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 811-21686
OPPENHEIMER PORTFOLIO SERIES, CONSISTING OF: ACTIVE ALLOCATION FUND, AGGRESSIVE
INVESTOR FUND, CONSERVATIVE INVESTOR FUND, AND MODERATE INVESTOR FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: JANUARY 31
Date of reporting period: JANUARY 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
ACTIVE ALLOCATION FUND
TOP HOLDINGS AND ALLOCATIONS
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- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Global Equity 26.6%
U.S. Equity 39.7
Fixed Income 23.7
Alternative Investments 10.0
Portfolio holdings and allocations are subject to change. Percentages are as of
January 31, 2006, and are based on the total market value of investments in
affiliated companies.
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10 | ACTIVE ALLOCATION FUND
PORTFOLIO PERFORMANCE DISCUSSION
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HOW HAS THE PORTFOLIO PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS,
INC., OF THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD OF APRIL 5,
2005 TO JANUARY 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE PORTFOLIO'S
PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE. Since its inception on April
5, 2005 to the end of the period on January 31, 2006, the Portfolio outperformed
its benchmark, the S&P 500 Index. We attribute the Portfolio's outperformance of
its benchmark to its diversified equity weighting that enabled it to own sectors
that outperformed the S&P 500 Index.
During the period, the Portfolio significantly benefited from its large
equity exposure, which accounted for approximately 70% of the Portfolio at the
end of the period. When the Portfolio was launched in early April 2005, U.S.
equities had hit year lows and since then the stock indices have rallied. For
example, the S&P 500 Index rose 9.96% since the Portfolio's inception, despite
returning only -0.81% for the first six months of 2005. In addition, the
Portfolio's exposure to foreign markets was also a boon to performance. Over the
period the MSCI All Country World Index returned 17.56%, far outpacing the S&P
500 Index. Since the Portfolio has exposure to foreign markets through the
underlying international funds it holds, it reaped the benefits as these markets
expanded.
Within the equity allocation of the Portfolio, many sectors produced
strong results over the period. The Portfolio benefited from the continued
outperformance of small-cap stocks versus large-cap stocks through its
allocation to Oppenheimer Main Street Small Cap Fund, which posted a return of
23.02% for the reporting period. Through its allocations to Oppenheimer Global
Fund, Oppenheimer Global Opportunity Fund and Oppenheimer Developing Markets
Fund the Portfolio enjoyed the strong results posted by international markets,
especially the emerging markets.
The Portfolio's exposure to the high performing real estate sector through
its 5% position in Oppenheimer Real Estate Fund, which posted a return of
34.44%, helped bolster the Portfolio's returns. Oppenheimer Real Estate Fund's
success can be attributed to its profitable investments in the apartment, office
and industrial sectors.
Within the tactical allocation component of the Portfolio, having
positions in both Oppenheimer International Small Company Fund and Oppenheimer
Developing Markets Fund boosted returns as these Funds beat their respective
benchmarks and posted returns of 41.89% and 50.9%, respectively, over the
reporting period.
The Portfolio's exposure to commodities through Oppenheimer Real Asset
Fund both contributed to and detracted from results. Most of the rally in
commodities occurred prior to the inception of the Portfolio. The Oppenheimer
Real Asset Fund did not post a positive return between the inception date of the
Active Allocation Fund and the end of the reporting period. Rather, commodities
rallied during this period, but later corrected as energy prices traded off from
their market highs in late September.
11 | ACTIVE ALLOCATION FUND
PORTFOLIO PERFORMANCE DISCUSSION
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On the negative side, the Portfolio's exposure to the fixed income markets
hampered performance as fixed income, as an asset class, underperformed equities
over the same period. For the reporting period, the Lehman Brothers Aggregate
Bond Index returned 2.78%, underperforming the S&P 500 Index's 9.96% return.
COMPARING THE PORTFOLIO'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 Portfolio held until January 31, 2006. Performance is measured from the
inception of Classes A, B, C, N and Y on April 5, 2005. The Portfolio's
performance reflects the deduction of the maximum initial sales charge on Class
A shares, the applicable contingent deferred sales charge on Class B, Class C,
and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Portfolio's performance is compared to the performance of the S&P 500
Index. The S&P 500 Index is an unmanaged index of equity securities. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graphs shows the effect of
taxes. The Portfolio's performance reflects the effects of the Portfolio's
business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Portfolio's performance, it must be noted that the
Portfolio's investments are not limited to the investments in the index.
12 | ACTIVE ALLOCATION FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Active Allocation Fund (Class A)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio Series:
Active Allocation Fund S&P 500 Lehman Brothers
(Class A) Index Aggregate Bond Index
- ---------- ----------------------------- ------------------ --------------------
04/05/2005 9,425 10,000 10,000
04/30/2005 9,227 9,810 10,135
07/31/2005 9,868 10,514 10,207
10/31/2005 9,830 10,327 10,150
01/31/2006 10,679 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 6.79%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER INFORMATION.
13 | ACTIVE ALLOCATION FUND
PORTFOLIO PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Active Allocation Fund (Class B)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
Oppenheimer Portfolio Series:
Active Allocation Fund S&P 500 Lehman Brothers
(Class B) Index Aggregate Bond Index
- ---------- ----------------------------- ------------------ --------------------
04/05/2005 10,000 10,000 10,000
04/30/2005 9,790 9,810 10,135
07/31/2005 10,450 10,514 10,207
10/31/2005 10,390 10,327 10,150
01/31/2006 10,772 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 7.72%
14 | ACTIVE ALLOCATION FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Active Allocation Fund (Class C)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
Oppenheimer Portfolio Series:
Active Allocation Fund S&P 500 Lehman Brothers
(Class C) Index Aggregate Bond Index
- ---------- ----------------------------- ------------------ --------------------
04/05/2005 10,000 10,000 10,000
04/30/2005 9,780 9,810 10,135
07/31/2005 10,440 10,514 10,207
10/31/2005 10,380 10,327 10,150
01/31/2006 11,166 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 11.66%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER INFORMATION.
15 | ACTIVE ALLOCATION FUND
PORTFOLIO PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Active Allocation Fund (Class N)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
Oppenheimer Portfolio Series:
Active Allocation Fund S&P 500 Lehman Brothers
(Class N) Index Aggregate Bond Index
- ---------- ----------------------------- ------------------ --------------------
04/05/2005 10,000 10,000 10,000
04/30/2005 9,790 9,810 10,135
07/31/2005 10,460 10,514 10,207
10/31/2005 10,410 10,327 10,150
01/31/2006 11,218 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 12.18%
16 | ACTIVE ALLOCATION FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Active Allocation Fund (Class Y)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
Oppenheimer Portfolio Series:
Active Allocation Fund S&P 500 Lehman Brothers
(Class Y) Index Aggregate Bond Index
- ---------- ----------------------------- ------------------ --------------------
04/05/2005 10,000 10,000 10,000
04/30/2005 9,790 9,810 10,135
07/31/2005 10,490 10,514 10,207
10/31/2005 10,450 10,327 10,150
01/31/2006 11,372 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 13.72%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER INFORMATION.
17 | ACTIVE ALLOCATION 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 Portfolio'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 Portfolio or any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND
OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S
PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, 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 Portfolio'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 Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year). Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio were first publicly offered on 4/5/05. 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 | ACTIVE ALLOCATION FUND
CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio's Statement
of Additional Information.
19 | ACTIVE ALLOCATION FUND
PORTFOLIO EXPENSES
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PORTFOLIO EXPENSES. As a shareholder of the Portfolio, 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 Portfolio expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of investing in
the Portfolio 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 January 31, 2006.
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 Portfolio'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
Portfolio'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 Portfolio 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 | ACTIVE ALLOCATION 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
(8/1/05) (1/31/06) JANUARY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,082.20 $2.73
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.58 2.65
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Class B Actual 1,000.00 1,078.70 6.94
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Class B Hypothetical 1,000.00 1,018.55 6.74
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Class C Actual 1,000.00 1,079.10 6.78
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Class C Hypothetical 1,000.00 1,018.70 6.58
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,082.00 3.68
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Class N Hypothetical 1,000.00 1,021.68 3.57
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Class Y Actual 1,000.00 1,084.10 1.00
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Class Y Hypothetical 1,000.00 1,024.25 0.97
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Portfolio'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,
excluding all underlying fund expenses, based on the 6-month period ended
January 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------
Class A 0.52%
- ---------------------------
Class B 1.32
- ---------------------------
Class C 1.29
- ---------------------------
Class N 0.70
- ---------------------------
Class Y 0.19
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Portfolio's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Portfolio's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
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21 | ACTIVE ALLOCATION FUND
STATEMENT OF INVESTMENTS January 31, 2006
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VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--98.5% 1
- ----------------------------------------------------------------------------------------------------
GLOBAL EQUITY--26.2%
Oppenheimer Developing Markets Fund, Cl. Y 735,369 $ 29,120,616
- ----------------------------------------------------------------------------------------------------
Oppenheimer Global Fund, Cl. Y 817,108 57,777,755
- ----------------------------------------------------------------------------------------------------
Oppenheimer Global Opportunities Fund, Cl. Y 771,757 31,233,008
- ----------------------------------------------------------------------------------------------------
Oppenheimer International Small Company Fund, Cl. Y 1,296,021 29,432,632
--------------
147,564,011
- ----------------------------------------------------------------------------------------------------
U.S. EQUITY--39.1%
Oppenheimer Capital Appreciation Fund, Cl. Y 1,206,388 55,059,534
- ----------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 1,422,021 54,619,844
- ----------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 1,943,920 27,564,794
- ----------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund, Cl. Y 1,258,510 29,084,171
- ----------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 2,210,413 54,133,002
--------------
220,461,345
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FIXED INCOME--23.3%
Oppenheimer Core Bond Fund, Cl. Y 5,106,446 52,085,753
- ----------------------------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund, Cl. Y 12,557,766 52,993,772
- ----------------------------------------------------------------------------------------------------
Oppenheimer U.S. Government Trust, Cl. Y 2,764,889 26,238,793
--------------
131,318,318
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ALTERNATIVE INVESTMENTS--9.9%
Oppenheimer Real Asset Fund, Cl. Y 3,273,185 26,872,855
- ----------------------------------------------------------------------------------------------------
Oppenheimer Real Estate Fund, Cl. Y 1,403,079 28,777,166
--------------
55,650,021
--------------
Total Investments in Affiliated Companies (Cost $531,891,076) 554,993,695
PRINCIPAL
AMOUNT
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JOINT REPURCHASE AGREEMENTS--0.5%
- ----------------------------------------------------------------------------------------------------
Undivided interest of 0.36% in joint repurchase agreement
(Principal Amount/ Value $781,426,000, with a maturity value of
$781,521,291) with UBS Warburg LLC, 4.39%, dated 1/31/06, to be
repurchased at $2,826,345 on 2/1/06, collateralized by Federal
Home Loan Mortgage Corp., 5%, 12/1/35, with a value of
$799,056,396 (Cost $2,826,000) $2,826,000 2,826,000
- ----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $534,717,076) 99.0% 557,819,695
- ----------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.0 5,836,209
----------------------------
NET ASSETS 100.0% $ 563,655,904
============================
22 | ACTIVE ALLOCATION FUND
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Affiliated companies. Represents ownership of an affiliated fund, at or
during the period ended January 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
APRIL 5, GROSS GROSS JANUARY 31,
2005 ADDITIONS REDUCTIONS 2006
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y -- 1,206,388 -- 1,206,388
Oppenheimer Core Bond Fund, Cl. Y* -- 5,106,446 -- 5,106,446
Oppenheimer Developing Markets Fund, Cl. A -- 749,173 749,173 --
Oppenheimer Developing Markets Fund, Cl. Y -- 1,158,340 422,971 735,369
Oppenheimer Global Fund, Cl. Y -- 817,108 -- 817,108
Oppenheimer Global Opportunities Fund, Cl. Y -- 771,757 -- 771,757
Oppenheimer International Small Company Fund, Cl. A -- 949,884 949,884 --
Oppenheimer International Small Company Fund, Cl. Y -- 1,986,571 690,550 1,296,021
Oppenheimer Main Street Fund, Cl. Y -- 1,422,021 -- 1,422,021
Oppenheimer Main Street Opportunity Fund, Cl. Y -- 1,943,920 -- 1,943,920
Oppenheimer Main Street Small Cap Fund, Cl. Y -- 1,258,510 -- 1,258,510
Oppenheimer Money Market Fund, Inc., Cl. Y -- 27,144,844 27,144,844 --
Oppenheimer Real Asset Fund, Cl. Y -- 5,641,708 2,368,523 3,273,185
Oppenheimer Real Estate Fund, Cl. Y* -- 1,403,079 -- 1,403,079
Oppenheimer Strategic Income Fund, Cl. Y -- 12,557,766 -- 12,557,766
Oppenheimer U.S. Government Trust, Cl. Y -- 6,692,138 3,927,249 2,764,889
Oppenheimer Value Fund, Cl. Y -- 3,670,221 1,459,808 2,210,413
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 55,059,534 $ 363,057 $ --
Oppenheimer Core Bond Fund, Cl. Y* 52,085,753 826,934 --
Oppenheimer Developing Markets Fund, Cl. A -- -- (142,284)
Oppenheimer Developing Markets Fund, Cl. Y 29,120,616 489,530 338,377
Oppenheimer Global Fund, Cl. Y 57,777,755 393,261 --
Oppenheimer Global Opportunities Fund, Cl. Y 31,233,008 453,977 --
Oppenheimer International Small Company Fund, Cl. A -- -- (121,768)
Oppenheimer International Small Company Fund, Cl. Y 29,432,632 921,459 48,338
Oppenheimer Main Street Fund, Cl. Y 54,619,844 543,445 --
Oppenheimer Main Street Opportunity Fund, Cl. Y 27,564,794 422,027 --
Oppenheimer Main Street Small Cap Fund, Cl. Y 29,084,171 235,180 --
Oppenheimer Money Market Fund, Inc., Cl. Y -- 63,814 --
Oppenheimer Real Asset Fund, Cl. Y 26,872,855 811,115 (1,263,564)
Oppenheimer Real Estate Fund, Cl. Y* 28,777,166 681,898 --
Oppenheimer Strategic Income Fund, Cl. Y 52,993,772 1,859,978 --
Oppenheimer U.S. Government Trust, Cl. Y 26,238,793 208,978 (38,191)
Oppenheimer Value Fund, Cl. Y 54,133,002 1,357,676 (931,242)
---------------------------------------------
$554,993,695 $ 9,632,329 $ (2,110,334)
=============================================
* Represents at least 5% of the voting securities of the issuer, and is or was
an affiliate, as defined in the Investment Company Act of 1940.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | ACTIVE ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
January 31, 2006
- -----------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $2,826,000) $ 2,826,000
Affiliated companies (cost $531,891,076) 554,993,695
-------------
557,819,695
- -----------------------------------------------------------------------------------
Cash 3,106
- -----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 10,543,096
Interest and dividends 318,146
Other 3,028
-------------
Total assets 568,687,071
- -----------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 4,352,220
Shares of beneficial interest redeemed 406,224
Distribution and service plan fees 106,439
Transfer and shareholder servicing agent fees 50,046
Shareholder communications 29,205
Trustees' compensation 654
Other 86,379
-------------
Total liabilities 5,031,167
- -----------------------------------------------------------------------------------
NET ASSETS $563,655,904
=============
- -----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 50,847
- -----------------------------------------------------------------------------------
Additional paid-in capital 536,276,269
- -----------------------------------------------------------------------------------
Accumulated net investment income 53,764
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments 4,172,405
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments 23,102,619
-------------
NET ASSETS $563,655,904
=============
24 | ACTIVE ALLOCATION FUND
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $293,577,731 and
26,438,593 shares of beneficial interest outstanding) $11.10
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.78
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $115,629,346 and 10,448,483 shares
of beneficial interest outstanding) $11.07
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $125,622,130 and 11,360,595 shares
of beneficial interest outstanding) $11.06
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $28,345,099 and 2,556,373 shares of
beneficial interest outstanding) $11.09
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $481,598 and 43,265 shares of beneficial interest outstanding) $11.13
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | ACTIVE ALLOCATION FUND
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Period Ended January 31, 2006 1
- -----------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------
Dividends from affiliated companies $ 9,632,329
- -----------------------------------------------------------------------------------
Interest 66,500
-------------
Total investment income 9,698,829
- -----------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 228,321
Class B 379,747
Class C 374,213
Class N 37,490
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 116,305
Class B 64,011
Class C 52,664
Class N 5,016
Class Y 183
- -----------------------------------------------------------------------------------
Shareholder communications:
Class A 33,310
Class B 20,373
Class C 14,559
Class N 1,045
Class Y 100
- -----------------------------------------------------------------------------------
Asset allocation fees 175,127
- -----------------------------------------------------------------------------------
Legal, auditing and other professional fees 31,413
- -----------------------------------------------------------------------------------
Trustees' compensation 9,002
- -----------------------------------------------------------------------------------
Custodian fees and expenses 2,218
- -----------------------------------------------------------------------------------
Other 65,678
-------------
Total expenses 1,610,775
Less reduction to custodian expenses (161)
Less waivers and reimbursements of expenses (38,809)
-------------
Net expenses 1,571,805
- -----------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,127,024
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -----------------------------------------------------------------------------------
Net realized gain (loss) on:
Distributions received from affiliated companies 7,504,012
Affiliated companies (2,110,334)
-------------
Net realized gain 5,393,678
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 23,102,619
- -----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,623,321
=============
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | ACTIVE ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED JANUARY 31, 2006 1
- -------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income $ 8,127,024
- -------------------------------------------------------------------------------------------------
Net realized gain 5,393,678
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 23,102,619
---------------
Net increase in net assets resulting from operations 36,623,321
- -------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (4,500,051)
Class B (1,549,890)
Class C (1,619,117)
Class N (414,437)
Class Y (6,386)
- -------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (376,546)
Class B (149,661)
Class C (153,460)
Class N (35,176)
Class Y (507)
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 278,869,967
Class B 109,728,240
Class C 119,590,827
Class N 27,088,823
Class Y 455,957
- -------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------
Total increase 563,551,904
- -------------------------------------------------------------------------------------------------
Beginning of period 104,000 2
---------------
End of period (including accumulated net investment income of $53,764
for the period ended January 31, 2006) $ 563,655,904
===============
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Reflects the value of the Manager's initial seed money investment on March
15, 2005.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | ACTIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
PERIOD ENDED JANUARY 31, 2006 1 2006 1 2006 1
- ---------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .43 .36 .37
Net realized and unrealized gain .89 .91 .89
---------------------------------------
Total from investment operations 1.32 1.27 1.26
- ---------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.20) (.18) (.18)
Distributions from net realized gain (.02) (.02) (.02)
---------------------------------------
Total dividends and/or distributions
to shareholders (.22) (.20) (.20)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.10 $ 11.07 $ 11.06
=======================================
- ---------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 13.31% 12.72% 12.66%
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $293,578 $115,629 $125,622
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands) $112,224 $ 46,284 $ 45,647
- ---------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.94% 4.06% 4.18%
Total expenses 0.56% 5 1.37% 6 1.33% 7
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.55% 1.34% 1.31%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 90% 90% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.28% for January 31,
2006.
6. Expenses including all underlying fund expenses were 2.09% for January 31,
2006.
7. Expenses including all underlying fund expenses were 2.05% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | ACTIVE ALLOCATION FUND
CLASS N CLASS Y
PERIOD ENDED JANUARY 31, 2006 1 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .46 .39
Net realized and unrealized gain .85 .97
---------------------------
Total from investment operations 1.31 1.36
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.20) (.21)
Distributions from net realized gain (.02) (.02)
---------------------------
Total dividends and/or distributions
to shareholders (.22) (.23)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 11.09 $ 11.13
===========================
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 13.18% 13.72%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 28,345 $ 482
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,156 $ 196
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 5.28% 4.44%
Total expenses 0.73% 5 0.33% 6
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.72% 0.21%
- --------------------------------------------------------------------------------
Portfolio turnover rate 90% 90%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.45% for January 31,
2006.
6. Expenses including all underlying fund expenses were 1.05% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Portfolio Series (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Active Allocation Fund (the "Portfolio") is a series of the Fund whose
investment objective is to seek long term growth of capital with a secondary
objective of current income. The Portfolio is a special type of mutual fund
known as a "fund of funds" because it invests in other mutual funds. The
Portfolio normally invests in a portfolio consisting of a target-weighted
allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's
investment advisor is OppenheimerFunds Inc. (the "Manager").
The Portfolio 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 Portfolio 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.
Under normal market conditions, the Manager will invest the Portfolio's
assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation
Fund, Oppenheimer Global Fund, Oppenheimer Global Opportunities Fund,
Oppenheimer Main Street Fund(R), Oppenheimer Main Street Opportunity Fund(R),
Oppenheimer Main Street Small Cap Fund(R), Oppenheimer Real Estate Fund,
Oppenheimer Strategic Income Fund and Oppenheimer Value Fund (individually, an
"Underlying Fund" and collectively, the "Underlying Funds").
Oppenheimer Funds:
Oppenheimer Core Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Limited-Term Government Fund
30 | ACTIVE ALLOCATION FUND
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Small- & Mid-Cap Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer Value Fund
In addition, up to 20% of the Portfolio's net assets may be invested
according to a tactical allocation among up to four Oppenheimer funds or money
market securities based on recommendations made by the Manager.
The following is a summary of significant accounting policies consistently
followed by the Portfolio.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Portfolio calculates the net asset value of each
class of shares based upon the net asset value of the applicable Underlying
Funds' 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 trading.
For each Underlying Fund, the net asset value per share for a class of
shares on a "regular business day" is determined by dividing the value of the
Underlying Fund's net assets attributable to that class by the number of shares
of that class outstanding on that day. To determine net asset values, the
Underlying Fund assets are valued primarily on the basis of current market
quotations. If market quotations are not readily available or do not accurately
reflect fair value for a security (in the Manager's judgment) or if a security's
value has been materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, that security
may be valued by another method that the Underlying Fund's Board of
Trustees/Directors believes accurately reflects the fair value. Because some
foreign securities trade in markets and on exchanges that operate on weekends
and U.S. holidays, the values of some of the Underlying Fund's foreign
investments may change on days when investors cannot buy or redeem Underlying
Fund shares. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Portfolio invests has its own investment risks, and those risks can
affect the value of the Portfolio's investments and therefore the value of the
Portfolio's shares. To the extent that the Portfolio invests more of its assets
in one Underlying Fund than in another, the Portfolio will have greater
exposure to the risks of that Underlying Fund.
31 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Portfolio, 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 Portfolio 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 Portfolio must satisfy under the income tax regulations,
losses the Portfolio may be able to offset against income and gains realized in
future years and unrealized appreciation or depreciation of securities and
other investments for federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1 TAX PURPOSES
----------------------------------------------------------------------------
$54,033 $5,975,584 $-- $21,299,440
1. During the period ended January 31, 2006, the Portfolio did not have any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Portfolio.
Accordingly, the following amounts have been reclassified for January 31, 2006.
Net assets of the Portfolio were unaffected by the reclassifications.
32 | ACTIVE ALLOCATION FUND
REDUCTION
INCREASE TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
TO PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 2
--------------------------------------------------------------------------
$489,302 $16,621 $505,923
2. $506,265, all of which was long-term capital gain, was distributed in
connection with Portfolio share redemptions.
The tax character of distributions paid during the period ended January 31, 2006
was as follows:
PERIOD ENDED
JANUARY 31, 2006
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $8,805,231
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 January 31, 2006 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities $ 536,520,255
==============
Gross unrealized appreciation $ 22,353,457
Gross unrealized depreciation (1,054,017)
--------------
Net unrealized appreciation $ 21,299,440
==============
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations
may include interest expense incurred by the Portfolio 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
Portfolio pays interest to its custodian on such cash overdrafts to the extent
they are not offset by positive cash balances maintained by the Portfolio at a
rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian
expenses" line item, if applicable, represents earnings on cash balances
maintained by the Portfolio during the period. At January 31, 2006, the
Portfolio had $39 of such earnings on cash balances available to offset future
custodian fees or interest expenses incurred during the next fiscal year.
33 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Portfolio's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Portfolio. In
the normal course of business, the Portfolio may also enter into contracts that
provide general indemnifications. The Portfolio's maximum exposure under these
arrangements is unknown as this would be dependent on future claims that may be
made against the Portfolio. The risk of material loss from such claims is
considered remote.
- --------------------------------------------------------------------------------
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:
PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT
- -----------------------------------------------------------------------
CLASS A
Sold 27,068,123 $ 285,660,045
Dividends and/or
distributions reinvested 438,928 4,665,805
Redeemed (1,078,458) (11,455,883)
---------------------------------
Net increase 26,428,593 $ 278,869,967
=================================
- -----------------------------------------------------------------------
CLASS B
Sold 10,764,936 $ 113,091,487
Dividends and/or
distributions reinvested 154,655 1,639,339
Redeemed (471,208) (5,002,586)
---------------------------------
Net increase 10,448,383 $ 109,728,240
=================================
- -----------------------------------------------------------------------
CLASS C
Sold 11,696,791 $ 123,196,995
Dividends and/or
distributions reinvested 155,748 1,649,374
Redeemed (492,044) (5,255,542)
---------------------------------
Net increase 11,360,495 $ 119,590,827
=================================
34 | ACTIVE ALLOCATION FUND
PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT
- -----------------------------------------------------------------------
CLASS N
Sold 2,664,849 $ 28,261,231
Dividends and/or
distributions reinvested 42,051 446,165
Redeemed (150,627) (1,618,573)
---------------------------------
Net increase 2,556,273 $ 27,088,823
=================================
- -----------------------------------------------------------------------
CLASS Y
Sold 54,640 $ 577,537
Dividends and/or
distributions reinvested 645 6,870
Redeemed (12,120) (128,450)
---------------------------------
Net increase 43,165 $ 455,957
=================================
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100
shares of Class B, Class C, Class N and Class Y at a value of $1,000,
respectively, to the Manager upon seeding of the Portfolio on March 15, 2005.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the period ended January 31, 2006, were as
follows:
PURCHASES SALES
--------------------------------------------------------------
Investment securities $725,196,533 $191,277,223
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets
of the Portfolio for the period ended January 31, 2006 was 0.60%.
The Portfolio pays the Manager an asset allocation fee equal to an annual
rate of 0.10% of the average daily net assets of the Portfolio.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Portfolio. The
Portfolio pays OFS a per account fee. For the period ended January 31, 2006, the
Portfolio paid $187,555 to OFS for services to the Portfolio.
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.
- --------------------------------------------------------------------------------
INITIAL OFFERING AND ORGANIZATIONAL COSTS. The Manager assumed all initial
offering and organizational costs associated with the registration and seeding
of the Portfolio.
35 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Portfolio's principal underwriter in the continuous
public offering of the Portfolio's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Portfolio 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 Portfolio. The Distributor
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
Portfolio under the Plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Portfolio has adopted Distribution and Service Plans for Class B, Class C and
Class N shares to compensate the Distributor for its services and costs in
connection with the distribution of those shares and servicing accounts. Under
the plans, the Portfolio 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 Portfolio 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 Portfolio 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 January 31, 2006 for Class B, Class C and Class N shares were $1,607,656,
$932,769 and $317,511, respectively. Fees incurred by the Portfolio 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 Portfolio. They are deducted from the
proceeds of sales of Portfolio 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
PERIOD ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -------------------------------------------------------------------------------------------------
January 31, 2006 $1,474,177 $-- $44,078 $16,412 $4,555
36 | ACTIVE ALLOCATION FUND
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees paid directly by the Portfolio to
0.35% of average annual net assets for each class. During the period ended
January 31, 2006, OFS waived $365, $186, $15 and $12 for Class B, Class C,
Class N and Class Y shares, respectively. This undertaking may be amended or
withdrawn at any time.
The Manager has voluntarily agreed to a total expense limitation on the
aggregate amount of combined direct (fund-of-funds level) and indirect expense
so that Combined Total Annual and Underlying Fund Operating Expenses as a
percentage of average daily net assets will not exceed the following annual
rates: 1.45%, 2.20%, 2.20%, 1.70% and 1.20%, for Class A, Class B, Class C,
Class N and Class Y, respectively. During the period ended January 31, 2006, the
Manager reimbursed the Portfolio $18,930, $10,748, $7,600, $763 and $190, for
the Class A, Class B, Class C, Class N and Class Y shares, respectively. The
Manager may modify or terminate this undertaking at any time without notice to
shareholders. These expense limitations do not include Extraordinary Expenses
and other expenses not incurred in the ordinary course of the Portfolio's
business. Notwithstanding the foregoing limits, the Manager is not required to
waive or reimburse Portfolio expenses in excess of indirect management fees
earned from investments in Underlying Funds to assure that expenses do not
exceed those limits.
- --------------------------------------------------------------------------------
5. LITIGATION
A complaint was filed as a putative class action against the Manager and OFS
(and other defendants) in the U.S. District Court for the Southern District of
New York on January 10, 2005 and was amended on March 4, 2005. Seven of the
eight counts in the complaint, including claims against certain of the
Oppenheimer funds excluding the Portfolio, as nominal defendants, and against
certain present and former Directors, Trustees and officers of the funds, and
the Distributor, as defendants, were dismissed with prejudice, under a court
order dated March 10, 2006, in response to a motion to dismiss the suit that
had been filed by the defendants. The remaining count against the Adviser
Defendants alleges, among other things, that the defendants charged excessive
fees in violation of section 36(b) of the Investment Company Act of 1940. The
plaintiffs seek unspecified damages, an accounting of all fees paid, and an
award of attorneys' fees and litigation expenses.
The Adviser Defendants believe that the claims asserted in the remaining
count under this lawsuit are without merit, and intend to defend the suit
vigorously and contest any claimed liability. They 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.
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At a meeting held on December 14, 2005, the Board of Trustees of the Fund
appointed KPMG LLP as the independent registered public accounting firm to the
Fund to replace the firm of Ernst & Young LLP, who were dismissed as the
independent registered public
37 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Continued
accounting firm to the Fund. This change in the Fund's auditors was approved by
the Fund's audit committee and ratified by the Fund's independent Trustees.
The report of Ernst & Young LLP on the Fund's statements of assets and
liabilities as of March 15, 2005 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
The Fund commenced operations on April 5, 2005. During the period from
March 15, 2005 through December 14, 2005, there were no disagreements with Ernst
& Young LLP on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved to
the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to
make reference to the matter in their report.
38 | ACTIVE ALLOCATION FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER PORTFOLIO SERIES:
We have audited the accompanying statement of assets and liabilities of Active
Allocation Fund (one of the portfolios constituting the Oppenheimer Portfolio
Series), including the statement of investments, as of January 31, 2006, and
the related statement of operations, the statement of changes in net assets and
the financial highlights for the period April 5, 2005 (commencement of
operations) to January 31, 2006. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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
Active Allocation Fund as of January 31, 2006, the results of its operations,
the changes in its net assets and the financial highlights for the period April
5, 2005 (commencement of operations) to January 31, 2006, in conformity with
U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
March 15, 2006
39 | ACTIVE ALLOCATION 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 Portfolio during
calendar year 2005. Regulations of the U.S. Treasury Department require the
Portfolio to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Portfolio during the fiscal year ended
January 31, 2006 which are not designated as capital gain distributions should
be multiplied by 26.42% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Portfolio during the
fiscal year ended January 31, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Portfolio has received qualified dividend income as stipulated by
recent tax legislation. $3,110,591 of the Portfolio's fiscal year taxable income
may be eligible for the lower individual income tax rates. In early 2006,
shareholders of record received information regarding the percentage of
distributions that are eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Portfolio 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.
40 | ACTIVE ALLOCATION FUND
REPORT OF SHAREHOLDER MEETING Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On September 26, 2005, a shareholder meeting of the Oppenheimer Portfolio
Series on behalf of Active Allocation Fund was held at which the eleven
Trustees identified below were elected. The following is a report of the votes
cast:
- --------------------------------------------------------------------------------
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 6,000,869.900 134,980.874 6,135,850.774
Robert G. Galli 6,000,869.900 134,980.874 6,135,850.774
Phillip A. Griffiths 6,000,869.900 134,980.874 6,135,850.774
Mary F. Miller 5,994,733.624 141,117.150 6,135,850.774
Joel W. Motley 6,000,869.900 134,980.874 6,135,850.774
John V. Murphy 5,996,947.708 138,903.066 6,135,850.774
Kenneth A. Randall 5,986,566.528 149,284.246 6,135,850.774
Russell S. Reynolds, Jr. 6,000,869.900 134,980.874 6,135,850.774
Joseph M. Wikler 5,996,035.348 139,815.426 6,135,850.774
Peter I. Wold 5,999,659.969 136,190.805 6,135,850.774
Clayton K. Yeutter 5,986,265.672 149,585.102 6,135,850.774
41 | ACTIVE ALLOCATION 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.
42 | ACTIVE ALLOCATION FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND
COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON
TRUSTEES WAY, CENTENNIAL, COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN
INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH
OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January
Chairman of the Board 2005); Attorney at Hogan & Hartson (law firm) (since June 1993);
of Trustees (since 2003), Director of Danielson Holding Corp. (waste-to-energy company) (since
Trustee (since 2005) 2002); Director of Weyerhaeuser Corp. (1999-April 2004); Director of
Age: 74 Caterpillar, Inc. (1993-December 2002); Director of ConAgra Foods
(1993-2001); Director of Texas Instruments (1993-2001); Director of
FMC Corporation (1993-2001). Oversees 38 portfolios in the
OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research
Trustee (since 2005) foundation) (since 2005); Director of ICI Education Foundation
Age: 64 (education foundation) (since October 1991); President of the
Investment Company Institute (trade association) (1991-2004);
Director of ICI Mutual Insurance Company (insurance company)
(1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48
Trustee (since 2005) portfolios in the OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier)
Trustee (since 2005) (since 2001); Trustee of Woodward Academy (since 1983); Senior
Age: 67 Advisor of The Andrew W. Mellon Foundation (since 2001); Member of
the National Academy of Sciences (since 1979); Member of the
American Philosophical Society (since 1996); Council on Foreign
Relations (since 2002); Director of the Institute for Advanced Study
(1991-2004); Director of Bankers Trust New York Corporation
(1994-1999). Oversees 38 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since
Trustee (since 2005) October 1998); and Senior Vice President and General Auditor of
Age: 63 American Express Company (financial services company) (July
1998-February 2003). Oversees 38 portfolios in the OppenheimerFunds
complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held
Trustee (since 2005) financial adviser) (since 2002); Managing Director of Carmona
Age: 53 Motley, Inc. (privately-held financial adviser) (since January
2002); Managing Director of Carmona Motley Hoffman Inc.
(privately-held financial adviser) (January 1998-December 2001).
Oversees 38 portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding
Trustee (since 2005) company) (since February 1972); Former Director of Prime Retail,
Age: 78 Inc. (real estate investment trust), Dominion Energy Inc. (electric
power and oil & gas producer), Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers
Mutual Insurance Company; Former President and Chief Executive
Officer of The Conference Board, Inc. (international economic and
business research). Oversees 38 portfolios in the OppenheimerFunds
complex.
43 | ACTIVE ALLOCATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate
Trustee (since 2005) governance consulting and executive recruiting) (since 1993); Life
Age: 73 Trustee of International House (non-profit educational
organization); Former Trustee of The Historical Society of the Town
of Greenwich. Oversees 38 portfolios in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since
Trustee (since 2005) 1992) and Cathco (since 1996); Director of Lakes Environmental
Age: 64 Association (since 1996); Member of the Investment Committee of the
Associated Jewish Charities of Baltimore (since 1994); Director of
Fortis/Hartford mutual funds (1994-December 2001). Oversees 39
portfolios in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and
Trustee (since 2005) production company) (since 1994); Vice President, Secretary and
Age: 57 Treasurer of Wold Trona Company, Inc. (soda ash processing and
production) (since 1996); Vice President of Wold Talc Company, Inc.
(talc mining) (since 1999); Managing Member of Hole-in-the-Wall
Ranch (cattle ranching) (since 1979); Director and Chairman of the
Denver Branch of the Federal Reserve Bank of Kansas City
(1993-1999); and Director of PacifiCorp. (electric utility)
(1995-1999). Oversees 39 portfolios in the OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since
Trustee (since 2005) September 1995); Director of Special Value Opportunities Fund, LLC
Age: 62 (registered investment company) (since September 2004); Member,
Zurich Financial Investment Advisory Board (affiliate of the
Manager's parent company) (since October 2004); Board of Governing
Trustees of The Jackson Laboratory (non-profit) (since August 1990);
Trustee of the Institute for Advanced Study (non-profit educational
institute) (since May 1992); Special Limited Partner of Odyssey
Investment Partners, LLC (private equity investment) (January
1999-September 2004); Trustee of Research Foundation of AIMR
(2000-2002) (investment research, non-profit); Governor, Jerome Levy
Economics Institute of Bard College (August 1990-September 2001)
(economics research); Director of Ray & Berendtson, Inc. (May
2000-April 2002) (executive search firm); President and Chief
Executive Officer of the Delaware Group of Mutual Funds (1992-1995);
Chairman, President and Chief Executive Officer of Equitable Capital
Management Corporation (1985-1992); Executive Vice President and
Chief Investment Officer at The Equitable Life Assurance Society of
the U.S. (1979-1992); Vice President and Co-manager at Smith Barney,
Harris Upham and Company (1970-1979); Engineer, Sperry Gyroscope
Company (1966-1970); former governor of the Association for
Investment Management and Research; former chairman of the Institute
of Chartered Financial Analysts; Chartered Financial Analyst.
Oversees 48 portfolios in the OppenheimerFunds complex.
44 | ACTIVE ALLOCATION FUND
- ----------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225
AND OFFICER LIBERTY STREET, 11TH FLOOR, 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
INDEFINITE 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)
Trustee, President and and President (since September 2000) of the Manager; President and
Principal Executive Officer Director or Trustee of other Oppenheimer funds; President and
(since 2005) Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's
Age: 56 parent holding company) and of Oppenheimer 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 subsidiaries of the Manager) (since July
2001); President and Director of OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since July
2001); Director of the following investment advisory subsidiaries
of the Manager: OFI Institutional Asset Management, Inc.,
Centennial Asset Management Corporation, Trinity Investment
Management Corporation and Tremont Capital Management, Inc. (since
November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since
November 1, 2001) and Director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company)
(since February 1997); Director of DLB Acquisition Corporation
(holding company parent of Babson Capital Management LLC) (since
June 1995); Member of the Investment Company Institute's Board of
Governors (since October 3, 2003); Chief Operating Officer of the
Manager (September 2000-June 2001); President and Trustee of MML
Series Investment Fund and MassMutual Select Funds (open-end
investment companies) (November 1999-November 2001); Director of
C.M. Life Insurance Company (September 1999-August 2000);
President, Chief Executive Officer and Director of MML Bay State
Life Insurance Company (September 1999-August 2000); Director of
Emerald Isle Bancorp and Hibernia Savings Bank (wholly-owned
subsidiary of Emerald Isle Bancorp) (June 1989-June 1998).
Oversees 87 portfolios in the OppenheimerFunds complex.
- ----------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS:
OF THE PORTFOLIO FOR MESSRS. SCHADT, WEBMAN, WILBY, WOLFGRUBER, WONG 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
INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT DEATH
OR REMOVAL.
RUDI W. SCHADT, Vice President, Director of Research in Product Design and Risk
Vice President and Portfolio Management of the Manager. Prior to joining the Manager in
Manager (since 2005) February 2002 he was a Director and Senior Quantitative Analyst
Age: 48 (2000-2001) at UBS Asset Management prior to which he was an
Associate Director of Research (since June 1999) and Senior
Researcher and Portfolio Manager (from June 1997) at State Street
Global Advisors. An officer of 7 portfolios in the
OppenheimerFunds complex.
JERRY WEBMAN, Senior Vice President (since February 1996) and Senior Investment
Vice President and Portfolio Officer and Director (since 1997) of the Manager's Fixed Income
Manager (since 2005) Investments; Senior Vice President (since May 1999) of HarbourView
Age: 56 Asset Management Corporation. An officer of 4 portfolios in the
OppenheimerFunds complex.
45 | ACTIVE ALLOCATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
WILLIAM L. WILBY, Senior Vice President (since July 1994) and Senior Investment
Vice President and Portfolio Officer, Director of Equities (since July 2004) of the Manager.
Manager (since 2005) Formerly, Senior Investment Officer, Director of International
Age: 61 Equities of the Manager (May 2000-July 2004) and Senior Vice
President of HarbourView Asset Management Corporation (May 1999-
November 2001). An officer of 6 portfolios in the OppenheimerFunds
complex.
KURT WOLFGRUBER, Executive Vice President (since March 2003) and Chief Investment
Vice President and Portfolio Officer and Director (since July 2003) of the Manager; Director of
Manager (since 2005) HarbourView Asset Management Corporation and of OFI Institutional
Age: 55 Asset Management, Inc. (since June 2003) and of Tremont Capital
Management, Inc. (since October 2001). An officer of 4 portfolios in
the OppenheimerFunds complex.
CALEB WONG, Vice President of the Manager since June 1999; worked in
Vice President and Portfolio fixed-income quantitative research and risk management for the
Manager (since 2005) Manager (since July 1996); an officer of 2 portfolios in the
Age: 40 OppenheimerFunds complex. Formerly Assistant Vice President of the
Manager (January 1997-June 1999); before joining the Manager in July
1996 Mr. Wong was enrolled in the Ph.D. program for Economics at the
University of Chicago.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager
Vice President and Chief (since March 2004); Vice President of OppenheimerFunds Distributor,
Compliance Officer Inc., Centennial Asset Management Corporation and Shareholder
(since 2005) Services, Inc. (since June 1983). Former Vice President and Director
Age: 55 of Internal Audit of the Manager (1997-February 2004). An officer
of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March
Treasurer and Principal 1999); Treasurer of the following: HarbourView Asset Management
Financial and Accounting Corporation, Shareholder Financial Services, Inc., Shareholder
Officer (since 2005) Services, Inc., Oppenheimer Real Asset Management Corporation, and
Age: 46 Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Private Investments, Inc. (since March 2000), OppenheimerFunds
International Ltd. (since May 2000), OppenheimerFunds plc (since May
2000), OFI Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (charitable trust program
established by the Manager) (since June 2003); Treasurer and Chief
Financial Officer of OFI Trust Company (trust company subsidiary of
the Manager) (since May 2000); Assistant Treasurer of the following:
OAC (since March 1999),Centennial 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
Secretary (since 2005) (since March 2002) of the Manager; General Counsel and Director of
Age: 57 the Distributor (since December 2001); General Counsel of Centennial
Asset Management Corporation (since December 2001); Senior Vice
President and General Counsel of HarbourView Asset Management
Corporation (since December 2001); Secretary and General Counsel of
OAC (since November 2001); Assistant Secretary (since September
1997) and Director (since November 2001) of OppenheimerFunds
International Ltd. and OppenheimerFunds plc; Vice President and
Director of Oppenheimer Partnership Holdings, Inc. (since December
2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director
of
46 | ACTIVE ALLOCATION FUND
ROBERT G. ZACK, Shareholder Financial Services, Inc. and Shareholder Services, Inc.
Continued (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 PORTFOLIO'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL
INFORMATION ABOUT THE PORTFOLIO'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT
CHARGE UPON REQUEST, BY CALLING 1.800.525.7048.
47 | ACTIVE ALLOCATION FUND
AGGRESSIVE INVESTOR FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Global Equity 31.5%
U.S. Equity 68.5
Portfolio holdings and allocations are subject to change. Percentages are as of
January 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
8 | AGGRESSIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
HOW HAS THE PORTFOLIO PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS,
INC., OF THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD OF APRIL 5,
2005 TO JANUARY 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE PORTFOLIO'S
PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
Since its inception on April 5, 2005 to the end of the period on January 31,
2006, the Portfolio outperformed its benchmark, the S&P 500 Index. We attribute
the Portfolio's outperformance of its benchmark to its diversified equity
weighting that enabled it to own sectors not included in the S&P 500 Index,
especially those of international markets, which posted strong results over the
reporting period.
Over the reporting period the MSCI All Country World Index, an unmanaged
index that is designed to measure equity market performance in the global
developed and emerging markets, returned 17.56%, far outpacing the S&P 500
Index. Since the Portfolio had an approximately 30% allocation to foreign
markets through the underlying international funds it holds, it reaped the
benefits as these markets expanded. Major contributors to performance included
Oppenheimer Global Fund, Oppenheimer Global Opportunities Fund and Oppenheimer
Developing Markets Fund.
The Portfolio's allocations to Oppenheimer Global Fund and Oppenheimer
Global Opportunities Fund benefited performance as the Funds produced strong
returns of 24.72% and 38.63%, respectively. The strong performance of both Funds
can be attributed to a successful stock selection process as well as the
beneficial effects of a strengthening global economy. The Portfolio's exposure
to Oppenheimer Developing Markets Fund also significantly contributed to
performance, as it produced a total return of 50.9% over the period. The
Portfolio benefited from a strong individual stock selection process as well as
its exposure to the emerging markets.
Although the other equity funds that the Portfolio owned produced solid
returns, they did not match the returns of the international funds and slightly
hampered performance. We attribute the underperformance of our domestic equity
funds relative to the performance of our international funds to the simple fact
that the domestic funds are focused on the U.S. equity market, which generally
underperformed international markets over the period.
COMPARING THE PORTFOLIO'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 Portfolio held until January 31, 2006. Performance is measured from the
inception of Classes A, B, C, N, and Y on April 5, 2005. The Portfolio's
performance reflects the deduction of the maximum initial sales charge on Class
A shares, the applicable contingent
9 | AGGRESSIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
deferred sales charge on Class B, Class C, and Class N shares, and reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
The Portfolio's performance is compared to the performance of the S&P 500
Index. The S&P 500 Index is an unmanaged index of equity securities. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graphs shows the effect of
taxes. The Portfolio's performance reflects the effects of the Portfolio's
business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Portfolio's performance, it must be noted that the
Portfolio's investments are not limited to the investments in the index.
10 | AGGRESSIVE INVESTOR FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Aggressive Investor Fund (Class A)
S&P 500 Index
MSCI World Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Aggressive
Investor Fund S & P 500 MSCI
(Class A) Index World Index
04/05/2005 9,425 10,000 10,000
04/30/2005 9,199 9,810 9,788
07/31/2005 9,991 10,514 10,414
10/31/2005 9,972 10,327 10,514
01/31/2006 11,071 11,005 11,612
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 10.71%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER INFORMATION.
11 | AGGRESSIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Aggressive Investor Fund (Class B)
S&P 500 Index
MSCI World Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Aggressive
Investor Fund S & P 500 MSCI
(Class B) Index World Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,750 9,810 9,788
07/31/2005 10,580 10,514 10,414
10/31/2005 10,540 10,327 10,514
01/31/2006 11,170 11,005 11,612
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 11.70%
12 | AGGRESSIVE INVESTOR FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Aggressive Investor Fund (Class C)
S&P 500 Index
MSCI World Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Aggressive
Investor Fund S & P 500 MSCI
(Class C) Index World Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,750 9,810 9,788
07/31/2005 10,570 10,514 10,414
10/31/2005 10,530 10,327 10,514
01/31/2006 11,564 11,005 11,612
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 15.64%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER INFORMATION.
13 | AGGRESSIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Aggressive Investor Fund (Class N)
S&P 500 Index
MSCI World Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Aggressive
Investor Fund S & P 500 MSCI
(Class N) Index World Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,750 9,810 9,788
07/31/2005 10,600 10,514 10,414
10/31/2005 10,580 10,327 10,514
01/31/2006 11,634 11,005 11,612
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 16.34%
14 | AGGRESSIVE INVESTOR FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Aggressive Investor Fund (Class Y)
S&P 500 Index
MSCI World Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Aggressive
Investor Fund S & P 500 MSCI
(Class Y) Index World Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,760 9,810 9,788
07/31/2005 10,600 10,514 10,414
10/31/2005 10,600 10,327 10,514
01/31/2006 11,769 11,005 11,612
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 17.69%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER INFORMATION.
15 | AGGRESSIVE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
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 Portfolio'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 Portfolio or any gains you may realize if you sell your shares.
Investors should consider the Portfolio's investment objectives, risks, and
other charges and expenses carefully before investing. The Portfolio's
prospectus contains this and other information about the Portfolio, 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 Portfolio'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 Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year). Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio were first publicly offered on 4/5/05. 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.
CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio's Statement
of Additional Information.
16 | AGGRESSIVE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
PORTFOLIO EXPENSES. As a shareholder of the Portfolio, 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 Portfolio expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of investing in
the Portfolio 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 January 31, 2006.
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 Portfolio'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
Portfolio'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 Portfolio and other funds. To do so, compare this 5%
hypothetical example for the class of shares you hold with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
17 | AGGRESSIVE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(8/1/05) (1/31/06) JANUARY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,108.10 $3.62
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,021.78 3.47
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,103.00 7.98
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,017.64 7.66
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,103.50 7.71
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,017.90 7.40
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,107.00 4.10
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.32 3.93
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,110.20 1.33
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,023.95 1.28
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Portfolio'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,
excluding all underlying fund expenses, based on the 6-month period ended
January 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------------
Class A 0.68%
- -----------------------------------
Class B 1.50
- -----------------------------------
Class C 1.45
- -----------------------------------
Class N 0.77
- -----------------------------------
Class Y 0.25
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Portfolio's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Portfolio's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
18 | AGGRESSIVE INVESTOR FUND
STATEMENT OF INVESTMENTS January 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--98.4% 1
GLOBAL EQUITY--31.0%
Oppenheimer Developing Markets Fund, Cl. Y 131,194 $ 5,195,257
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund, Cl. Y 265,671 18,785,577
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Global Opportunities Fund, Cl. Y 124,676 5,045,603
-----------
29,026,437
- -----------------------------------------------------------------------------------------------------------
U. S. EQUITY--67.4%
Oppenheimer Capital Appreciation Fund, Cl. Y 393,164 17,943,986
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 347,889 13,362,423
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 633,885 8,988,492
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund, Cl. Y 409,733 9,468,940
- -----------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 541,824 13,269,265
------------
63,033,106
-----------
Total Investments in Affiliated Companies (Cost $86,895,651) 92,059,543
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.6%
Undivided interest of 0.07% in joint repurchase agreement (Principal
Amount/Value $781,426,000, with a maturity value of $781,521,291)
with UBS Warburg LLC, 4.39%, dated 1/31/06, to be repurchased
at $535,065 on 2/1/06, collateralized by Federal Home Loan Mortgage
Corp., 5%, 12/1/35, with a value of $799,056,396 (Cost $535,000) $535,000 535,000
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $87,430,651) 99.0% 92,594,543
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.0 968,493
---------------------------
NET ASSETS 100.0% $93,563,036
===========================
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Affiliated companies. Represents ownership of an affiliated fund, at or
during the period ended January 31, 2006.
Transactions during the period in which the issuer was an affiliate are as
follows:
SHARES GROSS GROSS SHARES
APRIL 5, 2005 ADDITIONS REDUCTIONS JAN. 31, 2006
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y -- 393,164 -- 393,164
Oppenheimer Developing Markets Fund, Cl. A -- 69,254 69,254 --
Oppenheimer Developing Markets Fund, Cl. Y -- 131,194 -- 131,194
Oppenheimer Global Fund, Cl. Y -- 265,671 -- 265,671
Oppenheimer Global Opportunities Fund, Cl. Y -- 124,676 -- 124,676
Oppenheimer Main Street Fund, Cl. Y -- 347,889 -- 347,889
Oppenheimer Main Street Opportunity Fund, Cl. Y -- 633,885 -- 633,885
Oppenheimer Main Street Small Cap Fund, Cl. Y -- 409,733 -- 409,733
Oppenheimer Value Fund, Cl. Y -- 541,824 -- 541,824
19 | AGGRESSIVE INVESTOR FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN
- -----------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $17,943,986 $ 102,086 $ --
Oppenheimer Developing Markets Fund, Cl. A -- -- 136,715
Oppenheimer Developing Markets Fund, Cl. Y 5,195,257 80,177 --
Oppenheimer Global Fund, Cl. Y 18,785,577 111,604 --
Oppenheimer Global Opportunities Fund, Cl. Y 5,045,603 63,790 --
Oppenheimer Main Street Fund, Cl. Y 13,362,423 113,520 --
Oppenheimer Main Street Opportunity Fund, Cl. Y 8,988,492 120,815 --
Oppenheimer Main Street Small Cap Fund, Cl. Y 9,468,940 67,423 --
Oppenheimer Value Fund, Cl. Y 13,269,265 191,917 --
-------------------------------------------
$92,059,543 $ 851,332 $ 136,715
===========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | AGGRESSIVE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES January 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $535,000) $ 535,000
Affiliated companies (cost $86,895,651) 92,059,543
------------
92,594,543
- --------------------------------------------------------------------------------
Cash 5,412
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 1,785,905
Interest and dividends 65
Other 2,109
------------
Total assets 94,388,034
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 737,769
Shares of beneficial interest redeemed 17,527
Distribution and service plan fees 16,971
Shareholder communications 12,704
Transfer and shareholder servicing agent fees 11,625
Trustees' compensation 97
Other 28,305
------------
Total liabilities 824,998
- --------------------------------------------------------------------------------
NET ASSETS $93,563,036
============
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 8,084
- --------------------------------------------------------------------------------
Additional paid-in capital 87,414,797
- --------------------------------------------------------------------------------
Accumulated net investment loss (41)
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 976,304
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 5,163,892
- --------------------------------------------------------------------------------
NET ASSETS $93,563,036
============
21 | AGGRESSIVE INVESTOR 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 $48,132,412
and 4,150,893 shares of beneficial interest outstanding) $11.60
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $12.31
- -----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $19,077,611 and 1,651,928
shares of beneficial interest outstanding) $11.55
- -----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $20,033,822 and 1,735,743
shares of beneficial interest outstanding) $11.54
- -----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $5,608,345 and 483,918 shares
of beneficial interest outstanding) $11.59
- -----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $710,846 and 61,222 shares of beneficial interest outstanding) $11.61
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | AGGRESSIVE INVESTOR FUND
STATEMENT OF OPERATIONS For the Period Ended January 31, 2006 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $ 851,332
- --------------------------------------------------------------------------------
Interest 11,236
-----------
Total investment income 862,568
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 34,064
Class B 57,776
Class C 50,173
Class N 7,028
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 28,007
Class B 14,158
Class C 10,884
Class N 1,431
Class Y 320
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 13,623
Class B 7,721
Class C 5,373
Class N 481
Class Y 11
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 25,582
- --------------------------------------------------------------------------------
Trustees' compensation 7,695
- --------------------------------------------------------------------------------
Custodian fees and expenses 105
- --------------------------------------------------------------------------------
Other 12,370
-----------
Total expenses 276,802
Less reduction to custodian expenses (2)
Less waivers and reimbursements of expenses (5,919)
-----------
Net expenses 270,881
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 591,687
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on:
Distributions received from affiliated companies 1,146,959
Affiliated companies 136,715
-----------
Net realized gain 1,283,674
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 5,163,892
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,039,253
===========
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | AGGRESSIVE INVESTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED
JANUARY 31, 2006 1
- -------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income $ 591,687
- -------------------------------------------------------------------------------------------------
Net realized gain 1,283,674
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 5,163,892
-------------
Net increase in net assets resulting from operations 7,039,253
- -------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (380,503)
Class B (127,617)
Class C (120,802)
Class N (41,332)
Class Y (6,678)
- -------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (67,178)
Class B (28,621)
Class C (25,903)
Class N (7,402)
Class Y (1,071)
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 44,717,597
Class B 17,711,412
Class C 18,857,875
Class N 5,289,149
Class Y 650,857
- -------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------
Total increase 93,459,036
- -------------------------------------------------------------------------------------------------
Beginning of period 104,000 2
-------------
End of period (including accumulated net investment loss
of $41 for the period ended January 31, 2006) $93,563,036
=============
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Reflects the value of the Manager's initial seed money investment on March
15, 2005.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | AGGRESSIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
PERIOD ENDED JANUARY 31, 2006 1 2006 1 2006 1
- ------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
- ------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .22 .16 .15
Net realized and unrealized gain 1.52 1.50 1.51
--------------------------------------------
Total from investment operations 1.74 1.66 1.66
- ------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.09) (.10)
Distributions from net realized gain (.02) (.02) (.02)
--------------------------------------------
Total dividends and distributions
to shareholders (.14) (.11) (.12)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.60 $ 11.55 $ 11.54
============================================
- ------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 17.46% 16.70% 16.64%
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $48,132 $19,078 $20,034
- ------------------------------------------------------------------------------------------------
Average net assets (in thousands) $17,321 $ 7,050 $ 6,131
- ------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.47% 1.83% 1.71%
Total expenses 0.70% 5 1.53% 6 1.48% 7
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.68% 1.50% 1.45%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 7% 7% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.39% for January 31,
2006.
6. Expenses including all underlying fund expenses were 2.22% for January 31,
2006.
7. Expenses including all underlying fund expenses were 2.17% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | AGGRESSIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N CLASS Y
PERIOD ENDED JANUARY 31, 2006 1 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .24 .24
Net realized and unrealized gain 1.49 1.52
--------------------------
Total from investment operations 1.73 1.76
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.13)
Distributions from net realized gain (.02) (.02)
--------------------------
Total dividends and distributions
to shareholders (.14) (.15)
- --------------------------------------------------------------------------------
Net asset value, end of period $11.59 $11.61
==========================
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 17.34% 17.69%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $5,608 $ 711
- --------------------------------------------------------------------------------
Average net assets (in thousands) $1,717 $ 331
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.62% 2.67%
Total expenses 0.79% 5 0.30% 6
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.78% 0.27%
- --------------------------------------------------------------------------------
Portfolio turnover rate 7% 7%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.48% for January 31,
2006.
6. Expenses including all underlying fund expenses were 0.99% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Portfolio Series (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Aggressive Investor Fund (the "Portfolio") is a series of the Fund whose
investment objective is to seek long term growth of capital. The Portfolio is a
special type of mutual fund known as a "fund of funds" because it invests in
other mutual funds. The Portfolio normally invests in a portfolio consisting of
a target-weighted allocation in Class A or Class Y shares of other Oppenheimer
funds. The Fund's investment advisor is OppenheimerFunds Inc. (the "Manager").
The Portfolio 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 Portfolio 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.
Under normal market conditions, the Manager will invest the Portfolio's
assets in shares of Oppenheimer Capital Appreciation Fund, Oppenheimer
Developing Markets Fund, Oppenheimer Global Fund, Oppenheimer Global
Opportunities Fund, Oppenheimer Main Street Fund(R), Oppenheimer Main Street
Opportunity Fund(R), Oppenheimer Main Street Small Cap Fund(R) and Oppenheimer
Value Fund (individually, an "Underlying Fund" and collectively, the "Underlying
Funds").
The following is a summary of significant accounting policies consistently
followed by the Portfolio.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Portfolio calculates the net asset value of each class
of shares based upon the net asset value of the applicable Underlying Funds' 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 trading.
For each Underlying Fund, the net asset value per share for a class of
shares on a "regular business day" is determined by dividing the value of the
Underlying Fund's net assets attributable to that class by the number of shares
of that class outstanding on that day. To determine net asset values, the
Underlying Fund assets are valued primarily on the basis of current market
quotations. If market quotations are not readily available or do
27 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
not accurately reflect fair value for a security (in the Manager's judgment) or
if a security's value has been materially affected by events occurring after the
close of the exchange or market on which the security is principally traded,
that security may be valued by another method that the Underlying Fund's Board
of Trustees/Directors believes accurately reflects the fair value. Because some
foreign securities trade in markets and on exchanges that operate on weekends
and U.S. holidays, the values of some of the Underlying Fund's foreign
investments may change on days when investors cannot buy or redeem Underlying
Fund shares.
Short-term "money market type" debt securities with remaining maturities
of sixty days or less are valued at amortized cost (which approximates market
value).
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Portfolio invests has its own investment risks, and those risks can
affect the value of the Portfolio's investments and therefore the value of the
Portfolio's shares. To the extent that the Portfolio invests more of its assets
in one Underlying Fund than in another, the Portfolio will have greater exposure
to the risks of that Underlying Fund.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Portfolio, 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 Portfolio 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 Portfolio must satisfy under the income tax
regulations, losses the Portfolio 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.
28 | AGGRESSIVE INVESTOR FUND
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1 TAX PURPOSES
--------------------------------------------------------------------------
$-- $977,747 $-- $5,162,449
1. During the period ended January 31, 2006, the Portfolio did not have any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Portfolio.
Accordingly, the following amounts have been reclassified for January 31, 2006.
Net assets of the Portfolio were unaffected by the reclassifications.
REDUCTION
REDUCTION TO ACCUMULATED NET
INCREASE TO ACCUMULATED REALIZED GAIN
TO PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS 2
--------------------------------------------------------------------------
$91,991 $85,204 $177,195
2. $95,557, all of which was long-term capital gain, was distributed in
connection with Portfolio share redemptions.
The tax character of distributions paid during the period ended January 31, 2006
was as follows:
PERIOD ENDED
JANUARY 31, 2006
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $807,107
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 January 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $87,432,094
===========
Gross unrealized appreciation $ 5,162,449
Gross unrealized depreciation --
-----------
Net unrealized appreciation $ 5,162,449
===========
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded
29 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
on the ex-dividend date. Income and capital gain distributions, if any, are
declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Portfolio 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 Portfolio pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Portfolio at a rate equal to
the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line
item, if applicable, represents earnings on cash balances maintained by the
Portfolio during the period. At January 31, 2006, the Portfolio had $39 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Portfolio's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Portfolio. In
the normal course of business, the Portfolio may also enter into contracts that
provide general indemnifications. The Portfolio's maximum exposure under these
arrangements is unknown as this would be dependent on future claims that may be
made against the Portfolio. The risk of material loss from such claims is
considered remote.
- --------------------------------------------------------------------------------
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:
30 | AGGRESSIVE INVESTOR FUND
PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT
- -----------------------------------------------------------------
CLASS A
Sold 4,307,796 $46,498,407
Dividends and/or
distributions reinvested 38,611 427,037
Redeemed (205,514) (2,207,847)
-----------------------------
Net increase 4,140,893 $44,717,597
=============================
- -----------------------------------------------------------------
CLASS B
Sold 1,712,718 $18,374,371
Dividends and/or
distributions reinvested 13,238 145,879
Redeemed (74,128) (808,838)
-----------------------------
Net increase 1,651,828 $17,711,412
=============================
- -----------------------------------------------------------------
CLASS C
Sold 1,784,313 $19,370,332
Dividends and/or
distributions reinvested 12,844 141,411
Redeemed (61,514) (653,868)
-----------------------------
Net increase 1,735,643 $18,857,875
=============================
- -----------------------------------------------------------------
CLASS N
Sold 536,355 $ 5,884,519
Dividends and/or
distributions reinvested 3,629 40,096
Redeemed (56,166) (635,466)
-----------------------------
Net increase 483,818 $ 5,289,149
=============================
- -----------------------------------------------------------------
CLASS Y
Sold 69,936 $ 744,994
Dividends and/or
distributions reinvested 699 7,734
Redeemed (9,513) (101,871)
-----------------------------
Net increase 61,122 $ 650,857
=============================
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100
shares of Class B, Class C, Class N and Class Y at a value of $1,000,
respectively, to the Manager upon seeding of the Portfolio on March 15, 2005.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the period ended January 31, 2006, were as
follows:
PURCHASES SALES
--------------------------------------------------------------------------
Investment Securities $89,015,063 $2,256,128
31 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets of
the Portfolio for the period ended January 31, 2006 was 0.58%.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Portfolio. The
Portfolio pays OFS a per account fee. For the period ended January 31, 2006, the
Portfolio paid $43,055 to OFS for services to the Portfolio.
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.
- --------------------------------------------------------------------------------
INITIAL OFFERING AND ORGANIZATIONAL COSTS. The Manager assumed all initial
offering and organizational costs associated with the registration and seeding
of the Portfolio.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Portfolio's principal underwriter in the continuous
public offering of the Portfolio's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Portfolio 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 Portfolio. The Distributor
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
Portfolio under the Plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Portfolio has adopted Distribution and Service Plans for Class B, Class C and
Class N shares to compensate the Distributor for its services and costs in
connection with the distribution of those shares and servicing accounts. Under
the plans, the Portfolio 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 Portfolio or by
the shareholders of a class, the Board of Trustees and its independent
32 | AGGRESSIVE INVESTOR FUND
trustees must determine whether the Distributor shall be entitled to payment
from the Portfolio 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 January 31, 2006 for Class B, Class C and Class N shares were $262,957,
$142,362 and $36,299, respectively. Fees incurred by the Portfolio 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 Portfolio. They are deducted from the
proceeds of sales of Portfolio 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
CONTINGENT CONTINGENT CONTINGENT CONTINGENT
CLASS A DEFERRED SALES DEFERRED SALES DEFERRED SALES DEFERRED SALES
FRONT-END SALES CHARGES CHARGES CHARGES CHARGES
CHARGES RETAINED RETAINED BY RETAINED BY RETAINED BY RETAINED BY
PERIOD ENDED BY DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------------------------
January 31, 2006 $265,087 $-- $5,572 $2,126 $5,679
- -----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees paid directly by the Portfolio to
0.35% of average annual net assets for each class. During the period ended
January 31, 2006, OFS waived $113, $3 and $4 for Class B, Class N and Class Y
shares, respectively. This undertaking may be amended or withdrawn at any time.
The Manager has voluntarily agreed to a total expense limitation on the
aggregate amount of combined direct (fund-of-funds level) and indirect expense
so that Combined Total Annual and Underlying Fund Operating Expenses as a
percentage of average daily net assets will not exceed the following annual
rates: 1.45%, 2.20%, 2.20%, 1.70% and 1.20%, for Class A, Class B, Class C,
Class N and Class Y, respectively. During the period ended January 31, 2006, the
Manager reimbursed the Portfolio $2,512, $1,811, $1,334, $99 and $43, for the
Class A, Class B, Class C, Class N and Class Y shares, respectively. The Manager
may modify or terminate this undertaking at any time without notice to
shareholders. These expense limitations do not include Extraordinary Expenses
and other expenses not incurred in the ordinary course of the Portfolio's
business. Notwithstanding the foregoing limits, the Manager is not required to
waive or reimburse Portfolio expenses in excess of indirect management fees
earned from investments in Underlying Funds to assure that expenses do not
exceed those limits.
33 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LITIGATION
A complaint was filed as a putative class action against the Manager and OFS
(and other defendants) in the U.S. District Court for the Southern District of
New York on January 10, 2005 and was amended on March 4, 2005. Seven of the
eight counts in the complaint, including claims against certain of the
Oppenheimer funds excluding the Portfolio, as nominal defendants, and against
certain present and former Directors, Trustees and officers of the funds, and
the Distributor, as defendants, were dismissed with prejudice, under a court
order dated March 10, 2006, in response to a motion to dismiss the suit that had
been filed by the defendants. The remaining count against the Adviser Defendants
alleges, among other things, that the defendants charged excessive fees in
violation of section 36(b) of the Investment Company Act of 1940. The plaintiffs
seek unspecified damages, an accounting of all fees paid, and an award of
attorneys' fees and litigation expenses.
The Adviser Defendants believe that the claims asserted in the remaining
count under this lawsuit are without merit, and intend to defend the suit
vigorously and contest any claimed liability. They 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.
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At a meeting held on December 14, 2005, the Board of Trustees of the Fund
appointed KPMG LLP as the independent registered public accounting firm to the
Fund to replace the firm of Ernst & Young LLP, who were dismissed as the
independent registered public accounting firm to the Fund. This change in the
Fund's auditors was approved by the Fund's audit committee and ratified by the
Fund's independent Trustees.
The report of Ernst & Young LLP on the Fund's statements of assets and
liabilities as of March 15, 2005 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
The Fund commenced operations on April 5, 2005. During the period from
March 15, 2005 through December 14, 2005, there were no disagreements with Ernst
& Young LLP on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved to
the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to
make reference to the matter in their report.
34 | AGGRESSIVE INVESTOR FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER PORTFOLIO SERIES:
We have audited the accompanying statement of assets and liabilities of
Aggressive Investor Fund (one of the portfolios constituting the Oppenheimer
Portfolio Series), including the statement of investments, as of January 31,
2006, and the related statement of operations, the statement of changes in net
assets and the financial highlights for the period April 5, 2005 (commencement
of operations) to January 31, 2006. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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
Aggressive Investor Fund as of January 31, 2006, the results of its operations,
the changes in its net assets and the financial highlights for the period April
5, 2005 (commencement of operations) to January 31, 2006, in conformity with
U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
March 15, 2006
35 | AGGRESSIVE INVESTOR 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 Portfolio during
calendar year 2005. Regulations of the U.S. Treasury Department require the
Portfolio to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Portfolio during the fiscal year ended
January 31, 2006 which are not designated as capital gain distributions should
be multiplied by 71.34% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Portfolio during the
fiscal year ended January 31, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Portfolio has received qualified dividend income as stipulated by
recent tax legislation. $642,286 of the Portfolio's fiscal year taxable income
may be eligible for the lower individual income tax rates. In early 2006,
shareholders of record received information regarding the percentage of
distributions that are eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Portfolio 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.
36 | AGGRESSIVE INVESTOR FUND
REPORT OF SHAREHOLDER MEETING Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On September 26, 2005, a shareholder meeting of the Oppenheimer Portfolio Series
on behalf of Aggressive Investor Fund was held at which the eleven Trustees
identified below were elected. The following is a report of the votes cast:
- --------------------------------------------------------------------------------
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 1,101,509.865 4,475.714 1,105,985.579
Robert G. Galli 1,101,509.865 4,475.714 1,105,985.579
Phillip A. Griffiths 1,101,509.865 4,475.714 1,105,985.579
Mary F. Miller 1,101,108.324 4,877.255 1,105,985.579
Joel W. Motley 1,101,509.865 4,475.714 1,105,985.579
John V. Murphy 1,101,509.865 4,475.714 1,105,985.579
Kenneth A. Randall 1,101,509.865 4,475.714 1,105,985.579
Russell S. Reynolds, Jr. 1,101,509.865 4,475.714 1,105,985.579
Joseph M. Wikler 1,101,509.865 4,475.714 1,105,985.579
Peter I. Wold 1,101,509.865 4,475.714 1,105,985.579
Clayton K. Yeutter 1,101,509.865 4,475.714 1,105,985.579
37 | AGGRESSIVE INVESTOR 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.
38 | AGGRESSIVE INVESTOR 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 TRUSTEES THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board Attorney at Hogan & Hartson (law firm) (since June 1993); Director of Danielson
of Trustees (since 2003), Holding Corp. (waste-to-energy company) (since 2002); Director of
Trustee (since 2005) Weyerhaeuser Corp. (1999-April 2004); Director of Caterpillar, Inc. (1993-
Age: 74 December 2002); Director of ConAgra Foods (1993-2001); Director of Texas
Instruments (1993-2001); Director of FMC Corporation (1993-2001). Oversees 38
portfolios in the OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research foundation)
Trustee (since 2005) (since 2005); Director of ICI Education Foundation (education foundation)
Age: 64 (since October 1991); President of the Investment Company Institute (trade
association) (1991-2004); Director of ICI Mutual Insurance Company (insurance
company) (1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in the
Trustee (since 2005) OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 2005) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The
Age: 67 Andrew W. Mellon Foundation (since 2001); Member of the National Academy
of Sciences (since 1979); Member of the American Philosophical Society (since
1996); Council on Foreign Relations (since 2002); Director of the Institute for
Advanced Study (1991-2004); Director of Bankers Trust New York Corporation
(1994-1999). Oversees 38 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2005) 1998); and Senior Vice President and General Auditor of American Express
Age: 63 Company (financial services company) (July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser)
Trustee (since 2005) (since 2002); Managing Director of Carmona Motley, Inc. (privately-held financial
Age: 53 adviser) (since January 2002); Managing Director of Carmona Motley Hoffman
Inc. (privately-held financial adviser) (January 1998-December 2001). Oversees 38
portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (since
Trustee (since 2005) February 1972); Former Director of Prime Retail, Inc. (real estate investment
Age: 78 trust), Dominion Energy Inc. (electric power and oil & gas producer),
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company; Former
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research). Oversees 38 portfolios in the
OppenheimerFunds complex.
39 | AGGRESSIVE INVESTOR FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consulting
Trustee (since 2005) and executive recruiting) (since 1993); Life Trustee of International House
Age: 73 (non-profit educational organization); Former Trustee of The Historical Society
of the Town of Greenwich. Oversees 38 portfolios in the OppenheimerFunds
complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992) and
Trustee (since 2005) Cathco (since 1996); Director of Lakes Environmental Association (since 1996);
Age: 64 Member of the Investment Committee of the Associated Jewish Charities of
Baltimore (since 1994); Director of Fortis/Hartford mutual funds (1994-
December 2001). Oversees 39 portfolios in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and production
Trustee (since 2005) company) (since 1994); Vice President, Secretary and Treasurer of Wold Trona
Age: 57 Company, Inc. (soda ash processing and production) (since 1996); Vice President
of Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of
Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of
the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and
Director of PacifiCorp. (electric utility) (1995-1999). Oversees 39 portfolios in the
OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Trustee (since 2005) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 62 (since September 2004); Member, Zurich Financial Investment Advisory
Board (affiliate of the Manager's parent company) (since October 2004); Board
of Governing Trustees of The Jackson Laboratory (non-profit) (since August
1990); Trustee of the Institute for Advanced Study (non-profit educational institute)
(since May 1992); Special Limited Partner of Odyssey Investment Partners,
LLC (private equity investment) (January 1999-September 2004); Trustee of
Research Foundation of AIMR (2000-2002) (investment research, non-profit);
Governor, Jerome Levy Economics Institute of Bard College (August 1990-
September 2001) (economics research); Director of Ray & Berendtson, Inc. (May
2000-April 2002) (executive search firm); President and Chief Executive Officer
of the Delaware Group of Mutual Funds (1992-1995); Chairman, President and
Chief Executive Officer of Equitable Capital Management Corporation (1985-
1992); Executive Vice President and Chief Investment Officer at The Equitable
Life Assurance Society of the U.S. (1979-1992); Vice President and Co-manager at
Smith Barney, Harris Upham and Company (1970-1979); Engineer, Sperry
Gyroscope Company (1966-1970); former governor of the Association for
Investment Management and Research; former chairman of the Institute of
Chartered Financial Analysts; Chartered Financial Analyst. Oversees 48 portfolios
in the OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, 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 INDEFINITE 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
Trustee, President and (since September 2000) of the Manager; President and Director or Trustee of
Principal Executive Officer other Oppenheimer funds; President and Director of Oppenheimer Acquisition
(since 2005) Corp. ("OAC") (the Manager's parent holding company) 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
40 | AGGRESSIVE INVESTOR FUND
JOHN V. MURPHY, Manager) (since November 2001); Chairman and Director of Shareholder
Continued Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent
subsidiaries of the Manager) (since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust program established by
the Manager) (since July 2001); Director of the following investment advisory
subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment Management Corporation
and Tremont Capital Management, Inc. (since November 2001), HarbourView
Asset Management Corporation and OFI Private Investments, Inc. (since July
2001); President (since November 1, 2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company) (since
February 1997); Director of DLB Acquisition Corporation (holding company parent
of Babson Capital Management LLC) (since June 1995); Member of the
Investment Company Institute's Board of Governors (since October 3, 2003);
Chief Operating Officer of the Manager (September 2000-June 2001); President
and Trustee of MML Series Investment Fund and MassMutual Select Funds
(open-end investment companies) (November 1999-November 2001); Director
of C.M. Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia
Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June
1998). Oversees 87 portfolios in the OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. SCHADT,
OF THE PORTFOLIO WEBMAN, WILBY, WOLFGRUBER 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 INDEFINITE
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT DEATH OR REMOVAL.
RUDI W. SCHADT, Vice President, Director of Research in Product Design and Risk Management of
Vice President and Portfolio the Manager. Prior to joining the Manager in February 2002 he was a Director
Manager (since 2005) and Senior Quantitative Analyst (2000-2001) at UBS Asset Management prior to
Age: 48 which he was an Associate Director of Research (since June 1999) and Senior
Researcher and Portfolio Manager (from June 1997) at State Street Global
Advisors. An officer of 7 portfolios in the OppenheimerFunds complex.
JERRY WEBMAN, Senior Vice President (since February 1996) and Senior Investment Officer and
Vice President and Portfolio Director (since 1997) of the Manager's Fixed Income Investments; Senior Vice
Manager (since 2005) President (since May 1999) of HarbourView Asset Management Corporation. An
Age: 56 officer of 4 portfolios in the OppenheimerFunds complex.
WILLIAM L. WILBY, Senior Vice President (since July 1994) and Senior Investment Officer, Director of
Vice President and Portfolio Equities (since July 2004) of the Manager. Formerly, Senior Investment Officer,
Manager (since 2005) Director of International Equities of the Manager (May 2000-July 2004) and
Age: 61 Senior Vice President of HarbourView Asset Management Corporation (May
1999-November 2001). An officer of 6 portfolios in the OppenheimerFunds
complex.
KURT WOLFGRUBER, Executive Vice President (since March 2003) and Chief Investment Officer and
Vice President and Portfolio Director (since July 2003) of the Manager; Director of HarbourView Asset
Manager (since 2005) Management Corporation and of OFI Institutional Asset Management, Inc.
Age: 55 (since June 2003) and of Tremont Capital Management, Inc. (since October
2001). An officer of 4 portfolios in the OppenheimerFunds complex.
41 | AGGRESSIVE INVESTOR FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
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 2005) Former Vice President and Director of Internal Audit of the Manager (1997-
Age: 55 February 2004). An officer of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real
Officer (since 2005) Asset Management Corporation, and Oppenheimer Partnership Holdings, Inc.
Age: 46 (since March 1999), OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. (since May 2000), OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (charitable trust program estab-
lished by the Manager) (since June 2003); Treasurer and Chief Financial Officer of
OFI Trust Company (trust company subsidiary of the Manager) (since May
2000); Assistant Treasurer of the following: OAC (since March 1999),Centennial
Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual Fund Services Division
(March 1995-March 1999). An officer of 87 portfolios in the OppenheimerFunds
complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2005) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 57 December 2001); General Counsel of Centennial Asset Management
Corporation (since December 2001); Senior Vice President and General Counsel
of HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001); Assistant
Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since
December 2001); Senior Vice President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
(since November 2001); Director of OppenheimerFunds (Asia) Limited (since
December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE PORTFOLIO'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL
INFORMATION ABOUT THE PORTFOLIO'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING 1.800.525.7048.
42 | AGGRESSIVE INVESTOR FUND
CONSERVATIVE INVESTOR FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Global Equity 5.9%
U.S. Equity 17.0
Fixed Income 65.8
Alternative Investments 11.3
Portfolio holdings and allocations are subject to change. Percentages are as of
January 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
9 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
HOW HAS THE PORTFOLIO PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS,
INC., OF THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD OF APRIL 5,
2005 TO JANUARY 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE PORTFOLIO'S
PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE. Since the Portfolio's
inception on April 5, 2005 to the end of the reporting period on January 31,
2006, the Portfolio outperformed its fixed income benchmark, the Lehman Brothers
Aggregate Bond Index. We attribute this outperformance to the Portfolio's
diversified structure.
During the reporting period, the Portfolio significantly benefited from
its equity exposure, which accounted for approximately 23% of the Portfolio at
the end of the period. When the Portfolio was launched in early April 2005,
equities had hit year lows and since then the stock indices have rallied. For
example, the S&P 500 Index rose 9.96% since the Portfolio's inception, despite
returning only -0.81% for the first six months of 2005. Other major contributors
to the Portfolio's performance included its positions in Oppenheimer Global
Fund, Oppenheimer Real Estate Fund, Oppenheimer International Bond Fund and
Oppenheimer High Yield Fund.
On the equity side, the Portfolio's allocation to the Oppenheimer Global
Fund Class Y Shares, which posted a return of 24.72% over the reporting period,
aided its performance. The strong performance of Oppenheimer Global Fund is a
reflection of a successful stock selection strategy.
On the alternative investments side, the Portfolio's 5.7% position in
Oppenheimer Real Estate Fund's Class Y Shares, which posted a return of 34.44%
over the reporting period and ranked favorably within its own peer group, was a
boon to the Portfolio's performance. Oppenheimer Real Estate Fund's success can
be attributed to its profitable investments in the apartment, office and
industrial sectors.
On the fixed income side, the Portfolio benefited from its allocation to
Oppenheimer International Bond Fund's Class Y Shares, as this Fund outperformed
its Lipper peer group and peer benchmark primarily due to its successful
investments in local currencies within the emerging markets. Additionally
contributing to the Portfolio's performance was its allocation to Oppenheimer
High Yield Fund. Over the reporting period, Oppenheimer High Yield Fund received
positive contributions to performance from its relatively heavy investments in
the telecommunications sector, which benefited from a surge in
mergers-and-acquisitions activity.
On the negative side, the Portfolio's 16% allocation to Oppenheimer's
Limited-Term Government Fund's Class Y Shares hampered the Portfolio's
performance. As the Fed continued to raise short-term interest rates over the
period, funds that had a large exposure to the short end of the yield curve,
such as Oppenheimer Limited-Term Government Fund, with its significant
allocation to short-term treasury notes, were adversely affected since
short-term treasuries underperformed long-term treasuries.
10 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
COMPARING THE PORTFOLIO'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 Portfolio held until January 31, 2006. Performance is measured from the
inception of Classes A, B, C, N and Y on April 5, 2005. The Portfolio's
performance reflects the deduction of the maximum initial sales charge on Class
A shares, the applicable contingent deferred sales charge on Class B, Class C
and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Portfolio's performance is compared to the performance of the S&P 500
Index and the Lehman Brothers Aggregate Bond Index. The S&P 500 Index is a
broad-based measure of domestic stock performance that includes the reinvestment
of dividends. The index is unmanaged and cannot be purchased directly by
investors. Index performance is shown for illustrative purposes only and does
not predict or depict the performance of the Portfolio. The Lehman Brothers
Aggregate Bond Index is an index of U.S. Government and corporate bonds that
includes reinvestment of dividends. 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 Portfolio's performance
reflects the effects of the Portfolio's business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Portfolio's
performance, it must be noted that the Portfolio's investments are not limited
to the investments in the index.
11 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Conservative Investor Fund (Class A)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Conservative
Investor Fund S & P 500 Index Lehman Brothers
(Class A) Aggregate Bond Index
04/05/2005 9,425 10,000 10,000
04/30/2005 9,406 9,810 10,135
07/31/2005 9,745 10,514 10,207
10/31/2005 9,708 10,327 10,150
01/31/2006 10,099 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 0.99%
12 | CONSERVATIVE INVESTOR FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Conservative Investor Fund (Class B)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Conservative
Investor Fund S & P 500 Index Lehman Brothers
(Class B) Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,970 9,810 10,135
07/31/2005 10,320 10,514 10,207
10/31/2005 10,250 10,327 10,150
01/31/2006 10,144 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 1.44%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
13 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Conservative Investor Fund (Class C)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Conservative
Investor Fund S & P 500 Index Lehman Brothers
(Class C) Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,970 9,810 10,135
07/31/2005 10,310 10,514 10,207
10/31/2005 10,250 10,327 10,150
01/31/2006 10,537 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 5.37%
14 | CONSERVATIVE INVESTOR FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Conservative Investor Fund (Class N)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Conservative
Investor Fund S & P 500 Index Lehman Brothers
(Class N) Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,980 9,810 10,135
07/31/2005 10,340 10,514 10,207
10/31/2005 10,290 10,327 10,150
01/31/2006 10,598 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 5.98%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
15 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Conservative Investor Fund (Class Y)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Conservative
Investor Fund S & P 500 Index Lehman Brothers
(Class Y) Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,980 9,810 10,135
07/31/2005 10,350 10,514 10,207
10/31/2005 10,320 10,327 10,150
01/31/2006 10,734 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 7.34%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
16 | CONSERVATIVE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
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 Portfolio'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 Portfolio or any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND
OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S
PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, 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 Portfolio'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 Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year). Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio were first publicly offered on 4/5/05. 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.
17 | CONSERVATIVE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio's Statement
of Additional Information.
18 | CONSERVATIVE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
PORTFOLIO EXPENSES. As a shareholder of the Portfolio, 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 Portfolio expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of investing in
the Portfolio 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 January 31, 2006.
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 Portfolio'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
Portfolio'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 Portfolio 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
19 | CONSERVATIVE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(8/1/05) (1/31/06) JANUARY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,036.30 $2.52
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.74 2.50
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,031.40 6.88
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,018.45 6.84
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,031.70 6.83
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,018.50 6.79
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,034.60 3.65
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.63 3.62
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,037.10 1.18
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,024.05 1.17
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Portfolio'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,
excluding all underlying fund expenses, based on the 6-month period ended
January 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ----------------------------------
Class A 0.49%
- ----------------------------------
Class B 1.34
- ----------------------------------
Class C 1.33
- ----------------------------------
Class N 0.71
- ----------------------------------
Class Y 0.23
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Portfolio's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Portfolio's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
20 | CONSERVATIVE INVESTOR FUND
STATEMENT OF INVESTMENTS January 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--97.1% 1
- -----------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY--5.7%
Oppenheimer Global Fund, Cl. Y 66,908 $ 4,731,060
- -----------------------------------------------------------------------------------------------------------------
U.S. EQUITY--16.5%
Oppenheimer Capital Appreciation Fund, Cl. Y 99,978 4,563,028
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 117,728 4,521,933
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 181,842 4,453,313
-----------
13,538,274
- -----------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS--63.9%
Oppenheimer Core Bond Fund, Cl. Y 2,533,270 25,839,353
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer High Yield Fund, Cl. Y 978,485 9,119,482
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer International Bond Fund, Cl. Y 751,912 4,451,319
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund, Cl. Y 1,326,111 13,208,065
-----------
52,618,219
- -----------------------------------------------------------------------------------------------------------------
ALTERNATIVE INVESTMENTS--11.0%
Oppenheimer Real Asset Fund, Cl. Y 524,309 4,304,573
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Real Estate Fund, Cl. Y 230,456 4,726,661
-----------
9,031,234
-----------
Total Investments in Affiliated Companies (Cost $78,851,358) 79,918,787
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.0%
Undivided interest of 0.001% in joint repurchase agreement (Principal Amount/
Value $781,426,000, with a maturity value of $781,521,291) with UBS Warburg
LLC, 4.39%, dated 1/31/06, to be repurchased at $5,001 on 2/1/06, collateralized
by Federal Home Loan Mortgage Corp., 5%, 12/1/35, with a value of
$799,056,396 (Cost $5,000) $5,000 5,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $78,856,358) 97.1% 79,923,787
- -----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.9 2,366,981
---------------------------
NET ASSETS 100.0% $82,290,768
===========================
21 | CONSERVATIVE INVESTOR FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Affiliated companies. Represents ownership of an affiliated fund, at or
during the period ended January 31, 2006.
Transactions during the period in which the issuer was an affiliate are as
follows:
SHARES GROSS GROSS SHARES
APRIL 5, 2005 ADDITIONS REDUCTIONS JAN. 31, 2006
- ----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y -- 102,934 2,956 99,978
Oppenheimer Core Bond Fund, Cl. Y -- 2,800,411 267,141 2,533,270
Oppenheimer Global Fund, Cl. Y -- 68,853 1,945 66,908
Oppenheimer High Yield Fund, Cl. Y -- 1,008,253 29,768 978,485
Oppenheimer International Bond Fund, Cl. Y -- 774,461 22,549 751,912
Oppenheimer Limited-Term Government Fund, Cl. Y -- 1,367,069 40,958 1,326,111
Oppenheimer Main Street Fund, Cl. Y -- 121,217 3,489 117,728
Oppenheimer Real Asset Fund, Cl. Y -- 540,767 16,458 524,309
Oppenheimer Real Estate Fund, Cl. Y -- 237,176 6,720 230,456
Oppenheimer Value Fund, Cl. Y -- 187,276 5,434 181,842
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME LOSS
- ----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 4,563,028 $ 30,343 $ (2,207)
Oppenheimer Core Bond Fund, Cl. Y 25,839,353 480,979 (26,456)
Oppenheimer Global Fund, Cl. Y 4,731,060 32,152 (3,062)
Oppenheimer High Yield Fund, Cl. Y 9,119,482 247,087 (5,509)
Oppenheimer International Bond Fund, Cl. Y 4,451,319 155,090 (3,241)
Oppenheimer Limited-Term Government Fund, Cl. Y 13,208,065 183,650 (4,219)
Oppenheimer Main Street Fund, Cl. Y 4,521,933 45,568 (1,938)
Oppenheimer Real Asset Fund, Cl. Y 4,304,573 123,638 (24,408)
Oppenheimer Real Estate Fund, Cl. Y 4,726,661 116,383 (3,103)
Oppenheimer Value Fund, Cl. Y 4,453,313 75,784 (4,038)
----------------------------------------------
$ 79,918,787 $1,490,674 $(78,181)
==============================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | CONSERVATIVE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES January 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $5,000) $ 5,000
Affiliated companies (cost $78,851,358) 79,918,787
-----------
79,923,787
- --------------------------------------------------------------------------------
Cash 5,163
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 2,690,308
Interest and dividends 208,258
Other 1,998
-----------
Total assets 82,829,514
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 363,117
Shares of beneficial interest redeemed 115,012
Legal, auditing and other professional fees 19,038
Distribution and service plan fees 15,688
Shareholder communications 12,705
Transfer and shareholder servicing agent fees 4,216
Trustees' compensation 119
Other 8,851
-----------
Total liabilities 538,746
- --------------------------------------------------------------------------------
NET ASSETS $82,290,768
===========
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 7,830
- --------------------------------------------------------------------------------
Additional paid-in capital 80,809,603
- --------------------------------------------------------------------------------
Accumulated net investment income 143,905
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 262,001
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 1,067,429
-----------
NET ASSETS $82,290,768
===========
23 | CONSERVATIVE INVESTOR 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 $46,318,136 and
4,400,623 shares of beneficial interest outstanding) $10.53
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.17
- ------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $9,163,440 and 873,549 shares of
beneficial interest outstanding) $10.49
- ------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $19,144,803 and 1,826,455 shares of
beneficial interest outstanding) $10.48
- ------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $7,568,565 and 720,410 shares of
beneficial interest outstanding) $10.51
- ------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $95,824 and 9,089 shares of beneficial interest outstanding) $10.54
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | CONSERVATIVE INVESTOR FUND
STATEMENT OF OPERATIONS For the Period Ended January 31, 2006 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $1,490,674
- --------------------------------------------------------------------------------
Interest 10,535
-----------
Total investment income 1,501,209
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 43,617
Class B 32,998
Class C 62,739
Class N 9,122
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 11,058
Class B 4,274
Class C 6,333
Class N 720
Class Y 69
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 12,002
Class B 4,048
Class C 7,095
Class N 709
Class Y 12
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 25,605
- --------------------------------------------------------------------------------
Trustees' compensation 7,744
- --------------------------------------------------------------------------------
Custodian fees and expenses 821
- --------------------------------------------------------------------------------
Other 11,776
-----------
Total expenses 240,742
Less reduction to custodian expenses (4)
Less waivers and reimbursements of expenses (7,387)
-----------
Net expenses 233,351
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,267,858
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Distributions received from affiliated companies 396,255
Affiliated companies (78,181)
-----------
Net realized gain 318,074
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 1,067,429
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,653,361
===========
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | CONSERVATIVE INVESTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED JANUARY 31, 2006 1
- ---------------------------------------------------------------------------------------------
OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income $ 1,267,858
- ---------------------------------------------------------------------------------------------
Net realized gain 318,074
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation 1,067,429
-------------
Net increase in net assets resulting from operations 2,653,361
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (681,145)
Class B (105,273)
Class C (216,389)
Class N (125,016)
Class Y (1,638)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 45,236,761
Class B 9,001,293
Class C 18,835,139
Class N 7,498,474
Class Y 91,201
- ---------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------
Total increase 82,186,768
- ---------------------------------------------------------------------------------------------
Beginning of period 104,000 2
-------------
End of period (including accumulated net investment income
of $143,905 for the period ended January 31, 2006) $82,290,768
=============
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Reflects the value of the Manager's initial seed money investment on March
15, 2005.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | CONSERVATIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PERIOD ENDED JANUARY 31, 2006 1 CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .38 .32 .32
Net realized and unrealized gain .33 .32 .31
------------------------------------------
Total from investment operations .71 .64 .63
- ---------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.18) (.15) (.15)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.53 $ 10.49 $ 10.48
==========================================
- ---------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 7.15% 6.44% 6.37%
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $46,318 $ 9,163 $19,145
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,844 $ 4,018 $ 7,647
- ---------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.50% 3.74% 3.78%
Total expenses 0.53% 5 1.39% 6 1.36% 7
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.51% 1.34% 1.33%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 11% 11% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.19% for January 31,
2006.
6. Expenses including all underlying fund expenses were 2.05% for January 31,
2006.
7. Expenses including all underlying fund expenses were 2.02% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | CONSERVATIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
PERIOD ENDED JANUARY 31, 2006 1 CLASS N CLASS Y
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.00 $10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .41 .38
Net realized and unrealized gain .28 .35
------------------------
Total from investment operations .69 .73
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.18) (.19)
- --------------------------------------------------------------------------------
Net asset value, end of period $10.51 $10.54
========================
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 6.98% 7.34%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $7,569 $ 96
- --------------------------------------------------------------------------------
Average net assets (in thousands) $2,231 $ 71
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.82% 4.42%
Total expenses 0.72% 5 0.30% 6
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.71% 0.25%
- --------------------------------------------------------------------------------
Portfolio turnover rate 11% 11%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.38% for January 31,
2006.
6. Expenses including all underlying fund expenses were 0.96% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Portfolio Series (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Conservative Investor Fund (the "Portfolio") is a series of the Fund whose
investment objective is to seek current income with a secondary objective of
long-term growth of capital. The Portfolio is a special type of mutual fund
known as a "fund of funds" because it invests in other mutual funds. The
Portfolio normally invests in a portfolio consisting of a target-weighted
allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's
investment advisor is OppenheimerFunds, Inc. (the "Manager").
The Portfolio 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 Portfolio 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.
Under normal market conditions, the Manager will invest the Portfolio's
assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation
Fund, Oppenheimer Global Fund, Oppenheimer High Yield Fund, Oppenheimer
International Bond Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer
Main Street Fund(R), Oppenheimer Real Asset Fund(R), Oppenheimer Real Estate
Fund and Oppenheimer Value Fund (individually, an "Underlying Fund" and
collectively, the "Underlying Funds").
The following is a summary of significant accounting policies consistently
followed by the Portfolio.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Portfolio calculates the net asset value of each class
of shares based upon the net asset value of the applicable Underlying Funds' 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 trading.
For each Underlying Fund, the net asset value per share for a class of
shares on a "regular business day" is determined by dividing the value of the
Underlying Fund's net assets attributable to that class by the number of shares
of that class outstanding on that day. To determine net asset values, the
Underlying Fund assets are valued primarily on the basis of current market
quotations. If market quotations are not readily available or do
29 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
not accurately reflect fair value for a security (in the Manager's judgment) or
if a security's value has been materially affected by events occurring after the
close of the exchange or market on which the security is principally traded,
that security may be valued by another method that the Underlying Fund's Board
of Trustees/Directors believes accurately reflects the fair value. Because some
foreign securities trade in markets and on exchanges that operate on weekends
and U.S. holidays, the values of some of the Underlying Fund's foreign
investments may change on days when investors cannot buy or redeem Underlying
Fund shares.
Short-term "money market type" debt securities with remaining maturities
of sixty days or less are valued at amortized cost (which approximates market
value).
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Portfolio invests has its own investment risks, and those risks can
affect the value of the Portfolio's investments and therefore the value of the
Portfolio's shares. To the extent that the Portfolio invests more of its assets
in one Underlying Fund than in another, the Portfolio will have greater exposure
to the risks of that Underlying Fund.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Portfolio, 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 Portfolio 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 Portfolio must satisfy under the income tax
regulations, losses the Portfolio 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.
30 | CONSERVATIVE INVESTOR FUND
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1 TAX PURPOSES
------------------------------------------------------------------------
$143,954 $287,411 $-- $1,042,019
1. During the period ended January 31, 2006, the Fund did not have any capital
loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Portfolio.
Accordingly, the following amounts have been reclassified for January 31, 2006.
Net assets of the Portfolio were unaffected by the reclassifications.
REDUCTION
INCREASE TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
TO PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 2
------------------------------------------------------------------------
$50,565 $5,508 $56,073
2. $56,073, all of which was long-term capital gain, was distributed in
connection with Portfolio share redemptions.
The tax character of distributions paid during the period ended January 31, 2006
was as follows:
PERIOD ENDED
JANUARY 31, 2006
-------------------------------------------------------
Distributions paid from:
Ordinary income $1,129,461
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 January 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 78,881,768
=============
Gross unrealized appreciation $ 1,386,485
Gross unrealized depreciation (344,466)
-------------
Net unrealized appreciation $ 1,042,019
=============
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded
31 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
on the ex-dividend date. Income and capital gain distributions, if any, are
declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Portfolio 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 Portfolio pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Portfolio at a rate equal to
the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line
item, if applicable, represents earnings on cash balances maintained by the
Portfolio during the period. Such interest expense and other custodian fees may
be paid with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Portfolio's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Portfolio. In
the normal course of business, the Portfolio may also enter into contracts that
provide general indemnifications. The Portfolio's maximum exposure under these
arrangements is unknown as this would be dependent on future claims that may be
made against the Portfolio. The risk of material loss from such claims is
considered remote.
- --------------------------------------------------------------------------------
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.
32 | CONSERVATIVE INVESTOR FUND
- --------------------------------------------------------------------------------
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:
PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A
Sold 4,892,094 $50,465,464
Dividends and/or
distributions reinvested 58,785 607,250
Redeemed (560,256) (5,835,953)
--------------------------------
Net increase 4,390,623 $45,236,761
================================
- --------------------------------------------------------------------------------
CLASS B
Sold 949,406 $ 9,789,255
Dividends and/or
distributions reinvested 9,315 95,942
Redeemed (85,272) (883,904)
--------------------------------
Net increase 873,449 $ 9,001,293
================================
- --------------------------------------------------------------------------------
CLASS C
Sold 1,904,973 $19,653,821
Dividends and/or
distributions reinvested 19,416 199,792
Redeemed (98,034) (1,018,474)
--------------------------------
Net increase 1,826,355 $18,835,139
================================
- --------------------------------------------------------------------------------
CLASS N
Sold 1,007,278 $10,503,896
Dividends and/or
distributions reinvested 11,897 122,654
Redeemed (298,865) (3,128,076)
--------------------------------
Net increase 720,310 $ 7,498,474
================================
- --------------------------------------------------------------------------------
CLASS Y
Sold 14,752 $ 151,331
Dividends and/or
distributions reinvested 157 1,619
Redeemed (5,920) (61,749)
--------------------------------
Net increase 8,989 $ 91,201
================================
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. The Fund sold 10,000 shares of Class A at a value of $100,000 and 100 shares
of Class B, Class C, Class N and Class Y at a value of $1,000, respectively, to
the Manager upon seeding of the Fund on March 15, 2005.
33 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the period ended January 31, 2006, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
Investment securities $83,303,944 $4,374,405
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets of
the Portfolio for the period ended January 31, 2006 was 0.56%.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Portfolio. The
Portfolio pays OFS a per account fee. For the period ended January 31, 2006, the
Portfolio paid $18,168 to OFS for services to the Portfolio.
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.
- --------------------------------------------------------------------------------
INITIAL OFFERING AND ORGANIZATIONAL COSTS. The Manager assumed all initial
offering and organizational costs associated with the registration and seeding
of the Portfolio.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Portfolio's principal underwriter in the continuous
public offering of the Portfolio's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Portfolio 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 Portfolio. The Distributor
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
Portfolio under the Plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Portfolio has adopted Distribution and Service Plans for Class B, Class C and
Class N shares to compensate the Distributor for its services and costs in
connection with the distribution
34 | CONSERVATIVE INVESTOR FUND
of those shares and servicing accounts. Under the plans, the Portfolio 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 Portfolio 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 Portfolio 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 January 31, 2006 for Class B, Class C
and Class N shares were $103,594, $127,362 and $126,713, respectively. Fees
incurred by the Portfolio 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 Portfolio. They are deducted from the
proceeds of sales of Portfolio 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
PERIOD ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------------------------------
January 31, 2006 $202,862 $-- $3,193 $1,819 $1,832
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees paid directly by the Portfolio to
0.35% of average annual net assets for each class. During the period ended
January 31, 2006, OFS waived $60, $3 and $7 for Class B, Class N and Class Y
shares, respectively. This undertaking may be amended or withdrawn at any time.
The Manager has voluntarily agreed to a total expense limitation on the
aggregate amount of combined direct (fund-of-funds level) and indirect expense
so that Combined Total Annual and Underlying Fund Operating Expenses as a
percentage of average daily net assets will not exceed the following annual
rates: 1.25%, 2.00%, 2.00%, 1.50% and 1.00%, for Class A, Class B, Class C,
Class N and Class Y, respectively. During the period ended January 31, 2006, the
Manager reimbursed the Portfolio $4,011, $1,524, $1,683, $79 and $20, for the
Class A, Class B, Class C, Class N and Class Y shares, respectively. The Manager
may modify or terminate this undertaking at any time without notice to
shareholders. These expense limitations do not include Extraordinary Expenses
and other expenses not incurred in the ordinary course of the Portfolio's
business. Notwithstanding the foregoing limits, the Manager is not required to
waive or reimburse Portfolio expenses in excess of indirect management fees
earned from investments in Underlying Funds to assure that expenses do not
exceed those limits.
35 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LITIGATION
A complaint was filed as a putative class action against the Manager and OFS
(and other defendants) in the U.S. District Court for the Southern District of
New York on January 10, 2005 and was amended on March 4, 2005. Seven of the
eight counts in the complaint, including claims against certain of the
Oppenheimer funds excluding the Portfolio, as nominal defendants, and against
certain present and former Directors, Trustees and officers of the funds, and
the Distributor, as defendants, were dismissed with prejudice, under a court
order dated March 10, 2006, in response to a motion to dismiss the suit that had
been filed by the defendants. The remaining count against the Adviser Defendants
alleges, among other things, that the defendants charged excessive fees in
violation of section 36(b) of the Investment Company Act of 1940. The plaintiffs
seek unspecified damages, an accounting of all fees paid, and an award of
attorneys' fees and litigation expenses.
The Adviser Defendants believe that the claims asserted in the remaining
count under this lawsuit are without merit, and intend to defend the suit
vigorously and contest any claimed liability. They 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.
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At a meeting held on December 14, 2005, the Board of Trustees of the Fund
appointed KPMG LLP as the independent registered public accounting firm to the
Fund to replace the firm of Ernst & Young LLP, who were dismissed as the
independent registered public accounting firm to the Fund. This change in the
Fund's auditors was approved by the Fund's audit committee and ratified by the
Fund's independent Trustees.
The report of Ernst & Young LLP on the Fund's statements of assets and
liabilities as of March 15, 2005 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
The Fund commenced operations on April 5, 2005. During the period from
March 15, 2005 through December 14, 2005, there were no disagreements with Ernst
& Young LLP on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved to
the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to
make reference to the matter in their report.
36 | CONSERVATIVE INVESTOR FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER PORTFOLIO SERIES:
We have audited the accompanying statement of assets and liabilities of
Conservative Investor Fund (one of the portfolios constituting the Oppenheimer
Portfolio Series), including the statement of investments, as of January 31,
2006, and the related statement of operations, the statement of changes in net
assets and the financial highlights for the period April 5, 2005 (commencement
of operations) to January 31, 2006. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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
Conservative Investor Fund as of January 31, 2006, the results of its
operations, the changes in its net assets and the financial highlights for the
period April 5, 2005 (commencement of operations) to January 31, 2006, in
conformity with U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
March 15, 2006
37 | CONSERVATIVE INVESTOR 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 Portfolio during
calendar year 2005. Regulations of the U.S. Treasury Department require the
Portfolio to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Portfolio during the fiscal year ended
January 31, 2006 which are not designated as capital gain distributions should
be multiplied by 9.75% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Portfolio during the
fiscal year ended January 31, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Portfolio has received qualified dividend income as stipulated by
recent tax legislation. $150,724 of the Portfolio's fiscal year taxable income
may be eligible for the lower individual income tax rates. In early 2006,
shareholders of record received information regarding the percentage of
distributions that are eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Portfolio to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
38 | CONSERVATIVE INVESTOR FUND
REPORT OF SHAREHOLDER MEETING UNAUDITED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On September 26, 2005, a shareholder meeting of the Oppenheimer Portfolio Series
on behalf of Conservative Investor Fund was held at which the eleven Trustees
identified below were elected. The following is a report of the votes cast:
- --------------------------------------------------------------------------------
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 1,538,706.782 2,186.093 1,540,892.875
Robert G. Galli 1,538,706.782 2,186.093 1,540,892.875
Phillip A. Griffiths 1,538,706.782 2,186.093 1,540,892.875
Mary F. Miller 1,538,706.782 2,186.093 1,540,892.875
Joel W. Motley 1,538,706.782 2,186.093 1,540,892.875
John V. Murphy 1,538,706.782 2,186.093 1,540,892.875
Kenneth A. Randall 1,538,706.782 2,186.093 1,540,892.875
Russell S. Reynolds, Jr. 1,538,706.782 2,186.093 1,540,892.875
Joseph M. Wikler 1,538,706.782 2,186.093 1,540,892.875
Peter I. Wold 1,538,706.782 2,186.093 1,540,892.875
Clayton K. Yeutter 1,538,706.782 2,186.093 1,540,892.875
39 | CONSERVATIVE INVESTOR 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 web-site 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.
40 | CONSERVATIVE INVESTOR 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.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board Attorney at Hogan & Hartson (law firm) (since June 1993); Director of Danielson
of Trustees (since 2003), Holding Corp. (waste-to-energy company) (since 2002); Director of Weyerhaeuser
Trustee (since 2005) Corp. (1999-April 2004); Director of Caterpillar, Inc. (1993-December 2002);
Age: 74 Director of ConAgra Foods (1993-2001); Director of Texas Instruments (1993-
2001); Director of FMC Corporation (1993-2001). Oversees 38 portfolios in the
OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research founda-
Trustee (since 2005) tion) (since 2005); Director of ICI Education Foundation (education foundation)
Age: 64 (since October 1991); President of the Investment Company Institute (trade asso-
ciation) (1991-2004); Director of ICI Mutual Insurance Company (insurance
company) (1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in the
Trustee (since 2005) OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 2005) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The
Age: 67 Andrew W. Mellon Foundation (since 2001); Member of the National Academy
of Sciences (since 1979); Member of the American Philosophical Society (since
1996); Council on Foreign Relations (since 2002); Director of the Institute for
Advanced Study (1991-2004); Director of Bankers Trust New York Corporation
(1994-1999). Oversees 38 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2005) 1998); and Senior Vice President and General Auditor of American Express
Age: 63 Company (financial services company) (July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser)
Trustee (since 2005) (since 2002); Managing Director of Carmona Motley, Inc. (privately-held financial
Age: 53 adviser) (since January 2002); Managing Director of Carmona Motley Hoffman
Inc. (privately-held financial adviser) (January 1998-December 2001). Oversees 38
portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (since
Trustee (since 2005) February 1972); Former Director of Prime Retail, Inc. (real estate investment
Age: 78 trust), Dominion Energy Inc. (electric power and oil & gas producer),
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company; Former
President and Chief Executive Officer of The Conference Board, Inc. (interna-
tional economic and business research). Oversees 38 portfolios in the
OppenheimerFunds complex.
41 | CONSERVATIVE INVESTOR FUND
TRUSTEES AND OFFICERS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consult-
Trustee (since 2005) ing and executive recruiting) (since 1993); Life Trustee of International House
Age: 73 (non-profit educational organization); Former Trustee of The Historical Society
of the Town of Greenwich. Oversees 38 portfolios in the OppenheimerFunds
complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992) and
Trustee (since 2005) Cathco (since 1996); Director of Lakes Environmental Association (since 1996);
Age: 64 Member of the Investment Committee of the Associated Jewish Charities of
Baltimore (since 1994); Director of Fortis/Hartford mutual funds (1994-
December 2001). Oversees 39 portfolios in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and production
Trustee (since 2005) company) (since 1994); Vice President, Secretary and Treasurer of Wold Trona
Age: 57 Company, Inc. (soda ash processing and production) (since 1996); Vice President
of Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of
Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of
the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and
Director of PacifiCorp. (electric utility) (1995-1999). Oversees 39 portfolios in the
OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Trustee (since 2005) Director of Special Value Opportunities Fund, LLC (registered investment com-
Age: 62 pany) (since September 2004); Member, Zurich Financial Investment Advisory
Board (affiliate of the Manager's parent company) (since October 2004); Board
of Governing Trustees of The Jackson Laboratory (non-profit) (since August
1990); Trustee of the Institute for Advanced Study (non-profit educational insti-
tute) (since May 1992); Special Limited Partner of Odyssey Investment Partners,
LLC (private equity investment) (January 1999-September 2004); Trustee of
Research Foundation of AIMR (2000-2002) (investment research, non-profit);
Governor, Jerome Levy Economics Institute of Bard College (August 1990-
September 2001) (economics research); Director of Ray & Berendtson, Inc. (May
2000-April 2002) (executive search firm); President and Chief Executive Officer
of the Delaware Group of Mutual Funds (1992-1995); Chairman, President and
Chief Executive Officer of Equitable Capital Management Corporation (1985-
1992); Executive Vice President and Chief Investment Officer at The Equitable
Life Assurance Society of the U.S. (1979-1992); Vice President and Co-manager at
Smith Barney, Harris Upham and Company (1970-1979); Engineer, Sperry
Gyroscope Company (1966-1970); former governor of the Association for
Investment Management and Research; former chairman of the Institute of
Chartered Financial Analysts; Chartered Financial Analyst. Oversees 48 portfolios
in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEF-
INITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR
AN INDEFINITE 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
Trustee, President and (since September 2000) of the Manager; President and Director or Trustee of
Principal Executive Officer other Oppenheimer funds; President and Director of Oppenheimer Acquisition
(since 2005) Corp. ("OAC") (the Manager's parent holding company) and of Oppenheimer
Age: 56 Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since
42 | CONSERVATIVE INVESTOR FUND
JOHN V. MURPHY, July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the
Continued 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 1, 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 THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. SCHADT,
OF THE PORTFOLIO WEBMAN, WILBY, WOLFGRUBER 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 INDEFINITE
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT DEATH OR REMOVAL.
RUDI W. SCHADT, Vice President, Director of Research in Product Design and Risk Management of
Vice President and Portfolio the Manager. Prior to joining the Manager in February 2002 he was a Director
Manager (since 2005) and Senior Quantitative Analyst (2000-2001) at UBS Asset Management prior to
Age: 48 which he was an Associate Director of Research (since June 1999) and Senior
Researcher and Portfolio Manager (from June 1997) at State Street Global
Advisors. An officer of 7 portfolios in the OppenheimerFunds complex.
JERRY WEBMAN, Senior Vice President (since February 1996) and Senior Investment Officer and
Vice President and Portfolio Director (since 1997) of the Manager's Fixed Income Investments; Senior Vice
Manager (since 2005) President (since May 1999) of HarbourView Asset Management Corporation. An
Age: 56 officer of 4 portfolios in the OppenheimerFunds complex.
WILLIAM L. WILBY, Senior Vice President (since July 1994) and Senior Investment Officer, Director of
Vice President and Portfolio Equities (since July 2004) of the Manager. Formerly, Senior Investment Officer,
Manager (since 2005) Director of International Equities of the Manager (May 2000-July 2004) and
Age: 61 Senior Vice President of HarbourView Asset Management Corporation (May
1999-November 2001). An officer of 6 portfolios in the OppenheimerFunds
complex.
KURT WOLFGRUBER, Executive Vice President (since March 2003) and Chief Investment Officer and
Vice President and Portfolio Director (since July 2003) of the Manager; Director of HarbourView Asset
Manager (since 2005) Management Corporation and of OFI Institutional Asset Management, Inc.
Age: 55 (since June 2003) and of Tremont Capital Management, Inc. (since October
2001). An officer of 4 portfolios in the OppenheimerFunds complex.
43 | CONSERVATIVE INVESTOR FUND
TRUSTEES AND OFFICERS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
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 2005) Former Vice President and Director of Internal Audit of the Manager (1997-
Age: 55 February 2004). An officer of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer and Principal the following: HarbourView Asset Management Corporation, Shareholder Financial
Financial and Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Officer (since 2005) Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Age: 46 Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
(since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since June 2003); Treasurer
and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the
Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March
1999), Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2005) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 57 December 2001); General Counsel of Centennial Asset Management
Corporation (since December 2001); Senior Vice President and General Counsel
of HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001); Assistant
Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since
December 2001); Senior Vice President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
(since November 2001); Director of OppenheimerFunds (Asia) Limited (since
December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE PORTFOLIO'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL
INFORMATION ABOUT THE PORTFOLIO'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING 1.800.525.7048.
44 | CONSERVATIVE INVESTOR FUND
MODERATE INVESTOR FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Global Equity 10.7%
U.S. Equity 35.4
Fixed Income 43.5
Alternative Investments 10.4
Portfolio holdings and allocations are subject to change. Percentages are as of
January 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
9 | MODERATE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
HOW HAS THE PORTFOLIO PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS,
INC., OF THE PORTFOLIO'S PERFORMANCE DURING THE REPORTING PERIOD OF APRIL 5,
2005 TO JANUARY 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE PORTFOLIO'S
PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE. Since its inception on April
5, 2005 to the end of the period on January 31, 2006, the Portfolio outperformed
its fixed income benchmark, the Lehman Brothers Aggregate Bond Index, and
slightly lagged the return of its equity benchmark, the S&P 500 Index. We
attribute the Portfolio's strong outperformance of its fixed income benchmark to
its even mix of bond and equity funds. This is also why the Portfolio slightly
lagged its equity benchmark.
During the reporting period, the Portfolio significantly benefited from
its equity exposure, which accounted for approximately 46% of the Portfolio at
the end of the period. When the Portfolio was launched in early April 2005,
equities had hit year lows and since then the stock indices have rallied. For
example, the S&P 500 Index rose 9.96% since the Portfolio's inception, despite
returning only -0.81% for the first six months of 2005. Other major contributors
to performance included the Portfolio's positions in Oppenheimer Global Fund,
Oppenheimer Main Street Opportunity Fund, Oppenheimer Real Estate Fund and
Oppenheimer International Bond Fund.
On the equity side, the Portfolio's allocation to Oppenheimer Global
Fund's Class Y Shares, which posted a return of 24.72% over the period, aided
the Portfolio's performance. The strong performance of Oppenheimer Global Fund
is a reflection of a successful stock selection strategy. The Portfolio
benefited from Oppenheimer Main Street Opportunity Fund's strong security
selection as well as its allocation to small to midcap stocks, which
outperformed larger cap stocks over the same period.
On the alternative investments side, the Portfolio's 5.28% position in
Oppenheimer Real Estate Fund's Class Y Shares at period end, which posted a
return of 34.44% over the reporting period and ranked favorably within its own
peer group, was a boon to the Portfolio's performance. Oppenheimer Real Estate
Fund's success can be attributed to its profitable investments in the apartment,
office and industrial sectors.
On the fixed income side, the Portfolio benefited from its allocation to
Oppenheimer International Bond Fund's Class Y Shares, as this Fund outperformed
its Lipper peer group and peer benchmark primarily due to its successful
investments in local currencies within the emerging markets.
On the negative side, the Portfolio's overall exposure to the fixed income
markets hampered performance as fixed income as an asset class underperformed
equities over the same period. In particular the Portfolio's allocation to
Oppenheimer's Limited-Term
10 | MODERATE INVESTOR FUND
Government Fund's Class Y Shares detracted from the Portfolio's performance. As
the Fed continued to raise short-term interest rates over the period, funds that
had a large exposure to the short end of the yield curve, such as Oppenheimer
Limited-Term Government Fund, with its significant allocation to short-term
treasury notes, were adversely affected since short-term treasuries
underperformed long-term treasuries.
Lastly, the Portfolio's exposure to commodities through its 5% target
weighting allocation to the Oppenheimer Real Asset Fund negatively impacted
performance. During the reporting period, oil prices were quite volatile,
ranging from the $50's to a high of $70 per barrel in late summer then down
slightly to around the $60's per barrel during the reporting period. Although
this asset class has rebounded from its springtime lows, its overall
underperformance for the period detracted from the Portfolio's performance, with
the Oppenheimer Real Asset Fund returning just 8.49% for the period.
COMPARING THE PORTFOLIO'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 Portfolio held until January 31, 2006. Performance is measured from the
inception of Classes A, B, C, N and Y on April 5, 2005. The Portfolio's
performance reflects the deduction of the maximum initial sales charge on Class
A shares, the applicable contingent deferred sales charge on Class B, Class C
and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Portfolio's performance is compared to the performance of the S&P 500
Index and the Lehman Brothers Aggregate Bond Index. The S&P 500 Index is a
broad-based measure of domestic stock performance that includes the reinvestment
of dividends. The Lehman Brothers Aggregate Bond Index is an index of U.S.
Government and corporate bonds that includes reinvestment of dividends. 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 Portfolio's performance reflects the effects of the Portfolio's
business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Portfolio's performance, it must be noted that the
Portfolio's investments are not limited to the investments in the index.
11 | MODERATE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Moderate Investor Fund (Class A)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Moderate
Investor Fund S & P 500 Lehman Brothers
(Class A) Index Aggregate Bond Index
04/05/2005 9,425 10,000 10,000
04/30/2005 9,331 9,810 10,135
07/31/2005 9,821 10,514 10,207
10/31/2005 9,774 10,327 10,150
01/31/2006 10,328 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 3.28%
12 | MODERATE INVESTOR FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Moderate Investor Fund (Class B)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Moderate
Investor Fund S & P 500 Lehman Brothers
(Class B) Index Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,900 9,810 10,135
07/31/2005 10,390 10,514 10,207
10/31/2005 10,330 10,327 10,150
01/31/2006 10,390 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 3.90%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
13 | MODERATE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Moderate Investor Fund (Class C)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Moderate
Investor Fund S & P 500 Lehman Brothers
(Class C) Index Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,890 9,810 10,135
07/31/2005 10,380 10,514 10,207
10/31/2005 10,320 10,327 10,150
01/31/2006 10,782 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 7.82%
14 | MODERATE INVESTOR FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Moderate Investor Fund (Class N)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Moderate
Investor Fund S & P 500 Lehman Brothers
(Class N) Index Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,900 9,810 10,135
07/31/2005 10,410 10,514 10,207
10/31/2005 10,360 10,327 10,150
01/31/2006 10,835 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE
PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 8.35%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
15 | MODERATE INVESTOR FUND
PORTFOLIO PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Portfolio Series: Moderate Investor Fund (Class Y)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer Portfolio
Series: Moderate
Investor Fund S & P 500 Lehman Brothers
(Class Y) Index Aggregate Bond Index
04/05/2005 10,000 10,000 10,000
04/30/2005 9,900 9,810 10,135
07/31/2005 10,420 10,514 10,207
10/31/2005 10,390 10,327 10,150
01/31/2006 10,979 11,005 10,293
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE PORTFOLIO AT 1/31/06
Since Inception (4/5/05) 9.79%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE PORTFOLIO 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. PORTFOLIO RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR); AND FOR CLASS C AND N SHARES,
THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES
CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION.
16 | MODERATE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
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 Portfolio'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 Portfolio or any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE PORTFOLIO'S INVESTMENT OBJECTIVES, RISKS, AND
OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PORTFOLIO'S
PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE PORTFOLIO, 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 Portfolio'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 Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
CLASS B shares of the Portfolio were first publicly offered on 4/5/05. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year). Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio were first publicly offered on 4/5/05. 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.
17 | MODERATE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
CLASS Y shares of the Portfolio were first publicly offered on 4/5/05. 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 Portfolio's Statement of Additional Information.
18 | MODERATE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
PORTFOLIO EXPENSES. As a shareholder of the Portfolio, 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 Portfolio expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of investing in
the Portfolio 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 January 31, 2006.
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 Portfolio'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
Portfolio'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 Portfolio 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
19 | MODERATE INVESTOR FUND
PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(8/1/05) (1/31/06) JANUARY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,051.60 $2.28
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.99 2.25
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,048.10 6.58
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,018.80 6.48
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,048.40 6.21
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,019.16 6.13
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,050.40 3.36
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.93 3.32
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,053.70 0.31
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,024.90 0.31
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Portfolio'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,
excluding all underlying fund expenses, based on the 6-month period ended
January 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- --------------------------------
Class A 0.44%
- --------------------------------
Class B 1.27
- --------------------------------
Class C 1.20
- --------------------------------
Class N 0.65
- --------------------------------
Class Y 0.06
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Portfolio's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Portfolio's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
20 | MODERATE INVESTOR FUND
STATEMENT OF INVESTMENTS January 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--99.0% 1
- -----------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY--10.6%
Oppenheimer Global Fund, Cl. Y 307,304 $ 21,729,432
- -----------------------------------------------------------------------------------------------------------------
U. S. EQUITY--35.0%
Oppenheimer Capital Appreciation Fund, Cl. Y 452,591 20,656,244
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 533,482 20,491,066
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 729,566 10,345,238
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 829,078 20,304,120
------------
71,796,668
- -----------------------------------------------------------------------------------------------------------------
FIXED INCOME--43.2%
Oppenheimer Core Bond Fund, Cl. Y 3,823,987 39,004,670
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer High Yield Fund, Cl. Y 2,132,328 19,873,297
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer International Bond Fund, Cl. Y 1,704,413 10,090,125
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund, Cl. Y 1,959,654 19,518,148
------------
88,486,240
- -----------------------------------------------------------------------------------------------------------------
ALTERNATIVE INVESTMENTS--10.2%
Oppenheimer Real Asset Fund, Cl. Y 1,239,352 10,175,085
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Real Estate Fund, Cl. Y 527,524 10,819,515
------------
20,994,600
------------
Total Investments in Affiliated Companies (Cost $198,352,686) 203,006,940
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.2%
Undivided interest of 0.05% in joint repurchase agreement (Principal Amount/
Value $781,426,000, with a maturity value of $781,521,291) with UBS Warburg
LLC, 4.39%, dated 1/31/06, to be repurchased at $362,044 on 2/1/06,
collateralized by Federal Home Loan Mortgage Corp., 5%, 12/1/35,
with a value of $799,056,396
(Cost $362,000) $362,000 362,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $198,714,686) 99.2% 203,368,940
- -----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.8 1,610,395
-----------------------------
NET ASSETS 100.0% $204,979,335
=============================
21 | MODERATE INVESTOR FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Affiliated companies. Represents ownership of an affiliated fund, at or
during the period ended January 31, 2006.
Transactions during the period in which the issuer was an affiliate are as
follows:
SHARES GROSS GROSS SHARES
APRIL 5, 2005 ADDITIONS REDUCTIONS JAN. 31, 2006
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y -- 453,009 418 452,591
Oppenheimer Core Bond Fund, Cl. Y -- 3,827,191 3,204 3,823,987
Oppenheimer Global Fund, Cl. Y -- 307,594 290 307,304
Oppenheimer High Yield Fund, Cl. Y -- 2,134,105 1,777 2,132,328
Oppenheimer International Bond Fund, Cl. Y -- 1,705,838 1,425 1,704,413
Oppenheimer Limited-Term Government Fund, Cl. Y -- 1,961,301 1,647 1,959,654
Oppenheimer Main Street Fund, Cl. Y -- 533,977 495 533,482
Oppenheimer Main Street Opportunity Fund, Cl. Y -- 730,230 664 729,566
Oppenheimer Real Asset Fund, Cl. Y -- 1,240,394 1,042 1,239,352
Oppenheimer Real Estate Fund, Cl. Y -- 528,030 506 527,524
Oppenheimer Value Fund, Cl. Y -- 829,812 734 829,078
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 20,656,244 $ 140,045 $ (640)
Oppenheimer Core Bond Fund, Cl. Y 39,004,670 649,358 --
Oppenheimer Global Fund, Cl. Y 21,729,432 151,560 (571)
Oppenheimer High Yield Fund, Cl. Y 19,873,297 509,937 (195)
Oppenheimer International Bond Fund, Cl. Y 10,090,125 341,523 14
Oppenheimer Limited-Term Government Fund, Cl. Y 19,518,148 257,330 --
Oppenheimer Main Street Fund, Cl. Y 20,491,066 210,335 (747)
Oppenheimer Main Street Opportunity Fund, Cl. Y 10,345,238 162,372 (365)
Oppenheimer Real Asset Fund, Cl. Y 10,175,085 296,172 (396)
Oppenheimer Real Estate Fund, Cl. Y 10,819,515 264,614 (46)
Oppenheimer Value Fund, Cl. Y 20,304,120 352,032 (748)
-----------------------------------------------
$203,006,940 $3,335,278 $(3,694)
===============================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | MODERATE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES January 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $362,000) $ 362,000
Affiliated companies (cost $198,352,686) 203,006,940
------------
203,368,940
- --------------------------------------------------------------------------------
Cash 5,453
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 3,195,730
Interest and dividends 357,361
Other 2,422
------------
Total assets 206,929,906
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,142,679
Shares of beneficial interest redeemed 694,257
Distribution and service plan fees 39,573
Shareholder communications 16,535
Transfer and shareholder servicing agent fees 16,106
Trustees' compensation 269
Other 41,152
------------
Total liabilities 1,950,571
- --------------------------------------------------------------------------------
NET ASSETS $204,979,335
============
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 19,054
- --------------------------------------------------------------------------------
Additional paid-in capital 198,749,039
- --------------------------------------------------------------------------------
Accumulated net investment income 206,552
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,350,436
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 4,654,254
------------
NET ASSETS $204,979,335
============
23 | MODERATE INVESTOR 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 $107,685,705
and 9,990,294 shares of beneficial interest outstanding) $10.78
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $11.44
- -------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $36,955,874 and 3,442,105
shares of beneficial interest outstanding) $10.74
- -------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $47,904,460 and 4,466,040
shares of beneficial interest outstanding) $10.73
- -------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $12,116,889 and 1,126,088
shares of beneficial interest outstanding) $10.76
- -------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$316,407 and 29,318 shares of beneficial interest outstanding) $10.79
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | MODERATE INVESTOR FUND
STATEMENT OF OPERATIONS For the Period Ended January 31, 2006 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $3,335,278
- --------------------------------------------------------------------------------
Interest 25,380
-----------
Total investment income 3,360,658
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 89,171
Class B 127,405
Class C 160,182
Class N 17,032
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 35,681
Class B 20,272
Class C 17,669
Class N 2,843
Class Y 209
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 15,599
Class B 9,748
Class C 7,441
Class N 961
Class Y 101
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 25,782
- --------------------------------------------------------------------------------
Trustees' compensation 8,081
- --------------------------------------------------------------------------------
Custodian fees and expenses 1,016
- --------------------------------------------------------------------------------
Other 25,173
-----------
Total expenses 564,366
Less reduction to custodian expenses (8)
Less waivers and reimbursements of expenses (12,309)
-----------
Net expenses 552,049
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,808,609
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Distributions received from affiliated companies 1,521,916
Affiliated companies (3,694)
-----------
Net realized gain 1,518,222
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 4,654,254
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $8,981,085
===========
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | MODERATE INVESTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED JANUARY 31, 2006 1
- ---------------------------------------------------------------------------------------------
OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income $ 2,808,609
- ---------------------------------------------------------------------------------------------
Net realized gain 1,518,222
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation 4,654,254
--------------
Net increase in net assets resulting from operations 8,981,085
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (1,457,787)
Class B (428,124)
Class C (555,237)
Class N (164,658)
Class Y (5,308)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 104,188,008
Class B 35,779,888
Class C 46,402,364
Class N 11,835,440
Class Y 299,664
- ---------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------
Total increase 204,875,335
- ---------------------------------------------------------------------------------------------
Beginning of period 104,000 2
--------------
End of period (including accumulated net investment income of
$206,552 for the period ended January 31, 2006) $204,979,335
==============
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Reflects the value of the manager's initial seed money investments on March
15, 2005.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | MODERATE INVESTOR FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
PERIOD ENDED JANUARY 31, 2006 1 2006 1 2006 1
- ------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
- ------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .38 .31 .31
Net realized and unrealized gain .57 .58 .57
---------------------------------------------
Total from investment operations .95 .89 .88
- ------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.17) (.15) (.15)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.78 $ 10.74 $ 10.73
=============================================
- ------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 9.58% 8.90% 8.82%
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $107,686 $ 36,956 $ 47,904
- ------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 43,984 $ 15,521 $ 19,527
- ------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.39% 3.56% 3.64%
Total expenses 0.47% 5 1.31% 6 1.23% 7
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.46% 1.29% 1.22%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 0% 0% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.15% for January 31,
2006.
6. Expenses including all underlying fund expenses were 1.99% for January 31,
2006.
7. Expenses including all underlying fund expenses were 1.91% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | MODERATE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N CLASS Y
PERIOD ENDED JANUARY 31, 2006 1 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .40 .36
Net realized and unrealized gain .53 .61
--------------------------
Total from investment operations .93 .97
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.17) (.18)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 10.76 $ 10.79
==========================
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 9.35% 9.79%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $12,117 $ 316
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 4,158 $ 216
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.56% 4.20%
Total expenses 0.68% 5 0.28% 6
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.67% 0.12%
- --------------------------------------------------------------------------------
Portfolio turnover rate 0% 0%
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Portfolio distributions or the redemption of Portfolio shares.
4. Annualized for periods of less than one full year.
5. Expenses including all underlying fund expenses were 1.36% for January 31,
2006.
6. Expenses including all underlying fund expenses were 0.96% for January 31,
2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Portfolio Series (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Moderate Investor Fund (the "Portfolio") is a series of the Fund whose
investment objective is to seek long term growth of capital and current income.
The Portfolio is a special type of mutual fund known as a "fund of funds"
because it invests in other mutual funds. The Portfolio normally invests in a
portfolio consisting of a target-weighted allocation in Class A or Class Y
shares of other Oppenheimer funds. The Fund's investment advisor is
OppenheimerFunds Inc. (the "Manager").
The Portfolio 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 Portfolio 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.
Under normal market conditions, the Manager will invest the Portfolio's
assets in shares of Oppenheimer Core Bond Fund, Oppenheimer Capital Appreciation
Fund, Oppenheimer Global Fund, Oppenheimer High Yield Fund, Oppenheimer
International Bond Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer
Main Street Fund(R), Oppenheimer Main Street Opportunity Fund(R), Oppenheimer
Real Asset Fund(R), Oppenheimer Real Estate Fund and Oppenheimer Value Fund
(individually, an "Underlying Fund" and collectively, the "Underlying Funds").
The following is a summary of significant accounting policies consistently
followed by the Portfolio.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Portfolio calculates the net asset value of each class
of shares based upon the net asset value of the applicable Underlying Funds' 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 trading.
For each Underlying Fund, the net asset value per share for a class of
shares on a "regular business day" is determined by dividing the value of the
Underlying Fund's net assets attributable to that class by the number of shares
of that class outstanding on that day. To determine net asset values, the
Underlying Fund assets are valued primarily on the
29 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
basis of current market quotations. If market quotations are not readily
available or do not accurately reflect fair value for a security (in the
Manager's judgment) or if a security's value has been materially affected by
events occurring after the close of the exchange or market on which the security
is principally traded, that security may be valued by another method that the
Underlying Fund's Board of Trustees/Directors believes accurately reflects the
fair value. Because some foreign securities trade in markets and on exchanges
that operate on weekends and U.S. holidays, the values of some of the Underlying
Fund's foreign investments may change on days when investors cannot buy or
redeem Underlying Fund shares.
Short-term "money market type" debt securities with remaining maturities
of sixty days or less are valued at amortized cost (which approximates market
value).
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Portfolio invests has its own investment risks, and those risks can
affect the value of the Portfolio's investments and therefore the value of the
Portfolio's shares. To the extent that the Portfolio invests more of its assets
in one Underlying Fund than in another, the Portfolio will have greater exposure
to the risks of that Underlying Fund.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Portfolio, 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 Portfolio 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 Portfolio must satisfy under the income tax
regulations, losses the Portfolio 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.
30 | MODERATE INVESTOR FUND
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1 TAX PURPOSES
--------------------------------------------------------------------------
$206,658 $1,350,436 $-- $4,654,254
1. During the period ended January 31, 2006, the Portfolio did not have any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Portfolio.
Accordingly, the following amounts have been reclassified for January 31, 2006.
Net assets of the Portfolio were unaffected by the reclassifications.
REDUCTION
INCREASE TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
TO PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 2
--------------------------------------------------------------------------
$158,729 $9,057 $167,786
2. $167,786, all of which was long-term capital gain, was distributed in
connection with Portfolio share redemptions.
The tax character of distributions paid during the period ended January 31, 2006
was as follows:
PERIOD ENDED
JANUARY 31, 2006
----------------------------------------------------
Distributions paid from:
Ordinary income $2,611,114
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 January 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $198,714,686
=============
Gross unrealized appreciation $ 5,284,368
Gross unrealized depreciation (630,114)
-------------
Net unrealized appreciation $ 4,654,254
=============
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
31 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 Portfolio 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 Portfolio pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Portfolio at a rate equal to
the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line
item, if applicable, represents earnings on cash balances maintained by the
Portfolio during the period. Such interest expense and other custodian fees may
be paid with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Portfolio's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Portfolio. In
the normal course of business, the Portfolio may also enter into contracts that
provide general indemnifications. The Portfolio's maximum exposure under these
arrangements is unknown as this would be dependent on future claims that may be
made against the Portfolio. The risk of material loss from such claims is
considered remote.
- --------------------------------------------------------------------------------
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:
32 | MODERATE INVESTOR FUND
PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A
Sold 10,348,982 $108,067,839
Dividends and/or
distributions reinvested 131,505 1,380,804
Redeemed (500,193) (5,260,635)
------------------------------
Net increase 9,980,294 $104,188,008
==============================
- --------------------------------------------------------------------------------
CLASS B
Sold 3,602,759 $ 37,460,502
Dividends and/or
distributions reinvested 38,687 404,664
Redeemed (199,441) (2,085,278)
------------------------------
Net increase 3,442,005 $ 35,779,888
==============================
- --------------------------------------------------------------------------------
CLASS C
Sold 4,610,775 $ 47,936,138
Dividends and/or
distributions reinvested 48,772 509,662
Redeemed (193,607) (2,043,436)
------------------------------
Net increase 4,465,940 $ 46,402,364
==============================
- --------------------------------------------------------------------------------
CLASS N
Sold 1,274,902 $ 13,414,589
Dividends and/or
distributions reinvested 14,511 152,071
Redeemed (163,425) (1,731,220)
------------------------------
Net increase 1,125,988 $ 11,835,440
==============================
- --------------------------------------------------------------------------------
CLASS Y
Sold 35,197 $ 362,730
Dividends and/or
distributions reinvested 503 5,289
Redeemed (6,482) (68,355)
------------------------------
Net increase 29,218 $ 299,664
==============================
1. For the period from April 5, 2005 (commencement of operations) to January 31,
2006.
2. The Portfolio sold 10,000 shares of Class A at a value of $100,000 and 100
shares of Class B, Class C, Class N and Class Y at a value of $1,000,
respectively, to the Manager upon seeding of the Portfolio on March 15, 2005.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the period ended January 31, 2006, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
Investment securities $198,522,519 $166,137
33 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets of
the Portfolio for the period ended January 31, 2006 was 0.57%.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Portfolio. The
Portfolio pays OFS a per account fee. For the period ended January 31, 2006, the
Portfolio paid $60,548 to OFS for services to the Portfolio.
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.
- --------------------------------------------------------------------------------
INITIAL OFFERING AND ORGANIZATIONAL COSTS. The Manager assumed all initial
offering and organizational costs associated with the registration and seeding
of the Portfolio.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Portfolio, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Portfolio's principal underwriter in the continuous
public offering of the Portfolio's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Portfolio 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 Portfolio. The Distributor
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
Portfolio under the Plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Portfolio has adopted Distribution and Service Plans for Class B, Class C and
Class N shares to compensate the Distributor for its services and costs in
connection with the distribution of those shares and servicing accounts. Under
the plans, the Portfolio 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
34 | MODERATE INVESTOR FUND
under each plan. If either the Class B, Class C or Class N plan is terminated by
the Portfolio 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 Portfolio 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 January 31, 2006 for Class B, Class C and Class N shares were
$536,339, $358,188 and $112,008, respectively. Fees incurred by the Portfolio
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 Portfolio. They are deducted from the
proceeds of sales of Portfolio 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
PERIOD ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------
January 31, 2006 $568,947 $-- $14,166 $4,881 $3,554
- ---------------------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees paid directly by the Portfolio to
0.35% of average annual net assets for each class. During the period ended
January 31, 2006, OFS waived $20 for Class B shares. This undertaking may be
amended or withdrawn at any time.
The Manager has voluntarily agreed to a total expense limitation on the
aggregate amount of combined direct (fund-of-funds level) and indirect expense
so that Combined Total Annual and Underlying Fund Operating Expenses as a
percentage of average daily net assets will not exceed the following annual
rates: 1.30%, 2.05%, 2.05%, 1.55% and 1.05%, for Class A, Class B, Class C,
Class N and Class Y, respectively. During the period ended January 31, 2006, the
Manager reimbursed the Portfolio $5,415, $3,465, $2,682, $442 and $285, for the
Class A, Class B, Class C, Class N and Class Y shares, respectively. The Manager
may modify or terminate this undertaking at any time without notice to
shareholders. These expense limitations do not include Extraordinary Expenses
and other expenses not incurred in the ordinary course of the Portfolio's
business. Notwithstanding the foregoing limits, the Manager is not required to
waive or reimburse Portfolio expenses in excess of indirect management fees
earned from investments in Underlying Funds to assure that expenses do not
exceed those limits.
35 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LITIGATION
A complaint was filed as a putative class action against the Manager and OFS
(and other defendants) in the U.S. District Court for the Southern District of
New York on January 10, 2005 and was amended on March 4, 2005. Seven of the
eight counts in the complaint, including claims against certain of the
Oppenheimer funds excluding the Portfolio, as nominal defendants, and against
certain present and former Directors, Trustees and officers of the funds, and
the Distributor, as defendants, were dismissed with prejudice, under a court
order dated March 10, 2006, in response to a motion to dismiss the suit that had
been filed by the defendants. The remaining count against the Adviser Defendants
alleges, among other things, that the defendants charged excessive fees in
violation of section 36(b) of the Investment Company Act of 1940. The plaintiffs
seek unspecified damages, an accounting of all fees paid, and an award of
attorneys' fees and litigation expenses.
The Adviser Defendants believe that the claims asserted in the remaining
count under this lawsuit are without merit, and intend to defend the suit
vigorously and contest any claimed liability. They 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.
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At a meeting held on December 14, 2005, the Board of Trustees of the Fund
appointed KPMG LLP as the independent registered public accounting firm to the
Fund to replace the firm of Ernst & Young LLP, who were dismissed as the
independent registered public accounting firm to the Fund. This change in the
Fund's auditors was approved by the Fund's audit committee and ratified by the
Fund's independent Trustees.
The report of Ernst & Young LLP on the Fund's statements of assets and
liabilities as of March 15, 2005 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
The Fund commenced operations on April 5, 2005. During the period from
March 15, 2005 through December 14, 2005, there were no disagreements with Ernst
& Young LLP on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved to
the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to
make reference to the matter in their report.
36 | MODERATE INVESTOR FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER PORTFOLIO SERIES:
We have audited the accompanying statement of assets and liabilities of Moderate
Investor Fund (one of the portfolios constituting the Oppenheimer Portfolio
Series), including the statement of investments, as of January 31, 2006, and the
related statement of operations, the statement of changes in net assets and the
financial highlights for the period April 5, 2005 (commencement of operations)
to January 31, 2006. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of January 31, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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
Moderate Investor Fund as of January 31, 2006, the results of its operations,
the changes in its net assets and the financial highlights for the period April
5, 2005 (commencement of operations) to January 31, 2006, in conformity with
U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
March 15, 2006
37 | MODERATE INVESTOR 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 Portfolio during
calendar year 2005. Regulations of the U.S. Treasury Department require the
Portfolio to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Portfolio during the fiscal year ended
January 31, 2006 which are not designated as capital gain distributions should
be multiplied by 25.91% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Portfolio during the
fiscal year ended January 31, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Portfolio has received qualified dividend income as stipulated by
recent tax legislation. $829,224 of the Portfolio's fiscal year taxable income
may be eligible for the lower individual income tax rates. In early 2006,
shareholders of record received information regarding the percentage of
distributions that are eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Portfolio to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
38 | MODERATE INVESTOR FUND
REPORT OF SHAREHOLDER MEETING Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On September 26, 2005, a shareholder meeting of the Oppenheimer Portfolio Series
on behalf of Moderate Investor Fund was held at which the eleven Trustees
identified below were elected. The following is a report of the votes cast:
- --------------------------------------------------------------------------------
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 2,782,283.921 6,766.185 2,789,050.106
Robert G. Galli 2,782,283.921 6,766.185 2,789,050.106
Phillip A. Griffiths 2,782,005.577 7,044.529 2,789,050.106
Mary F. Miller 2,781,930.964 7,119.142 2,789,050.106
Joel W. Motley 2,780,164.294 8,885.812 2,789,050.106
John V. Murphy 2,782,283.921 6,766.185 2,789,050.106
Kenneth A. Randall 2,781,540.319 7,509.787 2,789,050.106
Russell S. Reynolds, Jr. 2,782,283.921 6,766.185 2,789,050.106
Joseph M. Wikler 2,782,283.921 6,766.185 2,789,050.106
Peter I. Wold 2,782,283.921 6,766.185 2,789,050.106
Clayton K. Yeutter 2,780,441.416 8,608.690 2,789,050.106
39 | MODERATE INVESTOR 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 web-site 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.
40 | MODERATE INVESTOR 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.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board Attorney at Hogan & Hartson (law firm) (since June 1993); Director of Danielson
of Trustees (since 2003), Holding Corp. (waste-to-energy company) (since 2002); Director of
Trustee (since 2005) Weyerhaeuser Corp. (1999-April 2004); Director of Caterpillar, Inc. (1993-
Age: 74 December 2002); Director of ConAgra Foods (1993-2001); Director of Texas
Instruments (1993-2001); Director of FMC Corporation (1993-2001). Oversees 38
portfolios in the OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research founda-
Trustee (since 2005) tion) (since 2005); Director of ICI Education Foundation (education foundation)
Age: 64 (since October 1991); President of the Investment Company Institute (trade asso-
ciation) (1991-2004); Director of ICI Mutual Insurance Company (insurance
company) (1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in the
Trustee (since 2005) OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 2005) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The
Age: 67 Andrew W. Mellon Foundation (since 2001); Member of the National Academy
of Sciences (since 1979); Member of the American Philosophical Society (since
1996); Council on Foreign Relations (since 2002); Director of the Institute for
Advanced Study (1991-2004); Director of Bankers Trust New York Corporation
(1994-1999). Oversees 38 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2005) 1998); and Senior Vice President and General Auditor of American Express
Age: 63 Company (financial services company) (July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser)
Trustee (since 2005) (since 2002); Managing Director of Carmona Motley, Inc. (privately-held financial
Age: 53 adviser) (since January 2002); Managing Director of Carmona Motley Hoffman
Inc. (privately-held financial adviser) (January 1998-December 2001). Oversees 38
portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (since
Trustee (since 2005) February 1972); Former Director of Prime Retail, Inc. (real estate investment
Age: 78 trust), Dominion Energy Inc. (electric power and oil & gas producer),
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company; Former
President and Chief Executive Officer of The Conference Board, Inc. (interna-
tional economic and business research). Oversees 38 portfolios in the
OppenheimerFunds complex.
41 | MODERATE INVESTOR FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consulting
Trustee (since 2005) and executive recruiting) (since 1993); Life Trustee of International House (non-
Age: 73 profit educational organization); Former Trustee of The Historical Society of the
Town of Greenwich. Oversees 38 portfolios in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992) and
Trustee (since 2005) Cathco (since 1996); Director of Lakes Environmental Association (since 1996);
Age: 64 Member of the Investment Committee of the Associated Jewish Charities of
Baltimore (since 1994); Director of Fortis/Hartford mutual funds (1994-
December 2001). Oversees 39 portfolios in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and production
Trustee (since 2005) company) (since 1994); Vice President, Secretary and Treasurer of Wold Trona
Age: 57 Company, Inc. (soda ash processing and production) (since 1996); Vice President
of Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of
Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of
the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and
Director of PacifiCorp. (electric utility) (1995-1999). Oversees 39 portfolios in the
OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Trustee (since 2005) Director of Special Value Opportunities Fund, LLC (registered investment com-
Age: 62 pany) (since September 2004); Member, Zurich Financial Investment Advisory
Board (affiliate of the Manager's parent company) (since October 2004); Board
of Governing Trustees of The Jackson Laboratory (non-profit) (since August
1990); Trustee of the Institute for Advanced Study (non-profit educational insti-
tute) (since May 1992); Special Limited Partner of Odyssey Investment Partners,
LLC (private equity investment) (January 1999-September 2004); Trustee of
Research Foundation of AIMR (2000-2002) (investment research, non-profit);
Governor, Jerome Levy Economics Institute of Bard College (August 1990-
September 2001) (economics research); Director of Ray & Berendtson, Inc. (May
2000-April 2002) (executive search firm); President and Chief Executive Officer
of the Delaware Group of Mutual Funds (1992-1995); Chairman, President and
Chief Executive Officer of Equitable Capital Management Corporation (1985-
1992); Executive Vice President and Chief Investment Officer at The Equitable
Life Assurance Society of the U.S. (1979-1992); Vice President and Co-manager at
Smith Barney, Harris Upham and Company (1970-1979); Engineer, Sperry
Gyroscope Company (1966-1970); former governor of the Association for
Investment Management and Research; former chairman of the Institute of
Chartered Financial Analysts; Chartered Financial Analyst. Oversees 48 portfolios
in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEF-
INITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR
AN INDEFINITE 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
Trustee, President and (since September 2000) of the Manager; President and Director or Trustee of
Principal Executive Officer other Oppenheimer funds; President and Director of Oppenheimer Acquisition
(since 2005) Corp. ("OAC") (the Manager's parent holding company) 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
42 | MODERATE INVESTOR FUND
JOHN V. MURPHY, Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent sub-
Continued 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 1, 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. SCHADT,
THE PORTFOLIO WEBMAN, WILBY, WOLFGRUBER 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 INDEFINITE
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT DEATH OR REMOVAL.
RUDI W. SCHADT, Vice President, Director of Research in Product Design and Risk Management of
Vice President and Portfolio the Manager. Prior to joining the Manager in February 2002 he was a Director
Manager (since 2005) and Senior Quantitative Analyst (2000-2001) at UBS Asset Management prior to
Age: 48 which he was an Associate Director of Research (since June 1999) and Senior
Researcher and Portfolio Manager (from June 1997) at State Street Global
Advisors. An officer of 7 portfolios in the OppenheimerFunds complex.
JERRY WEBMAN, Senior Vice President (since February 1996) and Senior Investment Officer and
Vice President and Portfolio Director (since 1997) of the Manager's Fixed Income Investments; Senior Vice
Manager (since 2005) President (since May 1999) of HarbourView Asset Management Corporation. An
Age: 56 officer of 4 portfolios in the OppenheimerFunds complex.
WILLIAM L. WILBY, Senior Vice President (since July 1994) and Senior Investment Officer, Director of
Vice President and Portfolio Equities (since July 2004) of the Manager. Formerly, Senior Investment Officer,
Manager (since 2005) Director of International Equities of the Manager (May 2000-July 2004) and Senior
Age: 61 Vice President of HarbourView Asset Management Corporation (May 1999-
November 2001). An officer of 6 portfolios in the OppenheimerFunds complex.
KURT WOLFGRUBER, Executive Vice President (since March 2003) and Chief Investment Officer and
Vice President and Portfolio Director (since July 2003) of the Manager; Director of HarbourView Asset
Manager (since 2005) Management Corporation and of OFI Institutional Asset Management, Inc.
Age: 55 (since June 2003) and of Tremont Capital Management, Inc. (since October
2001). An officer of 4 portfolios in the OppenheimerFunds complex.
43 | MODERATE INVESTOR FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
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 2005) Former Vice President and Director of Internal Audit of the Manager (1997-
Age: 55 February 2004). An officer of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer
Treasurer and Principal of the following: HarbourView Asset Management Corporation, Shareholder
Financial and Accounting Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset
Officer (since 2005) Management Corporation, and Oppenheimer Partnership Holdings, Inc. (since
Age: 46 March 1999), OFI Private Investments, Inc. (since March 2000), OppenheimerFunds
International Ltd. (since May 2000), OppenheimerFunds plc (since May 2000), OFI
Institutional Asset Management, Inc. (since November 2000), and
OppenheimerFunds Legacy Program (charitable trust program established by the
Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust
Company (trust company subsidiary of the Manager) (since May 2000); Assistant
Treasurer of the following: OAC (since March 1999), Centennial Asset
Management Corporation (March 1999-October 2003) and OppenheimerFunds
Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer of
Bankers Trust Company-Mutual Fund Services Division (March 1995-March 1999).
An officer of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2005) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 57 December 2001); General Counsel of Centennial Asset Management
Corporation (since December 2001); Senior Vice President and General Counsel
of HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001); Assistant
Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since
December 2001); Senior Vice President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
(since November 2001); Director of OppenheimerFunds (Asia) Limited (since
December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE PORTFOLIO'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL
INFORMATION ABOUT THE PORTFOLIO'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING 1.800.525.7048.
44 | MODERATE INVESTOR FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction
2(b) to Item 3 of Form N-CSR to qualify as an "audit committee financial
expert," whether through the type of specialized education or experience
described in that Instruction. The Board has concluded that while the members of
the Audit Committee collectively have the necessary attributes and experience
required to serve effectively as an Audit Committee, no single member possesses
all of the required technical attributes through the particular methods of
education or experience set forth in the Instructions to be designated as an
audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $58,000 in fiscal 2006 and no such fees in fiscal 2005.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $156,805 in fiscal 2006 and $39,500 in fiscal 2005 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2006 and $6,000 in fiscal 2005 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 include: Computations of capital gain tax liability, preparation
of tax returns, preparation of Form 5500 and tax consultations on pass through
of foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $161,805 in fiscal 2006 and $45,500 in fiscal
2005 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 January 31, 2006, 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 Portfolio Series, consisting of: Active Allocation Fund, Aggressive
Investor Fund, Conservative Investor Fund, and Moderate Investor Fund
By: /s/ John V. Murphy
----------------------------
John V. Murphy
Principal Executive Officer
Date: March 15, 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: March 15, 2006
By: /s/ Brian W. Wixted
----------------------------
Brian W. Wixted
Principal Financial Officer
Date: March 15, 2006