UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3420
OPPENHEIMER INTEGRITY FUNDS
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: DECEMBER 31
Date of reporting period: DECEMBER 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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CORPORATE BONDS & NOTES--TOP TEN INDUSTRIES
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Media 2.5%
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Electric Utilities 2.5
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Diversified Financial Services 2.1
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Automobiles 2.1
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Insurance 2.0
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Diversified Telecommunication Services 1.9
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Real Estate 1.7
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Food & Staples Retailing 1.5
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Commercial Banks 1.4
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Oil & Gas 1.4
Portfolio holdings and allocations are subject to change. Percentages are as of
December 31, 2005, and are based on net assets.
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CREDIT ALLOCATION Distribution of investments by ratings category, as a
percentage of total investments at value, is as follows:
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Treasury 1.0%
Agency 46.1
AAA 23.6
AA 2.3
A 5.8
BBB 12.3
BB 3.5
B 0.2
Not Rated 5.2
Portfolio holdings and allocations are subject to change. Percentages are as of
December 31, 2005, and are based on the total market value of investments.
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10 | | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED DECEMBER 31, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Oppenheimer Core Bond Fund
delivered a favorable, competitive yield and total return for the 12-month
period ended December 31, 2005, during which the Fund outpaced the median of its
peer group of similarly managed funds while only slightly trailing its primary
benchmark, the Citigroup Broad Investment Grade Bond Index. The Fund's positive
fiscal-year results can be attributed primarily to active management of the
portfolio's exposure to interest-rate risk, and secondarily, to sector decisions
and individual security selection among corporate bonds and agency and
mortgage-related securities.
Throughout the period, we generally kept the portfolio's duration, or
interest-rate sensitivity, significantly lower than that of our benchmark. Since
the year was underscored by generally rising rates, this decision proved to be
the most prominent contributor to performance for the year. At the same time,
while maintaining our less-than-market exposure to interest-rate risk, we made
slight adjustments to our interest-rate positioning at various points throughout
the year so as to capitalize on interest-rate shifts and movements in the yield
curve as they occurred. As such, our flexible, active management of the
portfolio's duration, while maintaining an overall short duration position, also
substantially benefited returns.
Although our overall exposure to the mortgage sector did not support
performance as strongly as it did last year, successful security selection
within the mortgage category added to returns this year. For example, our
decision to invest in seasoned, older mortgage securities that were showing
reasonably good levels of prepayment activity helped performance, as these
mortgages managed to fare well amidst a generally struggling mortgage market.
Within the portfolio's exposure to the credit (corporate bond) sector, our
decision to underweight longer-term, BBB-rated credit securities added to
performance, since this segment of the investment grade corporate bond
market--generally considered to be among the riskiest types of credit securities
in that market--underperformed the corporate sector as a whole. Our
substantially underweighted exposure to these bonds supported the Fund's returns
for the year, as did our decision to underweight industrial bonds, which also
lagged. At the same time, the fact that we chose to overweight our exposure to
the financials sector, particularly to brokerage companies, definitively added
to returns, as this sector of the high-grade corporate market fared well amidst
positive earnings results throughout 2005.
Finally, our tactical allocation to high-yield bonds in general helped
buoy performance this year. On the negative side, security selection within the
high-yield, or "junk" allocation
11 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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of the portfolio detracted from returns. Our decision to own a few, select
high-yield bonds issued by companies in the auto, auto parts and homebuilding
sectors cost us a few basis points of performance, as some of the bonds in these
sectors struggled.
Similarly, had we maintained the underweighted exposure to longer-maturity
industrial bonds that we established early in the period, we might have
preserved a few basis points of performance. Our decision to move to a neutral
exposure to these bonds later in the year hurt us when these types of corporate
bonds lagged the general market.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until December 31, 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. In the case of Class Y shares, performance is measured from inception of
the Class on April 27, 1998. The Fund's performance reflects the deduction of
the maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C and Class N shares, and reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
Beginning January 21, 2005, the Fund changed its primary benchmark index
from the Lehman Brothers Credit Index to the Citigroup Broad Investment Grade
Bond Index ("Citigroup Index") because the Fund believes that the Citigroup
Index is a more appropriate benchmark reflecting the types of securities in
which the Fund invests. The Citigroup Index consists of securities having a
higher grade and a lower modified duration than the securities in the Lehman
Brothers Credit Index.
The Fund's performance is compared to the performance of its former
primary benchmark, the Lehman Brothers Credit Index, a broad-based, unmanaged
index of publicly-issued non-convertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate corporate bond
market. Performance is also compared to its primary benchmark, the Citigroup
Broad Investment Grade Bond Index, a market-capitalization weighted index that
includes fixed-rate Treasury, government-sponsored, corporate and mortgage
securities. The Fund has also added a secondary benchmark, the Lehman Brothers
Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds,
to which its performance is compared. Index performance reflects the
reinvestment of income but does not consider the effect of transaction costs,
and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of the Fund's business and operating expenses.
While index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
investments in the index.
12 | OPPENHEIMER CORE BOND FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class A)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Core Bond Fund Lehman Brothers Lehman Aggregate Citigroup BIG
(Class A) Credit Index ** Bond Index Bond Index
12/31/1995 9,525 10,000 10,000 10,000
03/31/1996 9,399 9,742 9,823 9,825
06/30/1996 9,446 9,785 9,879 9,874
09/30/1996 9,658 9,981 10,061 10,058
12/31/1996 9,988 10,328 10,363 10,362
03/31/1997 9,974 10,225 10,305 10,308
06/30/1997 10,358 10,646 10,684 10,680
09/30/1997 10,728 11,063 11,039 11,035
12/31/1997 11,000 11,385 11,364 11,360
03/31/1998 11,188 11,559 11,540 11,543
06/30/1998 11,420 11,857 11,810 11,810
09/30/1998 11,612 12,287 12,309 12,300
12/31/1998 11,617 12,361 12,351 12,350
03/31/1999 11,564 12,274 12,289 12,293
06/30/1999 11,416 12,082 12,181 12,179
09/30/1999 11,374 12,116 12,264 12,267
12/31/1999 11,426 12,120 12,249 12,248
03/31/2000 11,529 12,293 12,519 12,516
06/30/2000 11,627 12,444 12,737 12,728
09/30/2000 11,848 12,826 13,121 13,116
12/31/2000 12,088 13,258 13,673 13,667
03/31/2001 12,567 13,824 14,088 14,089
06/30/2001 12,695 13,971 14,168 14,161
09/30/2001 13,158 14,507 14,821 14,829
12/31/2001 12,940 14,637 14,828 14,832
03/31/2002 12,886 14,598 14,842 14,842
06/30/2002 13,255 15,020 15,390 15,364
09/30/2002 13,913 15,694 16,095 16,071
12/31/2002 14,242 16,177 16,348 16,328
03/31/2003 14,486 16,565 16,576 16,557
06/30/2003 14,909 17,360 16,991 16,982
09/30/2003 14,973 17,335 16,966 16,953
12/31/2003 15,078 17,421 17,019 17,014
03/31/2004 15,476 17,992 17,472 17,471
06/30/2004 15,115 17,376 17,045 17,045
09/30/2004 15,627 18,105 17,590 17,601
12/31/2004 15,816 18,335 17,758 17,776
03/31/2005 15,757 18,141 17,673 17,686
06/30/2005 16,155 18,789 18,204 18,239
09/30/2005 16,103 18,601 18,082 18,116
12/31/2005 16,188 18,693 18,189 18,232
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
12/31/05
1-Year -2.51% 5-Year 4.99% 10-Year 4.94%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class B)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Core Bond Fund Lehman Brothers Lehman Aggregate Citigroup Big
(Class B) Credit Index ** Bond Index Bond Index
12/31/1995 10,000 10,000 10,000 10,000
03/31/1996 9,840 9,742 9,823 9,825
06/30/1996 9,879 9,785 9,879 9,874
09/30/1996 10,083 9,981 10,061 10,058
12/31/1996 10,399 10,328 10,363 10,362
03/31/1997 10,374 10,225 10,305 10,308
06/30/1997 10,753 10,646 10,684 10,680
09/30/1997 11,116 11,063 11,039 11,035
12/31/1997 11,377 11,385 11,364 11,360
03/31/1998 11,550 11,559 11,540 11,543
06/30/1998 11,766 11,857 11,810 11,810
09/30/1998 11,942 12,287 12,309 12,300
12/31/1998 11,924 12,361 12,351 12,350
03/31/1999 11,848 12,274 12,289 12,293
06/30/1999 11,662 12,082 12,181 12,179
09/30/1999 11,609 12,116 12,264 12,267
12/31/1999 11,628 12,120 12,249 12,248
03/31/2000 11,723 12,293 12,519 12,516
06/30/2000 11,799 12,444 12,737 12,728
09/30/2000 12,002 12,826 13,121 13,116
12/31/2000 12,222 13,258 13,673 13,667
03/31/2001 12,669 13,824 14,088 14,089
06/30/2001 12,788 13,971 14,168 14,161
09/30/2001 13,216 14,507 14,821 14,829
12/31/2001 12,993 14,637 14,828 14,832
03/31/2002 12,939 14,598 14,842 14,842
06/30/2002 13,309 15,020 15,390 15,364
09/30/2002 13,970 15,694 16,095 16,071
12/31/2002 14,300 16,177 16,348 16,328
03/31/2003 14,545 16,565 16,576 16,557
06/30/2003 14,970 17,360 16,991 16,982
09/30/2003 15,034 17,335 16,966 16,953
12/31/2003 15,139 17,421 17,019 17,014
03/31/2004 15,539 17,992 17,472 17,471
06/30/2004 15,176 17,376 17,045 17,045
09/30/2004 15,690 18,105 17,590 17,601
12/31/2004 15,881 18,335 17,758 17,776
03/31/2005 15,821 18,141 17,673 17,686
06/30/2005 16,220 18,789 18,204 18,239
09/30/2005 16,169 18,601 18,082 18,116
12/31/2005 16,255 18,693 18,189 18,232
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
12/31/05
1-Year -3.40% 5-Year 4.87% 10-Year 4.98%
14 | OPPENHEIMER CORE BOND FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class C)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Core Bond Fund Lehman Brothers Lehman Aggregate Citigroup Big
(Class C) Credit Index ** Bond Index Bond Index
12/31/1995 10,000 10,000 10,000 10,000
03/31/1996 9,841 9,742 9,823 9,825
06/30/1996 9,871 9,785 9,879 9,874
09/30/1996 10,085 9,981 10,061 10,058
12/31/1996 10,400 10,328 10,363 10,362
03/31/1997 10,375 10,225 10,305 10,308
06/30/1997 10,754 10,646 10,684 10,680
09/30/1997 11,116 11,063 11,039 11,035
12/31/1997 11,377 11,385 11,364 11,360
03/31/1998 11,549 11,559 11,540 11,543
06/30/1998 11,766 11,857 11,810 11,810
09/30/1998 11,941 12,287 12,309 12,300
12/31/1998 11,924 12,361 12,351 12,350
03/31/1999 11,848 12,274 12,289 12,293
06/30/1999 11,663 12,082 12,181 12,179
09/30/1999 11,609 12,116 12,264 12,267
12/31/1999 11,629 12,120 12,249 12,248
03/31/2000 11,724 12,293 12,519 12,516
06/30/2000 11,789 12,444 12,737 12,728
09/30/2000 12,003 12,826 13,121 13,116
12/31/2000 12,223 13,258 13,673 13,667
03/31/2001 12,671 13,824 14,088 14,089
06/30/2001 12,789 13,971 14,168 14,161
09/30/2001 13,217 14,507 14,821 14,829
12/31/2001 12,974 14,637 14,828 14,832
03/31/2002 12,897 14,598 14,842 14,842
06/30/2002 13,255 15,020 15,390 15,364
09/30/2002 13,889 15,694 16,095 16,071
12/31/2002 14,176 16,177 16,348 16,328
03/31/2003 14,408 16,565 16,576 16,557
06/30/2003 14,787 17,360 16,991 16,982
09/30/2003 14,835 17,335 16,966 16,953
12/31/2003 14,910 17,421 17,019 17,014
03/31/2004 15,275 17,992 17,472 17,471
06/30/2004 14,891 17,376 17,045 17,045
09/30/2004 15,366 18,105 17,590 17,601
12/31/2004 15,524 18,335 17,758 17,776
03/31/2005 15,437 18,141 17,673 17,686
06/30/2005 15,797 18,789 18,204 18,239
09/30/2005 15,701 18,601 18,082 18,116
12/31/2005 15,755 18,693 18,189 18,232
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
12/31/05
1-Year 0.51% 5-Year 5.21% 10-Year 4.65%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER CORE BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class N)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Core Bond Fund Lehman Brothers Lehman Aggregate Citigroup Big
(Class N) Credit Index ** Bond Index Bond Index
03/01/2001 10,000 10,000 10,000 10,000
03/31/2001 10,025 10,062 10,050 10,052
06/30/2001 10,136 10,169 10,107 10,104
09/30/2001 10,496 10,559 10,573 10,580
12/31/2001 10,318 10,653 10,578 10,582
03/31/2002 10,268 10,625 10,588 10,589
06/30/2002 10,567 10,932 10,979 10,962
09/30/2002 11,088 11,423 11,482 11,467
12/31/2002 11,321 11,775 11,663 11,650
03/31/2003 11,519 12,057 11,825 11,814
06/30/2003 11,833 12,635 12,121 12,116
09/30/2003 11,883 12,617 12,103 12,096
12/31/2003 11,944 12,680 12,141 12,140
03/31/2004 12,261 13,095 12,464 12,466
06/30/2004 11,968 12,647 12,159 12,162
09/30/2004 12,365 13,178 12,548 12,558
12/31/2004 12,507 13,345 12,668 12,683
03/31/2005 12,453 13,204 12,607 12,619
06/30/2005 12,759 13,675 12,986 13,013
09/30/2005 12,698 13,538 12,899 12,925
12/31/2005 12,757 13,606 12,976 13,009
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
12/31/05
1-Year 1.01% 5-Year N/A Since Inception (3/1/01) 5.17%
16 | OPPENHEIMER CORE BOND FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Core Bond Fund (Class Y)
Lehman Brothers Credit Index
Citigroup Broad Investment Grade Bond Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Core Bond Fund Lehman Brothers Lehman Aggregate Citigroup Big
(Class Y) Credit Index ** Bond Index Bond Index
04/27/1998 10,000 10,000 10,000 10,000
06/30/1998 10,254 10,193 10,180 10,179
09/30/1998 10,436 10,563 10,611 10,601
12/31/1998 10,440 10,627 10,647 10,644
03/31/1999 10,405 10,551 10,594 10,595
06/30/1999 10,272 10,386 10,501 10,497
09/30/1999 10,250 10,416 10,572 10,573
12/31/1999 10,297 10,419 10,559 10,556
03/31/2000 10,380 10,568 10,792 10,787
06/30/2000 10,471 10,698 10,980 10,970
09/30/2000 10,667 11,026 11,311 11,304
12/31/2000 11,031 11,397 11,787 11,779
03/31/2001 11,464 11,884 12,145 12,143
06/30/2001 11,594 12,011 12,213 12,205
09/30/2001 12,027 12,471 12,776 12,780
12/31/2001 11,836 12,583 12,782 12,783
03/31/2002 11,797 12,550 12,794 12,791
06/30/2002 12,163 12,913 13,267 13,242
09/30/2002 12,784 13,492 13,874 13,851
12/31/2002 13,088 13,907 14,093 14,072
03/31/2003 13,340 14,241 14,289 14,270
06/30/2003 13,732 14,924 14,646 14,636
09/30/2003 13,820 14,902 14,625 14,611
12/31/2003 13,920 14,976 14,671 14,664
03/31/2004 14,316 15,467 15,061 15,058
06/30/2004 13,992 14,937 14,693 14,690
09/30/2004 14,477 15,565 15,163 15,169
12/31/2004 14,657 15,762 15,308 15,320
03/31/2005 14,611 15,596 15,234 15,243
06/30/2005 14,989 16,152 15,693 15,719
09/30/2005 14,937 15,990 15,587 15,613
12/31/2005 15,024 16,070 15,680 15,714
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 12/31/05
1-Year 2.50% 5-Year 6.37% Since Inception (4/27/98) 5.44%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
17 | OPPENHEIMER CORE BOND FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 4/15/88. The Fund's
maximum sales charge for Class A shares was lower prior to 3/29/91, so actual
performance may have been higher. Unless otherwise noted, Class A returns
include the current maximum initial sales charge of 4.75%.
CLASS B shares of the Fund were first publicly offered on 5/3/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "10-year" return for Class B uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 7/11/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
18 | OPPENHEIMER CORE BOND FUND
CLASS Y shares of the Fund were first publicly offered on 4/27/98. Class Y
shares are offered only to certain institutional investors under special
agreements with the Distributor. An explanation of the calculation of
performance is in the Fund's Statement of Additional Information.
19 | OPPENHEIMER CORE BOND FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended December 31, 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
20 | OPPENHEIMER CORE BOND FUND
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(7/1/05) (12/31/05) DECEMBER 31, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,002.10 $4.50
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,020.72 4.54
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 997.40 8.24
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,016.99 8.32
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 997.30 8.29
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,016.94 8.37
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 999.80 5.81
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,019.41 5.87
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,002.30 3.29
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.93 3.32
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended December 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- -------------------------------
Class A 0.89%
- -------------------------------
Class B 1.63
- -------------------------------
Class C 1.64
- -------------------------------
Class N 1.15
- -------------------------------
Class Y 0.65
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
21 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS December 31, 2005
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--11.9%
- ----------------------------------------------------------------------------------------------------------------------------
Ace Securities Corp., Home Equity Loan Pass-Through Certificates,
Series 2002-HE7, Cl. A2B, 4.559%, 11/25/35 1 $ 1,910,000 $ 1,911,180
- ----------------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 4.43%, 4/20/08 1 890,000 890,635
- ----------------------------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates,
Series 2005-A, Cl. A2, 3.66%, 12/26/07 2,706,725 2,698,419
- ----------------------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.:
Series 2004-2, Cl. A3, 3.58%, 1/15/09 2,850,000 2,797,731
Series 2005-1, Cl. A2B, 3.73%, 7/16/07 1,384,477 1,382,690
- ----------------------------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 249,302 248,600
Series 2005-B, Cl. AF1, 4.02%, 3/26/35 544,864 542,059
Series 2005-C, Cl. AF1, 4.196%, 6/25/35 1,822,667 1,813,054
Series 2005-D, Cl. AF1, 5.04%, 10/25/35 4,018,349 4,007,752
Series 2005-D, Cl. AV2, 4.649%, 10/25/35 1 3,640,000 3,642,249
- ----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through
Certificates, Series 2005-A, Cl. A2, 3.72%, 12/15/07 3,190,000 3,176,309
- ----------------------------------------------------------------------------------------------------------------------------
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 1,160,789 1,157,474
- ----------------------------------------------------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.,
Series 2003-C4, Cl. C4, 5%, 6/10/15 430,000 422,094
- ----------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc., CMO,
Series 2005-WF2, Cl. AF2, 4.922%, 8/25/35 1 4,692,759 4,678,030
- ----------------------------------------------------------------------------------------------------------------------------
Consumer Credit Reference Index Securities Program, Credit Card
Asset-Backed Certificates, Series 2002-B, Cl. FX, 10.421%, 3/22/07 2 4,090,000 4,086,427
- ----------------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Inc., Home Equity
Asset-Backed Certificates:
Series 2002-4, Cl. A1, 4.749%, 2/25/33 1 45,508 45,598
Series 2005-7, Cl. AF1B, 4.317%, 11/25/35 1 2,235,225 2,223,574
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/36 1 1,360,000 1,360,000
Series 2005-17, Cl. 1AF1, 4.58%, 12/27/35 1 2,850,000 2,849,909
Series 2005-17, Cl. 1AF2, 5.363%, 12/27/35 1 910,000 910,224
- ----------------------------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates:
Series 2004-B, Cl. A2, 2.48%, 2/8/07 29,331 29,335
Series 2004-C, Cl. A2, 2.62%, 6/8/07 1,424,480 1,420,964
Series 2005-A, Cl. A2, 3.17%, 9/8/07 1,926,224 1,920,555
Series 2005-B, Cl. A2, 3.75%, 12/8/07 4,618,401 4,607,622
- ----------------------------------------------------------------------------------------------------------------------------
Equity One ABS, Inc., Home Equity Asset-Backed Security,
Series 2004-3, Cl. AF2, 3.80%, 7/25/34 1 3,350,000 3,336,709
- ----------------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Asset-Backed Certificates, Home Equity
Receivables, Series 2005-FF10, Cl. A3, 4.589%, 11/25/35 1 5,480,000 5,483,384
- ----------------------------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2005-A, Cl. A3, 3.48%, 11/17/08 2,060,000 2,035,247
Series 2005-B, Cl. A2, 3.78%, 9/15/07 2,005,195 2,001,022
22 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- ----------------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations:
Series 2005-1, Cl. A2, 3.21%, 5/21/07 $ 838,856 $ 836,563
Series 2005-3, Cl. A2, 3.73%, 10/18/07 2,960,000 2,945,859
- ----------------------------------------------------------------------------------------------------------------------------
Household Home Equity Loan Trust, Home Equity Loan Pass-Through
Certificates, Series 2005-3, Cl. A1, 4.63%, 1/20/35 1 2,716,190 2,718,129
- ----------------------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Home Equity Mtg. Pass-Through Certificates:
Series 2005-2, Cl. 2A1B, 3.63%, 8/25/35 1 3,790,935 3,796,288
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35 2,763,253 2,764,984
Series 2005-10, Cl. 2-A3B, 5.55%, 12/25/06 2,570,000 2,569,598
- ----------------------------------------------------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 3 1,879,398 1,910,220
- ----------------------------------------------------------------------------------------------------------------------------
MBNA Credit Card Master Note Trust, Credit Card Receivables,
Series 2003-C7, Cl. C7, 5.719%, 3/15/16 1 4,070,000 4,316,856
- ----------------------------------------------------------------------------------------------------------------------------
NC Finance Trust, CMO, Series 1999-I, Cl. ECFD, 1.079%, 1/25/29 3 1,750,658 402,651
- ----------------------------------------------------------------------------------------------------------------------------
Nissan Auto Lease Trust, Automobile Lease Obligations,
Series 2004-A, Cl. A2, 2.55%, 1/15/07 189,088 189,040
- ----------------------------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.,
Series 2005-C, Cl. A2, 3.99%, 1/15/08 5,530,000 5,507,723
- ----------------------------------------------------------------------------------------------------------------------------
Onyx Acceptance Owner Trust, Automobile Receivable Obligations,
Series 2005-B, Cl. A2, 4.03%, 4/15/08 2,480,000 2,472,377
- ----------------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust, Home Equity
Pass-Through Certificates:
Series 2004-5, Cl. A F2, 3.735%, 11/10/34 1 780,000 770,664
Series 2005-1, Cl. A F2, 3.914%, 5/25/35 1 570,000 562,150
Series 2005-2, Cl. A F2, 4.415%, 4/25/35 1 1,030,000 1,019,909
Series 2005-6, Cl. A3, 5.68%, 1/25/36 1 1,430,000 1,430,000
- ----------------------------------------------------------------------------------------------------------------------------
Residential Asset Mortgage Products, Inc., Home Equity Asset-Backed
Pass-Through Certificates, Series 2004-RS7, Cl. AI3, 4.45%, 7/25/28 2,350,000 2,338,192
- ----------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., CMO Pass-Through Certificates,
Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 3,724,946 3,726,352
- ----------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Home Equity Obligations,
Series 2003-25XS, Cl. A4, 4.51%, 8/25/33 1,012,375 1,009,240
- ----------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Authority, Asset-Backed Securities,
Series 2001-A, 6.79%, 6/1/10 1,230,000 1,285,215
- ----------------------------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
Series 2004-2, Cl. A2, 2.41%, 2/15/07 67,029 67,007
Series 2004-3, Cl. A2, 2.79%, 6/15/07 636,441 635,426
- ----------------------------------------------------------------------------------------------------------------------------
Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities:
Series 2004-A, Cl. A2, 2.47%, 1/22/07 672,016 670,905
Series 2005-A, Cl. A2, 3.52%, 4/20/07 2,378,194 2,370,902
- ----------------------------------------------------------------------------------------------------------------------------
Wachovia Auto Owner Trust, Automobile Receivable Nts.,
Series 2004-B, Cl. A2, 2.40%, 5/21/07 311,033 310,599
- ----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Trust, Home Equity Asset-Backed Certificates,
Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 1 1,286,839 1,277,763
23 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- ----------------------------------------------------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile Loan Receivable Certificates,
Series 2004-1, Cl. A2A, 2.59%, 5/15/07 $ 1,015,079 $ 1,011,338
---------------
Total Asset-Backed Securities (Cost $112,256,404) 110,594,796
- ----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--70.9%
- ----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--58.1%
- ----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--58.0%
Fannie Mae Whole Loan, CMO Pass-Through Certificates,
Trust 2004-W9, Cl.2A2, 7%, 2/25/44 2,212,300 2,318,075
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 5/1/19 29,132,588 28,396,131
5%, 1/1/36 4 14,202,000 13,749,311
6%, 5/1/18-10/1/34 18,336,891 18,572,792
6.50%, 4/1/18-4/1/34 3,977,862 4,091,281
7%, 2/1/29-2/1/35 14,455,830 15,074,348
8%, 4/1/16 991,345 1,056,325
9%, 3/1/17-5/1/25 277,417 299,847
12.50%, 4/1/14 1,899 2,101
13.50%, 11/1/10 3,962 4,385
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate Mtg
Investment Conduit Multiclass Pass-Through Certificates:
Series 2075, Cl. D, 6.50%, 8/15/28 605,695 624,009
Series 2326, Cl. ZP, 6.50%, 6/15/31 1,270,628 1,309,143
Series 2456, Cl. BD, 6%, 3/15/30 381,887 382,674
Series 2500, Cl. FD, 4.869%, 3/15/32 1 564,748 570,963
Series 2526, Cl. FE, 4.769%, 6/15/29 1 790,032 795,724
Series 2551, Cl. FD, 4.769%, 1/15/33 1 613,398 619,124
Series 2583, Cl. KA, 5.50%, 3/15/22 2,014,119 2,017,963
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Pass-Through Participation
Certificates, Series 151, Cl. F, 9%, 5/15/21 50,585 50,508
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates,
Series 2195, Cl. LH, 6.50%, 10/15/29 3,627,708 3,687,504
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 13.464%, 6/1/26 5 987,994 210,305
Series 183, Cl. IO, 11.095%, 4/1/27 5 1,522,275 316,681
Series 184, Cl. IO, 16.691%, 12/1/26 5 1,649,895 326,254
Series 192, Cl. IO, 15.433%, 2/1/28 5 395,663 80,877
Series 200, Cl. IO, 14.015%, 1/1/29 5 469,810 102,134
Series 206, Cl. IO,(8.685)%, 12/1/29 5 599,028 127,085
Series 2003-118, Cl. S, 20.029%, 12/25/33 5 8,471,938 925,484
Series 2130, Cl. SC, 7.80%, 3/15/29 5 1,092,649 81,478
Series 2134, Cl. SB, 11.861%, 3/15/29 5 1,173,749 89,343
Series 2796, Cl. SD, 12.317%, 7/15/26 5 1,726,334 133,979
Series 2920, Cl. S, 14.307%, 1/15/35 5 7,151,366 345,701
Series 3000, Cl. SE, 20.785%, 7/15/25 5 9,511,795 347,620
24 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed
Security, Series 176, Cl. PO, 4.49%, 6/1/26 6 $ 419,059 $ 353,506
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5%, 6/1/18-7/1/18 8,938,827 8,858,834
5%, 1/1/36 4 59,240,000 57,407,233
5.50%, 3/1/33-1/1/34 68,703,164 68,220,800
5.50%, 1/1/21-1/1/36 4 117,837,000 117,001,994
6%, 8/1/16-11/1/32 57,721,324 58,776,996
6.50%, 11/1/31-1/1/34 5,958,590 6,139,029
6.50%, 1/1/36 4 40,237,000 41,280,667
7%, 1/1/09-11/1/17 3,389,929 3,524,208
7.50%, 2/1/08-3/1/08 22,658 23,088
8%, 8/1/17 12,549 12,915
8.50%, 7/1/32 122,971 133,156
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, CMO,
Trust 2002-T1, Cl. A2, 7%, 11/25/31 2,485,910 2,573,744
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 37,714 38,418
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 477,429 492,742
Trust 2001-51, Cl. OD, 6.50%, 10/25/31 3,491,241 3,595,793
Trust 2001-70, Cl. LR, 6%, 9/25/30 641,426 647,577
Trust 2001-72, Cl. NH, 6%, 4/25/30 384,571 387,554
Trust 2001-74, Cl. PD, 6%, 5/25/30 154,214 154,602
Trust 2002-77, Cl. WF, 4.77%, 12/18/32 1 952,231 959,511
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 6,305,000 6,352,863
Trust 2003-23, Cl. EQ, 5.50%, 4/25/23 8,316,000 8,376,600
Trust 2003-28, Cl. KG, 5.50%, 4/25/23 1,074,000 1,097,464
Trust 2004-101, Cl. BG, 5%, 1/25/20 2,417,000 2,385,323
Trust 2005-71, Cl. DB, 4.50%, 8/25/25 1,170,000 1,098,923
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25 2,300,000 2,268,469
Trust 2005-104, Cl. MC, 5.50%, 12/25/25 11,000,000 10,973,437
Trust 2005-109, Cl. AH, 5.50%, 12/25/25 10,000,000 9,950,920
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security:
Trust 2002-38, Cl. SO, 8.585%, 4/25/32 5 518,870 30,307
Trust 2002-47, Cl. NS, 9.594%, 4/25/32 5 2,048,901 165,216
Trust 2002-51, Cl. S, 9.762%, 8/25/32 5 1,881,334 152,389
Trust 2002-77, Cl. IS, 11.079%, 12/18/32 5 884,000 74,332
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Interest-Only Stripped Mtg.-Backed Security:
Trust 222, Cl. 2, 13.682%, 6/1/23 5 3,208,972 761,273
Trust 240, Cl. 2, 15.615%, 9/1/23 5 3,775,611 786,248
Trust 252, Cl. 2, 7.415%, 11/1/23 5 2,523,350 557,213
Trust 273, Cl. 2, 14.617%, 8/1/26 5 739,788 152,694
Trust 301, Cl. 2, 7.705%, 4/1/29 5 1,970,725 427,675
25 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn.,
Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 303, Cl. IO, (5.181)%, 11/1/29 5 $ 255,653 $ 54,759
Trust 319, Cl. 2, 13.424%, 2/1/32 5 756,133 171,439
Trust 321, Cl. 2, 11.397%, 3/1/32 5 4,418,744 997,281
Trust 322, Cl. 2, 16.345%, 4/1/32 5 7,982,678 1,704,581
Trust 324, Cl. 2, 7.565%, 6/1/32 5 3,919,208 867,960
Trust 329, Cl. 2, 11.403%, 1/1/33 5 3,490,810 773,645
Trust 331, Cl. 9, (13.274)%, 2/1/33 5 2,204,517 500,186
Trust 333, Cl. 2, 11.615%, 3/1/33 5 14,019,961 3,141,628
Trust 334, Cl. 17, 2.19%, 2/1/33 5 311,947 69,124
Trust 338, Cl. 2, 10.364%, 6/1/33 5 16,923,054 3,781,852
Trust 346, Cl. 2, 11.782%, 12/1/33 5 24,708,893 5,479,013
Trust 350, Cl. 2, 12.23%, 2/1/34 5 10,218,760 2,266,192
Trust 2001-65, Cl. S, 21.164%, 11/25/31 5 4,404,526 407,630
Trust 2001-81, Cl. S, 11.605%, 1/25/32 5 821,503 71,528
Trust 2002-52, Cl. SD, 6.658%, 9/25/32 5 2,315,557 190,582
Trust 2002-75, Cl. SA, 21.814%, 11/25/32 5 4,050,634 364,920
Trust 2002-77, Cl. SH, 12.545%, 12/18/32 5 1,059,267 99,776
Trust 2003-4, Cl. S, 20.563%, 2/25/33 5 2,339,953 248,416
Trust 2004-54, Cl. DS, 6.243%, 11/25/30 5 359,758 20,712
Trust 2005-6, Cl. SE, 13.927%, 2/25/35 5 4,919,815 255,962
Trust 2005-19, Cl. SA, 12.727%, 3/25/35 5 25,333,845 1,410,411
Trust 2005-40, Cl. SA, 13.682%, 5/25/35 5 4,684,250 249,587
Trust 2005-71, Cl. SA, 19.968%, 8/25/25 5 6,109,631 365,100
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security:
Trust 322, Cl. 1, 3.379%, 4/1/32 6 2,781,659 2,224,124
Trust 1993-184, Cl. M, 5.779%, 9/25/23 6 905,745 760,289
---------------
539,379,559
- ----------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.1%
Government National Mortgage Assn.:
4.75%, 7/20/25-7/20/27 1 36,236 36,517
7%, 7/15/09 24,242 24,988
8%, 7/15/06-10/15/06 6,117 6,176
8.50%, 8/15/17-12/15/17 358,790 387,188
9%, 2/15/09-6/15/09 16,725 17,602
10%, 11/15/09 20,528 21,846
10.50%, 12/15/17-5/15/21 29,842 33,574
11%, 10/20/19 66,675 72,965
12%, 5/15/14 347 398
- ----------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only
Stripped Mtg.-Backed Security:
Series 2001-21, Cl. SB, 3.873%, 1/16/27 5 2,013,848 138,672
Series 2002-15, Cl. SM, 0.947%, 2/16/32 5 2,051,223 142,634
Series 2002-76, Cl. SY, 5.131%, 12/16/26 5 819,896 35,951
Series 2004-11, Cl. SM, (0.493)%, 1/17/30 5 296,462 12,503
---------------
931,014
26 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
NON-AGENCY--12.8%
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--10.1%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates,
Series 1996-MD6, Cl. A3, 7.408%, 11/13/29 1 $ 800,000 $ 830,458
- ----------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Interest-Only Stripped Mtg.-Backed Security
Collateralized Mtg. Obligations, Series 1997-D4, Cl. PS1, 4.501%, 4/14/29 5 40,459,738 1,158,666
- ----------------------------------------------------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc., Commercial Mtg
Pass-Through Certificates:
Series 2004-6, Cl. A3, 4.512%, 12/10/42 2,160,000 2,092,774
Series 2005-2, Cl. A4, 4.783%, 7/10/43 1 3,980,000 3,907,625
Series 2005-3, Cl. A2, 4.501%, 7/10/43 3,330,000 3,251,342
Series 2005-6, Cl. A4, 5.182%, 9/10/47 1 10,299,000 10,363,369
- ----------------------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., CMO Pass-Through Certificates,
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 2,492,796 2,495,501
- ----------------------------------------------------------------------------------------------------------------------------
Banc of America Mortgage Securities, Inc., CMO Pass-Through Certificates:
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 2,090,550 2,123,214
Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 1 54,757 54,739
Series 2005-E, Cl. 2A2, 4.983%, 6/25/35 1 681,450 678,357
- ----------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg
Obligations, Series 2005-PWR7, Cl. A2, 4.945%, 2/11/41 1,210,000 1,196,695
- ----------------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed
Pass-Through Certificates, Series 1997-CTL1, 6.722%, 6/22/24 5 8,610,342 334,752
- ----------------------------------------------------------------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial Mortgage Trust, Commercial Mtg
Obligations, Series 2005-CD1, Cl. A4, 5.225%, 7/15/44 7 4,360,000 4,408,168
- ----------------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, CMO:
Series 2004-J9, Cl. 1A1, 4.559%, 10/25/34 1 703,741 704,286
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 5,124,563 5,189,335
- ----------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. D, 7.674%, 4/29/39 1,2 2,690,000 2,703,450
- ----------------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 1,603,030 1,648,558
- ----------------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 1,730,000 1,700,741
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 2,100,000 2,086,077
Series 2005-CA, Cl. A3, 4.578%, 6/10/48 1,000,000 973,358
- ----------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg
Pass-Through Certificates:
Series 1997-C1, Cl. A3, 6.869%, 7/15/29 1,016,945 1,040,106
Series 2004-C3, Cl. A4, 4.547%, 12/10/41 1,410,000 1,365,722
- ----------------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg
Pass-Through Certificates:
Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 1,850,000 1,802,605
Series 2005-GG5, Cl. A2, 5.117%, 4/10/37 7 2,550,000 2,557,785
- ----------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 2004-C1, Cl. A1, 3.659%, 10/10/28 1,601,040 1,551,610
Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 1,100,000 1,086,531
27 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
JP Morgan Commercial Mortgage Finance Corp., Commercial Mtg
Obligations, Series 2000-C9, Cl. A2, 7.77%, 10/15/32 $ 5,000,000 $ 5,429,159
- ----------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 800,000 784,171
- ----------------------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg. Pass-Through
Certificates, Series 2005-C5, Cl. A2, 4.885%, 9/15/30 2,520,000 2,503,496
- ----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 9.07%, 2/18/30 5 11,236,330 290,578
- ----------------------------------------------------------------------------------------------------------------------------
Lehman Structured Securities Corp., CMO,
Series 2002-GE1, Cl. A, 2.514%, 7/26/24 3 226,346 182,952
- ----------------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, CMO Pass-Through Certificates:
Series 2004-6, Cl. 10A1, 6%, 7/25/34 3,097,567 3,114,560
Series 2004-9, Cl. A3, 4.70%, 8/25/34 1 4,007,696 3,989,419
- ----------------------------------------------------------------------------------------------------------------------------
Mastr Seasoned Securities Trust, Mtg. Pass-Through Certificates,
Series 2004-2, Cl. A1, 6.50%, 8/25/32 5,806,108 5,862,354
- ----------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 7 2,010,000 2,078,641
- ----------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mtg. Asset-Backed Pass-Through Certificates,
Series 2003-QS1, Cl. A2, 5.75%, 1/25/33 2,070,620 2,074,613
- ----------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial
Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, (2.705)%, 5/18/32 5 223,072,181 640,753
- ----------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Obligations:
Series 2005-C17, Cl. A2, 4.782%, 3/15/42 3,560,000 3,520,729
Series 2005-C20, Cl. A5, 5.087%, 7/15/42 1 2,520,000 2,503,474
- ----------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., CMO Pass-Through
Certificates, Series 2005-AR5, Cl. A1, 4.681%, 5/25/35 1 2,823,384 2,821,356
- ----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities Trust, CMO,
Series 2004-DD, Cl. 2A1, 4.522%, 1/25/35 1 1,219,964 1,216,233
---------------
94,318,312
- ----------------------------------------------------------------------------------------------------------------------------
OTHER--1.7%
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates,
Series 2005-C, Cl. A2, 4.24%, 3/15/08 4,800,000 4,783,294
- ----------------------------------------------------------------------------------------------------------------------------
JP Morgan Mortgage Trust, CMO Pass-Through Certificates,
Series 2005-S2, Cl. 3A1, 6.754%, 9/25/32 1 3,232,533 3,291,591
- ----------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg
Pass-Through Certificates, Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 3,150,000 3,109,905
- ----------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. B, (1.041)%, 10/23/17 5 17,847 4,411
- ----------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped
Mtg.-Backed Security, Series1987-3, Cl. A, 1.903%, 10/23/17 6 26,413 23,567
- ----------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., CMO Pass-Through
Certificates, Series 2005-AR8, Cl. 2AB1, 4.629%, 7/25/45 1 4,158,753 4,158,103
---------------
15,370,871
28 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--1.0%
Countrywide Alternative Loan Trust, CMO,
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 7 $ 6,755,050 $ 6,875,378
- ----------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., CMO Pass-Through Certificates,
Series 2002-AL1, Cl. B2, 3.45%, 2/25/32 2,685,094 2,347,091
---------------
9,222,469
---------------
Total Mortgage-Backed Obligations (Cost $662,409,383) 659,222,225
- ----------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--9.1%
- ----------------------------------------------------------------------------------------------------------------------------
Fannie Mae Unsec. Nts., 3.58%, 1/31/07 8 9,150,000 8,702,528
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Unsec. Bonds, 3.50%, 11/15/07 400,000 391,135
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
4.125%, 7/12/10 9 12,399,000 12,103,222
4.375%, 11/16/07 2,455,000 2,439,772
5.50%, 9/15/11 1,800,000 1,865,374
6.625%, 9/15/09 3,435,000 3,652,480
- ----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
4%, 2/28/07 905,000 897,408
4.75%, 12/15/10 2,745,000 2,748,030
6%, 5/15/11 7,280,000 7,708,421
6.625%, 9/15/09 2,870,000 3,054,291
7.25%, 5/15/30 7 2,180,000 2,894,458
- ----------------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
4.65%, 6/15/35 3,718,000 3,528,858
5.375%, 11/13/08 2,000,000 2,037,054
Series A, 6.79%, 5/23/12 18,831,000 20,866,970
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
5.50%, 8/15/28 7 1,819,000 2,045,878
8.875%, 8/15/17 7 5,464,000 7,594,534
STRIPS, 3.86%, 2/15/13 7,8 1,520,000 1,112,669
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 4.875%, 2/15/12 7 1,275,000 1,309,416
---------------
Total U.S. Government Obligations (Cost $86,276,171) 84,952,498
- ----------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.5%
- ----------------------------------------------------------------------------------------------------------------------------
United Mexican States Nts., 7.50%, 1/14/12 (Cost $3,861,965) 3,695,000 4,129,163
- ----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--29.2%
- ----------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--8.7%
- ----------------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--0.5%
Dana Corp., 6.50% Unsec. Nts., 3/1/09 7 2,905,000 2,338,525
- ----------------------------------------------------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 2,660,000 2,477,439
---------------
4,815,964
29 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--2.1%
DaimlerChrysler NA Holdings Corp., 8% Nts., 6/15/10 $ 3,955,000 $ 4,329,408
- ----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
5.80% Sr. Unsec. Nts., 1/12/09 5,850,000 5,106,570
7.375% Nts., 10/28/09 620,000 550,308
- ----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
6.15% Nts., 4/5/07 7,210,000 6,812,181
8% Bonds, 11/1/31 7 3,160,000 3,034,924
---------------
19,833,391
- ----------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.2%
Harrah's Operating Co., Inc., 5.625% Sr. Unsec. Bonds, 6/1/15 2,170,000 2,135,697
- ----------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 8.25% Sr. Unsec. Nts., 2/15/11 1,920,000 2,106,346
- ----------------------------------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 2,740,000 2,808,500
- ----------------------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 4,154,000 4,194,875
---------------
11,245,418
- ----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.1%
Beazer Homes USA, Inc., 6.875% Sr. Unsec. Nts., 7/15/15 1,930,000 1,860,038
- ----------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 6.125% Nts., 1/15/14 1,660,000 1,662,963
- ----------------------------------------------------------------------------------------------------------------------------
K. Hovnanian Enterprises, Inc., 6.50% Sr. Nts., 1/15/14 1,915,000 1,840,939
- ----------------------------------------------------------------------------------------------------------------------------
KB Home, 5.75% Sr. Unsec. Unsub. Nts., 2/1/14 2,665,000 2,526,074
- ----------------------------------------------------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 7 2,140,000 2,157,017
---------------
10,047,031
- ----------------------------------------------------------------------------------------------------------------------------
MEDIA--2.5%
British Sky Broadcasting Group plc, 7.30% Unsec. Nts., 10/15/06 823,000 836,474
- ----------------------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 4,275,000 4,547,835
- ----------------------------------------------------------------------------------------------------------------------------
Cox Communications, Inc., 4.625% Unsec. Nts., 1/15/10 4,185,000 4,054,964
- ----------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 5.70% Sr. Unsec. Nts., 5/15/13 7 2,350,000 2,201,388
- ----------------------------------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 3,400,000 4,106,588
- ----------------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP:
8.375% Sr. Nts., 7/15/33 2,340,000 2,772,355
10.15% Sr. Nts., 5/1/12 1,037,000 1,264,102
- ----------------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc., 3.50% Sr. Unsec. Nts., 10/15/07 7 3,580,000 3,474,326
---------------
23,258,032
- ----------------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--1.0%
Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 2,800,000 2,903,569
- ----------------------------------------------------------------------------------------------------------------------------
J.C. Penney Co., Inc. (Holding Co.), 7.40% Nts., 4/1/37 4,035,000 4,528,133
- ----------------------------------------------------------------------------------------------------------------------------
May Department Stores Co., 7.90% Unsec. Debs., 10/15/07 1,515,000 1,577,997
---------------
9,009,699
30 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--0.3%
Gap, Inc. (The):
6.90% Nts., 9/15/07 $ 2,095,000 $ 2,141,524
9.55% Unsub. Nts., 12/15/08 1 507,000 563,792
---------------
2,705,316
- ----------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--2.5%
- ----------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.5%
Albertson's, Inc., 8% Sr. Unsec. Debs., 5/1/31 7 2,465,000 2,431,676
- ----------------------------------------------------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 2,905,000 3,429,695
- ----------------------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 6.80% Sr. Unsec. Nts., 4/1/11 5,150,000 5,407,031
- ----------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09 3,10 476,601 --
- ----------------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 7.50% Sr. Unsec. Nts., 9/15/09 2,690,000 2,875,427
---------------
14,143,829
- ----------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--1.0%
Archer Daniels Midland Co., 5.375% Nts., 9/15/35 2,145,000 2,064,867
- ----------------------------------------------------------------------------------------------------------------------------
ConAgra Foods, Inc., 6% Nts., 9/15/06 1,615,000 1,626,460
- ----------------------------------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts., 11/30/07 3,025,000 2,967,059
- ----------------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts., 6/1/07 1,950,000 1,958,574
---------------
8,616,960
- ----------------------------------------------------------------------------------------------------------------------------
ENERGY--1.4%
- ----------------------------------------------------------------------------------------------------------------------------
OIL & GAS--1.4%
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 2,125,000 2,254,234
- ----------------------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 5.75% Unsec. Unsub. Nts.,
Series 12, 12/15/15 2,7 3,360,000 3,347,400
- ----------------------------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV, 4.623% Sr. Nts., Cl. A1, 6/15/10 2 5,757,000 5,705,953
- ----------------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 2 1,461,490 1,388,700
---------------
12,696,287
- ----------------------------------------------------------------------------------------------------------------------------
FINANCIALS--8.3%
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.8%
Credit Suisse First Boston, Inc. (USA), 5.50% Nts., 8/15/13 4,320,000 4,413,614
- ----------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Capital XV, 5.875% Sub. Nts., Series O, 3/15/35 7 3,120,000 3,112,765
---------------
7,526,379
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--1.4%
Barclays Bank plc, 6.278% Perpetual Bonds 11 3,690,000 3,715,424
- ----------------------------------------------------------------------------------------------------------------------------
HSBC Finance Corp., 4.75% Sr. Unsec. Nts., 7/15/13 4,205,000 4,069,128
- ----------------------------------------------------------------------------------------------------------------------------
National City Bank, 6.20% Sub. Nts., 12/15/11 216,000 228,835
- ----------------------------------------------------------------------------------------------------------------------------
Popular North America, Inc., 5.20% Nts., 12/12/07 4,535,000 4,532,674
31 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Socgen Real Estate LLC, 7.64% Bonds 1,2,11 $ 185,000 $ 192,560
---------------
12,738,621
- ----------------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--0.1%
MBNA America Bank NA, 7.125% Sub. Nts., 11/15/12 515,000 576,511
- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.1%
CIT Group, Inc.:
4.75% Sr. Nts., 8/15/08 695,000 692,774
7.75% Sr. Unsec. Unsub. Nts., 4/2/12 1,325,000 1,504,610
- ----------------------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 6.625% Unsec. Sub. Nts., 6/15/32 1,600,000 1,813,965
- ----------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 6,485,000 6,680,166
- ----------------------------------------------------------------------------------------------------------------------------
MBNA Corp., 7.50% Sr. Nts., Series F, 3/15/12 2,630,000 2,965,969
- ----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5% Sr. Unsub. Nts., Series C, 2/3/14 4,045,000 4,001,201
- ----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 2,045,000 2,200,925
---------------
19,859,610
- ----------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.0%
Allstate Financial Global Funding II, 4.25% Nts., 9/10/08 2 635,000 624,533
- ----------------------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 5.875% Sr. Unsec. Bonds, 8/1/33 2,780,000 2,670,037
- ----------------------------------------------------------------------------------------------------------------------------
MetLife, Inc., 5.70% Sr. Unsec. Nts., 6/15/35 7 2,040,000 2,054,855
- ----------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc.:
5.90% Nts., 7/1/12 1,430,000 1,492,873
6.25% Sr. Unsec. Nts., 11/15/11 680,000 716,585
- ----------------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 2 3,310,000 4,205,666
- ----------------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 3,185,000 4,133,534
- ----------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 3.75% Sr. Unsec. Nts., 3/15/08 2,845,000 2,776,202
---------------
18,674,285
- ----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.7%
EOP Operating LP:
6.763% Sr. Unsec. Nts., 6/15/07 7 560,000 571,834
8.10% Unsec. Nts., 8/1/10 2,690,000 2,973,908
- ----------------------------------------------------------------------------------------------------------------------------
iStar Financial, Inc.:
5.125% Sr. Unsec. Nts., Series B, 4/1/11 7 1,365,000 1,331,548
5.15% Sr. Unsec. Nts., 3/1/12 1,770,000 1,716,387
- ----------------------------------------------------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 2,255,000 2,287,655
- ----------------------------------------------------------------------------------------------------------------------------
Simon Property Group LP, 5.375% Nts., 6/1/11 2 3,075,000 3,085,784
- ----------------------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 4,120,000 4,150,245
---------------
16,117,361
- ----------------------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.2%
Countrywide Financial Corp., 4.50% Nts., Series A, 6/15/10 1,970,000 1,914,139
32 | OPPENHEIMER CORE BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--0.6%
- ----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.6%
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 $ 3,200,000 $ 3,212,806
- ----------------------------------------------------------------------------------------------------------------------------
HCA, Inc., 7.125% Sr. Unsec. Nts., 6/1/06 2,085,000 2,112,522
---------------
5,325,328
- ----------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--1.4%
- ----------------------------------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.4%
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 4,220,000 4,106,094
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.2%
Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 1,885,000 1,998,100
- ----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.8%
Tyco International Group SA:
6.125% Unsec. Unsub. Nts., 11/1/08 3,901,000 3,984,602
6.125% Unsec. Unsub. Nts., 1/15/09 575,000 588,078
6.375% Sr. Unsec. Unsub. Nts., 2/15/06 2,590,000 2,594,302
---------------
7,166,982
- ----------------------------------------------------------------------------------------------------------------------------
MARINE--0.0%
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07 3,10 57,000 64,695
- ----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.0%
- ----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.0%
Orion Network Systems, Inc., 12.50% Sr. Unsub. Disc. Nts., 1/15/07 10 200,000 2,000
- ----------------------------------------------------------------------------------------------------------------------------
MATERIALS--0.0%
- ----------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.0%
Morton International, Inc., 9.65% Credit Sensitive Nts., 6/1/20 85,000 119,194
- ----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.3%
- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.9%
British Telecommunications plc, 8.875% Bonds, 12/15/30 1,810,000 2,428,835
- ----------------------------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance BV, 8% Unsub. Nts., 6/15/10 1 2,525,000 2,865,453
- ----------------------------------------------------------------------------------------------------------------------------
France Telecom SA, 8.50% Sr. Unsec. Nts., 3/1/31 1 675,000 903,365
- ----------------------------------------------------------------------------------------------------------------------------
SBC Communications, Inc., 5.30% Nts., 11/15/10 3,310,000 3,323,551
- ----------------------------------------------------------------------------------------------------------------------------
Sprint Capital Corp., 8.75% Nts., 3/15/32 2,705,000 3,600,623
- ----------------------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp.:
5.85% Nts., 9/15/35 7 2,090,000 2,021,009
7.25% Sr. Unsec. Unsub. Nts., 12/1/10 2,665,000 2,894,864
---------------
18,037,700
- ----------------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.4%
AT&T Wireless Services, Inc., 8.125% Sr. Unsec. Nts., 5/1/12 3,035,000 3,511,146
- ----------------------------------------------------------------------------------------------------------------------------
Loral Skynet Corp., 14% Sr. Sec. Nts., 10/15/15 12 34,000 41,140
---------------
3,552,286
33 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
UTILITIES--4.0%
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.5%
CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10 $ 2,380,000 $ 2,555,646
- ----------------------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 2,740,000 3,048,313
- ----------------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 1,035,000 1,041,736
- ----------------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A, 11/15/06 1,770,000 1,776,731
7.375% Sr. Unsub. Nts., Series C, 11/15/31 2,212,000 2,618,302
- ----------------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 1 1,435,000 1,510,338
- ----------------------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Unsec. Nts., 10/1/12 3,465,000 3,582,093
- ----------------------------------------------------------------------------------------------------------------------------
Portland General Electric Co., 8.125% First Mortgage Nts., 2/1/10 2 1,505,000 1,662,572
- ----------------------------------------------------------------------------------------------------------------------------
PSE&G Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 1,810,000 1,882,400
- ----------------------------------------------------------------------------------------------------------------------------
PSE&G Power LLC, 6.875% Sr. Unsec. Nts., 4/15/06 645,000 648,386
- ----------------------------------------------------------------------------------------------------------------------------
TXU Energy Co., 6.125% Nts., 3/15/08 2,830,000 2,877,971
---------------
23,204,488
- ----------------------------------------------------------------------------------------------------------------------------
ENERGY TRADERS--0.4%
Constellation Energy Group, Inc., 7.60% Unsec. Nts., 4/1/32 3,065,000 3,698,870
- ----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.7%
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10 2,525,000 2,800,472
- ----------------------------------------------------------------------------------------------------------------------------
Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10 3,223,000 3,543,527
---------------
6,343,999
- ----------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.4%
PSEG Funding Trust I, 5.381% Nts., 11/16/07 3,935,000 3,942,727
---------------
Total Corporate Bonds and Notes (Cost $272,782,986) 271,341,296
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--0.0%
- ----------------------------------------------------------------------------------------------------------------------------
Loral Skynet Corp., 12% Cum., Series A, Non-Vtg.3,13 (Cost $53,392) 284 53,179
- ----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--0.0%
- ----------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. 181 5,743
- ----------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., Series B, Escrow Shares 3,13,14 25 --
- ----------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. 13 2,154 60,851
---------------
Total Common Stocks (Cost $62,790) 66,594
UNITS
- -----------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ----------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07 3,13 50 --
- ----------------------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/09 3,13 1,063 --
- ----------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08 2,13 150 --
34 | OPPENHEIMER CORE BOND FUND
VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Continued
- ----------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07 3,13 200 $ --
- ----------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10 13 2,028 568
---------------
Total Rights, Warrants and Certificates (Cost $25,015) 568
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.3%
- ----------------------------------------------------------------------------------------------------------------------------
Undivided interest of 0.22% in joint repurchase agreement (Principal
Amount/Value $1,414,200,000, with a maturity value of $1,414,844,247)
with UBS Warburg LLC, 4.10%, dated 12/30/05, to be repurchased at
$3,127,424 on 1/3/06, collateralized by Federal Home Loan Mortgage
Corp., 5%, 1/1/35, with a value of $157,513,104 and Federal National
Mortgage Assn., 5%--5.50%, 3/1/34--10/1/35, with a value of
$1,301,420,187 (Cost $3,126,000) $ 3,126,000 3,126,000
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with
Cash Collateral from Securities Loaned) (Cost $1,140,854,106) 1,133,486,319
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--4.0%
- ----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED FLOATING NOTE--0.6%
Trust Money Market Securities, Series A-2, 4.44%, 1/17/06 15 2,000,000 2,000,000
- ----------------------------------------------------------------------------------------------------------------------------
Whitehawk CDO Funding Corp., 4.56%, 3/15/06 15 3,000,000 3,000,000
---------------
5,000,000
- ----------------------------------------------------------------------------------------------------------------------------
DOMESTIC FLOATING CERTIFICATE OF DEPOSIT--0.2%
Washington Mutual Bank, 4.36%, 1/20/06 15 1,999,949 1,999,949
- ----------------------------------------------------------------------------------------------------------------------------
FUNDING AGREEMENT/GIC--0.2%
Protective Life Insurance Co., 4.36%, 1/30/06 15 2,000,000 2,000,000
- ----------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.4%
Undivided interest of 0.72% in joint repurchase agreement (Principal
Amount/Value $3,150,000,000, with a maturity value of $3,151,501,500)
with Nomura Securities, 4.29%, dated 12/30/05, to be repurchased at
$22,667,587 on 1/3/06, collateralized by U.S. Agency Mortgages,
3.34%--9.50%, 6/1/08--5/1/38, with a value of $3,213,000,000 15 22,656,787 22,656,787
- ----------------------------------------------------------------------------------------------------------------------------
MASTER FLOATING NOTE--0.4%
Bear Stearns, 4.37%, 1/3/06 15 4,000,000 4,000,000
- ----------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FLOATING NOTE--0.2%
American Express Credit Corp., 4.40%, 1/17/06 15 1,899,977 1,899,977
---------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $37,556,713) 37,556,713
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,178,410,819) 125.9% 1,171,043,032
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (25.9) (240,718,561)
----------------------------------
NET ASSETS 100.0% $ 930,324,471
==================================
35 | OPPENHEIMER CORE BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents the current interest rate for a variable or increasing rate
security.
2. 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 $27,003,045 or 2.90% of the Fund's net
assets as of December 31, 2005.
3. Illiquid or restricted security. The aggregate value of illiquid or
restricted securities as of December 31, 2005 was $2,613,697, which represents
0.28% of the Fund's net assets, none of which is considered restricted. See Note
7 of Notes to Financial Statements.
4. When-issued security or forward commitment to be delivered and settled after
December 31, 2005. See Note 1 of Notes to Financial Statements.
5. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $32,445,492 or 3.49% of the Fund's net assets
as of December 31, 2005.
6. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $3,361,486 or 0.36% of the Fund's net assets as of
December 31, 2005.
7. Partial or fully-loaned security. See Note 8 of Notes to Financial
Statements.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. 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 $3,806,966. See Note 5 of Notes to Financial
Statements.
10. Issue is in default. Non-income producing. See Note 1 of Notes to Financial
Statements.
11. This bond has no contractual maturity date, is not redeemable and
contractually pays an indefinite stream of interest.
12. Interest or dividend is paid-in-kind.
13. Non-income producing security.
14. Received as the result of issuer reorganization.
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 8 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER CORE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES December 31, 2005
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $48,959,258)
(cost $1,178,410,819)--see accompanying statement of investments $1,171,043,032
- ----------------------------------------------------------------------------------------------------
Cash 1,012,753
- ----------------------------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 43,981
- ----------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $66,242,815 sold on a when-issued basis or
forward commitment) 69,132,450
Interest 8,011,380
Shares of beneficial interest sold 2,677,184
Other 30,318
---------------
Total assets 1,251,951,098
- ----------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 37,556,713
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $277,324,641 purchased on a when-issued basis or
forward commitment) 282,273,239
Shares of beneficial interest redeemed 932,366
Distribution and service plan fees 461,973
Transfer and shareholder servicing agent fees 181,606
Shareholder communications 73,565
Futures margins 43,956
Trustees' compensation 32,939
Other 70,270
---------------
Total liabilities 321,626,627
- ----------------------------------------------------------------------------------------------------
NET ASSETS $ 930,324,471
===============
- ----------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 90,917
- ----------------------------------------------------------------------------------------------------
Additional paid-in capital 944,956,509
- ----------------------------------------------------------------------------------------------------
Accumulated net investment loss (86,008)
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (8,460,004)
- ----------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (6,176,943)
---------------
NET ASSETS $ 930,324,471
===============
37 | OPPENHEIMER CORE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$488,889,540 and 47,765,801 shares of beneficial interest outstanding) $10.24
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $10.75
- ------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $125,068,898 and
12,224,185 shares of beneficial interest outstanding) $10.23
- ------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $109,207,064
and 10,663,164 shares of beneficial interest outstanding) $10.24
- ------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $35,836,067
and 3,502,531 shares of beneficial interest outstanding) $10.23
- ------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of $171,322,902 and
16,761,479 shares of beneficial interest outstanding) $10.22
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER CORE BOND FUND
STATEMENT OF OPERATIONS For the Year Ended December 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 35,153,138
- --------------------------------------------------------------------------------
Fee income 3,558,542
- --------------------------------------------------------------------------------
Portfolio lending fees 143,123
- --------------------------------------------------------------------------------
Dividends 35
- --------------------------------------------------------------------------------
Other income 27,478
------------
Total investment income 38,882,316
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 4,290,641
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,042,340
Class B 1,352,642
Class C 946,463
Class N 151,192
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 921,089
Class B 402,233
Class C 242,759
Class N 117,136
Class Y 168,718
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 113,544
Class B 59,631
Class C 29,288
Class N 4,693
- --------------------------------------------------------------------------------
Custodian fees and expenses 27,100
- --------------------------------------------------------------------------------
Trustees' compensation 17,655
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 89,266
-------------
Total expenses 9,977,890
Less reduction to custodian expenses (22,368)
Less waivers and reimbursements of expenses (1,411,701)
-------------
Net expenses 8,543,821
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 30,338,495
39 | OPPENHEIMER CORE BOND FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ (7,211,002)
Closing and expiration of futures contracts 4,462,585
Foreign currency transactions (1,666)
Swap contracts (396,754)
-------------
Net realized loss (3,146,837)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (12,163,741)
Futures contracts 480,784
Swap contracts 32,193
-------------
Net change in unrealized depreciation (11,650,764)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,540,894
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40 | OPPENHEIMER CORE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2005 2004
- --------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------
Net investment income $ 30,338,495 $ 22,568,565
- --------------------------------------------------------------------------------------
Net realized gain (loss) (3,146,837) 13,788,328
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (11,650,764) (6,680,433)
------------------------------
Net increase in net assets resulting from operations 15,540,894 29,676,460
- --------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (18,178,321) (14,770,071)
Class B (4,744,426) (5,647,015)
Class C (3,359,283) (2,956,677)
Class N (1,226,750) (870,216)
Class Y (4,277,387) (2,000,794)
- --------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 153,603,323 (40,358,244)
Class B (20,719,422) (50,192,314)
Class C 26,483,304 (6,332,036)
Class N 10,895,909 7,706,597
Class Y 135,190,630 (5,409,686)
- --------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------
Total increase (decrease) 289,208,471 (91,153,996)
- --------------------------------------------------------------------------------------
Beginning of period 641,116,000 732,269,996
------------------------------
End of period (including accumulated net investment
loss of $86,008 and $1,366,730, respectively) $930,324,471 $641,116,000
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.44 $ 10.38 $ 10.14 $ 9.74 $ 9.79
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .38 1 .35 .54 .73
Net realized and unrealized gain (loss) (.18) .12 .24 .40 (.05)
-----------------------------------------------------------------------
Total from investment operations .24 .50 .59 .94 .68
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.44) (.44) (.35) (.54) (.73)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.24 $ 10.44 $ 10.38 $ 10.14 $ 9.74
=======================================================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 2.35% 4.90% 5.87% 10.06% 7.05%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $488,889 $344,205 $382,966 $356,480 $280,132
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $423,182 $353,046 $382,420 $316,279 $237,232
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.12% 3.63% 3.39% 5.47% 7.31%
Total expenses 1.06% 1.10% 1.10% 1.10% 1.23%
Expenses after payments and waivers and
reduction to custodian expenses 0.90% 0.93% 1.10% 1.10% 1.23%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 4 94% 4 111% 151% 162%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchases and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 3,447,306,025 3,473,854,068
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42 | OPPENHEIMER CORE BOND FUND
CLASS B YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.44 $ 10.37 $ 10.13 $ 9.73 $ 9.79
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 1 .30 1 .27 .47 .65
Net realized and unrealized gain (loss) (.20) .13 .24 .40 (.05)
----------------------------------------------------------------------
Total from investment operations .15 .43 .51 .87 .60
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.36) (.27) (.47) (.66)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.23 $ 10.44 $ 10.37 $ 10.13 $ 9.73
=======================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 1.50% 4.21% 5.05% 9.26% 6.14%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $125,069 $148,445 $197,774 $217,789 $161,998
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $135,296 $167,685 $216,853 $187,343 $118,521
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.37% 2.86% 2.61% 4.68% 6.60%
Total expenses 1.91% 1.91% 1.87% 1.85% 1.99%
Expenses after payments and waivers
and reduction to custodian expenses 1.65% 1.69% 1.87% 1.85% 1.99%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 4 94% 4 111% 151% 162%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchases and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 3,447,306,025 3,473,854,068
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.45 $ 10.39 $ 10.14 $ 9.74 $ 9.80
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 1 .30 1 .27 .47 .65
Net realized and unrealized gain (loss) (.20) .12 .25 .40 (.05)
-----------------------------------------------------------------------
Total from investment operations .15 .42 .52 .87 .60
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.36) (.27) (.47) (.66)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.24 $ 10.45 $ 10.39 $ 10.14 $ 9.74
=======================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 1.49% 4.12% 5.18% 9.26% 6.14%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $109,207 $84,696 $90,583 $90,800 $57,049
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 94,742 $86,020 $96,361 $75,531 $36,886
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.37% 2.87% 2.64% 4.61% 6.65%
Total expenses 1.86% 1.87% 1.84% 1.83% 1.98%
Expenses after payments and waivers and
reduction to custodian expenses 1.65% 1.68% 1.84% 1.83% 1.98%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 4 94% 4 111% 151% 162%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchases and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 3,447,306,025 3,473,854,068
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 | OPPENHEIMER CORE BOND FUND
CLASS N YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.44 $ 10.37 $ 10.13 $ 9.73 $10.02
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40 2 .35 2 .31 .51 .61
Net realized and unrealized gain (loss) (.19) .13 .24 .40 (.29)
-----------------------------------------------------------------------
Total from investment operations .21 .48 .55 .91 .32
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.42) (.41) (.31) (.51) (.61)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.23 $ 10.44 $ 10.37 $ 10.13 $ 9.73
=======================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 1.99% 4.71% 5.51% 9.73% 3.18%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $35,836 $25,580 $17,732 $11,302 $2,176
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $30,274 $21,411 $15,338 $ 7,071 $ 768
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.87% 3.38% 3.03% 4.76% 7.87%
Total expenses 1.47% 1.51% 1.50% 1.44% 1.37%
Expenses after payments and waivers
and reduction to custodian expenses 1.15% 1.20% 1.44% 1.44% 1.37%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 5 94% 5 111% 151% 162%
1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. The portfolio turnover rate excludes purchases and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 3,447,306,025 3,473,854,068
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 | OPPENHEIMER CORE BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.43 $ 10.36 $ 10.12 $ 9.72 $ 9.78
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 1 .41 1 .39 .59 .76
Net realized and unrealized gain (loss) (.19) .13 .24 .40 (.05)
-----------------------------------------------------------------------
Total from investment operations .26 .54 .63 .99 .71
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.47) (.47) (.39) (.59) (.77)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.22 $ 10.43 $ 10.36 $ 10.12 $ 9.72
=======================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 2.50% 5.30% 6.35% 10.58% 7.30%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $171,323 $38,190 $43,215 $24,358 $4,067
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 91,172 $45,333 $38,398 $10,243 $2,286
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.39% 3.92% 3.80% 5.53% 7.85%
Total expenses 0.76% 0.64% 0.63% 0.63% 0.94%
Expenses after payments and waivers and
reduction to custodian expenses 0.65% 0.64% 0.63% 0.63% 0.92%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 4 94% 4 111% 151% 162%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchases and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 3,447,306,025 3,473,854,068
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Core Bond Fund (the Fund), is a separate fund of Oppenheimer
Integrity Funds, an open-end management investment company registered under the
Investment Company Act of 1940, as amended. On January 14, 2005, shareholders of
the Fund approved a modification to the Fund's investment objective. Effective
January 21, 2005, the Fund's investment objective is to seek total return by
investing mainly in debt instruments. Previously, the Fund's investment
objective was to seek a high level of current income by investing mainly in debt
instruments. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities 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
47 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 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 December 31, 2005, the Fund had purchased
$277,324,641 of securities issued on a when-issued basis or forward commitment
and sold $66,242,815 of securities issued on a when-issued basis or forward
commitment.
In connection with its ability to purchase or sell securities on a
when-issued basis, the Fund may enter into forward roll transactions with
respect to mortgage-related securities. Forward roll transactions require the
sale of securities for delivery in the current month, and a simultaneous
agreement with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records the incremental difference between the forward purchase and sale of each
forward roll as realized gain (loss) on investments or as fee income in the case
of such transactions that have an associated fee in lieu of a difference in the
forward purchase and sale price.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to
48 | OPPENHEIMER CORE BOND FUND
receive inferior securities at redelivery as compared to the securities sold to
the counter-party; counterparty credit risk; and the potential pay down speed
variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of December 31, 2005, securities with an
aggregate market value of $66,695, representing 0.01% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
49 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
NET UNREALIZED
DEPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
---------------------------------------------------------------------------
$334,650 $ -- $7,251,448 $7,500,369
1. As of December 31, 2005, the Fund had $7,251,448 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2005,
details of the capital loss carryforwards were as follows:
EXPIRING
----------------------------
2010 $2,007,359
2013 5,244,089
----------------------------
Total $7,251,448
----------------------------
2. During the fiscal year ended December 31, 2005, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended December 31, 2004, the Fund utilized $10,865,230
of capital loss carryforward to offset capital gains realized in that fiscal
year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for December 31, 2005. Net assets of
the Fund were unaffected by the reclassifications.
REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED
NET INVESTMENT NET REALIZED LOSS
LOSS ON INVESTMENTS
-------------------------------------------
$2,728,394 $2,728,394
The tax character of distributions paid during the years ended December 31, 2005
and December 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
----------------------------------------------------------------------
Distributions paid from:
Ordinary income $31,786,167 $26,244,773
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments,
50 | OPPENHEIMER CORE BOND FUND
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 $1,178,464,133
Federal tax cost of other investments (163,066,646)
--------------
Total federal tax cost $1,015,397,487
==============
Gross unrealized appreciation $ 6,954,358
Gross unrealized depreciation (14,454,727)
--------------
Net unrealized depreciation $ (7,500,369)
==============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Fund. 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. At December 31, 2005, the
Fund had
51 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
$14,669 of such earnings on cash balances available to offset future custodian
fees or interest expenses incurred during the next fiscal year.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED DECEMBER 31, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------
CLASS A
Sold 22,484,859 $ 233,172,087 9,562,646 $ 99,724,382
Dividends and/or
distributions reinvested 1,468,476 15,183,663 1,163,350 12,097,690
Redeemed (9,157,866) (94,752,427) (14,652,987) (152,180,316)
-------------------------------------------------------------------
Net increase (decrease) 14,795,469 $ 153,603,323 (3,926,991) $ (40,358,244)
===================================================================
- --------------------------------------------------------------------------------------------------
CLASS B
Sold 2,411,315 $ 24,979,660 2,207,444 $ 22,976,953
Dividends and/or
distributions reinvested 379,150 3,922,040 432,832 4,499,401
Redeemed (4,791,597) (49,621,122) (7,478,492) (77,668,668)
-------------------------------------------------------------------
Net decrease (2,001,132) $ (20,719,422) (4,838,216) $ (50,192,314)
===================================================================
- --------------------------------------------------------------------------------------------------
CLASS C
Sold 4,590,226 $ 47,533,624 2,121,902 $ 22,129,587
Dividends and/or
distributions reinvested 273,806 2,832,425 235,133 2,447,087
Redeemed (2,308,506) (23,882,745) (2,971,439) (30,908,710)
-------------------------------------------------------------------
Net increase (decrease) 2,555,526 $ 26,483,304 (614,404) $ (6,332,036)
===================================================================
- --------------------------------------------------------------------------------------------------
CLASS N
Sold 2,021,843 $ 20,942,281 1,560,717 $ 16,256,014
Dividends and/or
distributions reinvested 103,371 1,068,388 79,094 822,229
Redeemed (1,073,761) (11,114,760) (897,845) (9,371,646)
-------------------------------------------------------------------
Net increase 1,051,453 $ 10,895,909 741,966 $ 7,706,597
===================================================================
52 | OPPENHEIMER CORE BOND FUND
YEAR ENDED DECEMBER 31, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 13,663,394 $141,043,009 4,235,213 $ 44,071,154
Dividends and/or
distributions reinvested 415,195 4,276,823 72,990 761,028
Redeemed (980,307) (10,129,202) (4,815,194) (50,241,868)
-----------------------------------------------------------------
Net increase (decrease) 13,098,282 $135,190,630 (506,991) $ (5,409,686)
=================================================================
- --------------------------------------------------------------------------------
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 December 31, 2005, were as
follows:
PURCHASES SALES
- -----------------------------------------------------------------------------------------
Investment securities $ 877,186,446 $ 539,681,432
U.S. government and government agency obligations 125,944,817 152,910,783
To Be Announced (TBA) mortgage-related securities 3,609,072,810 3,584,424,906
- -----------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at annual
rate of 0.60% of the first $200 million of average annual net assets of the
Fund, 0.57% of the next $200 million, 0.54% of the next $200 million, 0.51% of
the next $200 million, 0.45% of the next $200 million and 0.35% of average
annual net assets in excess of $1 billion.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended December 31, 2005, the Fund paid
$1,818,810 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor
53 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions periodically 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
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at December 31, 2005 for Class B, Class C
and Class N shares were $3,043,749, $1,973,766 and $566,745, respectively. Fees
incurred by the Fund under the plans are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------------------
December 31, 2005 $525,061 $1,136 $418,007 $17,923 $19,749
- -----------------------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. Effective March 1, 2004, the Manager has
voluntarily undertaken to limit the "Total Expenses" for all classes of shares
so that total expenses as percentages of average daily net assets, will not
exceed the following annual rates: 0.90% for the Class A shares; 1.65% for the
Class B and Class C shares, respectively; 1.15% for the Class N shares and 0.65%
for the Class Y shares. During the year ended December 31, 2005, the Manager
reimbursed the Fund $673,792, $353,012, $193,931,
54 | OPPENHEIMER CORE BOND FUND
$86,056 and $93,972 for Class A, Class B, Class C, Class N and Class Y,
respectively. The Manager may terminate this voluntary expense limitation
arrangement at any time without notice to shareholders.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the year ended December 31, 2005, OFS waived $10,938 for Class N shares.
This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
55 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS Continued
As of December 31, 2005, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS DECEMBER 31, 2005 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 3/22/06 766 $ 87,467,625 $1,463,110
-----------
CONTRACTS TO SELL
Euro-Bundesobligation, 10 yr. 3/8/06 75 10,818,426 (81,008)
U.S. Treasury Nts., 2 yr. 3/31/06 738 151,428,375 (80,898)
U.S. Treasury Nts., 5 yr. 3/22/06 461 49,024,469 (96,121)
U.S. Treasury Nts., 10 yr. 3/22/06 360 39,386,250 (56,916)
-----------
(314,943)
-----------
$1,148,167
===========
- --------------------------------------------------------------------------------
6. 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 unrealized gain (loss) related to the valuation of
such contracts as well as the amount due to (owed by) the Fund at termination or
settlement is combined and separately disclosed as an asset (liability) on the
Statement of Assets and Liabilities. The Fund also records any periodic payments
received from (paid to) the counterparty under such contracts as realized gain
(loss) on the Statement of Operations. Total return swaps are subject to risks
(if the counterparty fails to meet its obligations).
As of December 31, 2005, the Fund had entered into the following total return
swap agreements:
SWAP NOTIONAL TERMINATION UNREALIZED
COUNTERPARTY SWAP DESCRIPTION AMOUNT DATE APPRECIATION
- ------------------------------------------------------------------------------------------------------------------
Received or paid monthly. If the sum
of the Lehman Brothers CMBS Index
Payer Payment Amount and the
Floating Rate Payer Payment Amount
is positive, the Counterparty will pay
such amount to the Fund. If the sums
are negative, then the Fund shall pay
Goldman Sachs the absolute value of such amount to
Group, Inc. (The) the Counterparty. $15,570 6/1/06 $43,981
Abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities
56 | OPPENHEIMER CORE BOND FUND
- --------------------------------------------------------------------------------
7. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 2005, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund will not invest more than 15% of
its net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
Securities that are illiquid or restricted are marked with the applicable
footnote on the Statement of Investments. Information concerning restricted
securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATE COST DECEMBER 31, 2005 DEPRECIATION
- ------------------------------------------------------------------------------------------------------
Geotek Communications, Inc.,
Series B, Escrow Shares 1/4/01 $100 $-- $100
- ------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. 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 U.S.
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower. As of December 31,
2005, the Fund had on loan securities valued at $48,959,258. Collateral of
$49,810,823 was received for the loans, of which $37,556,713 was received in
cash and subsequently invested in approved instruments.
- --------------------------------------------------------------------------------
9. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual
57 | OPPENHEIMER CORE BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. LITIGATION Continued
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.
- --------------------------------------------------------------------------------
10. FUND REORGANIZATION
On September 14, 2005, the Board of Trustees of Oppenheimer Total Return Bond
Fund ("Total Return Bond Fund") approved a proposal to reorganize Total Return
Bond Fund with and into the Fund. A Special Meeting of the Shareholders of Total
Return Bond Fund is scheduled for March 15, 2006 to approve an Agreement and
Plan of Reorganization between Total Return Bond Fund and the Fund, and the
transactions contemplated thereby, including (a) the transfer of substantially
all the assets of Total Return Bond Fund to the Fund in exchange for Class A,
Class B, Class C, and Class N shares of the Fund, (b) the distribution of Class
A, Class B, Class C, and Class N shares of the Fund to the Class A, Class B,
Class C, and Class N shareholders of Total Return Bond Fund in complete
liquidation of Total Return Bond Fund and (c) the cancellation of the
outstanding shares of Total Return Bond Fund.
58 | OPPENHEIMER CORE BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEE AND SHAREHOLDERS OF OPPENHEIMER CORE BOND FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Core Bond Fund, a series of Oppenheimer Integrity Funds, including
the statement of investments, as of December 31, 2005, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2005, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Core Bond Fund as of December 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the periods presented, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 13, 2006
59 | OPPENHEIMER CORE BOND FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record received 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.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended December 31, 2005, $31,371,839 or 98.70% of the ordinary
distributions paid by the Fund qualifies as an interest related dividend. The
Fund did not distribute a short-term capital gain.
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.
60 | OPPENHEIMER CORE BOND 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.
61 | OPPENHEIMER CORE BOND FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager, including an analysis of the
cost of providing services, (v) whether economies of scale are realized as the
Fund grows and whether fee levels reflect these economies of scale for Fund
investors and (vi) other benefits to the Manager from its relationship with the
Fund. Outlined below is a summary of the principal information considered by the
Board as well as the Board's conclusions.
NATURE, QUALITY, AND EXTENT OF SERVICES. The Board considered information
on the nature and extent of the services provided to the Fund and information
regarding the Manager's key personnel that provide such services. The Manager's
duties include providing the Fund with the services of the portfolio manager and
the Manager's investment team, who provide research, analysis and other advisory
services in regard to the Fund's investments; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel that are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
62 | OPPENHEIMER CORE BOND FUND
The Board also considered the quality of the services provided and the
quality of the Manager's resources that are available to the Fund. The Board
took account of the fact that the Manager has had over forty years of experience
as an investment adviser and that its assets under management rank it among the
top mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services, and information the
Board has received regarding the experience and professional qualifications of
the Manager's key personnel and the size and functions of its staff providing
investment management services to the Fund. The Board also considered compliance
reports from the Fund's Chief Compliance Officer. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of the Fund's portfolio managers and the Manager's fixed-income
investment team and analysts. The Fund has been managed by a portfolio
management team comprised of Angelo Manioudakis, Benjamin Gord, Charles Moon,
Geoffrey Caan and Antulio N. Bomfim. Messrs. Manioudakis, Gord, Caan, Moon and
Bomfim have each had between 11 and 15 years of experience managing fixed-income
investments. The Board members also considered the totality of their experiences
with the Manager, as directors or trustees of the Fund and other funds advised
by the Manager. In light of the foregoing, the Board concluded that the Fund
benefits from the services provided under the Agreement as a result of the
Manager's experience, reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the performance of the Fund and the Manager at
each Board meeting, including comparative performance information. The Board
also reviewed information, prepared by the Manager and by the independent
consultant, comparing the Fund's historical performance to relevant market
indices and to the performance of other intermediate investment-grade debt funds
(including both funds advised by the Manager and funds advised by other
investment advisers). The Board noted that the Fund's one-year, three-year,
five-year and ten-year performance were all better than its peer group median.
COSTS OF SERVICES AND PROFITS REALIZED BY THE MANAGER. The Board
considered in formation regarding the Manager's costs in serving as the Fund's
investment adviser, including the costs associated with the personnel and
systems necessary to manage the Fund, and information regarding the Manager's
profitability from its relationship with the Fund. The Board reviewed the fees
paid to the Manager and the other expenses borne by the Fund. The Board also
evaluated the comparability of the fees charged and the services provided to the
Fund to the fees and services for other clients or accounts advised
63 | OPPENHEIMER CORE BOND FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
by the Manager. The independent consultant provided comparative data in regard
to the fees and expenses of the Fund, other intermediate investment-grade debt
funds and other funds with comparable asset levels and distribution features.
The Board noted that the Fund's contractual and actual management fees and total
expenses, which are all lower than its peer group median and average. In light
of this, the Board concluded that the management fee was reasonable.
ECONOMIES OF SCALE. The Board considered whether the Manager may realize
economies of scale in managing and supporting the Fund, whether those economies
of scale benefit the Fund's shareholders and the current level of Fund assets in
relation to the Fund's management fee breakpoints, which are intended to share
with shareholders economies of scale that may exist as the Fund grows.
OTHER BENEFITS TO THE MANAGER. In addition to considering the profits
realized by the Manager, the Board considered information that was provided
regarding the direct and indirect benefits the Manager receives as a result of
its relationship with the Fund, including compensation paid to the Manager's
affiliates. The Board also considered the nature and quality of services
provided by affiliates of the Manager, which it reviews at other times during
the year in connection with the renewal of the Fund's service agreements. The
Board considered that the Manager must be able to pay and retain experienced
professional personnel at competitive rates to provide services to the Fund and
that maintaining the financial viability of the Manager is important in order
for the Manager to continue to provide significant services to the Fund and its
shareholders.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and to the independent Trustees. Fund counsel and the independent
Trustees' counsel are both independent of the Manager within the meaning and
intent of the Securities and Exchange Commission Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
decided to continue the advisory agreement for another year. In arriving at this
decision, the Board did not single out any factor or factors as being more
important than others, but considered all of the factors together. The Board
judged the terms and conditions of the advisory agreement, including the
management fee, in light of all of the surrounding circumstances.
64 | OPPENHEIMER CORE BOND 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 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Chairman of the Board of Mortgage Company (since 1991), Centennial State Mortgage Company (since
Trustees (since 2003), 1994), and The El Paso Mortgage Company (since 1993); Chairman of the fol-
Trustee (since 1999) lowing private companies: Ambassador Media Corporation (since 1984) and
Age: 68 Broadway Ventures (since 1984); Director of the following: Helmerich & Payne,
Inc. (oil and gas drilling/production company) (since 1992), Campus Crusade for
Christ (since 1991) and The Lynde and Harry Bradley Foundation, Inc. (non-
profit organization) (since 2002); former Chairman of the following: Transland
Financial Services, Inc. (private mortgage banking company) (1997-2003), Great
Frontier Insurance (insurance agency) (1995-2000), Frontier Real Estate, Inc. (resi-
dential real estate brokerage) (1994-2000) and Frontier Title (title insurance
agency) (1995-2000); former Director of the following: UNUMProvident (insur-
ance company) (1991-2004), Storage Technology Corporation (computer
equipment company) (1991-2003) and International Family Entertainment (tele-
vision channel) (1992-1997); U.S. Senator (January 1979-January 1991). Oversees
38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner of private
Trustee (since 1993) equity funds) (until February 2001); Chairman, President and Chief Executive
Age: 74 Officer of A.G. Edwards Capital, Inc. (until March 2000); Director of A.G. Edwards
& Sons, Inc. (brokerage company) (until 2000) and A.G. Edwards Trust Company
(investment adviser) (until 2000); Vice Chairman and Director of A.G. Edwards,
Inc. (until March 1999); Vice Chairman of A.G. Edwards & Sons, Inc. (until March
1999); Chairman of A.G. Edwards Trust Company (until March 1999) and A.G.E.
Asset Management (investment adviser) (until March 1999). Oversees 38 portfo-
lios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management Corporation
Trustee (since 2001) (December 1991-April 1999); President, Treasurer and Director of Centennial
Age: 69 Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director
of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several
positions with the Manager and with subsidiary or affiliated companies of the
Manager (September 1987-April 1999). Oversees 38 portfolios in the
OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical
Trustee (since 2001) site) (since June 2000); Director of Genetic ID, Inc. (biotech company) (March
Age: 67 2001-May 2002); Partner at PricewaterhouseCoopers LLP (accounting firm) (July
1974-June 1999); Chairman of Price Waterhouse LLP Global Investment
Management Industry Services Group (July 1994-June 1998). Oversees 38 portfo-
lios in the OppenheimerFunds complex.
65 | OPPENHEIMER CORE BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director of
Trustee (since 1990) Northwestern Energy Corp. (public utility corporation) (since November 2004);
Age: 64 Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of
Rocky Mountain Elk Foundation (non-profit organization) (February 1998-
February 2003); Chairman and Director (until October 1996) and President and
Chief Executive Officer (until October 1995) of the Manager; President, Chief
Executive Officer and Director of the following: Oppenheimer Acquisition Corp.
("OAC") (parent holding company of the Manager), Shareholders Services, Inc.
and Shareholder Financial Services, Inc. (until October 1995). Oversees 38 portfo-
lios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (charitable organization) (since September 1984). Mr.
Trustee (since 1996) Freedman held several positions with the Manager and with subsidiary or affili-
Age: 65 ated companies of the Manager (until October 1994). Oversees 38 portfolios in
the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational organization)
Trustee (since 2002) (since February 2000); Director of The California Endowment (philanthropic
Age: 59 organization) (since April 2002); Director of Community Hospital of Monterey
Peninsula (since February 2002); Vice Chair of American Funds' Emerging
Markets Growth Fund, Inc. (mutual fund) (since October 1991); President of
ARCO Investment Management Company (February 1991-April 2000); Member
of the investment committees of The Rockefeller Foundation and The University
of Michigan; Advisor at Credit Suisse First Boston's Sprout venture capital unit
(venture capital fund) (1994-January 2005); Trustee of MassMutual Institutional
Funds (investment company) (1996-June 2004); Trustee of MML Series
Investment Fund (investment company) (April 1989-June 2004); Member of the
investment committee of Hartford Hospital (2000-2003); and Advisor to
Unilever (Holland) pension fund (2000-2003). Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University (educational organization) (since
Trustee (since 2002) August 2005); Chairman, Chief Executive Officer and Director of Steele Street
Age: 61 State Bank (commercial banking) (since August 2003); Director of Colorado
UpLIFT (charitable organization) (since 1986); Trustee of the Gallagher Family
Foundation (non-profit organization) (since 2000); Former Chairman of U.S.
Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National
Bank) (July 1996-April 1999); Director of Commercial Assets, Inc. (real estate
investment trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July
2004); and Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-
February 2004). Oversees 38 portfolios in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds)
Trustee (since 2001) (investment company) (since 1996) and MML Series Investment Fund (invest-
Age: 63 ment company) (since 1996), Trustee and Chairman of the Investment
Committee (since 1994) of the Worcester Polytech Institute (private university);
President and Treasurer of the SIS Funds (private charitable fund) (since January
1999); Chairman of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial
bank) (January 1999-July 1999); Member of the Investment Committee of the
Community Foundation of Western Massachusetts (1998-2003); and Executive
Vice President of Peoples Heritage Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 40 portfolios in the OppenheimerFunds
complex.
66 | OPPENHEIMER CORE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR,
AND OFFICER NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE TERM,
OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL 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 Trustee (since September 2000) of the Manager; President and Director or Trustee of
(since 2001) other Oppenheimer funds; President and Director of OAC and of Oppenheimer
Age: 56 Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since
July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the
Manager) (since November 2001); Chairman and Director of Shareholder
Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent sub-
sidiaries of the Manager) (since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust program established by
the Manager) (since July 2001); Director of the following investment advisory
subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment Management Corporation
and Tremont Capital Management, Inc. (since November 2001), HarbourView
Asset Management Corporation and OFI Private Investments, Inc. (since July
2001); President (since November 2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company) (since
February 1997); Director of DLB Acquisition Corporation (holding company par-
ent of Babson Capital Management LLC) (since June 1995); Member of the
Investment Company Institute's Board of Governors (since October 3, 2003);
Chief Operating Officer of the Manager (September 2000-June 2001); President
and Trustee of MML Series Investment Fund and MassMutual Select Funds
(open-end investment companies) (November 1999-November 2001); Director
of C.M. Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia
Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June
1998). Oversees 87 portfolios in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS OF THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
THE FUND MANIOUDAKIS AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK,
NEW YORK 10281-1008, FOR MESSRS. VANDEHEY AND WIXTED, 6803 S. TUCSON WAY,
CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS
OR HER RESIGNATION, RETIREMENT DEATH OR REMOVAL.
ANGELO MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President and Portfolio Management Corporation (since April, 2002 and of OFI Institutional Asset
Manager (since 2002 ) Management, Inc. (since June 2002); Executive Director and portfolio manager
Age: 39 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
Vice President and Chief March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial
Compliance Officer Asset Management Corporation and Shareholder Services, Inc. (since June 1983);
(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.
67 | OPPENHEIMER CORE BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real
Officer (since 1999) Asset Management Corporation, and Oppenheimer Partnership Holdings, Inc.
Age: 46 (since March 1999), OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May
2000), OFI Institutional Asset Management, Inc. (since November 2000), and
OppenheimerFunds Legacy Program (since June 2003); Treasurer and Chief
Financial Officer of OFI Trust Company (trust company subsidiary of the
Manager) (since May 2000); Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation (March 1999-October
2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal
and Chief Operating Officer of Bankers Trust Company-Mutual Fund Services
Division (March 1995-March 1999). An officer of 87 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Vice President and Secretary March 2002) of the Manager; General Counsel and Director of the Distributor
(since 2001) (since December 2001); General Counsel of Centennial Asset Management
Age: 57 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.
68 | OPPENHEIMER CORE BOND FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that Edward L. Cameron,
the Chairman of the Board's Audit Committee, and George C. Bowen, a member of
the Board's Audit Committee, possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts," and has designated Messrs. Cameron and
Bowen as the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $17,750 in fiscal 2005 and $17,500 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 $5,000 in fiscal 2005 and no such fees in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: seed money audit.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years to the registrant's investment adviser or any entity controlling,
controlled by, or under common control with the adviser that provides ongoing
services to the registrant.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $5,000 in fiscal 2005 and no such fees in
fiscal 2004 to the registrant and the registrant's investment adviser or
any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of December 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange Act of 1934 (a) is accumulated and communicated to
registrant's management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure, and
(b) is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities and Exchange
Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Integrity Funds
By: /s/ John V. Murphy
-------------------
John V. Murphy
Principal Executive Officer
Date: February 14, 2006
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: February 14, 2006
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: February 14, 2006