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
(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
Date of reporting period: 07/31/2006
ITEM 1. REPORTS TO STOCKHOLDERS.
CONSERVATIVE INVESTOR 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.]
Alternative Investments 11.6%
Fixed Income 67.3
Global Equity 5.2
U.S. Equity 15.9
Portfolio holdings and allocations are subject to change. Percentages are as of
July 31, 2006, and are based on the total market value of investments in
affiliated companies.
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9 | CONSERVATIVE INVESTOR FUND
NOTES
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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 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.
10 | CONSERVATIVE INVESTOR 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
agreement with the Distributor.
An explanation of the calculation of performance is in the Portfolio's Statement
of Additional Information.
11 | CONSERVATIVE INVESTOR 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 July 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.
12 | CONSERVATIVE INVESTOR FUND
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in the
Statement of Additional Information). Therefore, the "hypothetical" lines of the
table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(2/1/06) (7/31/06) JULY 31, 2006
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Class A Actual $1,000.00 $1,008.60 $1.89
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Class A Hypothetical 1,000.00 1,022.91 1.91
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Class B Actual 1,000.00 1,004.80 6.08
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Class B Hypothetical 1,000.00 1,018.74 6.12
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Class C Actual 1,000.00 1,005.70 5.94
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Class C Hypothetical 1,000.00 1,018.89 5.97
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Class N Actual 1,000.00 1,007.60 3.39
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Class N Hypothetical 1,000.00 1,021.42 3.41
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Class Y Actual 1,000.00 1,010.40 0.50
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Class Y Hypothetical 1,000.00 1,024.30 0.50
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 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding all underlying fund expenses, based on the 6-month period ended July
31, 2006 are as follows:
CLASS EXPENSE RATIOS
- --------------------------
Class A 0.38%
- --------------------------
Class B 1.22
- --------------------------
Class C 1.19
- --------------------------
Class N 0.68
- --------------------------
Class Y 0.10
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13 | CONSERVATIVE INVESTOR FUND
STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited
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VALUE
SHARES SEE NOTE 1
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INVESTMENTS IN AFFILIATED COMPANIES--98.3% 1
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ALTERNATIVE INVESTMENTS--11.4%
Oppenheimer Real Asset Fund, Cl. Y 962,355 $ 8,122,277
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Oppenheimer Real Estate Fund, Cl. Y 354,780 7,986,089
--------------
16,108,366
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FIXED INCOME--66.1%
Oppenheimer Core Bond Fund, Cl. Y 4,610,314 46,241,454
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Oppenheimer High Yield Fund, Cl. Y 1,745,730 15,990,888
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Oppenheimer International Bond Fund, Cl. Y 1,317,462 7,588,585
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Oppenheimer Limited-Term Government Fund, Cl. Y 2,405,200 23,787,431
--------------
93,608,358
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GLOBAL EQUITY--5.1%
Oppenheimer Global Fund, Cl. Y 105,347 7,256,287
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U.S. EQUITY--15.7%
Oppenheimer Capital Appreciation Fund, Cl. Y 166,218 7,077,551
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Oppenheimer Main Street Fund, Cl. Y 193,577 7,506,908
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Oppenheimer Value Fund, Cl. Y 307,785 7,577,658
--------------
22,162,117
--------------
Total Investments in Affiliated Companies (Cost $138,416,685) 139,135,128
PRINCIPAL
AMOUNT
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JOINT REPURCHASE AGREEMENTS--0.1%
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Undivided interest of 0.005% in joint repurchase agreement (Principal Amount/
Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS Warburg
LLC, 5.22%, dated 7/31/06, to be repurchased at $65,009 on 8/1/06,
collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with a
value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35, with
a value of $448,829,145 (Cost $65,000) $ 65,000 65,000
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TOTAL INVESTMENTS, AT VALUE (COST $138,481,685) 98.4% 139,200,128
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OTHER ASSETS NET OF LIABILITIES 1.6 2,280,192
------------------------------
NET ASSETS 100.0% $ 141,480,320
==============================
14 | CONSERVATIVE INVESTOR FUND
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Represents ownership of an affiliated fund, at or during the period ended
July 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:
SHARES SHARES
JANUARY 31, GROSS GROSS JULY 31,
2006 ADDITIONS REDUCTIONS 2006
- ----------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y 99,978 73,929 7,689 166,218
Oppenheimer Core Bond Fund, Cl. Y 2,533,270 2,144,757 67,713 4,610,314
Oppenheimer Global Fund, Cl. Y 66,908 46,898 8,459 105,347
Oppenheimer High Yield Fund, Cl. Y 978,485 792,677 25,432 1,745,730
Oppenheimer International Bond Fund, Cl. Y 751,912 586,688 21,138 1,317,462
Oppenheimer Limited-Term Government Fund, Cl. Y 1,326,111 1,114,407 35,318 2,405,200
Oppenheimer Main Street Fund, Cl. Y 117,728 85,354 9,505 193,577
Oppenheimer Real Asset Fund, Cl. Y 524,309 452,137 14,091 962,355
Oppenheimer Real Estate Fund, Cl. Y 230,456 156,275 31,951 354,780
Oppenheimer Value Fund, Cl. Y 181,842 134,591 8,648 307,785
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
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Oppenheimer Capital Appreciation Fund, Cl. Y $ 7,077,551 $ -- $ (71)
Oppenheimer Core Bond Fund, Cl. Y 46,241,454 880,082 (25,989)
Oppenheimer Global Fund, Cl. Y 7,256,287 -- 8,949
Oppenheimer High Yield Fund, Cl. Y 15,990,888 464,044 (4,237)
Oppenheimer International Bond Fund, Cl. Y 7,588,585 119,111 (4,039)
Oppenheimer Limited-Term Government Fund, Cl. Y 23,787,431 416,383 (6,621)
Oppenheimer Main Street Fund, Cl. Y 7,506,908 -- 296
Oppenheimer Real Asset Fund, Cl. Y 8,122,277 29,677 (19,697)
Oppenheimer Real Estate Fund, Cl. Y 7,986,089 13,482 2,698
Oppenheimer Value Fund, Cl. Y 7,577,658 -- (3,345)
-----------------------------------------
$ 139,135,128 $ 1,922,779 $ (52,056)
=========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15 | CONSERVATIVE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
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July 31, 2006
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ASSETS
- ---------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $65,000) $ 65,000
Affiliated companies (cost $138,416,685) 139,135,128
---------------
139,200,128
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Cash 53,272
- ---------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 2,579,881
Interest and dividends 375,212
Other 2,231
---------------
Total assets 142,210,724
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LIABILITIES
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Payables and other liabilities:
Investments purchased 493,791
Shares of beneficial interest redeemed 164,369
Distribution and service plan fees 28,158
Shareholder communications 12,118
Transfer and shareholder servicing agent fees 11,499
Trustees' compensation 3,938
Other 16,531
---------------
Total liabilities 730,404
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NET ASSETS $ 141,480,320
===============
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COMPOSITION OF NET ASSETS
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Par value of shares of beneficial interest $ 13,363
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Additional paid-in capital 138,844,704
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Accumulated net investment income 1,693,865
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Accumulated net realized gain on investments 209,945
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Net unrealized appreciation on investments 718,443
---------------
NET ASSETS $ 141,480,320
===============
16 | CONSERVATIVE INVESTOR FUND
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NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$77,227,465 and 7,271,156 shares of beneficial interest outstanding) $10.62
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $11.27
- --------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$16,268,806 and 1,543,227 shares of beneficial interest outstanding) $10.54
- --------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$35,191,541 and 3,340,369 shares of beneficial interest outstanding) $10.54
- --------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$12,638,309 and 1,193,971 shares of beneficial interest outstanding) $10.59
- --------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $154,199 and 14,476 shares of beneficial interest outstanding) $10.65
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | CONSERVATIVE INVESTOR FUND
STATEMENT OF OPERATIONS Unaudited
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For the Six Months Ended July 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $ 1,922,779
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Interest 10,766
-------------
Total investment income 1,933,545
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EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 73,240
Class B 63,295
Class C 133,723
Class N 23,904
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Transfer and shareholder servicing agent fees:
Class A 21,620
Class B 8,418
Class C 16,126
Class N 6,306
Class Y 22
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Shareholder communications:
Class A 7,396
Class B 3,186
Class C 4,659
Class N 673
Class Y 7
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Trustees' compensation 4,389
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Custodian fees and expenses 950
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Other 15,671
Total expenses 383,585
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NET INVESTMENT INCOME 1,549,960
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REALIZED AND UNREALIZED LOSS
- --------------------------------------------------------------------------------
Net realized loss on investments from affiliated companies (52,056)
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Net change in unrealized appreciation on investments (348,986)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,148,918
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | CONSERVATIVE INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
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SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
(UNAUDITED) 2006 1
- --------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 1,549,960 $ 1,267,858
- --------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (52,056) 318,074
- --------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (348,986) 1,067,429
--------------------------------
Net increase in net assets resulting from operations 1,148,918 2,653,361
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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)
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BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 30,169,641 45,236,761
Class B 6,993,651 9,001,293
Class C 15,848,583 18,835,139
Class N 4,972,484 7,498,474
Class Y 56,275 91,201
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NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Total increase 59,189,552 82,186,768
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Beginning of period 82,290,768 104,000 2
--------------------------------
End of period (including accumulated net investment income of
$1,693,865 and $143,905, respectively) $ 141,480,320 $ 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.
19 | CONSERVATIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS
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SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS A (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.53 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 1.74 .38
Net realized and unrealized gain (loss) (1.65) .33
------------------------------
Total from investment operations .09 .71
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Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.18)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.62 $ 10.53
==============================
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TOTAL RETURN, AT NET ASSET VALUE 3 0.86% 7.15%
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RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 77,227 $ 46,318
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 60,127 $ 21,844
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.17% 4.50%
Total expenses 0.38% 5 0.53% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 0.38% 0.51%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.00%
Period Ended January 31, 2006 1.19%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | CONSERVATIVE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS B (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.49 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .12 .32
Net realized and unrealized gain (loss) (.07) .32
------------------------------
Total from investment operations .05 .64
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Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.15)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.54 $ 10.49
==============================
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TOTAL RETURN, AT NET ASSET VALUE 3 0.48% 6.44%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 16,269 $ 9,163
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 12,804 $ 4,018
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.33% 3.74%
Total expenses 1.22% 5 1.39% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 1.22% 1.34%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.84%
Period Ended January 31, 2006 2.05%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | CONSERVATIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS C (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.48 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .12 .32
Net realized and unrealized gain (loss) (.06) .31
------------------------------
Total from investment operations .06 .63
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.15)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.54 $ 10.48
==============================
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.57% 6.37%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 35,192 $ 19,145
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 27,074 $ 7,647
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.36% 3.78%
Total expenses 1.19% 5 1.36% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 1.19% 1.33%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.81%
Period Ended January 31, 2006 2.02%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | CONSERVATIVE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS N (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .15 .41
Net realized and unrealized gain (loss) (.07) .28
------------------------------
Total from investment operations .08 .69
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.18)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.59 $ 10.51
==============================
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.76% 6.98%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 12,638 $ 7,569
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,671 $ 2,231
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.87% 4.82%
Total expenses 0.68% 5 0.72% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 0.68% 0.71%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.30%
Period Ended January 31, 2006 1.38%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | CONSERVATIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS Y (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.54 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .18 .38
Net realized and unrealized gain (loss) (.07) .35
------------------------------
Total from investment operations .11 .73
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.19)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.65 $ 10.54
==============================
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 1.04% 7.34%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 154 $ 96
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 102 $ 71
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.45% 4.42%
Total expenses 0.10% 5 0.30% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 0.10% 0.25%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 0.72%
Period Ended January 31, 2006 0.96%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Champion Income 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
25 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
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.
26 | CONSERVATIVE INVESTOR FUND
As of July 31, 2006, the Portfolio had available for federal income tax
purposes an estimated capital loss carryforward of $52,056 expiring by 2015.
This estimated capital loss carryforward represents carryforward as of the end
of the last fiscal year, increased for losses deferred under tax accounting
rules to the current fiscal year and is increased or decreased by capital losses
or gains realized in the first six months of the current fiscal year. During the
period ended January 31, 2006, the Portfolio did not have any capital loss
carryforward.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan
for the Portfolio's independent trustees. Benefits are based on years of service
and fees paid to each trustee during the years of service. During the six months
ended July 31, 2006, the Portfolio's projected benefit obligations were
increased by $3,605 and no payments were made to retired trustees, resulting in
an accumulated liability of $3,605 as of July 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the
Portfolio. For purposes of determining the amount owed to the Trustee under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Portfolio or in other Oppenheimer funds selected by
the Trustee. The Portfolio purchases shares of the funds selected for deferral
by the Trustee in amounts equal to his or her deemed investment, resulting in a
Portfolio asset equal to the deferred compensation liability. Such assets are
included as a component of "Other" within the asset section of the Statement of
Assets and Liabilities. Deferral of trustees' fees under the plan will not
affect the net assets of the Portfolio, and will not materially affect the
Portfolio's assets, liabilities or net investment income per share. Amounts will
be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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
27 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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:
SIX MONTHS ENDED JULY 31, 2006 YEAR ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
CLASS A
Sold 3,451,630 $ 36,287,016 4,892,094 $ 50,465,464
Dividends and/or distributions reinvested -- -- 58,785 607,250
Redeemed (581,097) (6,117,375) (560,256) (5,835,953)
-------------------------------------------------------------
Net increase 2,870,533 $ 30,169,641 4,390,623 $ 45,236,761
=============================================================
- -----------------------------------------------------------------------------------------------------------
CLASS B
Sold 818,960 $ 8,560,406 949,406 $ 9,789,255
Dividends and/or distributions reinvested -- -- 9,315 95,942
Redeemed (149,282) (1,566,755) (85,272) (883,904)
-------------------------------------------------------------
Net increase 669,678 $ 6,993,651 873,449 $ 9,001,293
=============================================================
- -----------------------------------------------------------------------------------------------------------
CLASS C
Sold 1,916,472 $ 20,052,548 1,904,973 $ 19,653,821
Dividends and/or distributions reinvested -- -- 19,416 199,792
Redeemed (402,558) (4,203,965) (98,034) (1,018,474)
-------------------------------------------------------------
Net increase 1,513,914 $ 15,848,583 1,826,355 $ 18,835,139
=============================================================
28 | CONSERVATIVE INVESTOR FUND
SIX MONTHS ENDED JULY 31, 2006 YEAR ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
CLASS N
Sold 743,859 $ 7,817,641 1,007,278 $ 10,503,896
Dividends and/or distributions reinvested -- -- 11,897 122,654
Redeemed (270,298) (2,845,157) (298,865) (3,128,076)
-------------------------------------------------------------
Net increase 473,561 $ 4,972,484 720,310 $ 7,498,474
=============================================================
- -----------------------------------------------------------------------------------------------------------
CLASS Y
Sold 8,128 $ 85,059 14,752 $ 151,331
Dividends and/or distributions reinvested -- -- 157 1,619
Redeemed (2,741) (28,784) (5,920) (61,749)
-------------------------------------------------------------
Net increase 5,387 $ 56,275 8,989 $ 91,201
=============================================================
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 six months ended July 31, 2006, were as
follows:
PURCHASES SALES
------------------------------------------------------
Investment securities $63,236,634 $3,749,926
- --------------------------------------------------------------------------------
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 six months ended July 31, 2006 was 0.55%.
- --------------------------------------------------------------------------------
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 six months ended July 31, 2006,
the Portfolio paid $45,209 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.
- --------------------------------------------------------------------------------
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.
29 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 periods. 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 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 July 31, 2006 for Class B,
Class C and Class N shares were $244,521, $266,820 and $162,085, 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 following table 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
SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------------
July 31, 2006 $ 200,355 $ 423 $ 17,175 $ 7,728 $ 3,762
30 | CONSERVATIVE INVESTOR FUND
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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. 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.
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. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Portfolio's tax returns to determine
whether it is "more-likely-than-not" that tax positions taken in the Portfolio's
tax return will be ultimately sustained. A tax liability and expense must be
recorded in respect of any tax position that, in Management's judgment, will not
be fully realized. FIN 48 is effective for fiscal years beginning after December
15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN
48. Its impact in the Portfolio's financial statements has not yet been
determined.
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
31 | CONSERVATIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. LITIGATION Continued
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, 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, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
32 | CONSERVATIVE INVESTOR FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under
which the Portfolio votes proxies relating to securities ("portfolio proxies")
held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting
Policies and Procedures is available (i) without charge, upon request, by
calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's
website at www.oppenheimerfunds.com, and (iii) on the SEC's website at
www.sec.gov. In addition, the Portfolio 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 Portfolio's voting record is available (i) without
charge, upon request, by calling the Portfolio 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 Portfolio 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 Portfolio'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.
33 | 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.]
Alternative Investments 10.6%
Fixed Income 45.6
Global Equity 9.6
U.S. Equity 34.2
Portfolio holdings and allocations are subject to change. Percentages are as of
July 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
9 | MODERATE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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 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.
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
agreement with the Distributor.
An explanation of the calculation of performance is in the Portfolio's Statement
of Additional Information.
10 | 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 July 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.
11 | MODERATE INVESTOR FUND
PORTFOLIO EXPENSES Continued
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in the
Statement of Additional Information). Therefore, the "hypothetical" lines of 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
(2/1/06) (7/31/06) JULY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,002.80 $1.99
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.81 2.01
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 998.10 6.01
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,018.79 6.07
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 999.10 5.77
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,019.04 5.82
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,001.90 3.28
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.52 3.31
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,004.60 0.10
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,024.70 0.10
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 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding all underlying fund expenses, based on the 6-month period ended July
31, 2006 are as follows:
CLASS EXPENSE RATIOS
- --------------------------------
Class A 0.40%
- --------------------------------
Class B 1.21
- --------------------------------
Class C 1.16
- --------------------------------
Class N 0.66
- --------------------------------
Class Y 0.02
- --------------------------------------------------------------------------------
12 | MODERATE INVESTOR FUND
STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--99.4% 1
- ---------------------------------------------------------------------------------------------------------------
ALTERNATIVE INVESTMENTS--10.6%
Oppenheimer Real Asset Fund, Cl. Y 2,461,156 $ 20,772,159
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Real Estate Fund, Cl. Y 909,022 20,462,096
--------------
41,234,255
- ---------------------------------------------------------------------------------------------------------------
FIXED INCOME--45.3%
Oppenheimer Core Bond Fund, Cl. Y 7,873,884 78,975,056
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer High Yield Fund, Cl. Y 4,276,288 39,170,805
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer International Bond Fund, Cl. Y 3,375,874 19,445,030
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund, Cl. Y 3,985,232 39,413,946
--------------
177,004,837
- ---------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY--9.5%
Oppenheimer Global Fund, Cl. Y 539,500 37,160,772
- ---------------------------------------------------------------------------------------------------------------
U.S. EQUITY--34.0%
Oppenheimer Capital Appreciation Fund, Cl. Y 852,074 36,281,330
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 990,780 38,422,456
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 1,341,827 19,121,035
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 1,576,189 38,805,770
--------------
132,630,591
--------------
Total Investments in Affiliated Companies (Cost $384,993,728) 388,030,455
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.3%
- ---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.07% in joint repurchase agreement (Principal
Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS
Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $927,134 on 8/1/06,
collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with
a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35,
with a value of $448,829,145 (Cost $927,000) $ 927,000 927,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $385,920,728) 99.7% 388,957,455
- ---------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 1,356,510
----------------------------
NET ASSETS 100.0% $ 390,313,965
============================
13 | MODERATE INVESTOR FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Represents ownership of an affiliated fund, at or during the period ended
July 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:
SHARES GROSS GROSS SHARES
JANUARY 31, 2006 ADDITIONS REDUCTIONS JULY 31, 2006
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y 452,591 418,011 18,528 852,074
Oppenheimer Core Bond Fund, Cl. Y* 3,823,987 4,130,297 80,400 7,873,884
Oppenheimer Global Fund, Cl. Y 307,304 264,860 32,664 539,500
Oppenheimer High Yield Fund, Cl. Y 2,132,328 2,187,332 43,372 4,276,288
Oppenheimer International Bond Fund, Cl. Y 1,704,413 1,705,967 34,506 3,375,874
Oppenheimer Limited-Term Government Fund, Cl. Y 1,959,654 2,066,194 40,616 3,985,232
Oppenheimer Main Street Fund, Cl. Y 533,482 482,889 25,591 990,780
Oppenheimer Main Street Opportunity Fund, Cl. Y 729,566 654,419 42,158 1,341,827
Oppenheimer Real Asset Fund, Cl. Y 1,239,352 1,245,987 24,183 2,461,156
Oppenheimer Real Estate Fund, Cl. Y 527,524 441,941 60,443 909,022
Oppenheimer Value Fund, Cl. Y 829,078 763,303 16,192 1,576,189
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME (LOSS)
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 36,281,330 $ -- $ (22,696)
Oppenheimer Core Bond Fund, Cl. Y* 78,975,056 1,452,992 (39,534)
Oppenheimer Global Fund, Cl. Y 37,160,772 -- (522)
Oppenheimer High Yield Fund, Cl. Y 39,170,805 1,100,187 (9,628)
Oppenheimer International Bond Fund, Cl. Y 19,445,030 294,646 (7,265)
Oppenheimer Limited-Term Government Fund, Cl. Y 39,413,946 668,433 (8,762)
Oppenheimer Main Street Fund, Cl. Y 38,422,456 -- (12,359)
Oppenheimer Main Street Opportunity Fund, Cl. Y 19,121,035 -- (5,811)
Oppenheimer Real Asset Fund, Cl. Y 20,772,159 70,978 (33,869)
Oppenheimer Real Estate Fund, Cl. Y 20,462,096 34,646 (18,604)
Oppenheimer Value Fund, Cl. Y 38,805,770 -- (11,831)
--------------------------------------------
$388,030,455 $3,621,882 $ (170,881)
============================================
* 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.
14 | MODERATE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
July 31, 2006
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $927,000) $ 927,000
Affiliated companies (cost $384,993,728) 388,030,455
--------------
388,957,455
- --------------------------------------------------------------------------------
Cash 156,607
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 3,091,444
Interest and dividends 722,592
Other 3,129
--------------
Total assets 392,931,227
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,806,828
Shares of beneficial interest redeemed 646,620
Distribution and service plan fees 78,525
Transfer and shareholder servicing agent fees 39,407
Shareholder communications 16,604
Trustees' compensation 9,938
Other 19,340
--------------
Total liabilities 2,617,262
- --------------------------------------------------------------------------------
NET ASSETS $ 390,313,965
==============
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 36,241
- --------------------------------------------------------------------------------
Additional paid-in capital 383,305,251
- --------------------------------------------------------------------------------
Accumulated net investment income 2,756,191
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,179,555
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 3,036,727
--------------
NET ASSETS $ 390,313,965
==============
15 | MODERATE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $202,489,949
and 18,731,252 shares of beneficial interest outstanding) $10.81
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.47
- -----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $71,154,707 and 6,635,057 shares of
beneficial interest outstanding) $10.72
- -----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $94,509,365
and 8,818,641 shares of beneficial interest outstanding) $10.72
- -----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $22,021,927 and 2,043,485 shares of
beneficial interest outstanding) $10.78
- -----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$138,017 and 12,727 shares of beneficial interest outstanding) $10.84
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 | MODERATE INVESTOR FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $ 3,621,882
- --------------------------------------------------------------------------------
Interest 26,985
------------
Total investment income 3,648,867
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 190,745
Class B 262,685
Class C 357,721
Class N 43,244
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 83,288
Class B 42,105
Class C 44,677
Class N 11,550
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 15,112
Class B 8,079
Class C 7,012
Class N 1,000
- --------------------------------------------------------------------------------
Trustees' compensation 11,054
- --------------------------------------------------------------------------------
Custodian fees and expenses 737
- --------------------------------------------------------------------------------
Other 20,219
------------
Total expenses 1,099,228
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,549,639
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
- --------------------------------------------------------------------------------
Net realized loss on investments from affiliated companies (170,881)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (1,617,527)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 761,231
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | MODERATE INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
(UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income $ 2,549,639 $ 2,808,609
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) (170,881) 1,518,222
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (1,617,527) 4,654,254
--------------------------------
Net increase in net assets resulting from operations 761,231 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 (decrease) in net assets resulting from
beneficial interest transactions:
Class A 94,157,294 104,188,008
Class B 34,094,356 35,779,888
Class C 46,568,778 46,402,364
Class N 9,934,143 11,835,440
Class Y (181,172) 299,664
- -------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------
Total increase 185,334,630 204,875,335
- -------------------------------------------------------------------------------------------------
Beginning of period 204,979,335 104,000 2
--------------------------------
End of period (including accumulated net investment income of
$2,756,191 and $206,552, respectively) $ 390,313,965 $ 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 investment on March
15, 2005.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | MODERATE INVESTOR FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS A (UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.78 $ 10.00
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .11 .38
Net realized and unrealized gain (loss) (.08) .57
---------------------------------
Total from investment operations .03 .95
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.17)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 10.81 $ 10.78
=================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.28% 9.58%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 202,490 $ 107,686
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 155,392 $ 43,984
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.07% 4.39%
Total expenses 0.40% 5 0.47% 5
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.40% 0.46%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.03%
Period Ended January 31, 2006 1.15%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | MODERATE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS B (UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.74 $ 10.00
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .07 .31
Net realized and unrealized gain (loss) (.09) .58
---------------------------------
Total from investment operations (.02) .89
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.15)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 10.72 $ 10.74
=================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.19)% 8.90%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 71,155 $ 36,956
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 53,167 $ 15,521
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.26% 3.56%
Total expenses 1.21% 5 1.31% 5
Expenses after waivers and reimbursements and
reduction to custodian expenses 1.21% 1.29%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.84%
Period Ended January 31, 2006 1.99%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | MODERATE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS C (UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.73 $ 10.00
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .07 .31
Net realized and unrealized gain (loss) (.08) .57
---------------------------------
Total from investment operations (.01) .88
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.15)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 10.72 $ 10.73
=================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.09)% 8.82%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 94,509 $ 47,904
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 72,432 $ 19,527
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.30% 3.64%
Total expenses 1.16% 5 1.23% 5
Expenses after waivers and reimbursements and
reduction to custodian expenses 1.16% 1.22%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.79%
Period Ended January 31, 2006 1.91%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | MODERATE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS N (UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.76 $ 10.00
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .10 .40
Net realized and unrealized gain (loss) (.08) .53
---------------------------------
Total from investment operations .02 .93
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.17)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 10.78 $ 10.76
=================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.19% 9.35%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 22,022 $ 12,117
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 17,496 $ 4,158
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.80% 4.56%
Total expenses 0.66% 5 0.68% 5
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.66% 0.67%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 1.29%
Period Ended January 31, 2006 1.36%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | MODERATE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS Y (UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.79 $ 10.00
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .13 .36
Net realized and unrealized gain (loss) (.08) .61
---------------------------------
Total from investment operations .05 .97
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.18)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 10.84 $ 10.79
=================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.46% 9.79%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 138 $ 316
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 196 $ 216
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.44% 4.20%
Total expenses 0.02% 5 0.28% 5
Expenses after waivers and reimbursements and
reduction to custodian expenses 0.02% 0.12%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 3% 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:
Six Months Ended July 31, 2006 0.65%
Period Ended January 31, 2006 0.96%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Champion Income 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 basis of current market quotations. If market quotations are
24 | MODERATE INVESTOR FUND
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.
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.
25 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
As of July 31, 2006, the Portfolio had available for federal income tax
purposes an estimated capital loss carryforward of $170,881 expiring by 2015.
This estimated capital loss carryforward represents carryforward as of the end
of the last fiscal year, increased for losses deferred under tax accounting
rules to the current fiscal year and is increased or decreased by capital losses
or gains realized in the first six months of the current fiscal year. During the
period ended January 31, 2006, the Portfolio did not have any capital loss
carryforward.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan
for the Portfolio's independent trustees. Benefits are based on years of service
and fees paid to each trustee during the years of service. During the six months
ended July 31, 2006, the Portfolio's projected benefit obligations were
increased by $9,142 and no payments were made to retired trustees, resulting in
an accumulated liability of $9,142 as of July 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the
Portfolio. For purposes of determining the amount owed to the Trustee under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Portfolio or in other Oppenheimer funds selected by
the Trustee. The Portfolio purchases shares of the funds selected for deferral
by the Trustee in amounts equal to his or her deemed investment, resulting in a
Portfolio asset equal to the deferred compensation liability. Such assets are
included as a component of "Other" within the asset section of the Statement of
Assets and Liabilities. Deferral of trustees' fees under the plan will not
affect the net assets of the Portfolio, and will not materially affect the
Portfolio's assets, liabilities or net investment income per share. Amounts will
be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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
26 | MODERATE INVESTOR FUND
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 Portfolio 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:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 10,146,391 $ 109,226,094 10,348,982 $ 108,067,839
Dividends and/or
distributions reinvested -- -- 131,505 1,380,804
Redeemed (1,405,433) (15,068,800) (500,193) (5,260,635)
-------------------------------------------------------------------
Net increase 8,740,958 $ 94,157,294 9,980,294 $ 104,188,008
===================================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 3,656,627 $ 39,061,275 3,602,759 $ 37,460,502
Dividends and/or
distributions reinvested -- -- 38,687 404,664
Redeemed (463,675) (4,966,919) (199,441) (2,085,278)
-------------------------------------------------------------------
Net increase 3,192,952 $ 34,094,356 3,442,005 $ 35,779,888
===================================================================
27 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 5,043,626 $ 53,942,659 4,610,775 $ 47,936,138
Dividends and/or
distributions reinvested -- -- 48,772 509,662
Redeemed (691,025) (7,373,881) (193,607) (2,043,436)
-------------------------------------------------------------------
Net increase 4,352,601 $ 46,568,778 4,465,940 $ 46,402,364
===================================================================
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 1,301,095 $ 14,008,804 1,274,902 $ 13,414,589
Dividends and/or
distributions reinvested -- -- 14,511 152,071
Redeemed (383,698) (4,074,661) (163,425) (1,731,220)
-------------------------------------------------------------------
Net increase 917,397 $ 9,934,143 1,125,988 $ 11,835,440
===================================================================
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 9,378 $ 101,482 35,197 $ 362,730
Dividends and/or
distributions reinvested -- -- 503 5,289
Redeemed (25,969) (282,654) (6,482) (68,355)
-------------------------------------------------------------------
Net increase (decrease) (16,591) $ (181,172) 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 six months ended July 31, 2006, were as
follows:
PURCHASES SALES
---------------------------------------------------------
Investment securities $194,688,872 $8,541,098
- --------------------------------------------------------------------------------
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 six months ended July 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 six months ended July 31, 2006,
the Portfolio paid $158,319 to OFS for services to the Portfolio.
28 | MODERATE INVESTOR FUND
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the 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 periods. 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 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 July 31, 2006 for Class B,
Class C and Class N shares were $1,162,326, $766,342 and $234,481, 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 following table for the period
indicated.
29 | MODERATE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------------
July 31, 2006 $701,914 $780 $56,503 $15,048 $3,212
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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. 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Portfolio's tax returns to determine
whether it is "more-likely-than-not" that tax positions taken in the Portfolio's
tax return will be ultimately sustained. A tax liability and expense must be
recorded in respect of any tax position that, in Management's judgment, will not
be fully realized. FIN 48 is effective for fiscal years beginning after December
15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN
48. Its impact in the Portfolio's financial statements has not yet been
determined.
30 | MODERATE INVESTOR FUND
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, 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, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
31 | MODERATE INVESTOR FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under
which the Portfolio votes proxies relating to securities ("portfolio proxies")
held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting
Policies and Procedures is available (i) without charge, upon request, by
calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's
website at www.oppenheimerfunds.com, and (iii) on the SEC's website at
www.sec.gov. In addition, the Portfolio 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 Portfolio's voting record is available (i) without
charge, upon request, by calling the Portfolio 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 Portfolio 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 Portfolio'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.
32 | MODERATE INVESTOR FUND
ACTIVE ALLOCATION FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Alternative Investment 5.9%
Fixed Income 23.2
Global Equity 24.3
U.S. Equity 46.6
Portfolio holdings and allocations are subject to change. Percentages are as of
July 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
10 | ACTIVE ALLOCATION FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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 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.
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
agreement with the Distributor.
An explanation of the calculation of performance is in the Portfolio's Statement
of Additional Information.
11 | ACTIVE ALLOCATION 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 July 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
12 | 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
(2/1/06) (7/31/06) JULY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $ 990.10 $2.47
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.32 2.51
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 985.50 6.37
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,018.40 6.48
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 985.50 6.27
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,018.50 6.38
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 988.30 3.46
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.32 3.51
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 991.90 0.64
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,024.15 0.65
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 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding all underlying fund expenses, based on the 6-month period ended July
31, 2006 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 0.50%
- -----------------------------
Class B 1.29
- -----------------------------
Class C 1.27
- -----------------------------
Class N 0.70
- -----------------------------
Class Y 0.13
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Portfolio's Manager 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.
- --------------------------------------------------------------------------------
13 | ACTIVE ALLOCATION FUND
STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--99.3% 1
- --------------------------------------------------------------------------------------------------------------
ALTERNATIVE INVESTMENT--5.9%
Oppenheimer Real Estate Fund, Cl. Y 2,929,348 $ 65,939,622
- --------------------------------------------------------------------------------------------------------------
FIXED INCOME--23.0%
Oppenheimer Core Bond Fund, Cl. Y 13,625,216 136,660,913
- --------------------------------------------------------------------------------------------------------------
Oppenheimer High Yield Fund, Cl. Y 1,252,882 11,476,401
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund, Cl. Y 27,157,053 111,887,058
---------------
260,024,372
- --------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY--24.1%
Oppenheimer Global Fund, Cl. Y 1,520,539 104,734,739
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Global Opportunities Fund, Cl. Y 1,468,479 54,847,678
- --------------------------------------------------------------------------------------------------------------
Oppenheimer International Growth Fund, Cl. Y 4,771,710 112,373,765
---------------
271,956,182
- --------------------------------------------------------------------------------------------------------------
U.S. EQUITY--46.3%
Oppenheimer Capital Appreciation Fund, Cl. Y 2,422,399 103,145,728
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 2,815,400 109,181,199
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 4,347,608 61,953,413
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund, Cl. Y 2,596,766 57,414,513
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 7,751,861 190,850,823
---------------
522,545,676
---------------
Total Investments in Affiliated Companies (Cost $1,116,124,005) 1,120,465,852
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.3%
- --------------------------------------------------------------------------------------------------------------
Undivided interest of 0.26% in joint repurchase agreement (Principal
Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514)
with UBS Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at
$3,263,473 on 8/1/06, collateralized by Federal National Mortgage Assn.,
5%-6%, 4/1/35-12/1/35, with a value of $845,724,461 and Federal
Home Loan Mortgage Corp., 5.50%, 5/1/35, with a value
of $448,829,145 (Cost $3,263,000) $ 3,263,000 3,263,000
- --------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,119,387,005) 99.6% 1,123,728,852
- --------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.4 4,821,445
------------------------------
NET ASSETS 100.0% $1,128,550,297
==============================
14 | ACTIVE ALLOCATION FUND
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Represents ownership of an affiliated fund, at or during the period ended
July 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:
SHARES
JANUARY 31, GROSS GROSS SHARES
2006 ADDITIONS REDUCTIONS JULY 31, 2006
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y 1,206,388 1,292,482 76,471 2,422,399
Oppenheimer Core Bond Fund, Cl. Y * 5,106,446 8,622,750 103,980 13,625,216
Oppenheimer Developing Markets Fund, Cl. Y 735,369 255,282 990,651 --
Oppenheimer Global Fund, Cl. Y 817,108 819,514 116,083 1,520,539
Oppenheimer Global Opportunities Fund, Cl. Y 771,757 711,459 14,737 1,468,479
Oppenheimer High Yield Fund, Cl. Y -- 1,262,166 9,284 1,252,882
Oppenheimer International Growth Fund, Cl. Y* -- 4,806,089 34,379 4,771,710
Oppenheimer International
Small Company Fund, Cl. Y 1,296,021 828,275 2,124,296 --
Oppenheimer Main Street Fund, Cl. Y 1,422,021 1,495,323 101,944 2,815,400
Oppenheimer Main Street
Opportunity Fund, Cl. Y 1,943,920 2,433,201 29,513 4,347,608
Oppenheimer Main Street Small Cap Fund, Cl. Y 1,258,510 1,376,044 37,788 2,596,766
Oppenheimer Quest International
Value Fund, Cl. Y -- 2,851,894 2,851,894 --
Oppenheimer Real Asset Fund, Cl. Y 3,273,185 1,528,500 4,801,685 --
Oppenheimer Real Estate Fund, Cl. Y* 1,403,079 1,546,339 20,070 2,929,348
Oppenheimer Strategic Income Fund, Cl. Y 12,557,766 14,805,278 205,991 27,157,053
Oppenheimer U.S. Government Trust, Cl. Y 2,764,889 1,589,544 4,354,433 --
Oppenheimer Value Fund, Cl. Y* 2,210,413 5,643,806 102,358 7,751,861
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 103,145,728 $ -- $ (6,931)
Oppenheimer Core Bond Fund, Cl. Y * 136,660,913 2,368,070 (49,967)
Oppenheimer Developing Markets Fund, Cl. Y -- -- 3,516,936
Oppenheimer Global Fund, Cl. Y 104,734,739 -- 81,275
Oppenheimer Global Opportunities Fund, Cl. Y 54,847,678 -- (16,121)
Oppenheimer High Yield Fund, Cl. Y 11,476,401 229,701 (364)
Oppenheimer International Growth Fund, Cl. Y* 112,373,765 -- (19,060)
Oppenheimer International Small Company Fund, Cl. Y -- -- 735,658
Oppenheimer Main Street Fund, Cl. Y 109,181,199 -- 1,958
Oppenheimer Main Street Opportunity Fund, Cl. Y 61,953,413 -- (5,514)
Oppenheimer Main Street Small Cap Fund, Cl. Y 57,414,513 -- (12,447)
Oppenheimer Quest International Value Fund, Cl. Y -- -- 2,221,005
Oppenheimer Real Asset Fund, Cl. Y -- 194,036 (795,037)
Oppenheimer Real Estate Fund, Cl. Y* 65,939,622 113,211 (14,313)
Oppenheimer Strategic Income Fund, Cl. Y 111,887,058 2,228,680 (30,261)
Oppenheimer U.S. Government Trust, Cl. Y -- 198,785 (526,338)
Oppenheimer Value Fund, Cl. Y* 190,850,823 -- (19,823)
------------------------------------------------
$1,120,465,852 $ 5,332,483 $ 5,060,656
================================================
* 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.
15 | ACTIVE ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
July 31, 2006
- ----------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $3,263,000) $ 3,263,000
Affiliated companies (cost $1,116,124,005) 1,120,465,852
---------------
1,123,728,852
- ----------------------------------------------------------------------------------
Cash 452,833
- ----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 9,527,931
Interest and dividends 689,607
Other 4,575
---------------
Total assets 1,134,403,798
- ----------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 4,309,092
Shares of beneficial interest redeemed 1,099,699
Distribution and service plan fees 226,338
Transfer and shareholder servicing agent fees 125,801
Shareholder communications 34,049
Trustees' compensation 27,305
Other 31,217
---------------
Total liabilities 5,853,501
- ----------------------------------------------------------------------------------
NET ASSETS $1,128,550,297
===============
- ----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 103,039
- ----------------------------------------------------------------------------------
Additional paid-in capital 1,113,023,191
- ----------------------------------------------------------------------------------
Accumulated net investment income 1,849,159
- ----------------------------------------------------------------------------------
Accumulated net realized gain on investments 9,233,061
- ----------------------------------------------------------------------------------
Net unrealized appreciation on investments 4,341,847
---------------
NET ASSETS $1,128,550,297
===============
16 | ACTIVE ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ---------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $582,296,505 and 52,982,781 shares of beneficial interest outstanding) $10.99
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $11.66
- ---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $223,123,606 and 20,450,124 shares of beneficial interest outstanding) $10.91
- ---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $263,350,972 and 24,154,247 shares of beneficial interest outstanding) $10.90
- ---------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $58,412,613 and 5,327,701 shares of beneficial interest outstanding) $10.96
- ---------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $1,366,601 and 123,816 shares of beneficial interest outstanding) $11.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | ACTIVE ALLOCATION FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends from affiliated companies $ 5,332,483
- --------------------------------------------------------------------------------
Interest 81,440
-------------
Total investment income 5,413,923
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 548,302
Class B 857,205
Class C 981,091
Class N 104,980
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 283,257
Class B 139,215
Class C 140,721
Class N 18,267
Class Y 66
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 36,257
Class B 19,562
Class C 16,004
Class N 1,236
- --------------------------------------------------------------------------------
Asset allocation fees 425,545
- --------------------------------------------------------------------------------
Trustees' compensation 30,451
- --------------------------------------------------------------------------------
Custodian fees and expenses 753
- --------------------------------------------------------------------------------
Other 27,367
-------------
Total expenses 3,630,279
Less waivers and reimbursements of expenses (11,751)
-------------
Net expenses 3,618,528
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,795,395
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investments from affiliated companies 5,060,656
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (18,760,772)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(11,904,721)
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | ACTIVE ALLOCATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
(UNAUDITED) 2006 1
- ------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,795,395 $ 8,127,024
- ------------------------------------------------------------------------------------------------------------------
Net realized gain 5,060,656 5,393,678
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (18,760,772) 23,102,619
------------------------------------
Net increase (decrease) in net assets resulting from operations (11,904,721) 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 294,197,633 278,869,967
Class B 110,206,677 109,728,240
Class C 140,908,079 119,590,827
Class N 30,607,245 27,088,823
Class Y 879,480 455,957
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Total increase 564,894,393 563,551,904
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 563,655,904 104,000 2
------------------------------------
End of period (including accumulated net investment income
of $1,849,159 and $53,764, respectively) $ 1,128,550,297 $ 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.
19 | ACTIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS A (UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.10 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .04 .43
Net realized and unrealized gain (loss) (.15) .89
-------------------------------------
Total from investment operations (.11) 1.32
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.20)
Distributions from net realized gain -- (.02)
-------------------------------------
Total dividends and/or distributions to shareholders -- (.22)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.99 $ 11.10
=====================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.99)% 13.31%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 582,296 $ 293,578
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 445,926 $ 112,224
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.76% 4.94%
Total expenses 0.51% 5 0.56% 5
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.50% 0.55%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 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:
Six Months Ended July 31, 2006 1.17%
Period Ended January 31, 2006 1.28%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | ACTIVE ALLOCATION FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS B (UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.07 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 -- 3 .36
Net realized and unrealized gain (loss) (.16) .91
-------------------------------------
Total from investment operations (.16) 1.27
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.18)
Distributions from net realized gain -- (.02)
-------------------------------------
Total dividends and/or distributions to shareholders -- (.20)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.91 $ 11.07
=====================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 (1.45)% 12.72%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 223,123 $ 115,629
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 173,493 $ 46,284
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.02)% 4.06%
Total expenses 1.29% 6 1.37% 6
Expenses after waivers and reimbursements
and reduction to custodian expenses 1.29% 1.34%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 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. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on portfolio distributions or the redemption of portfolio shares.
5. Annualized for periods of less than one full year.
6. Expenses including all underlying fund expenses were:
Six Months Ended July 31, 2006 1.95%
Period Ended January 31, 2006 2.09%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | ACTIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS C (UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.06 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 -- 3 .37
Net realized and unrealized gain (loss) (.16) .89
-------------------------------------
Total from investment operations (.16) 1.26
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.18)
Distributions from net realized gain -- (.02)
-------------------------------------
Total dividends and/or distributions to shareholders -- (.20)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.90 $ 11.06
=====================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 (1.45)% 12.66%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 263,351 $ 125,622
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 198,651 $ 45,647
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 0.00% 4.18%
Total expenses 1.27% 6 1.33% 6
Expenses after waivers and reimbursements
and reduction to custodian expenses 1.27% 1.31%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 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. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on portfolio distributions or the redemption of portfolio shares.
5. Annualized for periods of less than one full year.
6. Expenses including all underlying fund expenses were:
Six Months Ended July 31, 2006 1.93%
Period Ended January 31, 2006 2.05%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | ACTIVE ALLOCATION FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS N (UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.09 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .03 .46
Net realized and unrealized gain (loss) (.16) .85
-------------------------------------
Total from investment operations (.13) 1.31
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.20)
Distributions from net realized gain -- (.02)
-------------------------------------
Total dividends and/or distributions to shareholders -- (.22)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.96 $ 11.09
=====================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (1.17)% 13.18%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 58,413 $ 28,345
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 42,504 $ 9,156
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.57% 5.28%
Total expenses 0.70% 5 0.73% 5
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.70% 0.72%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 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:
Six Months Ended July 31, 2006 1.36%
Period Ended January 31, 2006 1.45%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | ACTIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS Y (UNAUDITED) 2006 1
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.13 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .06 .39
Net realized and unrealized gain (loss) (.15) .97
-------------------------------------
Total from investment operations (.09) 1.36
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.21)
Distributions from net realized gain -- (.02)
-------------------------------------
Total dividends and/or distributions to shareholders -- (.23)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.04 $ 11.13
=====================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.81)% 13.72%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,367 $ 482
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 705 $ 196
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.15% 4.44%
Total expenses 0.13% 5 0.33% 5
Expenses after waivers and reimbursements
and reduction to custodian expenses 0.13% 0.21%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 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:
Six Months Ended July 31, 2006 0.79%
Period Ended January 31, 2006 1.05%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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").
25 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
Oppenheimer Funds:
Oppenheimer Capital Appreciation Fund
Oppenheimer Core Bond Fund
Oppenheimer Champion Income 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
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Real Asset Fund(R)
Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer Value Fund
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
26 | ACTIVE ALLOCATION FUND
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.
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.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan
for the Portfolio's independent trustees. Benefits are based on years of service
and fees paid to each trustee during the years of service. During the six months
ended July 31, 2006, the Portfolio's projected benefit obligations were
increased by $25,180 and no payments were made to retired trustees, resulting in
an accumulated liability of $25,180 as of July 31, 2006.
27 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the
Portfolio. For purposes of determining the amount owed to the Trustee under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Portfolio or in other Oppenheimer funds selected by
the Trustee. The Portfolio purchases shares of the funds selected for deferral
by the Trustee in amounts equal to his or her deemed investment, resulting in a
Portfolio asset equal to the deferred compensation liability. Such assets are
included as a component of "Other" within the asset section of the Statement of
Assets and Liabilities. Deferral of trustees' fees under the plan will not
affect the net assets of the Portfolio, and will not materially affect the
Portfolio's assets, liabilities or net investment income per share. Amounts will
be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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
28 | ACTIVE ALLOCATION FUND
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 Portfolio 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:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
CLASS A
Sold 28,769,417 $ 318,687,635 27,068,123 $ 285,660,045
Dividends and/or
distributions reinvested -- -- 438,928 4,665,805
Redeemed (2,225,229) (24,490,002) (1,078,458) (11,455,883)
-------------------------------------------------------------------
Net increase 26,544,188 $ 294,197,633 26,428,593 $ 278,869,967
===================================================================
- -------------------------------------------------------------------------------------------------
CLASS B
Sold 11,237,770 $ 123,841,204 10,764,936 $ 113,091,487
Dividends and/or
distributions reinvested -- -- 154,655 1,639,339
Redeemed (1,236,129) (13,634,527) (471,208) (5,002,586)
-------------------------------------------------------------------
Net increase 10,001,641 $ 110,206,677 10,448,383 $ 109,728,240
===================================================================
- -------------------------------------------------------------------------------------------------
CLASS C
Sold 14,100,337 $ 155,184,086 11,696,791 $ 123,196,995
Dividends and/or
distributions reinvested -- -- 155,748 1,649,374
Redeemed (1,306,685) (14,276,007) (492,044) (5,255,542)
-------------------------------------------------------------------
Net increase 12,793,652 $ 140,908,079 11,360,495 $ 119,590,827
===================================================================
- -------------------------------------------------------------------------------------------------
CLASS N
Sold 3,091,410 $ 34,114,982 2,664,849 $ 28,261,231
Dividends and/or
distributions reinvested -- -- 42,051 446,165
Redeemed (320,082) (3,507,737) (150,627) (1,618,573)
-------------------------------------------------------------------
Net increase 2,771,328 $ 30,607,245 2,556,273 $ 27,088,823
===================================================================
29 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
CLASS Y
Sold 94,516 $ 1,036,561 54,640 $ 577,537
Dividends and/or
distributions reinvested -- -- 645 6,870
Redeemed (13,965) (157,081) (12,120) (128,450)
-------------------------------------------------------------------
Net increase 80,551 $ 879,480 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 six months ended July 31, 2006, were as
follows:
PURCHASES SALES
--------------------------------------------------------------------
Investment securities $830,408,522 $246,884,029
- --------------------------------------------------------------------------------
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 six months ended July 31, 2006 was 0.59%.
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 six months ended July 31, 2006,
the Portfolio paid $505,771 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.
- --------------------------------------------------------------------------------
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 pro-
30 | ACTIVE ALLOCATION FUND
vided 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
periods. 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 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 July 31, 2006 for Class B,
Class C and Class N shares were $4,128,785, $2,352,281 and $616,945,
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 following table 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
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------
July 31, 2006 $1,840,975 $315 $137,624 $33,517 $4,643
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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 six months ended July 31, 2006, the Manager
31 | ACTIVE ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
reimbursed the Portfolio $6,099, $2,381, $2,680, $583 and $8, 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Portfolio's tax returns to determine
whether it is "more-likely-than-not" that tax positions taken in the Portfolio's
tax return will be ultimately sustained. A tax liability and expense must be
recorded in respect of any tax position that, in Management's judgment, will not
be fully realized. FIN 48 is effective for fiscal years beginning after December
15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN
48. Its impact in the Portfolio's financial statements has not yet been
determined.
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, 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, by court order dated March 10, 2006,
and the remaining count against the Manager and
32 | ACTIVE ALLOCATION FUND
the Transfer Agent was dismissed with prejudice by court order dated April 5,
2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
33 | ACTIVE ALLOCATION FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under
which the Portfolio votes proxies relating to securities ("portfolio proxies")
held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting
Policies and Procedures is available (i) without charge, upon request, by
calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's
website at www.oppenheimerfunds.com, and (iii) on the SEC's website at
www.sec.gov. In addition, the Portfolio 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 Portfolio's voting record is available (i) without
charge, upon request, by calling the Portfolio 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 Portfolio 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 Portfolio'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.
34 | 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 29.3%
U.S. Equity 70.7
Portfolio holdings and allocations are subject to change. Percentages are as of
July 31, 2006, and are based on the total market value of investments in
affiliated companies.
- --------------------------------------------------------------------------------
9 | AGGRESSIVE INVESTOR FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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 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.
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
agreement with the Distributor.
An explanation of the calculation of performance is in the Portfolio's Statement
of Additional Information.
10 | 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 July 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
11 | 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
(2/1/06) (7/31/06) JULY 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $ 970.70 $2.50
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,022.27 2.56
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 966.20 6.46
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,018.25 6.63
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 967.10 6.31
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,018.40 6.48
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 969.80 3.52
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,021.22 3.61
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 972.40 0.24
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,024.55 0.25
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 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding all underlying fund expenses, based on the 6-month period ended July
31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ------------------------------
Class A 0.51%
- ------------------------------
Class B 1.32
- ------------------------------
Class C 1.29
- ------------------------------
Class N 0.72
- ------------------------------
Class Y 0.05
- --------------------------------------------------------------------------------
12 | AGGRESSIVE INVESTOR FUND
STATEMENT OF INVESTMENTS July 31, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--99.6% 1
- -------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY--29.2%
Oppenheimer Developing Markets Fund, Cl. Y 259,714 $ 9,528,877
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund, Cl. Y 582,915 40,151,142
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Opportunities Fund, Cl. Y 249,722 9,327,111
----------------
59,007,130
- -------------------------------------------------------------------------------------------------------------------------
U.S. EQUITY--70.4%
Oppenheimer Capital Appreciation Fund, Cl. Y 920,306 39,186,629
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 803,907 31,175,515
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Opportunity Fund, Cl. Y 1,451,098 20,678,146
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund, Cl. Y 900,093 19,901,065
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 1,278,976 31,488,381
----------------
142,429,736
----------------
Total Investments in Affiliated Companies (Cost $202,001,758) 201,436,866
PRINCIPAL
AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.1%
- -------------------------------------------------------------------------------------------------------------------------
Undivided interest of 0.01% in joint repurchase agreement (Principal
Amount/Value $1,265,611,000, with a maturity value of $1,265,794,514) with UBS
Warburg LLC, 5.22%, dated 7/31/06, to be repurchased at $177,026 on 8/1/06,
collateralized by Federal National Mortgage Assn., 5%-6%, 4/1/35-12/1/35, with
a value of $845,724,461 and Federal Home Loan Mortgage Corp., 5.50%, 5/1/35,
with a value of $448,829,145 (Cost $177,000) $ 177,000 177,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $202,178,758) 99.7% 201,613,866
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 678,843
------------------------------------
NET ASSETS 100.0% $ 202,292,709
====================================
13 | AGGRESSIVE INVESTOR FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Represents ownership of an affiliated fund, at or during the period ended
July 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:
SHARES GROSS GROSS SHARES
JANUARY 31, 2006 ADDITIONS REDUCTIONS JULY 31, 2006
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y 393,164 534,530 7,388 920,306
Oppenheimer Developing Markets Fund, Cl. Y 131,194 147,557 19,037 259,714
Oppenheimer Global Fund, Cl. Y 265,671 327,251 10,007 582,915
Oppenheimer Global Opportunities Fund, Cl. Y 124,676 141,732 16,686 249,722
Oppenheimer Main Street Fund, Cl. Y 347,889 462,376 6,358 803,907
Oppenheimer Main Street Opportunity Fund, Cl. Y 633,885 828,674 11,461 1,451,098
Oppenheimer Main Street Small Cap Fund, Cl. Y 409,733 497,266 6,906 900,093
Oppenheimer Value Fund, Cl. Y 541,824 747,144 9,992 1,278,976
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 39,186,629 $ -- $ (9,047)
Oppenheimer Developing Markets Fund, Cl. Y 9,528,877 -- 11,997
Oppenheimer Global Fund, Cl. Y 40,151,142 -- (6,875)
Oppenheimer Global Opportunities Fund, Cl. Y 9,327,111 -- 6,471
Oppenheimer Main Street Fund, Cl. Y 31,175,515 -- (2,359)
Oppenheimer Main Street Opportunity Fund, Cl. Y 20,678,146 -- (1,768)
Oppenheimer Main Street Small Cap Fund, Cl. Y 19,901,065 -- (4,330)
Oppenheimer Value Fund, Cl. Y 31,488,381 -- (2,438)
--------------------------------------------------
$ 201,436,866 $ -- $ (8,349)
==================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14 | AGGRESSIVE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
July 31, 2006
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Investments, at value - see accompanying statement of investments:
Unaffiliated companies (cost $177,000) $ 177,000
Affiliated companies (cost $202,001,758) 201,436,866
--------------
201,613,866
- -------------------------------------------------------------------------------------------------------------------------
Cash 95,372
- -------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 1,310,354
Interest and dividends 26
Other 2,490
--------------
Total assets 203,022,108
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 343,419
Investments purchased 271,945
Distribution and service plan fees 40,772
Transfer and shareholder servicing agent fees 36,596
Shareholder communications 14,598
Trustees' compensation 4,647
Other 17,422
--------------
Total liabilities 729,399
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 202,292,709
==============
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 18,034
- -------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 202,511,829
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net investment loss (640,217)
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 967,955
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (564,892)
--------------
NET ASSETS $ 202,292,709
==============
15 | AGGRESSIVE INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $104,802,003 and 9,311,008 shares of beneficial interest outstanding) $ 11.26
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $ 11.95
- -------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $37,004,420 and 3,314,426 shares of beneficial interest outstanding) $ 11.16
- -------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $43,450,595 and 3,893,339 shares of beneficial interest outstanding) $ 11.16
- -------------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $15,777,235 and 1,404,030 shares of beneficial interest outstanding) $ 11.24
- -------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $1,258,456 and 111,424 shares of beneficial interest outstanding) $ 11.29
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 | AGGRESSIVE INVESTOR FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 2006
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------
Interest $ 17,472
- -------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 98,998
Class B 146,560
Class C 170,430
Class N 27,289
- -------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 79,375
Class B 35,406
Class C 39,176
Class N 10,140
Class Y 131
- -------------------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 14,857
Class B 7,569
Class C 5,890
Class N 825
- -------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 5,201
- -------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 253
- -------------------------------------------------------------------------------------------------------------------------
Other 15,548
--------------
Total expenses 657,648
- -------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (640,176)
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
- -------------------------------------------------------------------------------------------------------------------------
Net realized loss on investments from affiliated companies (8,349)
- -------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (5,728,784)
- -------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (6,377,309)
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | AGGRESSIVE INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
(UNAUDITED) 2006 1
- --------------------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (640,176) $ 591,687
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (8,349) 1,283,674
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (5,728,784) 5,163,892
-----------------------------------
Net increase (decrease) in net assets resulting from operations (6,377,309) 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 59,837,669 44,717,597
Class B 19,136,637 17,711,412
Class C 24,914,725 18,857,875
Class N 10,644,247 5,289,149
Class Y 573,704 650,857
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Total increase 108,729,673 93,459,036
- --------------------------------------------------------------------------------------------------------------------------
Beginning of period 93,563,036 104,000 2
-----------------------------------
End of period (including accumulated net investment loss
of $640,217 and $41, respectively) $ 202,292,709 $ 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.
18 | AGGRESSIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS A (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.60 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 (.03) .22
Net realized and unrealized gain (loss) (.31) 1.52
------------------------------------
Total from investment operations (.34) 1.74
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.12)
Distributions from net realized gain -- (.02)
------------------------------------
Total dividends and distributions to shareholders -- (.14)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.26 $ 11.60
====================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (2.93)% 17.46%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 104,802 $ 48,132
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 81,423 $ 17,321
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.48)% 2.47%
Total expenses 0.51% 5 0.70% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 0.51% 0.68%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 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:
Six Months Ended July 31, 2006 1.16%
Period Ended January 31, 2006 1.39%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | AGGRESSIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS B (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.55 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 (.07) .16
Net realized and unrealized gain (loss) (.32) 1.50
------------------------------------
Total from investment operations (.39) 1.66
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.09)
Distributions from net realized gain -- (.02)
------------------------------------
Total dividends and distributions to shareholders -- (.11)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.16 $ 11.55
====================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (3.38)% 16.70%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 37,004 $ 19,078
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 29,657 $ 7,050
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (1.29)% 1.83%
Total expenses 1.32% 5 1.53% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 1.32% 1.50%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 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:
Six Months Ended July 31, 2006 1.97%
Period Ended January 31, 2006 2.22%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | AGGRESSIVE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS C (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.54 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 (.07) .15
Net realized and unrealized gain (loss) (.31) 1.51
------------------------------------
Total from investment operations (.38) 1.66
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.10)
Distributions from net realized gain -- (.02)
------------------------------------
Total dividends and distributions to shareholders -- (.12)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.16 $ 11.54
====================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (3.29)% 16.64%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 43,451 $ 20,034
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 34,506 $ 6,131
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (1.26)% 1.71%
Total expenses 1.29% 5 1.48% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 1.29% 1.45%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 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:
Six Months Ended July 31, 2006 1.94%
Period Ended January 31, 2006 2.17%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | AGGRESSIVE INVESTOR FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS N (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.59 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 (.04) .24
Net realized and unrealized gain (loss) (.31) 1.49
------------------------------------
Total from investment operations (.35) 1.73
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.12)
Distributions from net realized gain -- (.02)
------------------------------------
Total dividends and distributions to shareholders -- (.14)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.24 $ 11.59
====================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (3.02)% 17.34%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 15,777 $ 5,608
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 11,070 $ 1,717
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.70)% 2.62%
Total expenses 0.72% 5 0.79% 5
Expenses after waivers and reimbursements and reduction to custodian expenses 0.72% 0.78%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 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:
Six Months Ended July 31, 2006 1.37%
Period Ended January 31, 2006 1.48%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | AGGRESSIVE INVESTOR FUND
SIX MONTHS PERIOD
ENDED ENDED
JULY 31, 2006 JANUARY 31,
CLASS Y (UNAUDITED) 2006 1
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.61 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 -- 3 .24
Net realized and unrealized gain (loss) (.32) 1.52
------------------------------------
Total from investment operations (.32) 1.76
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.13)
Distributions from net realized gain -- (.02)
------------------------------------
Total dividends and distributions to shareholders -- (.15)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.29 $ 11.61
====================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 (2.76)% 17.69%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,259 $ 711
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 968 $ 331
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.03)% 2.67%
Total expenses 0.05% 6 0.30% 6
Expenses after waivers and reimbursements and reduction to custodian expenses 0.05% 0.27%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 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. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on portfolio distributions or the redemption of portfolio shares.
5. Annualized for periods of less than one full year.
6. Expenses including all underlying fund expenses were:
Six Months Ended July 31, 2006 0.70%
Period Ended January 31, 2006 0.99%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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
24 | AGGRESSIVE INVESTOR FUND
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.
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.
As of July 31, 2006, the Portfolio had available for federal income tax
purposes an estimated capital loss carryforward of $8,349 expiring by 2014. This
estimated capital loss carryforward represents carryforward as of the end of the
last fiscal year, increased for
25 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
losses deferred under tax accounting rules to the current fiscal year and is
increased or decreased by capital losses or gains realized in the first six
months of the current fiscal year. During the year ended January 31, 2006, the
Portfolio did not utilize any capital loss carryforward.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Portfolio has adopted an unfunded retirement plan
for the Portfolio's independent trustees. Benefits are based on years of service
and fees paid to each trustee during the years of service. During the six months
ended July 31, 2006, the Portfolio's projected benefit obligations were
increased by $4,301 and no payments were made to retired trustees, resulting in
an accumulated liability of $4,301 as of July 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the
Portfolio. For purposes of determining the amount owed to the Trustee under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Portfolio or in other Oppenheimer funds selected by
the Trustee. The Portfolio purchases shares of the funds selected for deferral
by the Trustee in amounts equal to his or her deemed investment, resulting in a
Portfolio asset equal to the deferred compensation liability. Such assets are
included as a component of "Other" within the asset section of the Statement of
Assets and Liabilities. Deferral of trustees' fees under the plan will not
affect the net assets of the Portfolio, and will not materially affect the
Portfolio's assets, liabilities or net investment income per share. Amounts will
be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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
26 | AGGRESSIVE INVESTOR FUND
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 Portfolio 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:
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 5,711,273 $ 66,109,584 4,307,796 $ 46,498,407
Dividends and/or
distributions reinvested -- -- 38,611 427,037
Redeemed (551,158) (6,271,915) (205,514) (2,207,847)
--------------------------------------------------------------------
Net increase 5,160,115 $ 59,837,669 4,140,893 $ 44,717,597
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 1,893,353 $ 21,779,537 1,712,718 $ 18,374,371
Dividends and/or
distributions reinvested -- -- 13,238 145,879
Redeemed (230,855) (2,642,900) (74,128) (808,838)
--------------------------------------------------------------------
Net increase 1,662,498 $ 19,136,637 1,651,828 $ 17,711,412
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 2,470,923 $ 28,468,275 1,784,313 $ 19,370,332
Dividends and/or
distributions reinvested -- -- 12,844 141,411
Redeemed (313,327) (3,553,550) (61,514) (653,868)
--------------------------------------------------------------------
Net increase 2,157,596 $ 24,914,725 1,735,643 $ 18,857,875
====================================================================
27 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED JULY 31, 2006 PERIOD ENDED JANUARY 31, 2006 1,2
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 1,075,889 $ 12,427,342 536,355 $ 5,884,519
Dividends and/or
distributions reinvested -- -- 3,629 40,096
Redeemed (155,777) (1,783,095) (56,166) (635,466)
--------------------------------------------------------------------
Net increase 920,112 $ 10,644,247 483,818 $ 5,289,149
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 63,918 $ 732,896 69,936 $ 744,994
Dividends and/or
distributions reinvested -- -- 699 7,734
Redeemed (13,716) (159,192) (9,513) (101,871)
--------------------------------------------------------------------
Net increase 50,202 $ 573,704 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 six months ended July 31, 2006, were as
follows:
PURCHASES SALES
-------------------------------------------------------
Investment securities $119,002,711 $3,422,431
- --------------------------------------------------------------------------------
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 six months ended July 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 six months ended July 31, 2006,
the Portfolio paid $139,257 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.
28 | AGGRESSIVE INVESTOR FUND
- --------------------------------------------------------------------------------
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 periods. 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 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 July 31, 2006 for Class B,
Class C and Class N shares were $756,186, $417,895 and $137,321, 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 following table 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
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------
July 31, 2006 $ 421,771 $ -- $ 28,933 $ 4,176 $ 814
29 | AGGRESSIVE INVESTOR FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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. 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Portfolio's tax returns to determine
whether it is "more-likely-than-not" that tax positions taken in the Portfolio's
tax return will be ultimately sustained. A tax liability and expense must be
recorded in respect of any tax position that, in Management's judgment, will not
be fully realized. FIN 48 is effective for fiscal years beginning after December
15, 2006. As of July 31, 2006, the Manager is evaluating the implications of FIN
48. Its impact in the Portfolio's financial statements has not yet been
determined.
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds excluding the Portfolio) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as
30 | AGGRESSIVE INVESTOR FUND
nominal defendants, and against certain present and former Directors, Trustees
and Officers of the funds, and the Distributor, as defendants, were dismissed
with prejudice, by court order dated March 10, 2006, and the remaining count
against the Manager and the Transfer Agent was dismissed with prejudice by court
order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on
May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
31 | AGGRESSIVE INVESTOR FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Portfolio has adopted Portfolio Proxy Voting Policies and Procedures under
which the Portfolio votes proxies relating to securities ("portfolio proxies")
held by the Portfolio. A description of the Portfolio's Portfolio Proxy Voting
Policies and Procedures is available (i) without charge, upon request, by
calling the Portfolio toll-free at 1.800.525.7048, (ii) on the Portfolio's
website at www.oppenheimerfunds.com, and (iii) on the SEC's website at
www.sec.gov. In addition, the Portfolio 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 Portfolio's voting record is available (i) without
charge, upon request, by calling the Portfolio 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 Portfolio 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 Portfolio'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.
32 | AGGRESSIVE INVESTOR FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
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 07/31/2006, 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) Not applicable to semiannual reports.
(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
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: 09/14/2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ JOHN V. MURPHY
---------------------------
John V. Murphy
Principal Executive Officer
Date: 09/14/2006
By: /S/ BRIAN W. WIXTED
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 09/14/2006