remington Oil & Gas Corp. 1 11,400 439,242
- --------------------------------------------------------------------------------
St. Mary Land & Exploration Co. 21,200 730,764
- --------------------------------------------------------------------------------
Stone Energy Corp. 1 13,700 717,743
- --------------------------------------------------------------------------------
Sunoco, Inc. 155,200 11,283,040
- --------------------------------------------------------------------------------
Swift Energy Co. 1 50,300 2,310,279
- --------------------------------------------------------------------------------
Talisman Energy, Inc. 424,300 20,713,689
- --------------------------------------------------------------------------------
Tesoro Corp. 154,800 8,947,440
- --------------------------------------------------------------------------------
Trilogy Energy Trust 532,000 8,828,946
- --------------------------------------------------------------------------------
Valero Energy Corp. 355,000 37,807,500
- --------------------------------------------------------------------------------
Vintage Petroleum, Inc. 123,800 4,757,634
- --------------------------------------------------------------------------------
Williams Cos., Inc. (The) 1,115,700 25,036,308
-----------------
1,477,419,637
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--22.9%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--0.2%
Bank of New York Co., Inc. (The) 504,300 $ 15,416,451
- --------------------------------------------------------------------------------
Mellon Financial Corp. 110,600 3,588,970
- --------------------------------------------------------------------------------
Northern Trust Corp. 67,900 3,384,136
-----------------
22,389,557
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--8.0%
AmSouth Bancorp 194,100 5,108,712
- --------------------------------------------------------------------------------
Astoria Financial Corp. 171,250 4,783,013
- --------------------------------------------------------------------------------
Bank of America Corp. 5,408,312 232,719,665
- --------------------------------------------------------------------------------
BB&T Corp. 559,900 22,715,143
- --------------------------------------------------------------------------------
Comerica, Inc. 313,200 18,945,468
- --------------------------------------------------------------------------------
Compass Bancshares, Inc. 58,900 2,757,109
- --------------------------------------------------------------------------------
Downey Financial Corp. 30,900 1,958,442
- --------------------------------------------------------------------------------
Fifth Third Bancorp 259,400 10,741,754
- --------------------------------------------------------------------------------
Golden West Financial Corp. 256,300 15,631,737
- --------------------------------------------------------------------------------
Hibernia Corp., Cl. A 145,200 4,610,100
- --------------------------------------------------------------------------------
Huntington Bancshares, Inc. 49,400 1,185,106
- --------------------------------------------------------------------------------
Indymac Mortgage Holdings, Inc. 160,000 6,372,800
- --------------------------------------------------------------------------------
KeyCorp 1,088,200 36,041,184
- --------------------------------------------------------------------------------
M&T Bank Corp. 273,500 29,160,570
- --------------------------------------------------------------------------------
Marshall & Ilsley Corp. 270,000 11,817,900
- --------------------------------------------------------------------------------
National City Corp. 980,000 35,897,400
- --------------------------------------------------------------------------------
PNC Financial Services Group, Inc. 518,500 29,155,255
- --------------------------------------------------------------------------------
Regions Financial Corp. 514,525 16,835,258
- --------------------------------------------------------------------------------
Sterling Financial Corp. 1 8,700 335,559
- --------------------------------------------------------------------------------
SunTrust Banks, Inc. 644,800 45,316,544
- --------------------------------------------------------------------------------
SVB Financial Group 1 45,200 2,126,208
- --------------------------------------------------------------------------------
Toronto-Dominion Bank (The) 65,969 3,113,077
- --------------------------------------------------------------------------------
U.S. Bancorp 3,123,370 91,264,871
- --------------------------------------------------------------------------------
UnionBanCal Corp. 154,500 10,470,465
- --------------------------------------------------------------------------------
Wachovia Corp. 2,461,400 122,134,668
52 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Washington Mutual, Inc. 1,177,300 $ 48,952,134
- --------------------------------------------------------------------------------
Wells Fargo & Co. 1,965,600 117,189,072
- --------------------------------------------------------------------------------
Zions Bancorp 111,600 7,796,376
-----------------
935,135,590
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--8.5%
American Capital Strategies Ltd. 2 166,700 6,289,591
- --------------------------------------------------------------------------------
American Express Co. 947,000 52,312,280
- --------------------------------------------------------------------------------
AmeriCredit Corp. 1 275,600 6,873,464
- --------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 343,200 34,491,600
- --------------------------------------------------------------------------------
Capital One Financial Corp. 372,900 30,667,296
- --------------------------------------------------------------------------------
CIT Group, Inc. 192,300 8,707,344
- --------------------------------------------------------------------------------
Citigroup, Inc. 6,227,546 272,579,688
- --------------------------------------------------------------------------------
Franklin Resources, Inc. 375,800 30,229,352
- --------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 369,900 41,125,482
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 4,025,596 136,427,448
- --------------------------------------------------------------------------------
Legg Mason, Inc. 57,100 5,968,663
- --------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 541,900 57,257,154
- --------------------------------------------------------------------------------
MBNA Corp. 1,307,900 32,959,080
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,440,900 82,361,844
- --------------------------------------------------------------------------------
Moody's Corp. 280,400 13,770,444
- --------------------------------------------------------------------------------
Morgan Stanley 1,528,400 77,749,708
- --------------------------------------------------------------------------------
Principal Financial Group, Inc. (The) 854,300 39,126,940
- --------------------------------------------------------------------------------
Providian Financial Corp. 1 138,400 2,574,240
- --------------------------------------------------------------------------------
Schwab (Charles) Corp. 2,823,200 38,197,896
- --------------------------------------------------------------------------------
SLM Corp. 400,000 19,900,000
-----------------
989,569,514
- --------------------------------------------------------------------------------
INSURANCE--5.1%
ACE Ltd. 324,100 14,393,281
- --------------------------------------------------------------------------------
AFLAC, Inc. 225,900 9,763,398
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE Continued
Allstate Corp. 1,150,700 $ 64,680,847
- --------------------------------------------------------------------------------
American International Group, Inc. 2,455,705 145,377,736
- --------------------------------------------------------------------------------
AmerUs Group Co. 111,600 6,173,712
- --------------------------------------------------------------------------------
Aon Corp. 84,700 2,534,224
- --------------------------------------------------------------------------------
Assurant, Inc. 127,800 4,770,774
- --------------------------------------------------------------------------------
Berkley (W.R.) Corp. 61,600 2,186,184
- --------------------------------------------------------------------------------
Chubb Corp. 462,600 40,227,696
- --------------------------------------------------------------------------------
Cincinnati Financial Corp. 14,645 600,152
- --------------------------------------------------------------------------------
Fidelity National Financial, Inc. 224,184 8,770,078
- --------------------------------------------------------------------------------
First American Corp. (The) 177,000 7,364,970
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 563,000 41,127,150
- --------------------------------------------------------------------------------
HCC Insurance Holdings, Inc. 120,450 3,209,993
- -------------------------------------------------------------------------------
Jefferson-Pilot Corp. 28,900 1,437,197
- --------------------------------------------------------------------------------
LandAmerica Financial Group, Inc. 63,100 3,730,472
- --------------------------------------------------------------------------------
Lincoln National Corp. 49,200 2,439,828
- --------------------------------------------------------------------------------
Loews Corp. 449,700 39,434,193
- --------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 64,000 1,795,200
- --------------------------------------------------------------------------------
MBIA, Inc. 75,300 4,365,141
- --------------------------------------------------------------------------------
MetLife, Inc. 925,900 45,350,582
- --------------------------------------------------------------------------------
Old Republic International Corp. 86,500 2,177,205
- --------------------------------------------------------------------------------
Partnerre Holdings Ltd. 18,100 1,098,670
- --------------------------------------------------------------------------------
Progressive Corp. 306,900 29,588,229
- --------------------------------------------------------------------------------
Protective Life Corp. 30,100 1,235,003
- --------------------------------------------------------------------------------
Prudential Financial, Inc. 752,400 48,431,988
- --------------------------------------------------------------------------------
Reinsurance Group of America, Inc. 13,900 596,449
- --------------------------------------------------------------------------------
Safeco Corp. 171,100 8,921,154
- --------------------------------------------------------------------------------
St. Paul Travelers Cos., Inc. (The) 942,900 40,554,129
53 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE Continued
StanCorp Financial Group, Inc. 44,100 $ 3,565,485
- --------------------------------------------------------------------------------
Universal American Financial Corp. 1 34,700 796,365
-----------------
586,697,485
- --------------------------------------------------------------------------------
REAL ESTATE--0.0%
CB Richard Ellis Group, Inc., Cl. A 1 42,000 2,047,920
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.1%
Countrywide Financial Corp. 850,200 28,728,258
- --------------------------------------------------------------------------------
Fannie Mae 956,800 48,835,072
- --------------------------------------------------------------------------------
Freddie Mac 737,100 44,506,098
- --------------------------------------------------------------------------------
Fremont General Corp. 82,600 1,884,932
- --------------------------------------------------------------------------------
MGIC Investment Corp. 47,900 2,990,397
- --------------------------------------------------------------------------------
PMI Group, Inc. (The) 39,400 1,594,124
- --------------------------------------------------------------------------------
Radian Group, Inc. 51,000 2,610,180
-----------------
131,149,061
- --------------------------------------------------------------------------------
HEALTH CARE--13.2%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--1.4%
Amgen, Inc. 1 992,600 79,308,740
- --------------------------------------------------------------------------------
Applera Corp./Applied Biosystems Group 185,200 3,981,800
- --------------------------------------------------------------------------------
Genentech, Inc. 1 149,100 14,006,454
- --------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 135,000 5,805,000
- --------------------------------------------------------------------------------
Invitrogen Corp. 1 29,800 2,524,954
- --------------------------------------------------------------------------------
Wyeth 1,247,700 57,132,183
-----------------
162,759,131
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.5%
Bausch & Lomb, Inc. 29,000 2,197,910
- --------------------------------------------------------------------------------
Baxter International, Inc. 770,200 31,062,166
- --------------------------------------------------------------------------------
Becton, Dickinson & Co. 633,100 33,320,053
- --------------------------------------------------------------------------------
Boston Scientific Corp. 1 332,100 8,926,848
- --------------------------------------------------------------------------------
Edwards Lifesciences Corp. 1 45,900 2,019,600
- --------------------------------------------------------------------------------
Guidant Corp. 247,000 17,448,080
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Haemonetics Corp. 1 27,900 $ 1,239,876
- --------------------------------------------------------------------------------
Medtronic, Inc. 1,434,200 81,749,400
- --------------------------------------------------------------------------------
Mentor Corp. 30,200 1,588,520
- --------------------------------------------------------------------------------
Thermo Electron Corp. 1 36,100 1,007,190
-----------------
180,559,643
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.8%
Aetna, Inc. 388,000 30,911,960
- --------------------------------------------------------------------------------
American Healthways, Inc. 1 65,400 2,857,980
- --------------------------------------------------------------------------------
AmerisourceBergen Corp. 72,100 5,383,707
- --------------------------------------------------------------------------------
Beverly Enterprises, Inc. 1 55,000 690,250
- --------------------------------------------------------------------------------
Cardinal Health, Inc. 209,300 12,476,373
- --------------------------------------------------------------------------------
Caremark Rx, Inc. 1 443,800 20,738,774
- --------------------------------------------------------------------------------
CIGNA Corp. 363,600 41,930,352
- --------------------------------------------------------------------------------
Community Health Systems, Inc. 1 29,000 1,068,070
- --------------------------------------------------------------------------------
Express Scripts, Inc. 1 92,600 5,357,836
- --------------------------------------------------------------------------------
Genesis HealthCare Corp. 1 37,500 1,503,750
- --------------------------------------------------------------------------------
HCA, Inc. 807,200 39,794,960
- --------------------------------------------------------------------------------
Health Net, Inc. 1 71,600 3,301,476
- --------------------------------------------------------------------------------
Humana, Inc. 1 165,000 7,946,400
- --------------------------------------------------------------------------------
Kindred Healthcare, Inc. 1 77,900 2,383,740
- --------------------------------------------------------------------------------
LCA-Vision, Inc. 63,750 2,616,938
- --------------------------------------------------------------------------------
Lincare Holdings, Inc. 1 98,700 4,178,958
- --------------------------------------------------------------------------------
McKesson Corp. 740,000 34,535,800
- --------------------------------------------------------------------------------
Medco Health Solutions, Inc. 1 574,029 28,282,409
- --------------------------------------------------------------------------------
PacifiCare Health Systems, Inc. 1 83,100 6,264,078
- --------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. 1 33,800 2,505,594
- --------------------------------------------------------------------------------
Quest Diagnostics, Inc. 419,900 20,986,602
- --------------------------------------------------------------------------------
Sierra Health Services, Inc. 1 33,400 2,247,820
- --------------------------------------------------------------------------------
Sunrise Senior Living, Inc. 1 22,400 1,330,336
- --------------------------------------------------------------------------------
Triad Hospitals, Inc. 1 72,700 3,499,778
54 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
UnitedHealth Group, Inc. 2,020,784 $ 104,070,376
- --------------------------------------------------------------------------------
VCA Antech, Inc. 1 25,500 611,745
- --------------------------------------------------------------------------------
WellChoice, Inc. 1 61,400 4,365,540
- --------------------------------------------------------------------------------
WellPoint, Inc. 1 655,400 48,663,450
-----------------
440,505,052
- --------------------------------------------------------------------------------
PHARMACEUTICALS--6.5%
Abbott Laboratories 1,569,500 70,831,535
- --------------------------------------------------------------------------------
Allergan, Inc. 284,100 26,151,405
- --------------------------------------------------------------------------------
Barr Pharmaceuticals, Inc. 1 146,000 6,659,060
- --------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,792,900 43,872,263
- --------------------------------------------------------------------------------
Eli Lilly & Co. 464,500 25,556,790
- --------------------------------------------------------------------------------
Johnson & Johnson 3,852,944 244,238,120
- --------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A 74,700 2,540,547
- --------------------------------------------------------------------------------
Merck & Co., Inc. 4,050,700 114,351,261
- --------------------------------------------------------------------------------
Pfizer, Inc. 8,817,345 224,577,777
-----------------
758,778,758
- --------------------------------------------------------------------------------
INDUSTRIALS--9.6%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.6%
Boeing Co. 965,000 64,674,300
- --------------------------------------------------------------------------------
General Dynamics Corp. 233,800 26,791,142
- --------------------------------------------------------------------------------
Goodrich Corp. 117,900 5,402,178
- --------------------------------------------------------------------------------
Honeywell International, Inc. 380,700 14,573,196
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 696,100 43,325,264
- --------------------------------------------------------------------------------
Northrop Grumman Corp. 780,700 43,789,463
- --------------------------------------------------------------------------------
Precision Castparts Corp. 82,800 8,005,104
- --------------------------------------------------------------------------------
Raytheon Co. 636,300 24,955,686
- --------------------------------------------------------------------------------
Rockwell Collins, Inc. 110,300 5,308,739
- --------------------------------------------------------------------------------
United Technologies Corp. 1,265,200 63,260,000
-----------------
300,085,072
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.3%
FedEx Corp. 294,200 $ 23,959,648
- --------------------------------------------------------------------------------
United Parcel Service, Inc., Cl. B 109,300 7,748,277
-----------------
31,707,925
- --------------------------------------------------------------------------------
AIRLINES--0.0%
Alaska Air Group, Inc. 1 69,600 2,346,912
- --------------------------------------------------------------------------------
BUILDING PRODUCTS--0.3%
American Standard Cos., Inc. 214,600 9,785,760
- --------------------------------------------------------------------------------
Masco Corp. 533,400 16,364,712
- --------------------------------------------------------------------------------
USG Corp. 1,2 94,300 5,926,755
-----------------
32,077,227
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.4%
Apollo Group, Inc., Cl. A 1 65,100 5,120,766
- --------------------------------------------------------------------------------
Cendant Corp. 511,000 10,393,740
- --------------------------------------------------------------------------------
Corporate Executive Board Co. 11,300 912,701
- --------------------------------------------------------------------------------
Donnelley (R.R.) & Sons Co. 122,400 4,572,864
- --------------------------------------------------------------------------------
Equifax, Inc. 76,200 2,517,648
- --------------------------------------------------------------------------------
Labor Ready, Inc. 1 25,100 570,272
- --------------------------------------------------------------------------------
PHH Corp. 1 43,930 1,328,443
- --------------------------------------------------------------------------------
Pitney Bowes, Inc. 48,300 2,088,975
- --------------------------------------------------------------------------------
Republic Services, Inc. 142,400 5,159,152
- --------------------------------------------------------------------------------
Robert Half International, Inc. 34,000 1,145,120
- --------------------------------------------------------------------------------
Waste Management, Inc. 429,600 11,783,928
-----------------
45,593,609
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.0%
Washington Group International, Inc. 1 40,000 2,113,600
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.2%
Emerson Electric Co. 251,400 16,914,192
- --------------------------------------------------------------------------------
Rockwell Automation, Inc. 81,900 4,262,076
- --------------------------------------------------------------------------------
Thomas & Betts Corp. 1 27,200 966,688
-----------------
22,142,956
55 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--4.1%
3M Co. 1,251,500 $ 89,044,225
- --------------------------------------------------------------------------------
General Electric Co. 10,929,400 367,337,134
- --------------------------------------------------------------------------------
Textron, Inc. 273,000 19,464,900
-----------------
475,846,259
- --------------------------------------------------------------------------------
MACHINERY--1.0%
Caterpillar, Inc. 892,800 49,541,472
- --------------------------------------------------------------------------------
Cummins, Inc. 29,100 2,516,277
- --------------------------------------------------------------------------------
Deere & Co. 79,500 5,197,710
- --------------------------------------------------------------------------------
Flowserve Corp. 1 53,200 1,975,848
- --------------------------------------------------------------------------------
Harsco Corp. 24,100 1,413,465
- --------------------------------------------------------------------------------
Ingersoll-Rand Co. Cl.A 217,700 17,333,274
- --------------------------------------------------------------------------------
ITT Industries, Inc. 68,300 7,452,896
- --------------------------------------------------------------------------------
Joy Global, Inc. 73,700 3,522,860
- --------------------------------------------------------------------------------
Mueller Industries, Inc. 22,800 597,588
- --------------------------------------------------------------------------------
Oshkosh Truck Corp. 9,200 369,012
- --------------------------------------------------------------------------------
Paccar, Inc. 198,850 13,935,408
- --------------------------------------------------------------------------------
Pall Corp. 24,900 712,140
- --------------------------------------------------------------------------------
SPX Corp. 51,200 2,331,648
- --------------------------------------------------------------------------------
Terex Corp. 1 29,000 1,414,620
- --------------------------------------------------------------------------------
Toro Co. (The) 143,200 5,560,456
-----------------
113,874,674
- --------------------------------------------------------------------------------
ROAD & RAIL--0.7%
Burlington Northern Santa Fe Corp. 699,300 37,076,886
- --------------------------------------------------------------------------------
CNF Transportation, Inc. 100,600 5,077,282
- --------------------------------------------------------------------------------
CSX Corp. 341,500 15,002,095
- --------------------------------------------------------------------------------
Laidlaw International, Inc. 131,200 3,247,200
- --------------------------------------------------------------------------------
Norfolk Southern Corp. 590,800 21,038,388
- --------------------------------------------------------------------------------
Swift Transportation Co., Inc. 1 86,000 1,714,840
- --------------------------------------------------------------------------------
Yellow Roadway Corp. 1 41,290 1,934,437
-----------------
85,091,128
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.0%
GATX Corp. 67,900 2,751,987
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS Continued
WESCO International, Inc. 1 70,900 $ 2,460,230
-----------------
5,212,217
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--13.9%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--2.2%
ADTRAN, Inc. 54,800 1,414,936
- --------------------------------------------------------------------------------
Brocade Communications Systems, Inc. 1 687,200 2,741,928
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1 7,478,300 131,767,646
- --------------------------------------------------------------------------------
Corning, Inc. 1 979,200 19,544,832
- --------------------------------------------------------------------------------
Motorola, Inc. 3,136,900 68,635,372
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 772,175 30,663,069
-----------------
254,767,783
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.9%
Apple Computer, Inc. 1 1,535,000 72,037,550
- --------------------------------------------------------------------------------
Dell, Inc. 1 4,066,900 144,781,640
- --------------------------------------------------------------------------------
EMC Corp. 1 1,379,200 17,736,512
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 2,283,800 63,398,288
- --------------------------------------------------------------------------------
International Business Machines Corp. 1,609,000 129,717,580
- --------------------------------------------------------------------------------
NCR Corp. 1 196,500 6,724,230
- --------------------------------------------------------------------------------
Palm, Inc. 1 24,400 833,992
- --------------------------------------------------------------------------------
Storage Technology Corp. 1 164,400 6,074,580
- --------------------------------------------------------------------------------
Western Digital Corp. 1 545,000 7,548,250
-----------------
448,852,622
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.1%
Agilent Technologies, Inc. 1 202,900 6,525,264
- --------------------------------------------------------------------------------
Amphenol Corp., Cl. A 190,900 8,096,069
-----------------
14,621,333
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.6%
EarthLink, Inc. 1 367,400 3,585,824
- --------------------------------------------------------------------------------
Google, Inc., Cl. A 1 112,800 32,260,800
- --------------------------------------------------------------------------------
Internet Security Systems, Inc. 1 105,000 2,385,600
56 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES Continued
United Online, Inc. 267,900 $ 3,490,737
- --------------------------------------------------------------------------------
Websense, Inc. 1 58,300 2,908,587
- --------------------------------------------------------------------------------
Yahoo!, Inc. 1 616,500 20,554,110
-----------------
65,185,658
- --------------------------------------------------------------------------------
IT SERVICES--0.3%
Automatic Data Processing, Inc. 58,100 2,483,775
- --------------------------------------------------------------------------------
Ceridian Corp. 1 29,200 592,760
- --------------------------------------------------------------------------------
CSG Systems International, Inc. 1 10,400 212,056
- --------------------------------------------------------------------------------
Electronic Data Systems Corp. 550,400 12,328,960
- --------------------------------------------------------------------------------
First Data Corp. 394,500 16,391,475
- --------------------------------------------------------------------------------
Fiserv, Inc. 1 94,500 4,240,215
- --------------------------------------------------------------------------------
Global Payments, Inc. 10,700 703,846
- --------------------------------------------------------------------------------
Paychex, Inc. 88,300 3,013,679
-----------------
39,966,766
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.2%
Applied Materials, Inc. 1,170,000 21,422,700
- --------------------------------------------------------------------------------
ATMI, Inc. 1 15,200 468,616
- --------------------------------------------------------------------------------
Broadcom Corp., Cl. A 1 183,100 7,964,850
- --------------------------------------------------------------------------------
Cymer, Inc. 1 24,100 807,350
- --------------------------------------------------------------------------------
Freescale Semiconductor, Inc., Cl. B 1 130,666 3,146,437
- --------------------------------------------------------------------------------
Intel Corp. 9,037,600 232,447,072
- --------------------------------------------------------------------------------
Intersil Corp., Cl. A 79,300 1,665,300
- --------------------------------------------------------------------------------
KLA-Tencor Corp. 8,400 426,384
- --------------------------------------------------------------------------------
LSI Logic Corp. 1 250,300 2,412,892
- --------------------------------------------------------------------------------
MEMC Electronic Materials, Inc. 1 318,600 5,371,596
- --------------------------------------------------------------------------------
Micrel, Inc. 1 117,100 1,475,460
- --------------------------------------------------------------------------------
National Semiconductor Corp. 178,800 4,457,484
- --------------------------------------------------------------------------------
NVIDIA Corp. 1 13,300 408,044
- --------------------------------------------------------------------------------
Photronics, Inc. 1 47,200 980,344
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 2,856,400 93,347,152
-----------------
376,801,681
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SOFTWARE--3.6%
Activision, Inc. 1 116,100 $ 2,594,835
- --------------------------------------------------------------------------------
Autodesk, Inc. 62,500 2,700,000
- --------------------------------------------------------------------------------
Cadence Design Systems, Inc. 1 13,600 217,736
- --------------------------------------------------------------------------------
Compuware Corp. 1 261,600 2,370,096
- --------------------------------------------------------------------------------
Fair Isaac Corp. 27,800 1,136,186
- --------------------------------------------------------------------------------
Hyperion Solutions Corp. 1 11,100 481,407
- --------------------------------------------------------------------------------
McAfee, Inc. 1 184,100 5,642,665
- --------------------------------------------------------------------------------
Microsoft Corp. 11,231,700 307,748,580
- --------------------------------------------------------------------------------
Oracle Corp. 1 6,301,700 81,733,049
- --------------------------------------------------------------------------------
Parametric Technology Corp. 1 386,400 2,341,584
- --------------------------------------------------------------------------------
Symantec Corp. 1 109,818 2,303,982
- --------------------------------------------------------------------------------
Synopsys, Inc. 1 400,300 7,605,700
-----------------
416,875,820
- --------------------------------------------------------------------------------
MATERIALS--2.2%
- --------------------------------------------------------------------------------
CHEMICALS--1.6%
Agrium, Inc. 171,800 3,693,700
- --------------------------------------------------------------------------------
Air Products & Chemicals, Inc. 253,700 14,054,980
- --------------------------------------------------------------------------------
Ashland, Inc. 40,400 2,455,916
- --------------------------------------------------------------------------------
Dow Chemical Co. 972,700 42,020,640
- --------------------------------------------------------------------------------
E.I. DuPont de Nemours & Co. 1,283,600 50,792,052
- --------------------------------------------------------------------------------
Eastman Chemical Co. 93,600 4,489,992
- --------------------------------------------------------------------------------
Engelhard Corp. 63,300 1,800,885
- --------------------------------------------------------------------------------
FMC Corp. 1 84,800 4,830,208
- --------------------------------------------------------------------------------
Monsanto Co. 180,200 11,503,968
- --------------------------------------------------------------------------------
PPG Industries, Inc. 364,300 22,943,614
- --------------------------------------------------------------------------------
Praxair, Inc. 76,300 3,685,290
- --------------------------------------------------------------------------------
Rohm & Haas Co. 553,100 24,010,071
- --------------------------------------------------------------------------------
Valspar Corp. (The) 12,300 594,213
-----------------
186,875,529
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.1%
Eagle Materials, Inc. 16,900 1,903,616
- --------------------------------------------------------------------------------
Eagle Materials, Inc., Cl. B 58,396 6,298,593
57 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS Continued
Martin Marietta Materials, Inc. 58,500 $ 4,230,720
- --------------------------------------------------------------------------------
Vulcan Materials Co. 50,200 3,606,870
-----------------
16,039,799
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING--0.1%
Crown Holdings, Inc. 1 212,000 3,580,680
- --------------------------------------------------------------------------------
Owens-Illinois, Inc. 1 315,500 8,139,900
- --------------------------------------------------------------------------------
Pactiv Corp. 1 26,500 514,365
-----------------
12,234,945
- --------------------------------------------------------------------------------
METALS & MINING--0.3%
Alcoa, Inc. 35,600 953,724
- --------------------------------------------------------------------------------
Carpenter Technology Corp. 52,300 2,913,110
- --------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. B 17,000 716,890
- --------------------------------------------------------------------------------
Nucor Corp. 116,500 6,579,920
- --------------------------------------------------------------------------------
Phelps Dodge Corp. 199,000 21,398,470
- --------------------------------------------------------------------------------
Quanex Corp. 49,100 3,020,141
- --------------------------------------------------------------------------------
Reliance Steel & Aluminum Co. 33,400 1,603,200
-----------------
37,185,455
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.1%
Louisiana-Pacific Corp. 125,400 3,171,366
- --------------------------------------------------------------------------------
Potlatch Corp. 44,000 2,376,000
- --------------------------------------------------------------------------------
Weyerhaeuser Co. 24,900 1,618,998
-----------------
7,166,364
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.4%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.1%
Alltel Corp. 357,600 22,167,624
- --------------------------------------------------------------------------------
BellSouth Corp. 1,810,700 47,603,303
- --------------------------------------------------------------------------------
CenturyTel, Inc. 238,400 8,558,560
- --------------------------------------------------------------------------------
MCI, Inc. 3,100 79,484
- --------------------------------------------------------------------------------
SBC Communications, Inc. 2,237,500 53,879,000
- --------------------------------------------------------------------------------
Sprint Nextel Corp. 3,565,432 92,451,652
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Verizon Communications, Inc. 4,247,010 $ 138,919,697
-----------------
363,659,320
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.3%
AT&T Corp. 1,544,400 30,393,792
- --------------------------------------------------------------------------------
Telephone & Data Systems, Inc., Special Shares 8,000 308,000
-----------------
30,701,792
- --------------------------------------------------------------------------------
UTILITIES--3.6%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.4%
American Electric Power Co., Inc. 911,300 33,882,134
- --------------------------------------------------------------------------------
CenterPoint Energy, Inc. 185,900 2,641,639
- --------------------------------------------------------------------------------
Cinergy Corp. 61,700 2,717,268
- --------------------------------------------------------------------------------
CMS Energy Corp. 1 156,900 2,526,090
- --------------------------------------------------------------------------------
Constellation Energy Group, Inc. 249,400 14,652,250
- --------------------------------------------------------------------------------
Dominion Resources, Inc. 338,000 25,850,240
- --------------------------------------------------------------------------------
Duke Energy Corp. 1,066,900 30,929,431
- --------------------------------------------------------------------------------
Edison International, Inc. 922,500 41,540,175
- --------------------------------------------------------------------------------
Entergy Corp. 290,200 21,738,882
- --------------------------------------------------------------------------------
Exelon Corp. 954,600 51,443,394
- --------------------------------------------------------------------------------
FirstEnergy Corp. 367,900 18,773,937
- --------------------------------------------------------------------------------
FPL Group, Inc. 533,100 22,971,279
- --------------------------------------------------------------------------------
NRG Energy, Inc. 1 106,900 4,278,138
- --------------------------------------------------------------------------------
PG&E Corp. 835,800 31,359,216
- --------------------------------------------------------------------------------
PPL Corp. 366,600 11,716,536
- --------------------------------------------------------------------------------
Progress Energy, Inc. 53,400 2,327,706
- --------------------------------------------------------------------------------
Progress Energy, Inc., Contingent Value
Obligation 1,3 680,100 68,010
- --------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 458,100 29,570,355
- --------------------------------------------------------------------------------
Southern Co. 252,500 8,686,000
58 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES Continued
TXU Corp. 355,300 $ 34,471,206
-----------------
392,143,886
- --------------------------------------------------------------------------------
GAS UTILITIES--0.2%
Atmos Energy Corp. 145,800 4,314,222
- --------------------------------------------------------------------------------
ONEOK, Inc. 88,900 3,022,600
- --------------------------------------------------------------------------------
Sempra Energy 358,400 16,063,488
- --------------------------------------------------------------------------------
UGI Corp. 49,000 1,354,850
-----------------
24,755,160
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.0%
Energy East Corp. 47,500 1,245,450
-----------------
Total Common Stocks
(Cost $9,404,815,463) 11,554,886,677
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.0%
- --------------------------------------------------------------------------------
Wachovia Corp., Dividend Equalization
Preferred Shares 1,3
(Cost $0) 100,000 800
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Dime Bancorp, Inc.
Wts., Exp. 1/2/10 1 485,800 83,072
- --------------------------------------------------------------------------------
Lucent Technologies,
Inc. Wts., Exp.
12/10/07 1 68,554 56,900
-----------------
Total Rights, Warrants
and Certificates (Cost $0) 139,972
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.4%
- --------------------------------------------------------------------------------
Undivided interest of 3.98% in joint
repurchase agreement (Principal Amount/
Value $1,184,643,000,with a maturity value
of $1,184,759,490) with UBS Warburg LLC,
3.54%, dated 8/31/05, to be repurchased at
$47,133,634 on 9/1/05, collateralized by
Federal National Mortgage Assn., 6%, 4/1/35,
with a value of $1,209,814,832
(Cost $47,129,000) $ 47,129,000 47,129,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
Total Investments, at Value
(excluding Investments Purchased
with Cash Collateral from
Securities Loaned)
(Cost $9,451,944,463) $ 11,602,156,449
- --------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED--0.1%
- --------------------------------------------------------------------------------
FUNDING AGREEMENT/GIC--0.0%
Allstate Life Insurance
Co., 3.70%, 9/1/05 4 $1,000,000 1,000,000
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.1%
Undivided interest of 0.96% in joint
repurchase agreement (Principal Amount/Value
$1,000,000,000, with a maturity value of
$1,000,098,958) with Cantor Fitzgerald
Securities, 3.5625%, dated 8/31/05, to be
repurchased at $9,593,228 on 9/1/05,
collateralized by U.S. Agency Mortgages,
0.00%--9.572%, 3/8/06--11/1/44,
with a value of $1,019,815,443 4 9,592,279 9,592,279
- --------------------------------------------------------------------------------
MASTER FLOATING NOTES--0.0%
Bear Stearns, 3.75%,
9/1/05 4 500,000 500,000
-----------------
Total Investments Purchased
with Cash Collateral from
Securities Loaned
(Cost $11,092,279) 11,092,279
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $9,463,036,742) 99.7% 11,613,248,728
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 0.3 33,623,956
------------------------------
NET ASSETS 100.0% $ 11,646,872,684
==============================
59 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Partial or fully-loaned security. See Note 7 of Notes to Financial
Statements.
3. Illiquid security. The aggregate value of illiquid securities as of August
31, 2005 was $68,810, which represents 0.00% of the Fund's net assets. See Note
6 of Notes to Financial Statements.
4. 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 7 of Notes to Financial
Statements.
Affiliated company. Represents ownership of at least 5% of the voting securities
of the issuer, and is or was an affiliate, as defined in the Investment Company
Act of 1940, at or during the period ended August 31, 2005. There were no
affiliate securities held by the Fund as of August 31, 2005. Transactions during
the period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2004 ADDITIONS REDUCTIONS AUGUST 31, 2005
- --------------------------------------------------------------------------------
Frontier Oil Corp.* 1,510,700 61,300** 1,497,700 74,300
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN
- --------------------------------------------------------------------------------
Frontier Oil Corp.* $--* $176,030 $7,733,775
* No longer an affiliate as of August 31, 2005.
** Shares acquired as result of stock split.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF ASSETS AND LIABILITIES August 31, 2005
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $11,027,306)
(cost $9,463,036,742)--see accompanying statement of investments $ 11,613,248,728
- ---------------------------------------------------------------------------------------------------------
Cash 5,483,682
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 95,147,967
Interest and dividends 27,291,195
Other 230,416
-----------------
Total assets 11,741,401,988
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 11,092,279
- ---------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 221
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 52,488,317
Shares of capital stock redeemed 22,835,261
Distribution and service plan fees 4,730,760
Transfer and shareholder servicing agent fees 1,990,711
Shareholder communications 1,029,112
Directors' compensation 206,864
Other 155,779
-----------------
Total liabilities 94,529,304
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 11,646,872,684
=================
- ---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 3,248,879
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 10,197,945,756
- ---------------------------------------------------------------------------------------------------------
Accumulated net investment income 66,534,667
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (771,070,063)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 2,150,213,445
-----------------
NET ASSETS $ 11,646,872,684
=================
61 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING 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 $7,810,713,842 and
215,875,222 shares of capital stock outstanding) $36.18
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $38.39
- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $1,968,828,381 and 56,266,796 shares
of capital stock outstanding) $34.99
- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $1,206,335,113 and 34,484,027 shares
of capital stock outstanding) $34.98
- ---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $177,463,237 and 4,969,072 shares
of capital stock outstanding) $35.71
- ---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $483,532,111 and 13,292,791 shares of capital stock outstanding) $36.38
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $142,135) $ 270,968,578
- --------------------------------------------------------------------------------
Interest 2,561,927
- --------------------------------------------------------------------------------
Portfolio lending fees 470,980
--------------
Total investment income 274,001,485
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 54,594,891
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 18,999,287
Class B 22,913,693
Class C 12,466,560
Class N 841,653
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 15,183,327
Class B 5,192,591
Class C 2,408,106
Class N 499,310
Class Y 324,320
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 1,350,204
Class B 677,941
Class C 197,884
Class N 12,752
- --------------------------------------------------------------------------------
Directors' compensation 194,976
- --------------------------------------------------------------------------------
Custodian fees and expenses 113,397
- --------------------------------------------------------------------------------
Other 543,830
--------------
Total expenses 136,514,722
Less reduction to custodian expenses (28,334)
--------------
Net expenses 136,486,388
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 137,515,097
63 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ------------------------------------------------------------------------------------------
Net realized gain on:
Investments $ 552,568,927
Foreign currency transactions 3,169,832
---------------
Net realized gain 555,738,759
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 607,769,971
Translation of assets and liabilities denominated in foreign currencies (730,064)
---------------
Net change in unrealized appreciation 607,039,907
- ------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,300,293,763
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
64 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2005 2004
- --------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------
Net investment income $ 137,515,097 $ 59,524,857
- --------------------------------------------------------------------------------------------------------
Net realized gain 555,738,759 1,310,210,960
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 607,039,907 (72,947,699)
----------------------------------------
Net increase in net assets resulting from operations 1,300,293,763 1,296,788,118
- --------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (92,759,936) (47,938,253)
Class B (6,840,949) --
Class C (6,104,306) --
Class N (1,600,231) (486,743)
Class Y (9,431,972) (4,473,289)
- --------------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
stock transactions:
Class A (330,754,330) (415,275,359)
Class B (825,679,905) (688,965,854)
Class C (158,653,723) (71,809,797)
Class N 10,302,309 62,792,249
Class Y (138,236,214) 91,154,911
- --------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Total increase (decrease) (259,465,494) 221,785,983
- --------------------------------------------------------------------------------------------------------
Beginning of period 11,906,338,178 11,684,552,195
----------------------------------------
End of period (including accumulated net investment income
of $66,534,667 and $45,932,414, respectively) $ 11,646,872,684 $ 11,906,338,178
========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
65 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.78 $ 29.62 $ 27.90 $ 32.15 $ 45.41
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .47 1 .26 .22 .16 .14
Net realized and unrealized gain (loss) 3.34 3.10 1.69 (4.29) (11.18)
--------------------------------------------------------------------------------
Total from investment operations 3.81 3.36 1.91 (4.13) (11.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.41) (.20) (.19) (.07) (.12)
Distributions from net realized gain -- -- -- (.05) (2.10)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.41) (.20) (.19) (.12) (2.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 36.18 $ 32.78 $ 29.62 $ 27.90 $ 32.15
================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.68% 11.37% 6.93% (12.90)% (24.85)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 7,810,714 $ 7,384,256 $ 7,033,312 $ 6,443,983 $ 7,320,747
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 7,759,230 $ 7,521,103 $ 6,310,359 $ 7,203,226 $ 7,954,409
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.36% 0.75% 0.87% 0.52% 0.47%
Total expenses 0.92% 4 0.93% 4,5 0.97% 4 0.99% 4 0.86% 4
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 76% 94% 78% 76%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS B YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.67 $ 28.68 $ 27.04 $ 31.34 $ 44.50
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .20 1 (.21) (.13) (.20) (.13)
Net realized and unrealized gain (loss) 3.21 3.20 1.77 (4.05) (10.93)
----------------------------------------------------------------------------------
Total from investment operations 3.41 2.99 1.64 (4.25) (11.06)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- -- -- --
Distributions from net realized gain -- -- -- (.05) (2.10)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.09) -- -- (.05) (2.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 34.99 $ 31.67 $ 28.68 $ 27.04 $ 31.34
==================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.79% 10.43% 6.06% (13.58)% (25.39)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,968,829 $ 2,558,206 $ 2,941,765 $ 3,510,800 $ 5,404,510
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 2,295,269 $ 2,884,434 $ 2,964,666 $ 4,607,653 $ 6,630,335
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.59% (0.10)% 0.04% (0.25)% (0.29)%
Total expenses 1.72% 4 1.78% 4,5 1.81% 4 1.75% 4 1.61% 4
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 76% 94% 78% 76%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
67 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.71 $ 28.69 $ 27.03 $ 31.33 $ 44.50
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .21 1 (.03) -- (.11) (.11)
Net realized and unrealized gain (loss) 3.22 3.05 1.66 (4.14) (10.96)
--------------------------------------------------------------------------------
Total from investment operations 3.43 3.02 1.66 (4.25) (11.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) -- -- -- --
Distributions from net realized gain -- -- -- (.05) (2.10)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.16) -- -- (.05) (2.10)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 34.98 $ 31.71 $ 28.69 $ 27.03 $ 31.33
================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.83% 10.53% 6.14% (13.58)% (25.42)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,206,335 $ 1,241,930 $ 1,188,826 $ 1,198,517 $ 1,562,452
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,250,845 $ 1,278,659 $ 1,111,131 $ 1,432,566 $ 1,825,540
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.62% (0.01)% 0.09% (0.24)% (0.29)%
Total expenses 1.67% 4 1.70% 4,5 1.74% 4 1.75% 4 1.61% 4
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 76% 94% 78% 76%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
CLASS N YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.39 $ 29.33 $ 27.72 $ 32.09 $ 34.36
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 2 .15 .20 .12 .02
Net realized and unrealized gain (loss) 3.30 3.05 1.65 (4.31) (2.29)
----------------------------------------------------------------
Total from investment operations 3.65 3.20 1.85 (4.19) (2.27)
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.33) (.14) (.24) (.13) --
Distributions from net realized gain -- -- -- (.05) --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.33) (.14) (.24) (.18) --
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 35.71 $ 32.39 $ 29.33 $ 27.72 $ 32.09
================================================================
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 11.30% 10.93% 6.78% (13.15)% (6.61)%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 177,463 $ 150,955 $ 79,188 $ 43,464 $ 7,641
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 168,866 $ 122,478 $ 60,950 $ 28,141 $ 2,672
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.02% 0.38% 0.65% 0.28% 0.36%
Total expenses 1.26% 1.31% 1.23% 1.24% 1.16%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 N/A 5,6 1.18% N/A 5 N/A 5
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 76% 94% 78% 76%
1. For the period from March 1, 2001 (inception of offering) to August 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 of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
69 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.93 $ 29.75 $ 28.02 $ 32.28 $ 45.64
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .64 1 .34 .11 .19 .17
Net realized and unrealized gain (loss) 3.34 3.13 1.86 (4.28) (11.22)
---------------------------------------------------------------
Total from investment operations 3.98 3.47 1.97 (4.09) (11.05)
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.29) (.24) (.12) (.21)
Distributions from net realized gain -- -- -- (.05) (2.10)
---------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.53) (.29) (.24) (.17) (2.31)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 36.38 $ 32.93 $ 29.75 $ 28.02 $ 32.28
===============================================================
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 12.15% 11.69% 7.11% (12.74)% (24.76)%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 483,532 $ 570,991 $ 441,460 $ 225,298 $ 225,475
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 496,349 $ 558,130 $ 242,029 $ 227,835 $ 239,222
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.82% 1.07% 1.01% 0.74% 0.60%
Total expenses 0.53% 0.60% 0.87% 0.92% 0.79% 4
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 N/A 5 0.83% 0.78% 0.73%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 76% 94% 78% 76%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Added since August 31, 2001 to reflect expenses before reduction to custodian
expenses and voluntary waiver of transfer agent fees.
5. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Main Street Fund (the Fund) is a separate series of Oppenheimer Main
Street Funds, Inc., an open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is to seek a high total return. 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 exchanges are valued
based on the last sale price of the security traded on that exchange prior to
the time when the Fund's assets are valued. Securities traded on NASDAQ are
valued based on the closing price provided by NASDAQ prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the last sale price on the prior trading day, if it is within the spread of the
closing "bid" and "asked" prices, and if not, at the closing bid price.
Securities traded on foreign exchanges are valued based on the last sale price
on the principal exchange on which the security is traded, in the country that
is identified by the portfolio pricing service, prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the official closing price on the principal exchange. Corporate, government and
municipal debt instruments having a remaining maturity in excess of sixty days
and all mortgage-backed securities will be valued at the mean between the "bid"
and "asked" prices. Futures contracts traded on a commodities or futures
exchange will be valued at the final settlement price or official closing price
on the principal exchange as reported by such principal exchange at its trading
session ending at, or most recently prior to, the time when the Fund's assets
are valued. Securities may be valued primarily
71 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Directors. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Directors. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Directors.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such
72 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
class. Operating expenses directly attributable to a specific class are charged
against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
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
-------------------------------------------------------------------------
$ 66,708,960 $ -- $ 669,112,569 $ 2,048,256,170
1. As of August 31, 2005, the Fund had $669,112,569 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2005, details
of the capital loss carryforward were as follows:
EXPIRING
--------------------------
2011 $669,112,569
2. During the fiscal year ended August 31, 2005, the Fund utilized $557,605,412
of capital loss carryforward to offset capital gains realized in that fiscal
year. a
a. Includes $489,935 of capital loss carryforwards acquired in the
September 4, 2003 merger of Oppenheimer Trinity Core Fund.
3. During the fiscal year ended August 31, 2004, the Fund utilized $941,293,880
of capital loss carryforward to offset capital gains realized in that fiscal
year. b
b. Includes $485,908 of capital loss carryforwards acquired in the
September 4, 2003 merger of Oppenheimer Trinity Core Fund.
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 August 31, 2005. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED LOSS
PAID-IN CAPITAL INCOME ON INVESTMENTS
-------------------------------------------------------------------------
$ 489,585 $ 175,450 $ 314,135
73 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The tax character of distributions paid during the years ended August 31, 2005
and August 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
--------------------------------------------------------------
Distributions paid from:
Ordinary income $116,737,394 $ 52,898,285
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 August 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 9,564,994,238
Federal tax cost of other investments (39,358)
----------------
Total federal tax cost $ 9,564,954,880
================
Gross unrealized appreciation $ 2,207,793,783
Gross unrealized depreciation (159,537,613)
----------------
Net unrealized appreciation $ 2,048,256,170
================
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Board of Directors has adopted a deferred
compensation plan for independent directors that enables directors to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Director 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 Director. The Fund purchases shares of the funds selected for
deferral by the Director 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 directors' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
74 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK
The Fund has authorized 840 million shares of $.01 par value capital stock of
each class. Transactions in shares of capital stock were as follows:
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
CLASS A
Sold 42,130,880 $ 1,462,992,163 44,245,000 $ 1,438,726,778
Dividends and/or
distributions reinvested 2,447,641 85,153,420 1,388,214 44,020,257
Acquisition-note 8 -- -- 484,771 14,962,004
Redeemed (53,958,588) (1,878,899,913) (58,289,882) (1,912,984,398)
---------------------------------------------------------------------
Net decrease (9,380,067) $ (330,754,330) (12,171,897) $ (415,275,359)
=====================================================================
- ----------------------------------------------------------------------------------------------------
CLASS B
Sold 6,104,800 $ 205,311,660 9,896,057 $ 310,880,353
Dividends and/or
distributions reinvested 186,907 6,324,963 -- --
Acquisition-note 8 -- -- 345,711 10,354,684
Redeemed (30,807,076) (1,037,316,528) (32,038,724) (1,010,200,891)
---------------------------------------------------------------------
Net decrease (24,515,369) $ (825,679,905) (21,796,956) $ (688,965,854)
=====================================================================
75 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK Continued
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------
CLASS C
Sold 3,496,633 $ 117,639,447 5,098,506 $ 160,379,276
Dividends and/or
distributions reinvested 155,120 5,247,695 -- --
Acquisition-note 8 -- -- 367,578 11,042,894
Redeemed (8,335,048) (281,540,865) (7,733,394) (243,231,967)
------------------------------------------------------------
Net decrease (4,683,295) $ (158,653,723) (2,267,310) $ (71,809,797)
============================================================
- ------------------------------------------------------------------------------------------
CLASS N
Sold 1,948,358 $ 66,956,350 2,668,652 $ 86,070,838
Dividends and/or
distributions reinvested 45,108 1,553,077 15,059 473,180
Acquisition-note 8 -- -- 677,940 20,916,882
Redeemed (1,684,370) (58,207,118) (1,401,462) (44,668,651)
------------------------------------------------------------
Net increase 309,096 $ 10,302,309 1,960,189 $ 62,792,249
============================================================
- ------------------------------------------------------------------------------------------
CLASS Y
Sold 11,089,312 $ 389,600,005 15,199,324 $ 503,145,210
Dividends and/or
distributions reinvested 270,489 9,431,944 140,639 4,469,511
Acquisition-note 8 -- -- 5,635 171,061
Redeemed (15,404,677) (537,268,163) (12,846,991) (416,630,871)
------------------------------------------------------------
Net increase (decrease) (4,044,876) $ (138,236,214) 2,498,607 $ 91,154,911
============================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2005, were as
follows:
PURCHASES SALES
----------------------------------------------------------
Investment securities $ 9,303,864,885 $ 10,673,571,824
- --------------------------------------------------------------------------------
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 an
annual rate of 0.65% of the first $200 million of average annual net assets of
the Fund, 0.60% of the next $150 million, 0.55% of the next $150 million, and
0.45% of average annual net assets in excess of $500 million.
- --------------------------------------------------------------------------------
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
76 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
account fee. For the year ended August 31, 2005, the Fund paid $23,806,119 to
OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 0.25% per year under each plan. If either the
Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Directors and its independent directors
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 August 31, 2005
for Class B, Class C and Class N shares were $29,821,763, $30,006,504 and
$2,609,421, 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.
77 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
August 31, 2005 $ 2,610,498 $ 32,005 $ 4,850,040 $ 127,421 $ 128,293
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2005, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION AS OF
EXPIRATION AMOUNT AUGUST 31, UNREALIZED
CONTRACT DESCRIPTION DATE (000s) 2005 DEPRECIATION
- ------------------------------------------------------------------------------
CONTRACTS TO SELL
Canadian Dollar [CAD] 9/1/05 47CAD $ 39,358 $ 221
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of August 31, 2005, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
78 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
- --------------------------------------------------------------------------------
7. 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 continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower. As of August 31, 2005,
the Fund had on loan securities valued at $11,027,306. Collateral of $11,092,279
was received for the loans, all of which was received in cash and subsequently
invested in approved instruments.
- --------------------------------------------------------------------------------
8. ACQUISITIONS OF OPPENHEIMER TRINITY CORE FUND AND OPPENHEIMER SELECT MANAGERS
MERCURY ADVISORS S&P 500 INDEX FUND
OPPENHEIMER TRINITY CORE FUND. On September 4, 2003, the Fund acquired all of
the net assets of Oppenheimer Trinity Core Fund, pursuant to an Agreement and
Plan of Reorganization approved by the Oppenheimer Trinity Core Fund
shareholders on August 29, 2003. The Fund issued (at an exchange ratio of
0.253882 for Class A, 0.253734 for Class B, 0.254265 for Class C, 0.254948 for
Class N and 0.261826 for Class Y of the Fund to one share of Oppenheimer Trinity
Core Fund), 172,551; 87,563; 62,625; 25,461 and 5,604 shares of beneficial
interest for Class A, Class B, Class C, Class N and Class Y, respectively,
valued at $5,214,489, $2,561,203, $1,833,025, $761,793 and $170,083 in exchange
for the net assets, resulting in combined Class A net assets of $7,168,850,638,
Class B net assets of $2,939,047,258, Class C net assets of $1,205,256,245,
Class N net assets of $81,166,505 and Class Y net assets of $465,470,533 on
September 4, 2003. The net assets acquired included net unrealized appreciation
of $1,073,398 and unused capital loss carryforward of $2,604,388 potential
utilization subject to tax limitation. The exchange qualified as a tax-free
reorganization for federal income tax purposes.
- --------------------------------------------------------------------------------
OPPENHEIMER SELECT MANAGERS MERCURY ADVISORS S&P 500 INDEX FUND. On October 16,
2003, the Fund acquired all of the net assets of Oppenheimer Select Managers
Mercury Advisors S&P 500 Index Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Oppenheimer Select Managers Mercury Advisors S&P
500 Index Fund shareholders on October 10, 2003. The Fund issued (at an exchange
ratio of 0.254787 for Class A, 0.260413 for Class B, 0.260086 for Class C,
0.256107 for Class N and 0.258975 for Class Y of the Fund to one share of
Oppenheimer Select Managers Mercury Advisors S&P 500 Index Fund), 312,220;
258,148; 304,963; 652,479
79 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. ACQUISITIONS OF OPPENHEIMER TRINITY CORE FUND AND OPPENHEIMER SELECT MANAGERS
MERCURY ADVISORS S&P 500 INDEX FUND Continued
and 31 shares of beneficial interest for Class A, Class B, Class C, Class N and
Class Y, respectively, valued at $9,747,515, $7,793,481, $9,209,869, $20,155,089
and $978 in exchange for the net assets, resulting in combined Class A net
assets of $7,382,484,399, Class B net assets of $2,980,592,414, Class C net
assets of $1,240,922,954, Class N net assets of $107,133,453 and Class Y net
assets of $474,429,948 on October 16, 2003. The net assets acquired included net
unrealized appreciation of $497,974 and no unused capital loss carryforward. The
exchange qualified as a tax-free reorganization for federal income tax purposes.
- --------------------------------------------------------------------------------
9. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The 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.
80 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND
OPPENHEIMER MAIN STREET FUND (UNDERLYING FUND)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER MAIN STREET FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Main Street Fund, a series of Oppenheimer Main Street Funds, Inc.,
including the statement of investments, as of August 31, 2005, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our 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, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. 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 Main Street Fund as of August 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 17, 2005
81 | OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET 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 $12,250 in fiscal 2005 and $12,000 in fiscal 2004.
(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 $5,000 in fiscal 2005 and no such fees in fiscal 2004 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 services: seed money audit.
(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 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.
(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 $5,000 in fiscal 2005 and no such fees in
fiscal 2004 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 accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of August 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange Act of 1934 (a) is accumulated and communicated to
registrant's management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure, and
(b) is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities and Exchange
Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Principal Protected Trust
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: October 17, 2005