UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3864
OPPENHEIMER BALANCED FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: September 30
Date of reporting period: September 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Software 6.2%
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Media 5.9
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Oil & Gas 4.2
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Pharmaceuticals 3.5
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Diversified Financial Services 3.5
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Aerospace & Defense 3.4
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Tobacco 2.3
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Insurance 2.2
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Commercial Services & Supplies 2.1
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Computers & Peripherals 1.9
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Take-Two Interactive Software, Inc. 2.6%
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Altria Group, Inc. 2.3
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Microsoft Corp. 2.0
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Cendant Corp. 2.0
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Liberty Media Corp., Cl. A 1.9
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Liberty Global, Inc., Series A 1.7
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Liberty Global, Inc., Series C 1.6
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Honeywell International, Inc. 1.5
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Orbital Sciences Corp. 1.3
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International Business Machines Corp. 1.3
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2005, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
8 | OPPENHEIMER BALANCED FUND
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PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
PORTFOLIO ALLOCATION
Bonds and Notes 46.5%
Stocks 44.8
Cash Equivalents 8.7
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2005, and are based on total market value of investments.
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9 | OPPENHEIMER BALANCED 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 SEPTEMBER 30, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. During its fiscal year ended
September 30, 2005, the Oppenheimer Balanced Fund slightly underperformed its
primary benchmark, the S&P 500, however, produced higher returns than the 60%
S&P 500/ 40% Citigroup Broad Investment Grade blended benchmark.
The Fund's performance was particularly robust in its equity portfolio. In
the consumer discretionary area, holdings such as media conglomerate Liberty
Global, Inc., retailer Sears Holdings and homebuilders Toll Brothers and WCI
Communities, Inc. helped boost the Fund's relative performance. Winners in the
consumer staples area included beverage producer Constellation Brands Inc., Cl.
A and food and tobacco giant Altria Group, Inc., which benefited from easing
litigation concerns and a planned corporate restructuring designed to unlock
shareholder value.
In the financials area, investment firm, Lehman Brothers Holdings, Inc.,
gained value as investors rewarded efforts to diversify its revenue sources; the
insurance provider, Genworth Financial, Inc., Cl. A, saw its valuation expand
after its spin-off from General Electric; and real estate owner Host Marriott
Corp. benefited from an upswing in occupancy rates and room prices. Among health
care holdings, the Fund successfully avoided declines posted by large
pharmaceutical companies while capturing gains in medical services providers,
such as Pacificare Health Systems, which was subject to an acquisition offer.
The Fund's equity portfolio suffered relatively few disappointments during
the reporting period. The Fund's telecommunications services holdings produced
slightly lower returns than the benchmark, primarily due to its lack of
participation in gains achieved by the regional bell operating companies.
Although the Fund had less exposure to the high-flying energy and utilities
sectors than the benchmark, strong stock selections offset any resulting
weakness.
The Fund's fixed-income investments produced more modest returns. We
generally maintained the bond portfolio's average duration in a range that was
shorter than the benchmark, which hindered relative performance early in the
reporting period but later benefited returns. Conversely, the Fund's emphasis on
corporate bonds at the lower end of the investment-grade range helped early in
the reporting period, when investors' appetite for risk grew, but later
undermined performance when weakness in the automotive sector eroded investor
sentiment. Among mortgage-backed securities, the Fund's focus on seasoned,
higher-coupon mortgages that the markets had priced too high a
10 | OPPENHEIMER BALANCED FUND
premium for prepayment risk in our view, helped support returns over the
reporting period's first half, but detracted modestly during the second half.
As of the reporting period's end, the Fund assets were apportioned 44.8%
to equities, 46.5% to bonds and 8.7% to cash. In our view, the Fund remains well
positioned to capture the growth opportunities of stocks while managing risks
through diversification across both stocks and bonds.
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 September 30, 2005. In the case of Class A, Class B, and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. The Fund's performance reflects the deduction of the maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B, Class C and Class N shares, and reinvestments of all dividends and
capital gains distributions. Past performance cannot guarantee future results.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
The Fund's performance is also compared to the Lehman Brothers Aggregate Bond
Index, an unmanaged index of U.S. Government Treasury and agency issues,
investment grade corporate bond issues and fixed-rate mortgage-backed
securities. That index is widely regarded as a measure of the performance of the
domestic debt securities market. 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
either index.
11 | OPPENHEIMER BALANCED FUND
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund (Class A)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers
Balanced Fund Aggregate
(Class A) S&P 500 Index Bond Index
12/31/1995 9,425 10,000 10,000
03/31/1996 9,807 10,537 9,823
06/30/1996 10,091 11,009 9,879
09/30/1996 1 10,483 11,349 10,061
12/31/1996 11,049 12,295 10,363
03/31/1997 11,126 12,625 10,305
06/30/1997 12,133 14,827 10,684
09/30/1997 13,152 15,937 11,039
12/31/1997 13,012 16,395 11,364
03/31/1998 13,950 18,680 11,540
06/30/1998 13,985 19,300 11,810
09/30/1998 12,532 17,385 12,309
12/31/1998 13,929 21,084 12,351
03/31/1999 14,101 22,134 12,289
06/30/1999 15,155 23,691 12,181
09/30/1999 14,574 22,215 12,264
12/31/1999 15,406 25,518 12,249
03/31/2000 16,283 26,103 12,519
06/30/2000 16,398 25,409 12,737
09/30/2000 16,513 25,163 13,121
12/31/2000 16,418 23,196 13,673
03/31/2001 16,241 20,447 14,088
06/30/2001 17,213 21,643 14,168
09/30/2001 15,313 18,468 14,821
12/31/2001 16,695 20,441 14,828
03/31/2002 16,787 20,497 14,842
06/30/2002 15,549 17,753 15,390
09/30/2002 14,000 14,687 16,095
12/31/2002 14,924 15,925 16,348
03/31/2003 14,757 15,423 16,576
06/30/2003 16,536 17,796 16,991
09/30/2003 17,078 18,267 16,966
12/31/2003 18,493 20,490 17,019
03/31/2004 18,900 20,837 17,472
06/30/2004 18,705 21,195 17,045
09/30/2004 18,849 20,799 17,590
12/31/2004 20,280 22,718 17,758
03/31/2005 20,039 22,230 17,673
06/30/2005 20,559 22,535 18,204
09/30/2005 21,135 23,347 18,082
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year 5.68% 5-Year 3.82% 10-Year 8.01%
1. The Fund changed its fiscal year end from 12/31 to 9/30.
12 | OPPENHEIMER BALANCED FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund (Class B)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers
Balanced Fund Aggregate
(Class B) S&P 500 Index Bond Index
12/31/1995 10,000 10,000 10,000
03/31/1996 10,365 10,537 9,823
06/30/1996 10,641 11,009 9,879
09/30/1996 1 11,037 11,349 10,061
12/31/1996 11,606 12,295 10,363
03/31/1997 11,659 12,625 10,305
06/30/1997 12,683 14,827 10,684
09/30/1997 13,723 15,937 11,039
12/31/1997 13,543 16,395 11,364
03/31/1998 14,501 18,680 11,540
06/30/1998 14,497 19,300 11,810
09/30/1998 12,969 17,385 12,309
12/31/1998 14,382 21,084 12,351
03/31/1999 14,532 22,134 12,289
06/30/1999 15,584 23,691 12,181
09/30/1999 14,960 22,215 12,264
12/31/1999 15,782 25,518 12,249
03/31/2000 16,641 26,103 12,519
06/30/2000 16,726 25,409 12,737
09/30/2000 16,800 25,163 13,121
12/31/2000 16,686 23,196 13,673
03/31/2001 16,464 20,447 14,088
06/30/2001 17,414 21,643 14,168
09/30/2001 15,463 18,468 14,821
12/31/2001 16,831 20,441 14,828
03/31/2002 16,925 20,497 14,842
06/30/2002 15,676 17,753 15,390
09/30/2002 14,114 14,687 16,095
12/31/2002 15,046 15,925 16,348
03/31/2003 14,878 15,423 16,576
06/30/2003 16,671 17,796 16,991
09/30/2003 17,217 18,267 16,966
12/31/2003 18,644 20,490 17,019
03/31/2004 19,054 20,837 17,472
06/30/2004 18,858 21,195 17,045
09/30/2004 19,003 20,799 17,590
12/31/2004 20,446 22,718 17,758
03/31/2005 20,203 22,230 17,673
06/30/2005 20,727 22,535 18,204
09/30/2005 21,308 23,347 18,082
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year 6.17% 5-Year 3.80% 10-Year 8.09%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER INFORMATION.
13 | OPPENHEIMER BALANCED FUND
FUND PERFORMANCE DISCUSSION
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CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund (Class C)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers
Balanced Fund Aggregate
(Class C) S&P 500 Index Bond Index
12/31/1995 10,000 10,000 10,000
03/31/1996 10,386 10,537 9,823
06/30/1996 10,661 11,009 9,879
09/30/1996 1 11,055 11,349 10,061
12/31/1996 11,631 12,295 10,363
03/31/1997 11,683 12,625 10,305
06/30/1997 12,715 14,827 10,684
09/30/1997 13,755 15,937 11,039
12/31/1997 13,583 16,395 11,364
03/31/1998 14,532 18,680 11,540
06/30/1998 14,537 19,300 11,810
09/30/1998 13,008 17,385 12,309
12/31/1998 14,419 21,084 12,351
03/31/1999 14,568 22,134 12,289
06/30/1999 15,631 23,691 12,181
09/30/1999 14,995 22,215 12,264
12/31/1999 15,817 25,518 12,249
03/31/2000 16,687 26,103 12,519
06/30/2000 16,760 25,409 12,737
09/30/2000 16,846 25,163 13,121
12/31/2000 16,720 23,196 13,673
03/31/2001 16,511 20,447 14,088
06/30/2001 17,460 21,643 14,168
09/30/2001 15,498 18,468 14,821
12/31/2001 16,861 20,441 14,828
03/31/2002 16,929 20,497 14,842
06/30/2002 15,652 17,753 15,390
09/30/2002 14,052 14,687 16,095
12/31/2002 14,947 15,925 16,348
03/31/2003 14,754 15,423 16,576
06/30/2003 16,501 17,796 16,991
09/30/2003 16,999 18,267 16,966
12/31/2003 18,379 20,490 17,019
03/31/2004 18,735 20,837 17,472
06/30/2004 18,513 21,195 17,045
09/30/2004 18,605 20,799 17,590
12/31/2004 19,980 22,718 17,758
03/31/2005 19,692 22,230 17,673
06/30/2005 20,154 22,535 18,204
09/30/2005 20,685 23,347 18,082
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year 10.18% 5-Year 4.19% 10-Year 7.75%
1. The Fund changed its fiscal year end from 12/31 to 9/30.
14 | OPPENHEIMER BALANCED FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund (Class N)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Lehman Brothers
Balanced Fund Aggregate
(Class N) S&P 500 Index Bond Index
03/01/2001 10,000 10,000 10,000
03/31/2001 9,640 9,367 10,050
06/30/2001 10,197 9,915 10,107
09/30/2001 9,070 8,460 10,573
12/31/2001 9,876 9,364 10,578
03/31/2002 9,930 9,390 10,588
06/30/2002 9,190 8,132 10,979
09/30/2002 8,266 6,728 11,482
12/31/2002 8,793 7,295 11,663
03/31/2003 8,678 7,065 11,825
06/30/2003 9,719 8,153 12,121
09/30/2003 10,025 8,368 12,103
12/31/2003 10,843 9,387 12,141
03/31/2004 11,065 9,545 12,464
06/30/2004 10,936 9,710 12,159
09/30/2004 11,004 9,528 12,548
12/31/2004 11,829 10,407 12,668
03/31/2005 11,677 10,184 12,607
06/30/2005 11,961 10,323 12,986
09/30/2005 12,286 10,695 12,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year 10.66% 5-Year N/A Since Inception (3/1/01) 4.60%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER INFORMATION.
15 | OPPENHEIMER BALANCED FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 4/24/87. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 8/29/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since-inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 12/1/93. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER BALANCED 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 September 30, 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 BALANCED FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/05) (9/30/05) SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,054.70 $ 5.37
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.85 5.28
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,050.30 10.17
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.19 10.00
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,050.50 9.86
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.49 9.70
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,052.20 7.69
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.60 7.56
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 183/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended September 30, 2005 are as follows:
CLASS EXPENSE RATIOS
- -------------------------------
Class A 1.04%
- -------------------------------
Class B 1.97
- -------------------------------
Class C 1.91
- -------------------------------
Class N 1.49
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18 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS September 30, 2005
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VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--51.1%
- --------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--6.4%
- --------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.3%
WCI Communities, Inc. 1 97,400 $ 2,763,238
- --------------------------------------------------------------------------------------------------------------------
MEDIA--5.9%
Liberty Global, Inc., Series A 569,594 15,424,606
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Liberty Global, Inc., Series C 1 569,594 14,667,046
- --------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., Cl. A 1 2,207,100 17,767,155
- --------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B 188,800 6,232,288
---------------
54,091,095
- --------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--0.2%
Gap, Inc. (The) 118,800 2,070,684
- --------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.7%
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BEVERAGES--0.8%
Constellation Brands, Inc., Cl. A 1 288,600 7,503,600
- --------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--0.6%
Tyson Foods, Inc., Cl. A 328,900 5,936,645
- --------------------------------------------------------------------------------------------------------------------
TOBACCO--2.3%
Altria Group, Inc. 282,400 20,815,704
- --------------------------------------------------------------------------------------------------------------------
Energy--5.0%
- --------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.8%
Halliburton Co. 103,300 7,078,116
- --------------------------------------------------------------------------------------------------------------------
OIL & GAS--4.2%
BP plc, ADR 70,900 5,023,265
- --------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc. 23,800 2,288,608
- --------------------------------------------------------------------------------------------------------------------
LUKOIL, Sponsored ADR 168,300 9,696,395
- --------------------------------------------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 448,000 7,145,261
- --------------------------------------------------------------------------------------------------------------------
Talisman Energy, Inc. 200,400 9,805,378
- --------------------------------------------------------------------------------------------------------------------
TotalFinaElf SA, Sponsored ADR 37,500 5,093,250
---------------
39,052,157
- --------------------------------------------------------------------------------------------------------------------
FINANCIALS--9.4%
- --------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.9%
UBS AG 97,591 8,292,465
- --------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--1.6%
Bank of America Corp. 96,952 4,081,679
- --------------------------------------------------------------------------------------------------------------------
Wachovia Corp. 85,974 4,091,503
- --------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 118,900 6,963,973
---------------
15,137,155
19 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.5%
Alliance Capital Management Holding LP 73,700 $ 3,526,545
- --------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp. 92,900 7,387,408
- --------------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 132,700 6,040,504
- --------------------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co. 144,300 4,896,099
- --------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 69,400 8,083,712
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley 46,900 2,529,786
---------------
32,464,054
- --------------------------------------------------------------------------------------------------------------------
INSURANCE--2.2%
American International Group, Inc. 42,500 2,633,300
- --------------------------------------------------------------------------------------------------------------------
Assured Guaranty Ltd. 2 101,200 2,421,716
- --------------------------------------------------------------------------------------------------------------------
Everest Re Group Ltd. 49,600 4,855,840
- --------------------------------------------------------------------------------------------------------------------
Genworth Financial, Inc., Cl. A 325,700 10,500,568
---------------
20,411,424
- --------------------------------------------------------------------------------------------------------------------
REAL ESTATE--0.4%
Host Marriott Corp. 197,600 3,339,440
- --------------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.8%
Countrywide Financial Corp. 137,400 4,531,452
- --------------------------------------------------------------------------------------------------------------------
Freddie Mac 51,100 2,885,106
---------------
7,416,558
- --------------------------------------------------------------------------------------------------------------------
HEALTH CARE--6.3%
- --------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--1.4%
MedImmune, Inc. 1 168,600 5,673,390
- --------------------------------------------------------------------------------------------------------------------
Wyeth 150,200 6,949,754
---------------
12,623,144
- --------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.8%
Beckman Coulter, Inc. 85,200 4,599,096
- --------------------------------------------------------------------------------------------------------------------
Cooper Cos., Inc. (The) 35,900 2,750,299
---------------
7,349,395
- --------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.6%
Manor Care, Inc. 67,000 2,573,470
- --------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. 1 280,900 3,154,507
---------------
5,727,977
- --------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--3.5%
GlaxoSmithKline plc, ADR 118,500 6,076,680
20 | OPPENHEIMER BALANCED FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS Continued
Pfizer, Inc. 291,740 $ 7,284,748
- --------------------------------------------------------------------------------------------------------------------
Sanofi-Aventis SA, ADR 190,900 7,931,895
- --------------------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 3 245,800 5,174,090
- --------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. 1 168,300 6,161,463
---------------
32,628,876
- --------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--6.1%
- --------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.4%
Empresa Brasileira de Aeronautica SA, ADR 142,100 5,485,060
- --------------------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 361,700 13,563,750
- --------------------------------------------------------------------------------------------------------------------
Orbital Sciences Corp. 1 957,717 11,971,463
- --------------------------------------------------------------------------------------------------------------------
Raytheon Co. 2,200 83,644
---------------
31,103,917
- --------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--2.1%
Cendant Corp. 873,700 18,033,168
- --------------------------------------------------------------------------------------------------------------------
Corinthian Colleges, Inc. 1 79,300 1,052,311
---------------
19,085,479
- --------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.1%
GrafTech International Ltd. 1 230,900 1,253,787
- --------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.5%
Tyco International Ltd. 167,700 4,670,445
- --------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--10.7%
- --------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.5%
Cisco Systems, Inc. 1 262,700 4,710,211
- --------------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--1.9%
Hewlett-Packard Co. 204,479 5,970,787
- --------------------------------------------------------------------------------------------------------------------
Hutchinson Technology, Inc. 1 100 2,612
- --------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 147,100 11,800,362
---------------
17,773,761
- --------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.7%
Flextronics International Ltd. 1 485,300 6,236,105
- --------------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.1%
Net2Phone, Inc. 1 676,600 1,184,050
- --------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.3%
ATI Technologies, Inc. 1,2 321,100 4,476,134
- --------------------------------------------------------------------------------------------------------------------
Freescale Semiconductor, Inc., Cl. A 1 294,700 6,898,927
---------------
11,375,061
21 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
SOFTWARE--6.2%
Compuware Corp. 1 345,329 $ 3,280,626
- --------------------------------------------------------------------------------------------------------------------
Microsoft Corp. 717,600 18,463,848
- --------------------------------------------------------------------------------------------------------------------
Novell, Inc. 1 900,300 6,707,235
- --------------------------------------------------------------------------------------------------------------------
Synopsys, Inc. 1 274,900 5,195,610
- --------------------------------------------------------------------------------------------------------------------
Take-Two Interactive Software, Inc. 1 1,078,000 23,813,020
---------------
57,460,339
- --------------------------------------------------------------------------------------------------------------------
MATERIALS--1.1%
- --------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.4%
Praxair, Inc. 82,700 3,963,811
- --------------------------------------------------------------------------------------------------------------------
METALS & MINING--0.7%
Companhia Vale do Rio Doce, Sponsored ADR 162,900 6,338,439
- --------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--0.9%
- --------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.9%
IDT Corp., Cl. B 1 696,200 8,486,678
- --------------------------------------------------------------------------------------------------------------------
WorldCom, Inc./WorldCom Group 1,4 450,000 --
---------------
8,486,678
- --------------------------------------------------------------------------------------------------------------------
UTILITIES--1.5%
- --------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.5%
AES Corp. (The) 1 534,000 8,773,620
- --------------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc. 1 344,500 5,319,080
---------------
14,092,700
---------------
Total Common Stocks (Cost $338,291,466) 472,436,510
UNITS
- --------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc. Wts., Exp. 12/10/071 (Cost $0) 11,758 11,170
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--6.1%
- --------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 3.856%, 4/20/08 5 $ 550,000 550,400
- --------------------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates, Series 2005-A,
Cl. A2, 3.66%, 12/26/07 2,180,000 2,175,063
- --------------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.:
Series 2004-2, Cl. A3, 3.58%, 1/15/09 1,870,000 1,837,191
Series 2005-1, Cl. A2B, 3.73%, 7/16/07 890,000 889,040
- --------------------------------------------------------------------------------------------------------------------
Capital One Prime Auto Receivables Trust, Automobile Loan Asset-Backed
Securities, Series 2005-1, Cl. A2, 4.24%, 11/15/07 2,090,000 2,088,255
22 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- --------------------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 $ 335,381 $ 333,576
Series 2005-B, Cl. AF1, 4.02%, 3/26/35 468,991 466,549
Series 2005-C, Cl. AF1, 4.196%, 6/25/35 1,146,541 1,142,992
- --------------------------------------------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity
Mtg. Obligations:
Series 2003-5, Cl. 1A2, 2.451%, 11/25/18 100,455 100,219
Series 2004-1, Cl. 1A2, 2.427%, 6/25/19 492,516 491,088
- --------------------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through
Certificates:
Series 2002-A, Cl. A4, 4.24%, 9/15/08 201,835 202,003
Series 2005-A, Cl. A2, 3.72%, 12/15/07 1,530,000 1,523,867
- --------------------------------------------------------------------------------------------------------------------
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 1,161,920 1,157,308
- --------------------------------------------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.:
Series 2001-A6, Cl. A6, 5.65%, 6/16/08 1,760,000 1,775,560
Series 2003-C4, Cl. C4, 5%, 6/10/15 270,000 267,509
- --------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc., Collateralized Mtg. Obligations,
Series 2005-WF2, Cl. AF2, 4.922%, 8/25/35 5 2,415,000 2,416,509
- --------------------------------------------------------------------------------------------------------------------
Consumer Credit Reference Index Securities Program, Credit Card
Asset-Backed Certificates, Series 2002-B, Cl. FX, 10.421%, 3/22/07 4 500,000 523,296
- --------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Inc., Home Equity Asset-Backed
Certificates:
Series 2002-4, Cl. A1, 4.20%, 2/25/33 5 27,360 27,611
Series 2005-7, Cl. AF1B, 4.317%, 11/25/35 1,264,092 1,259,555
- --------------------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates:
Series 2002-A, Cl. A4, 4.49%, 10/6/08 402,983 403,502
Series 2004-B, Cl. A2, 2.48%, 2/8/07 445,903 445,503
Series 2004-C, Cl. A2, 2.62%, 6/8/07 1,474,075 1,469,116
Series 2005-A, Cl. A2, 3.17%, 9/8/07 1,909,240 1,903,520
- --------------------------------------------------------------------------------------------------------------------
Equity One ABS, Inc., Home Equity Mtg. Pass-Through Certificates,
Series 2004-3, Cl. AF2, 3.80%, 7/25/34 1,610,000 1,602,699
- --------------------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2004-A, Cl. A2, 2.13%, 10/15/06 692,399 691,457
Series 2005-A, Cl. A3, 3.48%, 11/17/08 1,370,000 1,354,997
Series 2005-B, Cl. A2, 3.77%, 9/15/07 1,369,663 1,367,872
- --------------------------------------------------------------------------------------------------------------------
GS Auto Loan Trust, Automobile Loan Asset-Backed Securities,
Series 2005-1, Cl. A2, 4.32%, 5/15/08 4,010,000 4,005,690
- --------------------------------------------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.,
Series 2003-3, Cl. A1, 1.50%, 1/15/08 209,714 209,474
- --------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations:
Series 2005-1, Cl. A2, 3.21%, 5/21/07 876,603 874,183
Series 2005-3, Cl. A2, 3.73%, 10/18/07 1,420,000 1,413,570
- --------------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Home Equity Obligations, Series 2005-2, Cl. 2A1B,
5.18%, 8/25/35 2,047,596 2,056,007
23 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- --------------------------------------------------------------------------------------------------------------------
MBNA Credit Card Master Note Trust, Credit Card Receivables,
Series 2003-C7, Cl. C7, 5.118%, 3/15/16 5 $ 2,540,000 $ 2,699,577
- --------------------------------------------------------------------------------------------------------------------
Nissan Auto Lease Trust, Automobile Lease Obligations, Series 2004-A,
Cl. A2, 2.55%, 1/15/07 618,910 617,616
- --------------------------------------------------------------------------------------------------------------------
Onyx Acceptance Owner Trust, Automobile Receivable Obligations:
Series 2002-B, Cl. A4, 4.71%, 3/15/09 874,304 874,952
Series 2005-B, Cl. A2, 4.03%, 4/15/08 1,170,000 1,167,205
- --------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through
Certificates:
Series 2004-5, Cl. A F2, 3.735%, 11/10/34 500,000 493,223
Series 2005-1, Cl. A F2, 3.914%, 5/25/35 390,000 384,494
Series 2005-2, Cl. A F2, 4.415%, 4/25/35 630,000 625,044
- --------------------------------------------------------------------------------------------------------------------
Residential Asset Mortgage Products, Inc., Home Equity Asset-Backed
Pass-Through Certificates, Series 2004-RS7, Cl. AI3, 4.45%, 7/25/28 1,130,000 1,123,928
- --------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations
Pass-Through Certificates, Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 2,910,757 2,916,468
- --------------------------------------------------------------------------------------------------------------------
Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed
Obligations, Series 2002-B, Cl. A4, 4.39%, 5/15/09 1,775,005 1,776,506
- --------------------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
Series 2004-2, Cl. A2, 2.41%, 2/15/07 474,817 474,156
Series 2004-3, Cl. A2, 2.79%, 6/15/07 817,160 815,133
- --------------------------------------------------------------------------------------------------------------------
Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities:
Series 2004-A, Cl. A2, 2.47%, 1/22/07 937,624 935,018
Series 2005-A, Cl. A2, 3.52%, 4/20/07 1,610,000 1,604,621
- --------------------------------------------------------------------------------------------------------------------
Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B,
Cl. A2, 2.40%, 5/21/07 495,129 493,837
- --------------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations,
Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 1,165,689 1,156,278
- --------------------------------------------------------------------------------------------------------------------
WFS Financial Owner Trust, Automobile Receivable Obligations,
Series 2002-2, Cl. A4, 4.50%, 2/20/10 431,952 432,649
- --------------------------------------------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile Loan Receivable Certificates,
Series 2004-1, Cl. A2A, 2.59%, 5/15/07 990,220 985,843
---------------
Total Asset-Backed Securities (Cost $56,799,958) 56,601,729
- --------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--28.0%
- --------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--22.8%
- --------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--22.6%
Federal Home Loan Mortgage Corp.:
6%, 9/1/24 1,096,376 1,122,834
6.50%, 4/1/18-4/1/34 2,319,317 2,394,121
7%, 5/1/29-11/1/32 3,297,323 3,446,780
- --------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Pass-Through Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 56,589 56,557
24 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 1669, Cl. G, 6.50%, 2/15/23 $ 93,821 $ 93,869
Series 2034, Cl. Z, 6.50%, 2/15/28 530,209 547,241
Series 2053, Cl. Z, 6.50%, 4/15/28 602,219 620,170
Series 2055, Cl. ZM, 6.50%, 5/15/28 764,406 785,563
Series 2075, Cl. D, 6.50%, 8/15/28 1,822,953 1,875,891
Series 2080, Cl. Z, 6.50%, 8/15/28 488,789 501,074
Series 2387, Cl. PD, 6%, 4/15/30 688,648 694,094
Series 2456, Cl. BD, 6%, 3/15/30 342,466 343,769
Series 2498, Cl. PC, 5.50%, 10/15/14 38,038 38,076
Series 2500, Cl. FD, 4.268%, 3/15/32 5 264,248 266,359
Series 2526, Cl. FE, 4.168%, 6/15/29 5 338,949 340,745
Series 2551, Cl. FD, 4.168%, 1/15/33 5 264,568 266,634
Series 2583, Cl. KA, 5.50%, 3/15/22 1,664,936 1,671,320
- --------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed
Security:
Series 176, Cl. IO, 1.348%, 6/1/26 6 475,750 94,645
Series 183, Cl. IO, (0.93)%, 4/1/27 6 747,993 147,557
Series 184, Cl. IO, 4.60%, 12/1/26 6 810,653 150,535
Series 192, Cl. IO, 6.677%, 2/1/28 6 224,225 40,778
Series 200, Cl. IO, 5.407%, 1/1/29 6 267,435 50,620
Series 2130, Cl. SC, 0.191%, 3/15/29 6 595,528 47,700
Series 2796, Cl. SD, 7.381%, 7/15/26 6 896,222 73,418
Series 2920, Cl. S, 10.714%, 1/15/35 6 5,362,034 300,967
Series 3000, Cl. SE, 31.046%, 7/15/25 6 4,856,862 234,781
- --------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security, Series 176, Cl. PO, 6.729%, 6/1/26 7 192,892 164,833
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 10/1/20 8 10,642,000 10,422,509
5%, 6/1/18-7/1/18 4,867,627 4,859,689
5%, 10/1/35-11/1/35 8 26,745,000 26,177,548
5.50%, 3/1/33-1/1/34 11,777,057 11,786,195
5.50%, 10/1/20-11/1/35 8 31,140,000 31,171,755
6%, 4/1/16-11/1/32 15,868,416 16,311,413
6%, 10/1/20-10/1/35 8 33,737,000 34,469,349
6.50%, 12/1/27-11/1/31 3,514,260 3,632,496
6.50%, 10/1/34-11/1/35 8 27,080,382 27,878,438
7%, 11/1/17 1,811,086 1,893,845
7.50%, 8/1/29 707,508 750,199
8.50%, 7/1/32 53,863 58,585
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, Commercial Mtg.
Obligations, Trust 2002-T1, Cl. A2, 7%, 11/25/31 1,737,114 1,810,157
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 1,416,151 1,461,676
Trust 1998-63, Cl. PG, 6%, 3/25/27 116,456 116,392
Trust 2001-50, Cl. NE, 6%, 8/25/30 356,757 358,883
25 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Continued
Trust 2001-51, Cl. OD, 6.50%, 10/25/31 $ 1,933,308 $ 1,997,364
Trust 2001-70, Cl. LR, 6%, 9/25/30 412,134 416,474
Trust 2001-72, Cl. NH, 6%, 4/25/30 275,519 277,043
Trust 2001-74, Cl. PD, 6%, 5/25/30 111,315 111,815
Trust 2002-77, Cl. WF, 4.189%, 12/18/32 5 414,443 417,166
Trust 2002-94, Cl. MA, 4.50%, 8/25/09 104,733 104,574
Trust 2003-10, Cl. HP, 5%, 2/25/18 2,480,000 2,472,509
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 630,000 637,724
Trust 2003-28, Cl. KG, 5.50%, 4/25/23 1,045,000 1,073,703
Trust 2004-101, Cl. BG, 5%, 1/25/20 1,633,000 1,632,297
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security:
Trust 2002-38, Cl. SO, 3.181%, 4/25/32 6 972,649 67,661
Trust 2002-47, Cl. NS, 1.931%, 4/25/32 6 1,009,917 96,438
Trust 2002-51, Cl. S, 2.125%, 8/25/32 6 927,263 91,446
Trust 2002-77, Cl. IS, 3.876%, 12/18/32 6 1,657,106 164,330
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 214, Cl. 2, 7.023%, 3/1/23 6 1,457,269 285,723
Trust 222, Cl. 2, 3.82%, 6/1/23 6 1,628,310 321,567
Trust 240, Cl. 2, 6.83%, 9/1/23 6 2,484,414 475,806
Trust 252, Cl. 2, 1.409%, 11/1/23 6 1,216,040 235,781
Trust 254, Cl. 2, 5.103%, 1/1/24 6 620,366 122,711
Trust 273, Cl. 2, 5.892%, 7/1/26 6 349,686 67,342
Trust 319, Cl. 2, 1.406%, 2/1/32 6 502,715 105,023
Trust 321, Cl. 2, (3.70)%, 3/1/32 6 5,159,207 1,088,147
Trust 329, Cl. 2, 4.906%, 1/1/33 6 1,235,207 263,308
Trust 333, Cl. 2, 5.73%, 3/1/33 6 5,730,968 1,238,574
Trust 334, Cl. 17, (5.478)%, 2/1/33 6 845,987 166,819
Trust 346, Cl. 2, 8.63%, 12/1/33 6 3,023,049 645,744
Trust 350, Cl. 2, 6.05%, 2/1/34 6 5,328,022 1,135,655
Trust 2001-65, Cl. S, 18.657%, 11/25/31 6 2,236,445 205,816
Trust 2001-81, Cl. S, 4.542%, 1/25/32 6 519,498 48,376
Trust 2002-9, Cl. MS, 3.043%, 3/25/32 6 700,539 68,012
Trust 2002-52, Cl. SD, (0.566)%, 9/25/32 6 1,145,295 111,308
Trust 2002-77, Cl. SH, 9.172%, 12/18/32 6 672,238 67,234
Trust 2002-96, Cl. SK, 18.902%, 4/25/32 6 5,756,563 528,418
Trust 2003-4, Cl. S, 17.135%, 2/25/33 6 1,224,278 127,533
Trust 2004-54, Cl. DS, 3.602%, 11/25/30 6 1,026,050 70,706
Trust 2005-6, Cl. SE, 11.131%, 2/25/35 6 3,687,741 219,620
Trust 2005-19, Cl. SA, 9.55%, 3/25/35 6 14,571,059 857,348
Trust 2005-40, Cl. SA, 11.533%, 5/25/35 6 3,259,188 192,938
Trust 2005-71, Cl. SA, 22.845%, 8/25/25 6 3,112,132 177,220
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M, 8.244%, 9/25/23 7 549,646 470,690
---------------
208,388,023
26 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.2%
Government National Mortgage Assn.:
4.375%, 3/20/26 5 $ 38,264 $ 38,772
7%, 4/15/26 249,097 262,765
7.50%, 5/15/27 1,238,676 1,317,853
- --------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 4.769%, 1/16/27 6 1,203,083 93,605
Series 2002-15, Cl. SM, 0.751%, 2/16/32 6 1,128,432 84,627
Series 2002-76, Cl. SY, 5.958%, 12/16/26 6 2,313,179 191,178
Series 2004-11, Cl. SM, 0.305%, 1/17/30 6 878,085 64,497
---------------
2,053,297
- --------------------------------------------------------------------------------------------------------------------
NON-AGENCY--5.2%
- --------------------------------------------------------------------------------------------------------------------
COMMERCIAL--4.7%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 2004-6, Cl. A3, 4.512%, 12/10/42 1,480,000 1,447,596
Series 2005-2, Cl. A4, 4.783%, 7/10/43 1,910,000 1,894,253
Series 2005-3, Cl. A2, 4.501%, 7/10/43 1,580,000 1,554,747
- --------------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., Collateralized Mtg. Obligations
Pass-Through Certificates, Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 1,631,841 1,644,078
- --------------------------------------------------------------------------------------------------------------------
Banc of America Mortgage Securities, Inc., Collateralized Mtg. Obligations
Pass-Through Certificates:
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 1,288,082 1,312,637
Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 355,086 355,084
Series 2005-E, Cl. 2A2, 4.989%, 6/25/35 5 414,048 413,297
- --------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg.
Obligations, Series 2005-PWR7, Cl. A2, 4.945%, 2/11/41 750,000 749,866
- --------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations:
Series 2004-J9, Cl. 1A1, 4.01%, 10/25/34 5 688,769 689,358
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 2,091,212 2,135,411
- --------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. D, 7.67%, 4/29/39 5,9 1,170,000 1,172,925
- --------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 925,715 961,010
- --------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 960,000 949,547
Series 2005-CA, Cl. A3, 4.578%, 6/10/48 650,000 638,690
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 940,000 941,870
- --------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 1997-C1, Cl. A3, 6.869%, 7/15/29 623,553 642,808
Series 2004-C3, Cl. A4, 4.547%, 12/10/41 940,000 920,942
- --------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates, Series 2005-G G3, Cl. A2, 4.305%, 8/10/42 1,330,000 1,304,597
27 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 2004-C1, Cl. A1, 3.659%, 10/10/28 $ 994,884 $ 969,455
Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 620,000 616,325
- --------------------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 2004-12,
Cl. 3A1, 4.494%, 12/25/34 5 486,273 485,009
- --------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 380,000 375,494
- --------------------------------------------------------------------------------------------------------------------
LB-UBS Securities Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates, Series 2005-C5, Cl. A2, 4.885%, 9/15/40 1,120,000 1,122,258
- --------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-6, Cl. 10A1, 6%, 7/25/34 2,087,534 2,112,539
- --------------------------------------------------------------------------------------------------------------------
Mastr Asset Securitization Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-9, Cl. A3, 4.70%, 8/25/34 5 3,541,867 3,530,498
- --------------------------------------------------------------------------------------------------------------------
Mastr Seasoned Securities Trust, Collateralized Mtg. Obligations,
Series 2004-2, Cl. A1, 6.50%, 8/25/32 3,085,015 3,125,507
- --------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 2 1,130,000 1,180,705
- --------------------------------------------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 1,362,000 1,510,317
- --------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mtg. Asset-Backed Pass-Through
Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33 1,119,764 1,124,803
- --------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1996-C1, Cl. F, 8.301%, 1/20/28 4,5 250,000 205,000
- --------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Obligations:
Series 2005-C17, Cl. A2, 4.782%, 3/15/42 2,190,000 2,183,995
Series 2005-C20, Cl. A5, 5.087%, 7/15/42 1,120,000 1,123,976
- --------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series 2005-AR5, Cl. A1, 4.684%, 5/25/35 5 1,607,509 1,608,345
- --------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities Trust, Collateralized Mtg. Obligations:
Series 2004-DD, Cl. 2 A1, 4.53%, 1/25/35 5 1,704,981 1,701,845
Series 2004-N, Cl. A10, 3.803%, 8/25/34 464,377 464,786
Series 2004-W, Cl. A2, 4.594%, 11/25/34 5 198,363 197,903
---------------
43,367,476
- --------------------------------------------------------------------------------------------------------------------
OTHER--0.2%
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 1,360,000 1,356,682
- --------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.3%
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 8 3,135,035 3,184,020
---------------
Total Mortgage-Backed Obligations (Cost $260,283,492) 258,349,498
28 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--5.4%
- --------------------------------------------------------------------------------------------------------------------
Fannie Mae Unsec. Nts., 3.69%, 10/5/07 10 $ 1,245,000 $ 1,140,481
- --------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Unsec. Bonds:
3.125%, 11/15/06 2,600,000 2,564,458
3.50%, 11/15/07 1,020,000 1,001,705
- --------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
3.625%, 9/15/06 3,495,000 3,472,087
4.125%, 7/12/10 2 1,406,000 1,384,469
6.625%, 9/15/09 2 235,000 253,034
- --------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
4%, 2/28/07 2,310,000 2,297,568
4.25%, 7/15/07-8/15/10 2 2,420,000 2,412,457
6%, 5/15/11 3,900,000 4,177,321
6.625%, 9/15/09 135,000 145,200
7.25%, 1/15/10 11 1,500,000 1,658,450
7.25%, 5/15/30 2 1,215,000 1,608,186
- --------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
4.65%, 6/15/35 2 1,560,000 1,491,221
5.375%, 11/13/08 375,000 385,443
Series A, 6.79%, 5/23/12 11,936,000 13,415,694
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.375%, 2/15/31 1,064,000 1,192,346
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
3.625%, 6/15/10 2 792,000 772,201
3.75%, 3/31/07 2 3,980,000 3,955,750
3.875%, 7/31/07-9/15/10 2 2,914,000 2,876,930
4%, 8/31/07 2 110,000 109,661
4.125%, 5/15/15 2 646,000 635,074
4.25%, 8/15/15 1,270,000 1,262,460
5%, 2/15/11-8/15/11 2 1,340,000 1,391,615
---------------
Total U.S. Government Obligations (Cost $50,112,907) 49,603,811
- --------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.2%
- --------------------------------------------------------------------------------------------------------------------
United Mexican States Nts., 7.50%, 1/14/12 (Cost $1,786,191) 1,620,000 1,821,690
- --------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--13.4%
- --------------------------------------------------------------------------------------------------------------------
ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93 500,000 598,658
- --------------------------------------------------------------------------------------------------------------------
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 1,675,000 1,694,552
- --------------------------------------------------------------------------------------------------------------------
Albertson's, Inc., 8% Sr. Unsec. Debs., 5/1/31 1,080,000 985,969
- --------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 840,000 879,900
- --------------------------------------------------------------------------------------------------------------------
Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08 9 365,000 360,657
- --------------------------------------------------------------------------------------------------------------------
AOL Time Warner, Inc., 7.70% Debs., 5/1/32 1,010,000 1,199,472
- --------------------------------------------------------------------------------------------------------------------
Archer Daniels Midland Co., 5.375% Nts., 9/15/35 940,000 914,099
- --------------------------------------------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 8.125% Sr. Unsec. Nts., 5/1/12 1,210,000 1,420,787
- --------------------------------------------------------------------------------------------------------------------
Bank of America Corp., 4.875% Sr. Unsec. Nts., 1/15/13 23,000 22,954
29 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- --------------------------------------------------------------------------------------------------------------------
Bankers Trust Corp., 7.375% Unsec. Sub. Nts., 5/1/08 $ 140,000 $ 148,898
- --------------------------------------------------------------------------------------------------------------------
Barclays Bank plc, 6.278% Perpetual Bond 12 1,460,000 1,438,480
- --------------------------------------------------------------------------------------------------------------------
Beazer Homes USA, Inc., 6.875% Sr. Nts., 7/15/15 9 895,000 872,625
- --------------------------------------------------------------------------------------------------------------------
British Telecommunications plc, 8.875% Bonds, 12/15/30 795,000 1,081,590
- --------------------------------------------------------------------------------------------------------------------
Canadian National Railway Co., 4.25% Nts., 8/1/09 238,000 234,533
- --------------------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10 2 975,000 1,059,667
- --------------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 2 1,660,000 1,788,653
- --------------------------------------------------------------------------------------------------------------------
CIGNA Corp.:
7% Sr. Unsec. Nts., 1/15/11 610,000 666,154
7.40% Unsec. Nts., 5/15/07 1,230,000 1,279,709
- --------------------------------------------------------------------------------------------------------------------
CIT Group, Inc.:
4.75% Sr. Nts., 8/15/08 265,000 265,249
7.75% Sr. Unsec. Unsub. Nts., 4/2/12 680,000 780,516
- --------------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 6.625% Unsec. Sub. Nts., 6/15/32 705,000 797,500
- --------------------------------------------------------------------------------------------------------------------
Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93 440,000 576,799
- --------------------------------------------------------------------------------------------------------------------
ConAgra Foods, Inc., 6% Nts., 9/15/06 925,000 936,805
- --------------------------------------------------------------------------------------------------------------------
Constellation Energy Group, Inc., 7% Unsec. Nts., 4/1/12 2 1,455,000 1,601,623
- --------------------------------------------------------------------------------------------------------------------
Countrywide Financial Corp., 4.50% Nts., Series A, 6/15/10 925,000 906,653
- --------------------------------------------------------------------------------------------------------------------
Cox Communications, Inc., 4.625% Unsec. Nts., 1/15/10 1,865,000 1,825,251
- --------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, Inc., (USA), 5.50% Nts., 8/15/13 1,685,000 1,738,955
- --------------------------------------------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts., 10/15/08 860,000 895,434
- --------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 6.125% Nts., 1/15/14 2 780,000 782,161
- --------------------------------------------------------------------------------------------------------------------
DaimlerChrysler NA Holdings Corp.:
7.20% Unsec. Nts., 9/1/09 880,000 939,616
8% Nts., 6/15/10 682,000 755,923
- --------------------------------------------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 1,175,000 1,362,226
- --------------------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10 1,105,000 1,254,007
- --------------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 1,280,000 1,444,303
- --------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 830,000 840,223
- --------------------------------------------------------------------------------------------------------------------
EOP Operating LP:
6.763% Sr. Unsec. Nts., 6/15/07 295,000 304,022
8.10% Unsec. Nts., 8/1/10 1,210,000 1,359,192
8.375% Nts., 3/15/06 560,000 569,764
- --------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 1,165,000 1,220,526
- --------------------------------------------------------------------------------------------------------------------
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 1,875,000 1,822,824
- --------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A, 11/15/06 730,000 736,369
7.375% Sr. Unsub. Nts., Series C, 11/15/31 755,000 888,303
30 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- --------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
5.80% Sr. Unsec. Nts., 1/12/09 $ 1,540,000 $ 1,437,986
6.25% Unsec. Nts., 12/8/05 628,000 628,778
7.375% Nts., 10/28/09 375,000 362,541
- --------------------------------------------------------------------------------------------------------------------
France Telecom SA:
7.75% Sr. Unsec. Nts., 3/1/11 5 855,000 971,913
8.50% Sr. Unsec. Nts., 3/1/31 5 275,000 369,671
- --------------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts., 4/15/08 585,000 571,745
- --------------------------------------------------------------------------------------------------------------------
Gap, Inc. (The):
6.90% Nts., 9/15/07 1,360,000 1,403,320
9.55% Unsub. Nts., 12/15/08 5 199,000 224,086
- --------------------------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts., 11/30/07 1,400,000 1,376,217
- --------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.125% Unsec. Unsub. Nts., 2/1/07 3,645,000 3,624,712
- --------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 1,685,000 1,750,139
- --------------------------------------------------------------------------------------------------------------------
Harrah's Operating Co., Inc., 5.625% Bonds, 6/1/15 9 940,000 930,958
- --------------------------------------------------------------------------------------------------------------------
HCA, Inc., 7.125% Sr. Unsec. Nts., 6/1/06 561,000 571,039
- --------------------------------------------------------------------------------------------------------------------
Hertz Corp. (The), 6.35% Nts., 6/15/10 2 1,860,000 1,760,613
- --------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 8.25% Sr. Unsec. Nts., 2/15/11 804,000 911,745
- --------------------------------------------------------------------------------------------------------------------
HSBC Finance Corp., 4.75% Sr. Unsec. Nts., 7/15/13 1,840,000 1,798,780
- --------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 5 810,000 862,650
- --------------------------------------------------------------------------------------------------------------------
iStar Financial, Inc., 4.875% Sr. Unsec. Nts., Series B, 1/15/09 2 1,285,000 1,273,644
- --------------------------------------------------------------------------------------------------------------------
J.C. Penney Co., Inc., (Holding Co.), 7.40% Nts., 4/1/37 2 1,610,000 1,748,863
- --------------------------------------------------------------------------------------------------------------------
JPMorgan Capital XV, 5.875% Nts., 3/15/35 1,220,000 1,198,328
- --------------------------------------------------------------------------------------------------------------------
K. Hovnanian Enterprises, Inc., 6.50% Sr. Nts., 1/15/14 2 895,000 865,736
- --------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., Series B, 10/15/06 14 250,000 244,375
- --------------------------------------------------------------------------------------------------------------------
KB Home, 5.75% Sr. Unsec. Unsub. Nts., 2/1/14 1,145,000 1,090,582
- --------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 985,000 1,055,969
- --------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts., 6/1/07 2,040,000 2,061,587
- --------------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 6.80% Sr. Unsec. Nts., 4/1/11 1,285,000 1,371,036
- --------------------------------------------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 2 1,450,000 1,443,165
- --------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 7% Nts., 2/1/08 1,165,000 1,223,657
- --------------------------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 185,000 193,119
- --------------------------------------------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 880,000 896,114
- --------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 5.70% Sr. Unsec. Nts., 5/15/13 2 930,000 850,966
- --------------------------------------------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 885,000 903,560
- --------------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 5.875% Sr. Unsec. Bonds, 8/1/33 1,110,000 1,008,623
- --------------------------------------------------------------------------------------------------------------------
May Department Stores Co.:
3.95% Nts., 7/15/07 616,000 607,606
7.90% Unsec. Debs., 10/15/07 735,000 773,805
- --------------------------------------------------------------------------------------------------------------------
MBNA Corp., 7.50% Sr. Nts., Series F, 3/15/12 1,380,000 1,571,020
31 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- --------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5% Sr. Unsub. Nts., Series C, 2/3/14 $ 1,825,000 $ 1,818,118
- --------------------------------------------------------------------------------------------------------------------
MetLife, Inc., 5.70% Sr. Unsec. Nts., 6/15/35 915,000 912,822
- --------------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Unsec. Nts., 10/1/12 1,525,000 1,593,471
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 855,000 927,513
- --------------------------------------------------------------------------------------------------------------------
National City Bank, 6.20% Sub. Nts., 12/15/11 124,000 133,116
- --------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc.:
5.90% Nts., 7/1/12 675,000 706,960
6.25% Sr. Unsec. Nts., 11/15/11 195,000 209,199
- --------------------------------------------------------------------------------------------------------------------
NiSource Finance Corp.:
3.20% Nts., 11/1/06 250,000 246,055
7.875% Sr. Unsec. Nts., 11/15/10 1,070,000 1,204,261
- --------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 1,125,000 1,244,679
- --------------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 5.75% Unsec. Unsub. Nts.,
Series 12, 12/15/15 9 1,480,000 1,467,050
- --------------------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV, 4.623% Sr. Nts., Cl. A1, 6/15/10 9 2,750,000 2,737,290
- --------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 9 547,925 518,471
- --------------------------------------------------------------------------------------------------------------------
Portland General Electric Co., 8.125% First Mortgage Nts., 2/1/10 9 715,000 798,606
- --------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 9 1,510,000 1,935,227
- --------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 9 1,530,000 1,983,660
- --------------------------------------------------------------------------------------------------------------------
PSE&G Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 810,000 832,275
- --------------------------------------------------------------------------------------------------------------------
PSE&G Power LLC, 6.875% Sr. Unsec. Nts., 4/15/06 915,000 926,049
- --------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08 750,000 852,734
- --------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 7.50% Sr. Unsec. Nts., 9/15/09 1,195,000 1,287,161
- --------------------------------------------------------------------------------------------------------------------
Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10 900,000 1,000,418
- --------------------------------------------------------------------------------------------------------------------
Simon Property Group LP:
5.45% Unsec. Nts., 3/15/13 2 820,000 829,812
5.625% Unsec. Unsub. Nts., 8/15/14 545,000 559,056
- --------------------------------------------------------------------------------------------------------------------
Sprint Capital Corp., 8.75% Nts., 3/15/32 1,100,000 1,479,528
- --------------------------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 1,350,000 1,398,938
- --------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 10% Sr. Sec. Nts., 12/19/07 4,13 136,379 135,697
- --------------------------------------------------------------------------------------------------------------------
SunTrust Banks, Inc.:
4% Nts., 10/15/08 965,000 946,618
7.75% Unsec. Sub. Nts., 5/1/10 86,000 96,440
- --------------------------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 1,640,000 2,019,421
- --------------------------------------------------------------------------------------------------------------------
Telecom Italia Capital, 5.25% Nts., 10/1/15 235,000 231,361
- --------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 308,000 386,795
- --------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 3.75% Sr. Unsec. Nts., 3/15/08 1,325,000 1,289,001
- --------------------------------------------------------------------------------------------------------------------
TXU Corp., 6.55% Sr. Unsec. Nts., Series R, 11/15/34 1,165,000 1,087,064
- --------------------------------------------------------------------------------------------------------------------
Tyco International Group SA, 6.375% Sr. Unsec. Unsub. Nts., 2/15/06 1,135,000 1,142,681
32 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- --------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc.:
2.875% Sr. Unsec. Nts., 10/15/06 $ 241,000 $ 236,292
3.50% Sr. Unsec. Nts., 10/15/07 1,255,000 1,218,540
- --------------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp., 5.85% Nts., 9/15/35 915,000 902,996
- --------------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 2 1,765,000 1,780,424
- --------------------------------------------------------------------------------------------------------------------
Waste Management, Inc., 6.875% Sr. Unsec. Nts., 5/15/09 1,700,000 1,810,204
- --------------------------------------------------------------------------------------------------------------------
Western Forest Products, Inc., 15% Sec. Nts., 7/28/09 4,13 302,804 296,748
- --------------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 1,785,000 1,821,750
---------------
Total Non-Convertible Corporate Bonds and Notes (Cost $124,571,538) 124,194,750
- --------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--8.0%
Undivided interest of 7.71% in joint repurchase agreement (Principal Amount/
Value $951,774,000, with a maturity value of $952,055,566) with UBS Warburg
LLC, 3.55%, dated 9/30/05, to be repurchased at $73,416,713 on 10/3/05,
collateralized by Federal National Mortgage Assn., 5%, 10/1/35, with
a value of $972,647,107 (Cost $73,395,000) 73,395,000 73,395,000
- --------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with
Cash Collateral from Securities Loaned) (Cost $905,240,552) 1,036,414,158
- --------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--2.0%
- --------------------------------------------------------------------------------------------------------------------
ASSET BACKED FLOATING NOTE--0.2%
Whitehawk CDO Funding Corp., 3.94%, 12/15/05 15 2,000,000 2,000,000
- --------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--1.7%
Undivided interest of 0.46% in joint repurchase agreement (Principal Amount/
Value $3,300,000,000, with a maturity value of $3,301,064,250) with Nomura
Securities, 3.87%, dated 9/30/05, to be repurchased at $15,313,636 on 10/3/05,
collateralized by U.S. Agency Mortgages, 5%--5.50%, 9/1/20--8/1/35,
with a value of $3,366,000,000 15 15,308,699 15,308,699
- --------------------------------------------------------------------------------------------------------------------
MASTER FLOATING NOTES--0.1%
Bear Stearns, 4.06%, 10/3/05 15 1,000,000 1,000,000
---------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $18,308,699) 18,308,699
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $923,549,251) 114.2% 1,054,722,857
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (14.2) (130,992,894)
--------------------------------
NET ASSETS 100.0% $ 923,729,963
================================
33 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Partial or fully-loaned security. See Note 10 of Notes to Financial
Statements.
3. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------
Schering-Plough Corp. 786 1/23/06 $22.50 $96,477 $55,020
4. Illiquid security. The aggregate value of illiquid securities as of September
30, 2005 was $1,160,741, which represents 0.13% of the Fund's net assets. See
Note 9 of Notes to Financial Statements.
5. Represents the current interest rate for a variable or increasing rate
security.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $10,821,512 or 1.17% of the Fund's net assets
as of September 30, 2005.
7. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $635,523 or 0.07% of the Fund's net assets as of
September 30, 2005.
8. When-issued security or forward commitment to be delivered and settled after
September 30, 2005. See Note 1 of Notes to Financial Statements.
9. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $12,777,469 or 1.38% of the Fund's net
assets as of September 30, 2005.
10. Zero coupon bond reflects effective yield on the date of purchase.
11. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts. The aggregate
market value of such securities is $1,105,633. See Note 6 of Notes to Financial
Statements.
12. This bond has no contractual maturity date, is not redeemable and
contractually pays an indefinite stream of interest.
13. Interest or dividend is paid-in-kind.
14. Issue is in default. Non-income producing. See Note 1 of Notes to Financial
Statements.
15. 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 10 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2005
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $29,832,219) (cost $923,549,251)
- --see accompanying statement of investments $1,054,722,857
- ------------------------------------------------------------------------------------------------------------
Cash 170,029
- ------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $30,078,948 sold on a when-issued basis
or forward commitment) 41,022,383
Interest, dividends and principal paydowns 4,157,781
Shares of beneficial interest sold 1,004,348
Futures margins 144,584
Other 27,349
---------------
Total assets 1,101,249,331
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $96,477)
- --see accompanying statement of investments 55,020
- ------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 18,308,699
- ------------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 71,343
- ------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $155,457,045 purchased on a when-issued basis
or forward commitment) 156,919,863
Shares of beneficial interest redeemed 1,258,969
Distribution and service plan fees 495,372
Trustees' compensation 155,682
Transfer and shareholder servicing agent fees 111,556
Shareholder communications 70,090
Other 72,774
---------------
Total liabilities 177,519,368
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 923,729,963
===============
- ------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Paid-in capital $ 741,307,555
- ------------------------------------------------------------------------------------------------------------
Accumulated net investment income 5,145,284
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 45,784,524
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 131,492,600
---------------
NET ASSETS $ 923,729,963
===============
35 | OPPENHEIMER BALANCED 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 $725,836,301 and
50,010,844 shares of beneficial interest outstanding) $14.51
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $15.40
- ------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $98,270,880 and 6,907,567 shares
of beneficial interest outstanding) $14.23
- ------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $87,820,386 and 6,145,816 shares
of beneficial interest outstanding) $14.29
- ------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $11,802,396 and 820,597 shares of
beneficial interest outstanding) $14.38
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER BALANCED FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 16,658,051
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $175,859) 7,225,027
- --------------------------------------------------------------------------------
Portfolio lending fees 52,528
- --------------------------------------------------------------------------------
Other income 33,230
-------------
Total investment income 23,968,836
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 6,085,297
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,399,566
Class B 924,866
Class C 778,708
Class N 51,254
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 833,080
Class B 208,495
Class C 135,453
Class N 26,986
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 121,101
Class B 42,473
Class C 22,879
Class N 2,814
- --------------------------------------------------------------------------------
Trustees' compensation 27,672
- --------------------------------------------------------------------------------
Custodian fees and expenses 23,909
- --------------------------------------------------------------------------------
Other 91,278
-------------
Total expenses 10,775,831
Less reduction to custodian expenses (20,670)
-------------
Net expenses 10,755,161
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 13,213,675
37 | OPPENHEIMER BALANCED FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments $ 55,523,311
Closing of futures contracts 3,868,560
Foreign currency transactions 483,399
Swap contracts (34,072)
-------------
Net realized gain 59,841,198
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 25,331,740
Translation of assets and liabilities denominated in foreign currencies (35,485)
Futures contracts (838,889)
Option contracts 41,457
Swap contracts (86,475)
-------------
Net change in unrealized appreciation 24,412,348
- ------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 97,467,221
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2005 2004
- -----------------------------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------
Net investment income $ 13,213,675 $ 6,881,213
- -----------------------------------------------------------------------------------------------------------------
Net realized gain 59,841,198 64,202,686
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 24,412,348 240,460
---------------------------------
Net increase in net assets resulting from operations 97,467,221 71,324,359
- -----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (7,922,968) (4,777,266)
Class B (487,362) (111,890)
Class C (462,164) (122,220)
Class N (90,860) (30,405)
- -----------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (33,213,932) --
Class B (4,435,493) --
Class C (3,587,318) --
Class N (466,585) --
- -----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 36,521,136 20,788,123
Class B 8,636,193 13,846,692
Class C 15,819,238 16,261,663
Class N 2,483,994 4,986,013
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Total increase 110,261,100 122,165,069
- -----------------------------------------------------------------------------------------------------------------
Beginning of period 813,468,863 691,303,794
---------------------------------
End of period (including accumulated net investment income (loss)
of $5,145,284 and $(681,095), respectively) $ 923,729,963 $ 813,468,863
=================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.75 $ 12.55 $ 10.51 $ 12.14 $ 14.23
----------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .14 .21 .35 .43
Net realized and unrealized gain (loss) 1.38 1.16 2.08 (1.29) (1.40)
----------------------------------------------------------------------
Total from investment operations 1.62 1.30 2.29 (.94) (.97)
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) (.10) (.22) (.31) (.38)
Tax return of capital distribution -- -- (.03) -- --
Distributions from net realized gain (.70) -- -- (.38) (.74)
----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.86) (.10) (.25) (.69) (1.12)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.51 $ 13.75 $ 12.55 $ 10.51 $ 12.14
======================================================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 12.13% 10.37% 21.98% (8.58)% (7.27)%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $725,836 $651,754 $575,799 $483,311 $562,281
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $694,147 $631,041 $523,477 $570,796 $626,251
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.69% 1.05% 1.78% 2.84% 3.16%
Total expenses 1.05% 1.07% 1.11% 1.15% 1.01%
Expenses after payments and waivers and
reduction to custodian expenses 1.05% 1.06% 1.11% 1.15% 1.01%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 4 61% 4 205% 31% 40%
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. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2005 $2,097,453,846 $2,135,377,175
Year Ended September 30, 2004 $1,069,526,653 $1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40 | OPPENHEIMER BALANCED FUND
CLASS B YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.53 $ 12.40 $ 10.38 $ 12.01 $ 14.08
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 1 .02 .09 .25 .31
Net realized and unrealized gain (loss) 1.36 1.13 2.07 (1.29) (1.36)
-----------------------------------------------------------------------
Total from investment operations 1.47 1.15 2.16 (1.04) (1.05)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.07) (.02) (.11) (.21) (.28)
Tax return of capital distribution -- -- (.03) -- --
Distributions from net realized gain (.70) -- -- (.38) (.74)
- --------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.77) (.02) (.14) (.59) (1.02)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.23 $ 13.53 $ 12.40 $ 10.38 $ 12.01
=======================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.17% 9.26% 20.91% (9.38)% (7.96)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $98,271 $84,924 $64,944 $54,757 $63,487
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $92,677 $77,082 $57,836 $64,702 $67,959
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.76% 0.11% 0.81% 2.02% 2.37%
Total expenses 1.98% 4 2.02% 4,5 2.08% 4 1.97% 4 1.81% 4
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 6 61% 6 205% 31% 40%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
6. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2005 $2,097,453,846 $2,135,377,175
Year Ended September 30, 2004 $1,069,526,653 $1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.59 $ 12.44 $ 10.42 $ 12.06 $ 14.13
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 1 .04 .11 .24 .31
Net realized and unrealized gain (loss) 1.37 1.13 2.06 (1.29) (1.37)
-----------------------------------------------------------------------
Total from investment operations 1.48 1.17 2.17 (1.05) (1.06)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.08) (.02) (.12) (.21) (.27)
Tax return of capital distribution -- -- (.03) -- --
Distributions from net realized gain (.70) -- -- (.38) (.74)
-----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.78) (.02) (.15) (.59) (1.01)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.29 $ 13.59 $ 12.44 $ 10.42 $ 12.06
=======================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.18% 9.45% 20.98% (9.41)% (8.00)%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $87,820 $68,018 $47,212 $33,300 $36,171
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $78,091 $60,095 $38,407 $37,412 $39,030
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.83% 0.19% 0.90% 2.03% 2.37%
Total expenses 1.91% 4 1.93% 4,5 1.98% 4 1.96% 4 1.81% 4
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 6 61% 6 205% 31% 40%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
6. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2005 $2,097,453,846 $2,135,377,175
Year Ended September 30, 2004 $1,069,526,653 $1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
CLASS N YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.65 $ 12.49 $ 10.48 $ 12.13 $ 13.67
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 2 .10 .20 .39 .24
Net realized and unrealized gain (loss) 1.38 1.12 2.01 (1.38) (1.48)
---------------------------------------------------------------
Total from investment operations 1.55 1.22 2.21 (.99) (1.24)
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.06) (.17) (.28) (.30)
Tax return of capital distribution -- -- (.03) -- --
Distributions from net realized gain (.70) -- -- (.38) --
---------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.82) (.06) (.20) (.66) (.30)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.38 $ 13.65 $ 12.49 $ 10.48 $ 12.13
===============================================================
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 11.66% 9.77% 21.27% (8.94)% (9.30)%
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $11,803 $ 8,772 $ 3,349 $ 798 $ 95
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $10,278 $ 5,701 $ 1,604 $ 454 $ 12
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.24% 0.55% 1.24% 2.49% 5.81%
Total expenses 1.50% 1.58% 1.76% 1.48% 1.32%
Expenses after payments and waivers and
reduction to custodian expenses 1.50% 1.57% 1.62% 1.48% 1.32%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 73% 5 61% 5 205% 31% 40%
1. For the period from March 1, 2001 (inception of offering) to September 30,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2005 $2,097,453,846 $2,135,377,175
Year Ended September 30, 2004 $1,069,526,653 $1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Balanced Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as an open end management investment company. The
Fund's investment objective is to seek high total investment return consistent
with preservation of principal. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. 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
(including restricted securities) for which market quotations are not readily
available are valued at their fair value. Foreign
44 | OPPENHEIMER BALANCED FUND
and domestic securities whose values have been materially affected by what the
Manager identifies as a significant event occurring before the Fund's assets are
valued but after the close of their respective exchanges will be fair valued.
Fair value is determined in good faith using consistently applied procedures
under the supervision of the Board of Trustees. Short-term "money market type"
debt securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of September 30, 2005, the Fund had purchased
$155,457,045 of securities issued on a when-issued basis or forward commitment
and sold $30,078,948 of securities issued on a when-issued basis or forward
commitment.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of September 30, 2005, securities with an
aggregate market value of $244,375, representing 0.03% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign
45 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 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 1,2,3,4 TAX PURPOSES
----------------------------------------------------------------------------
$14,225,407 $38,133,390 $444,925 $130,662,367
1. The Fund had $44,552 of post-October foreign currency losses which were
deferred.
2. The Fund had $400,373 of straddle losses which were deferred.
46 | OPPENHEIMER BALANCED FUND
3. During the fiscal year ended September 30, 2005, the Fund utilized $248,875
of capital loss carryforward to offset capital gains realized in that fiscal
year.
4. During the fiscal year ended September 30, 2004, the Fund utilized $4,257,280
of capital loss carryforward to offset capital gains realized in that fiscal
year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for September 30, 2005. Net assets of
the Fund were unaffected by the reclassifications.
INCREASE TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL INCOME ON INVESTMENTS 5
--------------------------------------------------------------
$3,848,071 $1,576,058 $5,424,129
5. $3,600,291, including $2,911,989 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended September 30,
2005 and September 30, 2004 was as follows:
YEAR ENDED YEAR ENDED
SEPT. 30, 2005 SEPT. 30, 2004
--------------------------------------------------------------
Distributions paid from:
Ordinary income $ 20,732,822 $ 5,041,781
Long-term capital gain 29,933,860 --
-------------------------------
Total $ 50,666,682 $ 5,041,781
===============================
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 September 30, 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 $ 924,122,414
Federal tax cost of other investments (123,047,206)
--------------
Total federal tax cost $ 801,075,208
==============
Gross unrealized appreciation $ 148,655,942
Gross unrealized depreciation (17,993,575)
--------------
Net unrealized appreciation $ 130,662,367
==============
47 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended
September 30, 2005, the Fund's projected benefit obligations were increased by
$5,423 and payments of $9,637 were made to retired trustees, resulting in an
accumulated liability of $124,605 as of September 30, 2005.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
and paid quarterly. Capital gain distributions, if any, are declared and paid
annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
48 | OPPENHEIMER BALANCED FUND
- --------------------------------------------------------------------------------
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 no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
YEAR ENDED SEPTEMBER 30, 2005 YEAR ENDED SEPTEMBER 30, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 6,341,196 $ 89,407,865 6,122,137 $ 82,783,982
Dividends and/or
distributions reinvested 2,700,256 37,680,524 313,143 4,294,088
Redeemed (6,426,942) (90,567,253) (4,905,906) (66,289,947)
--------------------------------------------------------------
Net increase 2,614,510 $ 36,521,136 1,529,374 $ 20,788,123
==============================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 2,164,968 $ 29,908,987 2,864,209 $ 38,137,332
Dividends and/or
distributions reinvested 334,015 4,563,228 7,693 103,111
Redeemed (1,865,946) (25,836,022) (1,835,055) (24,393,751)
--------------------------------------------------------------
Net increase 633,037 $ 8,636,193 1,036,847 $ 13,846,692
==============================================================
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 1,913,961 $ 26,621,005 2,004,496 $ 26,837,027
Dividends and/or
distributions reinvested 273,835 3,758,922 8,365 112,683
Redeemed (1,047,238) (14,560,689) (801,328) (10,688,047)
--------------------------------------------------------------
Net increase 1,140,558 $ 15,819,238 1,211,533 $ 16,261,663
==============================================================
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 295,550 $ 4,136,828 553,663 $ 7,419,779
Dividends and/or
distributions reinvested 39,150 541,581 2,182 29,726
Redeemed (156,565) (2,194,415) (181,488) (2,463,492)
--------------------------------------------------------------
Net increase 178,135 $ 2,483,994 374,357 $ 4,986,013
==============================================================
49 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 September 30, 2005, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------
Investment securities $1,289,673,154 $ 476,962,320
U.S. government and government
agency obligations 90,915,994 100,960,839
To Be Announced (TBA)
mortgage-related securities 2,097,453,846 2,135,377,175
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager are in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.75% of the first $200 million of average annual net assets of
the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66%
of the next $200 million, 0.60% of the next $700 million, and 0.58% of average
annual net assets in excess of $1.5 billion.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended September 30, 2005, the Fund paid
$1,190,778 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% on Class B and
Class C shares and 0.25% 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
50 | OPPENHEIMER BALANCED FUND
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 September 30, 2005 for Class B, Class C
and Class N shares were $2,799,628, $1,392,035 and $134,366, respectively. Fees
incurred by the Fund under the plans are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------
September 30, 2005 $407,881 $2,396 $175,201 $21,759 $6,448
- ---------------------------------------------------------------------------------------------------
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 September 30, 2005, the Fund had no outstanding foreign currency
contracts.
51 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates.
The Fund may also buy or write put or call options on these futures
contracts.The Fund generally sells futures contracts as a hedge against
increases in interest rates and decreases in market value of portfolio
securities. The Fund may also purchase futures contracts to gain exposure to
market changes as it may be more efficient or cost effective than actually
buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of September 30, 2005, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS 2005 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 12/20/05 310 $35,465,938 $ (756,638)
-----------
CONTRACTS TO SELL
U.S. Treasury Nts., 2 yr. 12/30/05 428 88,121,188 593,961
U.S. Treasury Nts., 5 yr. 12/20/05 477 50,971,922 297,015
U.S. Treasury Nts., 10 yr. 12/20/05 175 19,236,328 209,961
-----------
1,100,937
-----------
$ 344,299
===========
52 | OPPENHEIMER BALANCED FUND
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Contracts subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended September 30, 2005 was as follows:
CALL OPTIONS
-----------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- ---------------------------------------------------------
Options outstanding as of
September 30, 2004 -- $ --
Options written 786 96,477
-----------------
Options outstanding as of
September 30, 2005 786 $96,477
=================
- --------------------------------------------------------------------------------
8. TOTAL RETURN SWAP CONTRACTS
The Fund may enter into a total return swap transaction to maintain a total
return on a particular investment, or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. The Fund records an increase or decrease to unrealized
gain (loss), in the amount due to or owed by the Fund at
53 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. TOTAL RETURN SWAP CONTRACTS Continued
termination or settlement. Total return swaps are subject to risks (if the
counterparty fails to meet its obligations).
As of September 30, 2005, the Fund had entered into the following total return
swap agreements:
PAID RECEIVED
BY THE RATE BY THE RATE
FUND AT AS OF FUND AT AS OF
SWAP NOTIONAL SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, TERMINATION UNREALIZED
COUNTERPARTY AMOUNT 2005 2005 2005 2005 DATE DEPRECIATION
- -------------------------------------------------------------------------------------------------------------------
One-Month
LIBOR Change of
minus Total Return
0.25% of Lehman
(+ or -) Brothers
Rate CMBS
UBS AG $5,260,000 Received 5.04893% Index (1.36)%* 12/1/05 $71,343
*Represents an additional amount paid by the Fund at September 30, 2005.
Index abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities
LIBOR London-Interbank Offered Rate
- --------------------------------------------------------------------------------
9. ILLIQUID SECURITIES
As of September 30, 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.
- --------------------------------------------------------------------------------
10. 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
54 | OPPENHEIMER BALANCED FUND
the form of a substitute payment received from the borrower. As of September 30,
2005, the Fund had on loan securities valued at $29,832,219. Collateral of
$30,627,203 was received for the loans, of which $18,308,699 was received in
cash and subsequently invested in approved instruments.
- --------------------------------------------------------------------------------
11. 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.
55 | OPPENHEIMER BALANCED FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER BALANCED FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Balanced Fund, including the statement of investments, as of
September 30, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year 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.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 2005, by correspondence
with the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Balanced Fund as of September 30, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with U.S.
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
November 16, 2005
56 | OPPENHEIMER BALANCED 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.
Distributions of $0.7044 per share were paid to Class A, Class B, Class C
and Class N shareholders, respectively, on December 15, 2004, of which $0.5057
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 September
30, 2005 which are not designated as capital gain distributions should be
multiplied by 24.33% 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 September 30, 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. $7,030,691 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.
57 | OPPENHEIMER BALANCED FUND
REPORT OF SHAREHOLDER MEETING Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On August 17, 2005, a shareholder meeting of the Oppenheimer Balanced Fund was
held at which the eleven Trustees identified below were elected (Proposal No. 1)
and the sub-proposals in (Proposal No. 2) were approved as described in the
Fund's proxy statement for that meeting. The following is a report of the votes
cast:
- --------------------------------------------------------------------------------
PROPOSAL NO. 1
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
Trustees
Matthew P. Fink 33,979,201.908 830,875.404 34,810,077.312
Robert G. Galli 33,923,883.620 886,193.692 34,810,077.312
Phillip A. Griffiths 33,965,113.692 844,963.620 34,810,077.312
Mary F. Miller 33,918,730.487 891,346.825 34,810,077.312
Joel W. Motley 33,983,140.394 826,936.918 34,810,077.312
John V. Murphy 33,974,052.504 836,024.808 34,810,077.312
Kenneth A. Randall 33,933,013.152 877,064.160 34,810,077.312
Russell S. Reynolds, Jr. 33,917,932.165 892,145.147 34,810,077.312
Joseph M. Wikler 33,977,331.355 832,745.957 34,810,077.312
Peter I. Wold 33,974,047.833 836,029.479 34,810,077.312
Clayton K. Yeutter 33,911,926.266 898,151.046 34,810,077.312
- --------------------------------------------------------------------------------
PROPOSAL NO. 2 Proposal to change the policy on
FOR AGAINST ABSTAIN BROKER NON-VOTE TOTAL
- ---------------------------------------------------------------------------------------------------------------
2A: Borrowing
26,080,056.700 1,948,603.795 1,632,976.817 5,148,440.000 34,810,077.312
2B: Concentration of Investments
26,945,373.657 1,181,587.490 1,534,676.165 5,148,440.000 34,810,077.312
2C: Diversification of Investments
27,089,363.466 1,199,354.430 1,372,919.416 5,148,440.000 34,810,077.312
2E: Investing to Exercise Control
26,964,242.155 1,453,553.525 1,243,841.632 5,148,440.000 34,810,077.312
2F: Investing in Issuers Whose Shares are Owned by the Funds' Trustee and Officers
26,140,861.482 2,229,306.148 1,291,469.682 5,148,440.000 34,810,077.312
2H: Lending
26,360,510.438 1,974,741.480 1,326,385.394 5,148,440.000 34,810,077.312
2I: Margin and Short Sales (purchasing)
26,134,010.041 2,223,806.795 1,303,820.476 5,148,440.000 34,810,077.312
2J: Pledging, Mortgaging or Hypothecating of Assets
26,322,013.614 1,921,495.969 1,418,127.729 5,148,440.000 34,810,077.312
2K: Real Estate and Commodities
27,224,526.903 1,248,326.182 1,188,784.227 5,148,440.000 34,810,077.312
2L: Senior Securities
27,269,261.163 1,113,715.060 1,278,661.089 5,148,440.000 34,810,077.312
2O: Investment Percentage Restrictions
26,989,309.700 1,369,138.791 1,303,188.821 5,148,440.000 34,810,077.312
58 | OPPENHEIMER BALANCED FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in 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.
59 | OPPENHEIMER BALANCED FUND
TRUSTEES AND OFFICERS Unaudited
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, NEW
TRUSTEES YORK, NY 10281-1008. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR
HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board Attorney at Hogan & Hartson (law firm) (since June 1993); Director of Danielson
of Trustees (since 2003); Holding Corp. (waste-to-energy company) (since 2002); Director of Weyer-haeuser
Trustee (since 1993) Corp. (1999-April 2004); Director of Caterpillar, Inc. (1993-December 2002);
Age: 74 Director of ConAgra Foods (1993-2001); Director of Texas Instruments (1993-2001);
Director of FMC Corporation (1993-2001). Oversees 38 portfolios in the
OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research foundation)
Trustee (since 2005) (since 2005); Director of ICI Education Foundation (education foundation) (since
Age: 64 October 1991); President of the Investment Company Institute (trade association)
(1991-2004); Director of ICI Mutual Insurance Company (insurance company)
(1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in the
Trustee (since 1993) OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 1999) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The Andrew W.
Age: 67 Mellon Foundation (since 2001); Member of the National Academy of Sciences (since
1979); Member of the American Philosophical Society (since 1996); Council on
Foreign Relations (since 2002); Director of the Institute for Advanced Study
(1991-2004); Director of Bankers Trust New York Corporation (1994-1999). Oversees
38 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October 1998);
Trustee (since 2004) and Senior Vice President and General Auditor of American Express Company
Age: 63 (financial services company) (July 1998-February 2003). Oversees 38 portfolios in
the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser)
Trustee (since 2002) (since 2002); Managing Director of Carmona Motley, Inc. (privately-held financial
Age: 53 adviser) (since January 2002); Managing Director of Carmona Motley Hoffman Inc.
(privately-held financial adviser) (January 1998-December 2001). Oversees 38
portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (since
Trustee (since 1983) February 1972); Former Director of Prime Retail, Inc. (real estate investment
Age: 78 trust), Dominion Energy Inc. (electric power and oil & gas producer), Lumbermens
Mutual Casualty Company, American Motorists Insurance Company and American
Manufacturers Mutual Insurance Company; Former President and Chief Executive
Officer of The Conference Board, Inc. (international economic and business
research). Oversees 38 portfolios in the OppenheimerFunds complex.
60 | OPPENHEIMER BALANCED FUND
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consulting
Trustee (since 1989) and executive recruiting) (since 1993); Life Trustee of International House
Age: 73 (non-profit educational organization); Former Trustee of The Historical Society
of the Town of Greenwich. Oversees 38 portfolios in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992) and
Trustee (since 2005) Cathco (since 1996); Director of Lakes Environmental Association (since 1996);
Age: 64 Member of the Investment Committee of the Associated Jewish Charities of
Baltimore (since 1994); Director of Fortis/Hartford mutual funds (1994-December
2001). Oversees 39 portfolios in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and production
Trustee (since 2005) company) (since 1994); Vice President, Secretary and Treasurer of Wold Trona
Age: 57 Company, Inc. (soda ash processing and production) (since 1996); Vice President
of Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of
Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of
the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and
Director of PacifiCorp. (electric utility) (1995-1999). Oversees 39 portfolios in
the OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1996);
Trustee (since 2005) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 62 (since September 2004); Director of Zurich Financial Investment Advisory Board
(affiliate of the Manager's parent company) (since October 2004); Board of
Governing Trustees of The Jackson Laboratory (non-profit) (since August 1990);
Trustee of the Institute for Advanced Study (non-profit educational institute)
(since May 1992); Special Limited Partner of Odyssey Investment Partners, LLC
(private equity investment) (January 1999-September 2004); Trustee of Research
Foundation of AIMR (2000-2002) (investment research, non-profit); Governor,
Jerome Levy Economics Institute of Bard College (August 1990-September 2001)
(economics research); Director of Ray & Berendtson, Inc. (May 2000-April 2002)
(executive search firm). Oversees 48 portfolios in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------
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
OPPENHEIMERFUNDS, 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 Oppenheimer Acquisition Corp.
(since 2001) ("OAC") (the Manager's parent holding company) and of Oppenheimer Partnership
and Trustee Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001);
(since 2001) Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since
Age: 56 November 2001); Chairman and Director of Shareholder Services, Inc. and of
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
61 | OPPENHEIMER BALANCED FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JOHN V. MURPHY, Management Corporation and OFI Private Investments, Inc. (since July 2001);
Continued President (since November 1, 2001) and Director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; Executive Vice President of Mass-achusetts 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 77 portfolios as a Director or Trustee
and 10 additional portfolios as officer in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND FERREIRA, LEAVY AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
FLOOR, NEW YORK, NY 10281-1008, AND FOR MESSRS. WIXTED AND VANDEHEY, 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.
EMMANUEL FERREIRA, Vice President of the Manager since January 2003. Formerly, Portfolio Manager at
Vice President (since 2003) Lashire Investments (July 1999-December 2002). An officer of 5 portfolios in the
Age: 38 OppenheimerFunds complex.
CHRISTOPHER LEAVY, Senior Vice President of the Manager since September 2000. Formerly a portfolio
Vice President (since 2003) manager of Morgan Stanley Dean Witter Investment Management (1997 - September
Age: 34 2000). An officer of 8 portfolios in the OppenheimerFunds complex.
ANGELO G. MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President (since 2003) Management Corporation (since April, 2002 and of OFI Institutional Asset
Age: 38 Management, Inc. (since June 2002). Formerly Executive Director and portfolio
manager for Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment
Management (August 1993-April 2002). An officer of 14 portfolios in the
OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March
Vice President and 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset
Chief Compliance Officer Management Corporation and Shareholder Services, Inc. (since June 1983) Former
(since 2004) Vice President and Director of Internal Audit of the Manager (1997-February
Age: 55 2004). An officer of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer
Treasurer and of 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 1999) Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
Age: 46 (since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program estab lished by the Manager) (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
62 | OPPENHEIMER BALANCED FUND
BRIAN W. WIXTED, Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds
Continued 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
Secretary (since 2001) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 57 December 2001); General Counsel of Centennial Asset Management Corporation (since
December 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.
63 | OPPENHEIMER BALANCED 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 the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee financial expert," whether
through the type of specialized education or experience described in that
Instruction. The Board has concluded that while the members of the Audit
Committee collectively have the necessary attributes and experience required to
serve effectively as an Audit Committee, no single member possesses all of the
required technical attributes through the particular methods of education or
experience set forth in the Instructions to be designated as an audit committee
financial expert.
7ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $45,000 in fiscal 2005 and $43,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $156,805 in fiscal 2005 and $44,500 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: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and $6,000 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: Preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees 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 $161,805 in fiscal 2005 and $50,500 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 September 30, 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 Balanced Fund
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: November 16, 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: November 16, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: November 16, 2005