UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3864
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OPPENHEIMER BALANCED FUND
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(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: SEPTEMBER 30
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Date of reporting period: 03/31/2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Software 9.1%
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Media 4.7
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Tobacco 4.1
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Oil & Gas 2.7
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Biotechnology 2.7
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Commercial Banks 2.7
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Aerospace & Defense 2.5
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Capital Markets 2.4
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Insurance 2.0
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Pharmaceuticals 1.9
Portfolio holdings and allocations are subject to change. Percentages are as of
March 31, 2007, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Take-Two Interactive Software, Inc. 3.6%
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Microsoft Corp. 2.9
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Altria Group, Inc. 2.8
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UBS AG 2.0
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Liberty Global, Inc., Series A 2.0
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Liberty Global, Inc., Series C 1.9
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Siemens AG, Sponsored ADR 1.8
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Wachovia Corp. 1.7
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Exxon Mobil Corp. 1.4
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Loews Corp./Carolina Group 1.3
Portfolio holdings and allocations are subject to change. Percentages are as of
March 31, 2007, and are based on net assets. For up-to-date Top 10 Fund
holdings, please visit www.oppenheimerfunds.com.
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10 | OPPENHEIMER BALANCED FUND
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PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Stocks 48.6%
Bonds and Notes 44.7
Cash Equivalents 6.7
Portfolio holdings and allocations are subject to change. Percentages are as of
March 31, 2007, and are based on the total market value of investments.
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11 | OPPENHEIMER BALANCED 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 Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE
FUND'S INVESTMENT OBJECTIVES, RISKS AND OTHER CHARGES AND EXPENSES CAREFULLY
BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION
ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US
AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 4/24/87. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 8/29/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 12/1/93. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
12 | OPPENHEIMER BALANCED FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended March 31, 2007.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
13 | OPPENHEIMER BALANCED FUND
FUND EXPENSES
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the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(10/1/06) (3/31/07) MARCH 31, 2007
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Class A Actual $1,000.00 $1,078.70 $ 5.40
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Class A Hypothetical 1,000.00 1,019.75 5.25
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Class B Actual 1,000.00 1,074.10 10.08
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Class B Hypothetical 1,000.00 1,015.26 9.79
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Class C Actual 1,000.00 1,074.00 9.87
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Class C Hypothetical 1,000.00 1,015.46 9.59
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Class N Actual 1,000.00 1,076.80 7.48
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Class N Hypothetical 1,000.00 1,017.75 7.27
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 182/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding indirect expenses from affiliated fund, based on the 6-month period
ended March 31, 2007 are as follows:
CLASS EXPENSE RATIOS
- -------------------------------
Class A 1.04%
- -------------------------------
Class B 1.94
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Class C 1.90
- -------------------------------
Class N 1.44
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager that can be terminated at any time, without advance notice.
The "Financial Highlights" tables in the Fund's financial statements, included
in this report, also show the gross expense ratios, without such waivers or
reimbursements.
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14 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS March 31, 2007 / Unaudited
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VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--52.0%
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CONSUMER DISCRETIONARY--6.5%
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INTERNET & CATALOG RETAIL--1.0%
Liberty Media Holding Corp.-Interactive, Series A 1 440,200 $ 10,485,564
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MEDIA--4.7%
Liberty Global, Inc., Series A 1 635,277 20,919,672
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Liberty Global, Inc., Series C 1 644,261 19,740,157
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Liberty Media Holding Corp.-Capital, Series A 1 81,020 8,960,002
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49,619,831
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SPECIALTY RETAIL--0.8%
Office Depot, Inc. 1 240,900 8,465,226
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CONSUMER STAPLES--5.4%
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BEVERAGES--1.0%
Constellation Brands, Inc., Cl. A 1 185,100 3,920,418
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Diageo plc, Sponsored ADR 85,400 6,913,130
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10,833,548
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FOOD PRODUCTS--0.3%
ConAgra Foods, Inc. 126,100 3,141,151
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TOBACCO--4.1%
Altria Group, Inc. 337,600 29,644,656
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Loews Corp./Carolina Group 185,800 14,048,338
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43,692,994
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ENERGY--3.0%
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ENERGY EQUIPMENT & SERVICES--0.3%
Halliburton Co. 109,000 3,459,660
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OIL & GAS--2.7%
BP plc, ADR 87,800 5,685,050
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Exxon Mobil Corp. 190,200 14,350,590
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Kinder Morgan, Inc. 29,000 3,087,050
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Petroleo Brasileiro SA, ADR 27,900 2,776,329
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Petroleo Brasileiro SA, Preference 129,000 2,888,929
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28,787,948
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FINANCIALS--9.6%
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CAPITAL MARKETS--2.4%
E*TRADE Financial Corp. 1 224,200 4,757,524
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UBS AG 358,040 21,273,495
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26,031,019
15 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
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VALUE
SHARES SEE NOTE 1
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COMMERCIAL BANKS--2.7%
Wachovia Corp. 325,462 $ 17,916,683
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Wells Fargo & Co. 299,900 10,325,557
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28,242,240
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CONSUMER FINANCE--1.5%
American Express Co. 98,400 5,549,760
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Capital One Financial Corp. 136,000 10,262,560
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15,812,320
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DIVERSIFIED FINANCIAL SERVICES--1.0%
Bank of America Corp. 199,354 10,171,041
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INSURANCE--2.0%
Everest Re Group Ltd. 107,100 10,299,807
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Genworth Financial, Inc., Cl. A 141,300 4,937,022
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Platinum Underwriters Holdings Ltd. 179,600 5,761,568
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20,998,397
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HEALTH CARE--6.2%
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BIOTECHNOLOGY--2.7%
Amgen, Inc. 1,2 126,000 7,040,880
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deCODE genetics, Inc. 1 340,500 1,242,825
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Human Genome Sciences, Inc. 1 464,000 4,927,680
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MedImmune, Inc. 1 113,400 4,126,626
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Vanda Pharmaceuticals, Inc. 1 457,200 11,137,392
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28,475,403
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HEALTH CARE EQUIPMENT & SUPPLIES--0.9%
Beckman Coulter, Inc. 88,400 5,647,876
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Boston Scientific Corp. 1 261,100 3,796,394
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9,444,270
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HEALTH CARE PROVIDERS & SERVICES--0.7%
WellPoint, Inc. 1 98,400 7,980,240
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PHARMACEUTICALS--1.9%
Medicines Co. (The) 1 107,200 2,688,576
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Novartis AG, ADR 143,500 7,839,405
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Sanofi-Aventis SA, ADR 213,000 9,267,630
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19,795,611
16 | OPPENHEIMER BALANCED FUND
VALUE
SHARES SEE NOTE 1
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INDUSTRIALS--4.6%
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AEROSPACE & DEFENSE--2.5%
Boeing Co. 58,700 $ 5,219,017
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Empresa Brasileira de Aeronautica SA, ADR 61,200 2,806,632
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Orbital Sciences Corp. 1 274,417 5,142,575
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Spirit Aerosystems Holdings, Inc., Cl. A 1 88,070 2,805,030
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United Technologies Corp. 170,500 11,082,500
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27,055,754
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INDUSTRIAL CONGLOMERATES--1.8%
Siemens AG, Sponsored ADR 175,200 18,781,440
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MACHINERY--0.3%
Navistar International Corp. 1 76,600 3,504,450
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INFORMATION TECHNOLOGY--13.2%
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COMMUNICATIONS EQUIPMENT--1.2%
Cisco Systems, Inc. 1 288,000 7,352,640
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Juniper Networks, Inc. 1 131,800 2,593,824
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QUALCOMM, Inc. 60,400 2,576,664
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12,523,128
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COMPUTERS & PERIPHERALS--0.9%
Hutchinson Technology, Inc. 1 158,200 3,693,970
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International Business Machines Corp. 63,200 5,957,232
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9,651,202
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INTERNET SOFTWARE & SERVICES--1.0%
eBay, Inc. 1 227,300 7,534,995
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Yahoo!, Inc. 1 94,700 2,963,163
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10,498,158
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.0%
Texas Instruments, Inc. 339,800 10,227,980
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SOFTWARE--9.1%
Compuware Corp. 1 678,929 6,443,036
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Microsoft Corp. 1,105,400 30,807,498
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Novell, Inc. 1 1,049,500 7,577,390
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Synopsys, Inc. 1 502,100 13,170,083
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Take-Two Interactive Software, Inc. 1 1,911,047 38,488,487
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96,486,494
17 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
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VALUE
SHARES SEE NOTE 1
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MATERIALS--1.4%
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CONSTRUCTION MATERIALS--1.0%
Martin Marietta Materials, Inc. 27,300 $ 3,690,960
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Texas Industries, Inc. 41,900 3,164,707
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Vulcan Materials Co. 29,900 3,482,752
----------------
10,338,419
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METALS & MINING--0.4%
Companhia Vale do Rio Doce, Sponsored ADR 136,200 4,260,336
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UTILITIES--2.1%
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ELECTRIC UTILITIES--0.7%
Reliant Energy, Inc. 1 375,600 7,632,192
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ENERGY TRADERS--1.4%
AES Corp. (The) 1 539,700 11,614,344
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Dynegy, Inc. 1 321,400 2,976,164
----------------
14,590,508
----------------
Total Common Stocks (Cost $418,419,087) 550,986,524
UNITS
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RIGHTS, WARRANTS AND CERTIFICATES--0.0%
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Lucent Technologies, Inc. Wts., Exp. 12/10/07 1 (Cost $0) 11,758 1,117
PRINCIPAL
AMOUNT
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ASSET-BACKED SECURITIES--3.6%
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Ace Securities Corp. Home Equity Loan Trust, Asset-Backed Pass-Through
Certificates, Series 2005-HE7, Cl. A2B, 5.50%, 11/25/35 3 $ 890,000 890,784
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Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 5.38%, 4/20/08 3 630,000 630,285
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Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates,
Series 2004-W8, Cl. A2, 5.80%, 5/25/34 3 2,262,764 2,271,482
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Argent Securities Trust 2006-W5, Asset-Backed Pass-Through Certificates,
Series 2006-W5, Cl. A2B, 5.42%, 5/26/36 3 1,250,000 1,249,586
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Capital Auto Receivables Asset Trust 2004-2, Automobile Asset-Backed
Securities, Series 2004-2, Cl. A3, 3.58%, 1/15/09 2,140,000 2,124,629
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Centex Home Equity Loan Trust 2005-D, Asset-Backed Certificates:
Series 2005-D, Cl. AF1, 5.04%, 10/25/35 148,710 148,232
Series 2005-D, Cl. AV2, 5.59%, 10/25/35 3 1,707,998 1,709,352
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Centex Home Equity Loan Trust 2006-A, Asset-Backed Certificates,
Series 2006-A, Cl. AV2, 5.42%, 5/16/36 3 1,570,000 1,570,362
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Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.,
Series 2003-C4, Cl. C4, 5%, 6/10/15 310,000 303,066
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Citigroup Mortgage Loan Trust 2005-WF2, Asset-Backed Pass-Through
Certificates, Series 2005-WF2, Cl. AF2, 4.922%, 8/25/35 3 889,924 884,005
18 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES Continued
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CWABS Asset-Backed Certificates Trust 2002-4, Asset-Backed Certificates,
Series 2002-4, Cl. A1, 6.06%, 2/25/33 3 $ 31,485 $ 31,514
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CWABS Asset-Backed Certificates Trust 2005-16, Asset-Backed Certificates,
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/36 3 1,700,000 1,694,941
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CWABS Asset-Backed Certificates Trust 2005-17, Asset-Backed Certificates:
Series 2005-17, Cl. 1AF1, 5.52%, 5/25/36 3 500,460 500,801
Series 2005-17, Cl. 1AF2, 5.363%, 5/25/36 3 420,000 418,684
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CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates,
Series 2006-25, Cl. 2A2, 5.44%, 12/25/29 3 920,000 919,790
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First Franklin Mortgage Loan Trust 2005-FF10, Mtg. Pass-Through
Certificates, Series 2005-FF10, Cl. A3, 5.53%, 11/25/35 3 2,600,000 2,602,330
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First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through
Certificates, Series 2006-FF10, Cl. A3, 5.41%, 7/25/36 3 1,230,000 1,230,008
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First Franklin Mortgage Loan Trust 2006-FF5, Mtg. Pass-Through
Certificates, Series 2006-FF5, Cl. 2A1, 5.37%, 5/15/36 3 529,242 529,595
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First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through
Certificates, Series 2006-FF9, Cl. 2A2, 5.43%, 7/7/36 3 620,000 620,144
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Ford Credit Auto Owner Trust, Automobile Loan Pass-Through
Certificates, Series 2005-A, Cl. A3, 3.48%, 11/17/08 575,614 573,091
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Household Home Equity Loan Trust, Home Equity Loan Pass-Through
Certificates:
Series 2005-3, Cl. A1, 5.58%, 1/20/35 3 759,089 759,232
Series 2006-4, Cl. A2V, 5.43%, 3/20/36 3,4 340,000 339,932
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Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-2, Cl. 2A1B,
5.18%, 8/25/35 3 848,527 845,412
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Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 4 461,608 464,202
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MBNA Credit Card Master Note Trust, Credit Card Receivables,
Series 2003-C7, Cl. C7, 6.67%, 3/15/16 3 2,900,000 3,056,990
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Morgan Stanley ABS Capital I, Mtg. Pass-Through Certificates,
Series 2005-WMC6, Cl. A2B, 5.58%, 7/25/35 3 790,000 791,162
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Option One Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-2, Cl. 2A2, 5.42%, 7/1/36 3 2,060,000 2,060,129
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Popular ABS Mortgage Pass-Through Trust 2005-2, Mtg. Pass-Through
Certificates, Series 2005-2, Cl. AF2, 4.415%, 4/25/35 3 690,510 686,378
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RAMP Series 2004-RS7 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2004-RS7, Cl. AI32, 4.45%, 7/25/28 675,606 671,586
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RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-RS4, Cl. A1, 5.40%, 7/25/36 3 554,278 554,623
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RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-KS7, Cl. A2, 5.42%, 9/25/36 3 1,500,000 1,500,118
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Specialty Underwriting & Residential Finance Trust, Home Equity
Asset-Backed Obligations, Series 2005-BC3, Cl. A2B, 5.57%, 6/25/36 3 2,670,000 2,675,599
19 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates,
Series 2006-2, Cl. A1, 5.38%, 4/25/36 3 $ 467,074 $ 467,254
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Structured Asset Securities Corp., Mtg. Pass-Through Certificates,
Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 1,344,190 1,341,926
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Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust,
Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 5.42%, 7/25/36 3 1,230,000 1,229,749
----------------
Total Asset-Backed Securities (Cost $38,375,970) 38,346,973
- ------------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--27.5%
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--23.2%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--23.0%
Federal Home Loan Mortgage Corp.:
4.50%, 5/1/18-5/1/19 7,111,030 6,899,628
5%, 8/1/33 521,143 505,141
5%, 4/1/37 5 5,190,000 5,016,457
6%, 4/1/17-9/1/24 1,497,788 1,521,816
6.50%, 4/1/18-4/1/34 5,064,437 5,202,512
7%, 5/1/29-11/1/32 3,247,345 3,375,967
8%, 4/1/16 53,370 56,296
9%, 8/1/22-5/1/25 15,838 16,996
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Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate Mtg.
Investment Conduit Multiclass Pass-Through Certificates:
Series 2006-11, Cl. PS, 5.06%, 3/25/36 3 747,432 749,586
Series 2034, Cl. Z, 6.50%, 2/15/28 432,270 443,867
Series 2043, Cl. ZP, 6.50%, 4/15/28 1,246,300 1,284,368
Series 2053, Cl. Z, 6.50%, 4/15/28 469,091 480,952
Series 2055, Cl. ZM, 6.50%, 5/15/28 620,659 632,865
Series 2075, Cl. D, 6.50%, 8/15/28 1,485,566 1,522,793
Series 2080, Cl. Z, 6.50%, 8/15/28 933,097 956,490
Series 2387, Cl. PD, 6%, 4/15/30 147,892 147,988
Series 2427, Cl. ZM, 6.50%, 3/15/32 1,667,191 1,715,862
Series 2500, Cl. FD, 5.82%, 3/15/32 3 189,106 191,021
Series 2526, Cl. FE, 5.72%, 6/15/29 3 271,665 274,213
Series 2551, Cl. FD, 5.72%, 1/15/33 3 211,955 214,004
Series 2583, Cl. KA, 5.50%, 3/15/22 199,756 199,473
Series 3025, Cl. SJ, 5.243%, 8/15/35 3 164,450 167,377
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Federal Home Loan Mortgage Corp., CMO Pass-Through Participation
Certificates, Series 151, Cl. F, 9%, 5/15/21 36,115 36,024
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Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 176, Cl. IO, 12.588%, 6/1/26 6 375,789 82,514
Series 183, Cl. IO, 9.522%, 4/1/27 6 578,234 132,542
Series 184, Cl. IO, 15.339%, 12/1/26 6 631,904 140,555
20 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security: Continued
Series 192, Cl. IO, 13.82%, 2/1/28 6 $ 182,160 $ 43,279
Series 200, Cl. IO, 12.169%, 1/1/29 6 215,100 47,991
Series 2003-118, Cl. S, 8.772%, 12/25/33 6 3,340,334 398,380
Series 2005-87, Cl. SG, 9.456%, 10/25/35 6 5,506,188 328,413
Series 2130, Cl. SC, (2.461)%, 3/15/29 6 475,738 37,315
Series 216, Cl. IO, 12.223%, 12/1/31 6 408,106 87,987
Series 224, Cl. IO, 7.682%, 3/1/33 6 1,259,362 282,504
Series 243, Cl. 6, 26.368%, 12/15/32 6 788,931 178,947
Series 2796, Cl. SD, 0.711%, 7/15/26 6 704,778 59,852
Series 2802, Cl. AS, 1.619%, 4/15/33 6 1,286,292 76,129
Series 2920, Cl. S, (4.183)%, 1/15/35 6 3,994,397 189,174
Series 3000, Cl. SE, (3.921)%, 7/15/25 6 4,128,075 160,289
Series 3110, Cl. SL, 4.408%, 2/15/26 6 668,623 23,686
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed
Security, Series 176, Cl. PO, 4.608%, 6/1/26 7 159,650 130,389
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 5/1/18-12/1/20 22,315,245 21,645,974
5%, 12/1/17-3/1/34 35,832,243 35,104,283
5%, 12/1/17-4/1/22 5 19,337,154 19,094,721
5.50%, 2/1/33-11/1/34 9,475,130 9,400,326
5.50%, 4/1/22-4/1/37 5 30,103,000 29,870,514
6%, 11/1/29-11/1/33 16,953,291 17,136,876
6%, 4/1/21 5 13,610,000 13,835,409
6.50%, 6/1/17-11/1/31 11,818,341 12,165,702
7%, 11/1/17-1/1/35 4,774,247 4,960,263
7.50%, 1/1/08-1/1/33 509,345 534,080
8.50%, 7/1/32 30,301 32,669
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, CMO, Trust 2002-T1,
Cl. A2, 7%, 11/25/31 1,352,963 1,396,107
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1992-15, Cl. KZ, 7%, 2/25/22 84,133 84,889
Trust 1993-215, Cl. ZQ, 6.50%, 11/25/23 1,447,516 1,485,149
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 1,155,084 1,188,631
Trust 1996-35, Cl. Z, 7%, 7/25/26 209,461 216,321
Trust 1998-61, Cl. PL, 6%, 11/25/28 715,308 728,359
Trust 2001-44, Cl. QC, 6%, 9/25/16 2,196,859 2,236,270
Trust 2001-50, Cl. NE, 6%, 8/25/30 95,397 95,564
Trust 2001-51, Cl. OD, 6.50%, 10/25/31 1,630,028 1,669,924
Trust 2001-70, Cl. LR, 6%, 9/25/30 194,624 194,643
Trust 2001-72, Cl. NH, 6%, 4/25/30 21,729 21,678
Trust 2001-74, Cl. PD, 6%, 5/25/30 17,155 17,107
Trust 2001-82, Cl. ZA, 6.50%, 1/25/32 656,268 679,701
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 630,000 619,457
Trust 2003-28, Cl. KG, 5.50%, 4/25/23 1,045,000 1,034,020
Trust 2003-84, Cl. PW, 3%, 6/25/22 1,218,018 1,200,889
Trust 2004-101, Cl. BG, 5%, 1/25/20 1,869,000 1,839,209
21 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates: Continued
Trust 2005-71, Cl. DB, 4.50%, 8/25/25 $ 160,000 $ 149,343
Trust 2006-24, Cl. DB, 5.50%, 4/25/26 4,010,000 4,009,296
Trust 2006-44, Cl. OA, 5.50%, 12/25/26 3,100,000 3,108,172
Trust 2006-46, Cl. SW, 4.693%, 6/25/36 3 586,737 577,386
Trust 2006-50, Cl. KS, 4.693%, 6/25/36 3 1,469,138 1,434,030
Trust 2006-50, Cl. SA, 4.693%, 6/25/36 3 481,205 469,644
Trust 2006-50, Cl. SK, 4.693%, 6/25/36 3 1,346,903 1,310,959
Trust 2006-57, Cl. PA, 5.50%, 8/25/27 3,912,156 3,920,705
Trust 2006-64, Cl. MD, 5.50%, 7/25/36 5,101,000 5,015,738
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security:
Trust 1993-223, Cl. PM, 3.376%, 10/25/23 6 35,435 2,521
Trust 2001-65, Cl. S, 8.584%, 11/25/31 6 1,890,393 189,672
Trust 2001-81, Cl. S, 0.039%, 1/25/32 6 407,856 39,738
Trust 2002-38, Cl. IO, (5.061)%, 4/25/32 6 683,700 39,645
Trust 2002-47, Cl. NS, (0.935)%, 4/25/32 6 798,062 75,257
Trust 2002-51, Cl. S, (0.812)%, 8/25/32 6 732,799 69,088
Trust 2002-52, Cl. SD, (3.377)%, 9/25/32 6 842,142 70,789
Trust 2002-77, Cl. IS, (0.108)%, 12/18/32 6 1,164,822 106,333
Trust 2002-77, Cl. SH, 0.542%, 12/18/32 6 530,088 52,167
Trust 2002-9, Cl. MS, (0.119)%, 3/25/32 6 553,501 54,174
Trust 2002-96, Cl. SK, 9.692%, 4/25/32 6 4,953,140 557,621
Trust 2003-33, Cl. SP, 9.60%, 5/25/33 6 1,915,756 242,277
Trust 2003-4, Cl. S, 7.118%, 2/25/33 6 1,028,316 119,855
Trust 2003-46, Cl. IH, 6.682%, 6/25/33 6 6,812,671 1,381,674
Trust 2004-54, Cl. DS, (7.098)%, 11/25/30 6 761,734 46,189
Trust 2005-19, Cl. SA, (4.005)%, 3/25/35 6 10,555,438 547,770
Trust 2005-40, Cl. SA, (4.202)%, 5/25/35 6 2,279,285 111,827
Trust 2005-6, Cl. SE, (3.377)%, 2/25/35 6 2,794,777 143,272
Trust 2005-71, Cl. SA, 3.218%, 8/25/25 6 2,603,765 152,174
Trust 2006-33, Cl. SP, 12.499%, 5/25/36 6 5,962,649 513,579
Trust 214, Cl. 2, 16.026%, 3/1/23 6 1,006,930 236,875
Trust 222, Cl. 2, 11.57%, 6/1/23 6 1,336,710 297,368
Trust 240, Cl. 2, 15.911%, 9/1/23 6 2,087,253 484,563
Trust 247, Cl. 2, 13.477%, 10/1/23 6 270,213 70,347
Trust 252, Cl. 2, 10.439%, 11/1/23 6 987,237 234,971
Trust 273, Cl. 2, 11.268%, 8/1/26 6 277,820 61,199
Trust 319, Cl. 2, 9.72%, 2/1/32 6 396,764 93,425
Trust 321, Cl. 2, 5.323%, 4/1/32 6 4,063,741 957,550
Trust 329, Cl. 2, 8.73%, 1/1/33 6 1,066,280 244,741
Trust 331, Cl. 9, 8.781%, 2/1/33 6 136,445 31,356
Trust 334, Cl. 17, 23.434%, 2/1/33 6 657,815 161,298
Trust 342, Cl. 2, 9.072%, 9/1/33 6 1,194,628 275,123
Trust 344, Cl. 2, 4.563%, 12/1/33 6 1,402,637 321,907
Trust 346, Cl. 2, 11.829%, 12/1/33 6 2,357,243 538,337
Trust 350, Cl. 2, 10.052%, 3/1/34 6 1,797,206 410,679
Trust 362, Cl. 12, 5.572%, 8/1/35 6 5,680,786 1,265,686
Trust 362, Cl. 13, 5.607%, 8/1/35 6 3,155,651 694,198
22 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M, 6.044%, 9/25/23 7 $ 471,625 $ 382,652
----------------
243,773,547
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.2%
Government National Mortgage Assn.:
5.375%, 3/20/26 3 24,919 25,220
7%, 4/15/09-4/15/26 246,672 257,439
7.50%, 3/15/09-5/15/27 916,028 956,323
8%, 5/15/17 36,339 38,380
8.50%, 8/15/17-12/15/17 22,483 23,921
- ------------------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, (3.666)%, 1/16/27 6 980,318 69,765
Series 2002-15, Cl. SM, (6.848)%, 2/16/32 6 772,568 55,247
Series 2002-76, Cl. SY, (3.668)%, 12/16/26 6 1,876,030 157,416
Series 2004-11, Cl. SM, (6.588)%, 1/17/30 6 654,045 47,783
----------------
1,631,494
- ------------------------------------------------------------------------------------------------------------------------------------
NON-AGENCY--4.3%
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--3.9%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through
Certificates, Series 2005-3, Cl. A2, 4.501%, 7/10/43 1,810,000 1,778,048
- ------------------------------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., CMO Pass-Through Certificates,
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 1,224,552 1,246,871
- ------------------------------------------------------------------------------------------------------------------------------------
Banc of America Mortgage Securities, Inc., CMO Pass-Through Certificates:
Series 2005-E, Cl. 2A2, 4.972%, 6/25/35 3 57,210 57,164
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 1,030,417 1,041,365
- ------------------------------------------------------------------------------------------------------------------------------------
ChaseFlex Trust 2006-2, Multiclass Mtg. Pass-Through Certificates,
Series 2006-2, Cl. A1B, 5.42%, 8/25/08 3,4 815,816 816,544
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust 2006-WF1, Asset-Backed Pass-Through
Certificates, Series 2006-WF1, Cl. A2B, 5.536%, 3/1/36 460,000 458,734
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial Mortgage Trust, Commercial Mtg.
Obligations, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49 2,150,000 2,160,750
- ------------------------------------------------------------------------------------------------------------------------------------
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg. Pass-Through
Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36 1,659,629 1,655,195
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36 2,163,910 2,168,069
Series 2006-AB3, Cl. A7, 6.36%, 4/25/08 518,044 518,495
- ------------------------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates,
Series 1998-C2, Cl. A2, 6.56%, 11/18/35 676,288 682,141
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 960,000 946,555
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 1,080,000 1,072,487
23 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 $ 195,677 $ 195,678
- ------------------------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates:
Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 1,520,000 1,491,635
Series 2005-GG5, Cl. A2, 5.117%, 4/10/37 1,200,000 1,201,129
Series 2007-GG9, Cl. A2, 5.381%, 7/10/12 4 1,600,000 1,613,132
- ------------------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates:
Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 440,000 433,260
Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 1,560,000 1,544,336
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49 410,000 410,832
- ------------------------------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg. Pass-Through
Certificates:
Series 2005-C5, Cl. A2, 4.885%, 9/15/30 1,280,000 1,274,041
Series 2007-C1, Cl. A2, 5.318%, 1/15/12 1,780,000 1,793,698
- ------------------------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, CMO Pass-Through Certificates:
Series 2004-9, Cl. A3, 4.70%, 8/25/34 3 1,423,088 1,411,210
Series 2004-6, Cl. 10A1, 6%, 7/25/34 1,621,939 1,621,681
- ------------------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 2,221,548 2,241,872
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 1,554,000 1,654,524
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2003-QS1, Cl. A2, 5.75%, 1/25/33 813,032 813,230
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-QS13, Cl. 1A8, 6%, 9/25/36 1,894,210 1,890,341
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2006-QS5 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-QS5, Cl. 2A2, 6%, 4/25/08 2,015,355 2,010,735
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust 2006-A9CB, CMO Pass-Through
Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36 2,338,836 2,332,830
- ------------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2005-C17, Commercial Mtg.
Obligations, Series 2005-C17, Cl. A2, 4.782%, 3/15/42 2,490,000 2,467,728
- ------------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial
Asset-Backed Securities, Series 2006-C29, Cl. A2, 5.272%, 11/15/48 492,000 494,024
- ------------------------------------------------------------------------------------------------------------------------------------
WAMU Mortgage Pass-Through Certificates, Series 2005-AR5 Trust,
Series 2005-AR5, Cl. A1, 4.675%, 5/25/35 3 423,049 422,706
----------------
41,921,040
24 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.4%
Countrywide Alternative Loan Trust, CMO:
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 $ 2,521,813 $ 2,556,488
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 1,414,250 1,444,047
----------------
4,000,535
----------------
Total Mortgage-Backed Obligations (Cost $291,319,126) 291,326,616
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--3.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Fannie Mae Unsec. Nts., 3.69%, 10/5/07 8,9 1,245,000 1,212,377
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Unsec. Bonds, 3.50%, 11/15/07 1,160,000 1,148,163
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
4.25%, 7/15/07 9 2,555,000 2,547,708
6%, 5/15/11 9 2,305,000 2,405,599
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
4.50%, 2/15/36 9 5,178,000 4,883,506
8.875%, 8/15/17 9,10 790,000 1,056,625
STRIPS, 4.96%, 2/15/16 8 171,000 113,253
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
3.875%, 2/15/13 2,030,000 1,961,408
4.625%, 10/31/11-2/29/12 6,091,000 6,114,365
4.625%, 12/31/11-2/15/17 9 4,896,000 4,894,336
4.75%, 2/28/09-2/15/10 3,252,000 3,271,003
4.75%, 1/31/12 9 3,822,000 3,856,490
----------------
Total U.S. Government Obligations (Cost $33,333,206) 33,464,833
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--13.4%
- ------------------------------------------------------------------------------------------------------------------------------------
ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93 500,000 556,814
- ------------------------------------------------------------------------------------------------------------------------------------
Albertson's, Inc., 8% Sr. Unsec. Debs., 5/1/31 1,645,000 1,684,774
- ------------------------------------------------------------------------------------------------------------------------------------
Barclays Bank plc, 6.278% Perpetual Bonds 11 3,530,000 3,399,284
- ------------------------------------------------------------------------------------------------------------------------------------
Beazer Homes USA, Inc., 6.875% Sr. Unsec. Nts., 7/15/15 1,025,000 919,938
- ------------------------------------------------------------------------------------------------------------------------------------
Belo Corp., 8% Sr. Unsec. Unsub. Nts., 11/1/08 1,355,000 1,405,453
- ------------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc, 8.20% Sr. Unsec. Nts., 7/15/09 1,255,000 1,335,134
- ------------------------------------------------------------------------------------------------------------------------------------
Caesars Entertainment, Inc., 7.50% Sr. Unsec. Nts., 9/1/09 4 2,240,000 2,342,084
- ------------------------------------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10 1,955,000 2,065,219
- ------------------------------------------------------------------------------------------------------------------------------------
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09 395,000 395,805
- ------------------------------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 1,530,000 1,585,845
- ------------------------------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11 1,425,000 1,419,343
- ------------------------------------------------------------------------------------------------------------------------------------
Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93 440,000 533,563
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 6.45% Unsec. Nts., 3/15/37 2,050,000 2,059,127
- ------------------------------------------------------------------------------------------------------------------------------------
Cox Enterprises, Inc., 4.375% Nts., 5/1/08 12 2,095,000 2,062,825
- ------------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.25% Sr. Unsec. Nts., 7/15/08 677,000 689,694
25 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc.:
5.375% Sr. Unsec. Nts., 6/15/12 $ 1,265,000 $ 1,218,291
6.125% Nts., 1/15/14 895,000 879,461
8% Sr. Nts., 2/1/09 700,000 726,285
- ------------------------------------------------------------------------------------------------------------------------------------
DaimlerChrysler North America Holding Corp.:
5.69% Nts., Series E, 3/13/09 3 780,000 781,787
7.30% Nts., 1/15/12 1,955,000 2,112,434
- ------------------------------------------------------------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 1,285,000 1,550,379
- ------------------------------------------------------------------------------------------------------------------------------------
Dillard's, Inc., 6.625% Unsec. Nts., 11/15/08 4 535,000 542,356
- ------------------------------------------------------------------------------------------------------------------------------------
Duke Energy Field Services Corp., 6.875% Sr. Unsec. Nts., 2/1/11 1,455,000 1,532,540
- ------------------------------------------------------------------------------------------------------------------------------------
Earthgrains Co. (The), 6.50% Nts., 4/15/09 645,000 657,539
- ------------------------------------------------------------------------------------------------------------------------------------
Eastman Kodak Co., 3.625% Nts., Series A, 5/15/08 244,000 237,900
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 5.75% Sr. Unsec. Nts., 10/1/08 2,530,000 2,539,488
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Corp., 6.50% Sr. Unsec. Nts., 6/1/08 390,000 394,875
- ------------------------------------------------------------------------------------------------------------------------------------
Enbridge Energy Partners LP, 5.95% Sr. Unsec. Nts., Series B, 6/1/33 525,000 492,234
- ------------------------------------------------------------------------------------------------------------------------------------
Enterprise Products Operating LP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11 915,000 982,076
- ------------------------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp., 7.375% Sr. Unsub. Nts., Series C, 11/15/31 770,000 877,416
- ------------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 9.75% Sr. Unsec. Nts., 9/15/10 12 3,780,000 3,984,528
- ------------------------------------------------------------------------------------------------------------------------------------
Gap, Inc. (The):
6.90% Nts., 9/15/07 1,870,000 1,890,103
9.445% Unsub. Nts., 12/15/08 3 228,000 243,849
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Bonds, 11/1/31 1,670,000 1,795,469
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34 2,070,000 2,051,349
- ------------------------------------------------------------------------------------------------------------------------------------
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A 11,12 3,400,000 3,333,088
- ------------------------------------------------------------------------------------------------------------------------------------
HCA, Inc., 8.75% Sr. Nts., 9/1/10 980,000 1,030,225
- ------------------------------------------------------------------------------------------------------------------------------------
Heinz (H.J.) Co., 6.428% Bonds, 12/1/08 12 290,000 295,126
- ------------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 8.25% Sr. Unsec. Nts., 2/15/11 4 1,480,000 1,600,250
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/35 3 3,000,000 2,982,894
- ------------------------------------------------------------------------------------------------------------------------------------
Hyatt Equities LLC, 6.875% Nts., 6/15/07 12 1,955,000 1,958,441
- ------------------------------------------------------------------------------------------------------------------------------------
Hyundai Motor Manufacturing Alabama LLC, 5.30% Sr. Unsec. Nts., 12/19/08 12 1,140,000 1,139,204
- ------------------------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 3 920,000 954,500
- ------------------------------------------------------------------------------------------------------------------------------------
iStar Financial, Inc., 5.15% Sr. Unsec. Nts., 3/1/12 2,090,000 2,052,405
- ------------------------------------------------------------------------------------------------------------------------------------
J.C. Penney Co., Inc., 9% Nts., 8/1/12 525,000 605,231
- ------------------------------------------------------------------------------------------------------------------------------------
K. Hovnanian Enterprises, Inc., 6.50% Sr. Nts., 1/15/14 225,000 202,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kaneb Pipe Line Operating Partnership LP:
5.875% Sr. Unsec. Nts., 6/1/13 1,630,000 1,653,322
7.75% Sr. Unsec. Nts., 2/15/12 190,000 207,882
- ------------------------------------------------------------------------------------------------------------------------------------
KB Home, 5.75% Sr. Unsec. Unsub. Nts., 2/1/14 1,820,000 1,636,058
- ------------------------------------------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners LP, 7.30% Sr. Unsec. Nts., 8/15/33 1,810,000 1,961,122
- ------------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 5.50% Unsec. Unsub. Nts., 2/1/13 2,075,000 2,071,248
26 | OPPENHEIMER BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Lennar Corp., 7.625% Sr. Unsec. Nts., 3/1/09 $ 1,915,000 $ 1,989,771
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 7.875% Sr. Nts., 7/15/09 610,000 643,001
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Media LLC, 7.75% Sr. Nts., 7/15/09 1,825,000 1,919,311
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Brands, Inc., 6.125% Sr. Unsec. Nts., 12/1/12 1,675,000 1,703,607
- ------------------------------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc.:
5.875% Sr. Unsec. Bonds, 8/1/33 1,300,000 1,191,206
7.125% Sr. Unsec. Nts., 6/15/09 1,170,000 1,214,152
- ------------------------------------------------------------------------------------------------------------------------------------
May Department Stores Co., 7.90% Unsec. Debs., 10/15/07 715,000 722,696
- ------------------------------------------------------------------------------------------------------------------------------------
MBIA, Inc., 5.70% Sr. Unsec. Unsub. Nts., 12/1/34 1,100,000 1,056,804
- ------------------------------------------------------------------------------------------------------------------------------------
MGM Mirage, Inc., 6% Sr. Sec. Nts., 10/1/09 2,435,000 2,450,219
- ------------------------------------------------------------------------------------------------------------------------------------
Mission Energy Holding Co., 13.50% Sr. Sec. Nts., 7/15/08 2,005,000 2,195,475
- ------------------------------------------------------------------------------------------------------------------------------------
Monongahela Power Co., 7.36% Unsec. Nts., Series A, 1/15/10 1,325,000 1,395,915
- ------------------------------------------------------------------------------------------------------------------------------------
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09 195,000 200,729
- ------------------------------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 7.875% Unsec. Unsub. Nts., 2/1/09 2,950,000 3,082,750
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV, 4.623% Sr. Nts., Cl. A1, 6/15/10 12 2,247,556 2,225,004
- ------------------------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 12 511,173 482,565
- ------------------------------------------------------------------------------------------------------------------------------------
Popular North America, Inc., 4.70% Nts., 6/30/09 2,540,000 2,508,814
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 12 2,520,000 3,180,442
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 2,140,000 2,682,083
- ------------------------------------------------------------------------------------------------------------------------------------
PSEG Funding Trust I, 5.381% Nts., 11/16/07 1,320,000 1,319,030
- ------------------------------------------------------------------------------------------------------------------------------------
Pulte Homes, Inc., 4.875% Nts., 7/15/09 2,830,000 2,790,125
- ------------------------------------------------------------------------------------------------------------------------------------
Qwest Corp., 5.625% Unsec. Nts., 11/15/08 4 245,000 246,225
- ------------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08 750,000 800,982
- ------------------------------------------------------------------------------------------------------------------------------------
Reed Elsevier Capital, Inc., 4.625% Nts., 6/15/12 865,000 836,576
- ------------------------------------------------------------------------------------------------------------------------------------
Reynolds American, Inc., 6.50% Sr. Sec. Nts., 6/1/07 1,309,000 1,311,712
- ------------------------------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd., 7% Sr. Unsec. Unsub. Nts., 10/15/07 550,000 555,314
- ------------------------------------------------------------------------------------------------------------------------------------
Ryder System, Inc., 5.95% Nts., 5/2/11 515,000 524,934
- ------------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 6.50% Sr. Unsec. Nts., 3/1/11 2,010,000 2,090,117
- ------------------------------------------------------------------------------------------------------------------------------------
Sara Lee Corp., 2.75% Unsec. Nts., 6/15/08 850,000 823,825
- ------------------------------------------------------------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 315,000 315,249
- ------------------------------------------------------------------------------------------------------------------------------------
Telecom Italia Capital SpA, 4% Unsec. Unsub. Nts., 1/15/10 2,590,000 2,503,901
- ------------------------------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.50% Nts., 11/19/08 2,060,000 2,044,911
- ------------------------------------------------------------------------------------------------------------------------------------
Telus Corp., 8% Nts., 6/1/11 1,815,000 1,989,599
- ------------------------------------------------------------------------------------------------------------------------------------
TEPPCO Partners LP:
6.125% Nts., 2/1/13 930,000 949,499
7.625% Sr. Unsec. Nts., 2/15/12 640,000 691,208
- ------------------------------------------------------------------------------------------------------------------------------------
Textron Financial Corp., 6% Jr. Unsec. Sub. Nts., 2/15/67 3,12 1,565,000 1,573,539
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Nts., 7/15/33 865,000 1,054,514
27 | OPPENHEIMER BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Tribune Co., 5.50% Nts., Series E, 10/6/08 $ 1,485,000 $ 1,482,089
- ------------------------------------------------------------------------------------------------------------------------------------
TXU Energy Co., 6.125% Nts., 3/15/08 1,330,000 1,339,434
- ------------------------------------------------------------------------------------------------------------------------------------
TXU Energy Co. LLC, 5.85% Sr. Nts., 9/16/08 3,4 1,865,000 1,865,621
- ------------------------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc.:
3.50% Sr. Unsec. Nts., 10/15/07 1,270,000 1,257,300
3.875% Sr. Unsec. Nts., 10/15/08 590,000 573,775
- ------------------------------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 2,055,000 2,054,268
- ------------------------------------------------------------------------------------------------------------------------------------
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09 1,705,000 1,775,636
- ------------------------------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The), Credit Linked Certificate Trust, 6.75% Nts., 4/15/09 4 2,385,000 2,444,625
- ------------------------------------------------------------------------------------------------------------------------------------
Xerox Corp., 9.75% Sr. Unsec. Nts., 1/15/09 2,950,000 3,178,439
- ------------------------------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 7.70% Sr. Nts., 7/1/12 1,345,000 1,477,678
----------------
Total Non-Convertible Corporate Bonds and Notes (Cost $140,901,494) 142,343,426
SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--6.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E, 5.23% 13,14
(Cost $71,299,875) 71,299,875 71,299,875
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding
Investments Purchased with Cash Collateral
(Cost $993,648,758) 1,127,769,364
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--0.5% 15
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.5%
Undivided interest of 0.14% in joint repurchase agreement (Principal Amount/
Value $3,500,000,000, with a maturity value of $3,501,591,771) with Bank of
America NA, 5.4575%, dated 3/30/07, to be repurchased at $4,994,077 on
4/2/07, collateralized by U.S. Agency Mortgages, 5%-5.50%, 9/1/33-6/1/35,
with a value of $3,570,000,000 (Cost $4,991,807) $ 4,991,807 4,991,807
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $998,640,565) 106.9% 1,132,761,171
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (6.9) (73,582,647)
----------------------------------
NET ASSETS 100.0% $ 1,059,178,524
==================================
28 | OPPENHEIMER BALANCED FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO CALL DATES PRICE RECEIVED SEE NOTE 1
- ------------------------------------------------------------------------------
Amgen, Inc. 159 4/23/07 $ 75 $ 83,552 $ 795
Amgen, Inc. 797 1/21/08 70 272,089 99,625
----------------------
$ 355,641 $ 100,420
======================
3. Represents the current interest rate for a variable or increasing rate
security.
4. Illiquid security. The aggregate value of illiquid securities as of March 31,
2007 was $12,274,971, which represents 1.16% of the Fund's net assets. See Note
10 of accompanying Notes.
5. When-issued security or forward commitment to be delivered and settled after
March 31, 2007. See Note 1 of accompanying Notes.
6. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $13,495,013 or 1.27% of the Fund's net assets
as of March 31, 2007.
7. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $513,041 or 0.05% of the Fund's net assets as of
March 31, 2007.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Partial or fully-loaned security. See Note 11 of accompanying Notes.
10. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures contracts. The aggregate market
value of such securities is $234,063. See Note 6 of accompanying Notes.
11. This bond has no contractual maturity date, is not redeemable and
contractually pays an indefinite stream of interest. Rate reported represents
the current interest rate for this variable rate security.
12. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $20,234,762 or 1.91% of the Fund's net
assets as of March 31, 2007.
13. Rate shown is the 7-day yield as of March 31, 2007.
14. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended March 31, 2007 by virtue of the Fund owning at least
5% of the voting securities of the issuer or as a result of the Fund and the
issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
SEPTEMBER 30, GROSS GROSS MARCH 31,
2006 ADDITIONS REDUCTIONS 2007
- ------------------------------------------------------------------------------------------
Oppenheimer Institutional Money
Market Fund, Cl. E, 5.23% -- 280,569,945 209,270,070 71,299,875
VALUE DIVIDEND
SEE NOTE 1 INCOME
- ------------------------------------------------------------------------------------------
Oppenheimer Institutional Money
Market Fund, Cl. E, 5.23% $ 71,299,875 $ 2,311,682
15. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 11 of
accompanying Notes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
March 31, 2007
- -------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $927,340,690) $ 1,061,461,296
Affiliated companies (cost $71,299,875) 71,299,875
-----------------
1,132,761,171
- -------------------------------------------------------------------------------------------------------------
Cash 187,289
- -------------------------------------------------------------------------------------------------------------
Swaps, at value (premiums received $205,428) 48,518
- -------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $6,174,805 sold on a when-issued basis or forward commitment) 8,163,740
Interest, dividends and principal paydowns 4,452,742
Shares of beneficial interest sold 346,093
Other 68,566
-----------------
Total assets 1,146,028,119
- -------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $355,641)--see accompanying
statement of investments 100,420
- -------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 4,991,807
- -------------------------------------------------------------------------------------------------------------
Swaps, at value (premiums paid $370) 269,307
- -------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $74,144,778 purchased on a when-issued basis
or forward commitment) 79,099,060
Shares of beneficial interest redeemed 1,274,375
Distribution and service plan fees 578,059
Trustees' compensation 204,428
Transfer and shareholder servicing agent fees 123,059
Shareholder communications 103,036
Futures margins 67,144
Other 38,900
-----------------
Total liabilities 86,849,595
- -------------------------------------------------------------------------------------------------------------
NET ASSETS $ 1,059,178,524
=================
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Paid-in capital $ 909,795,435
- -------------------------------------------------------------------------------------------------------------
Accumulated net investment income 5,768,265
- -------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 9,604,463
- -------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 134,010,361
-----------------
NET ASSETS $ 1,059,178,524
=================
30 | OPPENHEIMER BALANCED FUND
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -----------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $846,679,388
and 60,656,619 shares of beneficial interest outstanding) $ 13.96
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $ 14.81
- -----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $95,340,626 and 6,991,134 shares
of beneficial interest outstanding) $ 13.64
- -----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $97,680,900 and 7,126,240 shares
of beneficial interest outstanding) $ 13.71
- -----------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $19,477,610 and 1,410,676 shares
of beneficial interest outstanding) $ 13.81
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER BALANCED FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended March 31, 2007
- -------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------
Interest $ 12,017,215
- -------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $77,509) 3,051,971
Affiliated companies 2,311,682
- -------------------------------------------------------------------------------------------
Portfolio lending fees 227,336
----------------
Total investment income 17,608,204
- -------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------
Management fees 3,558,933
- -------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 895,758
Class B 483,660
Class C 475,660
Class N 44,294
- -------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 518,857
Class B 106,493
Class C 89,674
Class N 20,900
- -------------------------------------------------------------------------------------------
Shareholder communications:
Class A 74,384
Class B 18,029
Class C 10,683
Class N 1,315
- -------------------------------------------------------------------------------------------
Trustees' compensation 49,972
- -------------------------------------------------------------------------------------------
Custodian fees and expenses 6,319
- -------------------------------------------------------------------------------------------
Other 44,613
----------------
Total expenses 6,399,544
Less reduction to custodian expenses (1,645)
Less waivers and reimbursements of expenses (43,865)
----------------
Net expenses 6,354,034
- -------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 11,254,170
32 | OPPENHEIMER BALANCED FUND
- -------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ 18,636,095
Closing and expiration of futures contracts 657,656
Foreign currency transactions 115,482
Swap contracts (202,031)
Net increase from payments by affiliate 2,270
----------------
Net realized gain 19,209,472
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 47,765,058
Translation of assets and liabilities denominated in foreign currencies 307,308
Futures contracts (485,315)
Option contracts written 255,221
Swap contracts (70,812)
----------------
Net change in unrealized appreciation 47,771,460
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 78,235,102
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2007 SEPTEMBER 30,
(UNAUDITED) 2006
- ---------------------------------------------------------------------------------------------
OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income $ 11,254,170 $ 18,884,078
- ---------------------------------------------------------------------------------------------
Net realized gain 19,209,472 69,364,968
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation 47,771,460 (53,167,263)
------------------------------------
Net increase in net assets resulting from operations 78,235,102 35,081,783
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ---------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (10,023,606) (16,011,740)
Class B (743,441) (1,186,200)
Class C (759,184) (1,173,973)
Class N (189,942) (238,509)
------------------------------------
(11,716,173) (18,610,422)
- ---------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (51,176,554) (39,741,174)
Class B (6,078,031) (5,399,948)
Class C (5,885,017) (4,997,038)
Class N (1,116,454) (703,418)
------------------------------------
(64,256,056) (50,841,578)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 33,887,606 111,393,954
Class B (2,797,030) 3,678,115
Class C 4,757,318 8,465,336
Class N 4,593,648 3,576,958
------------------------------------
40,441,542 127,114,363
- ---------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------
Total increase 42,704,415 92,744,146
- ---------------------------------------------------------------------------------------------
Beginning of period 1,016,474,109 923,729,963
------------------------------------
End of period (including accumulated net investment
income of $5,768,265 and $6,230,268, respectively) $ 1,059,178,524 $ 1,016,474,109
====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2007 SEPT. 30,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.94 $ 14.51 $ 13.75 $ 12.55 $ 10.51 $ 12.14
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 1 .30 1 .24 1 .14 .21 .35
Net realized and unrealized gain (loss) .92 .21 1.38 1.16 2.08 (1.29)
----------------------------------------------------------------------------------------
Total from investment operations 1.08 .51 1.62 1.30 2.29 (.94)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.17) (.29) (.16) (.10) (.22) (.31)
Tax return of capital distribution -- -- -- -- (.03) --
Distributions from net realized gain (.89) (.79) (.70) -- -- (.38)
----------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.06) (1.08) (.86) (.10) (.25) (.69)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.96 $ 13.94 $ 14.51 $ 13.75 $ 12.55 $ 10.51
========================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.87% 3.86% 12.13% 10.37% 21.98% (8.58)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 846,679 $ 810,738 $ 725,836 $ 651,754 $ 575,799 $ 483,311
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 839,233 $ 752,163 $ 694,147 $ 631,041 $ 523,477 $ 570,796
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.32% 2.16% 1.69% 1.05% 1.78% 2.84%
Total expenses 1.05% 4 1.06% 1.05% 1.07% 1.11% 1.15%
Expenses after payments and waivers and
reduction to custodian expenses 1.04% 1.06% 1.05% 1.06% 1.11% 1.15%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 5 84% 5 73% 5 61% 5 205% 31%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended March 31, 2007 1.06%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-------------------------------------------------------------------------
Six Months Ended March 31, 2007 $ 420,117,728 $ 434,884,666
Year Ended September 30, 2006 1,329,963,782 1,377,730,782
Year Ended September 30, 2005 2,097,453,846 2,135,377,175
Year Ended September 30, 2004 1,069,526,653 1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2007 SEPT. 30,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.64 $ 14.23 $ 13.53 $ 12.40 $ 10.38 $ 12.01
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10 1 .17 1 .11 1 .02 .09 .25
Net realized and unrealized gain (loss) .90 .20 1.36 1.13 2.07 (1.29)
----------------------------------------------------------------------------------------
Total from investment operations 1.00 .37 1.47 1.15 2.16 (1.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.11) (.17) (.07) (.02) (.11) (.21)
Tax return of capital distribution -- -- -- -- (.03) --
Distributions from net realized gain (.89) (.79) (.70) -- -- (.38)
----------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.00) (.96) (.77) (.02) (.14) (.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.64 $ 13.64 $ 14.23 $ 13.53 $ 12.40 $ 10.38
========================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.41% 2.84% 11.17% 9.26% 20.91% (9.38)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 95,341 $ 98,021 $ 98,271 $ 84,924 $ 64,944 $ 54,757
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 97,199 $ 95,979 $ 92,677 $ 77,082 $ 57,836 $ 64,702
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.42% 1.24% 0.76% 0.11% 0.81% 2.02%
Total expenses 1.95% 4 1.99% 1.98% 2.02% 2.08% 1.97%
Expenses after payments and waivers and
reduction to custodian expenses 1.94% 1.99% 1.98% 2.02% 2.08% 1.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 5 84% 5 73% 5 61% 5 205% 31%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended March 31, 2007 1.96%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-------------------------------------------------------------------------
Six Months Ended March 31, 2007 $ 420,117,728 $ 434,884,666
Year Ended September 30, 2006 1,329,963,782 1,377,730,782
Year Ended September 30, 2005 2,097,453,846 2,135,377,175
Year Ended September 30, 2004 1,069,526,653 1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER BALANCED FUND
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2007 SEPT. 30,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.71 $ 14.29 $ 13.59 $ 12.44 $ 10.42 $ 12.06
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10 1 .18 1 .11 1 .04 .11 .24
Net realized and unrealized gain (loss) .90 .21 1.37 1.13 2.06 (1.29)
-------------------------------------------------------------------------------------
Total from investment operations 1.00 .39 1.48 1.17 2.17 (1.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.11) (.18) (.08) (.02) (.12) (.21)
Tax return of capital distribution -- -- -- -- (.03) --
Distributions from net realized gain (.89) (.79) (.70) -- -- (.38)
-------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.00) (.97) (.78) (.02) (.15) (.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.71 $ 13.71 $ 14.29 $ 13.59 $ 12.44 $ 10.42
=====================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.40% 2.97% 11.18% 9.45% 20.98% (9.41)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 97,681 $ 92,782 $ 87,820 $ 68,018 $ 47,212 $ 33,300
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 95,563 $ 90,567 $ 78,091 $ 60,095 $ 38,407 $ 37,412
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.46% 1.30% 0.83% 0.19% 0.90% 2.03%
Total expenses 1.91% 4 1.93% 1.91% 1.93% 1.98% 1.96%
Expenses after payments and waivers and
reduction to custodian expenses 1.90% 1.92% 1.91% 1.93% 1.98% 1.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 5 84% 5 73% 5 61% 5 205% 31%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended March 31, 2007 1.92%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-------------------------------------------------------------------------
Six Months Ended March 31, 2007 $ 420,117,728 $ 434,884,666
Year Ended September 30, 2006 1,329,963,782 1,377,730,782
Year Ended September 30, 2005 2,097,453,846 2,135,377,175
Year Ended September 30, 2004 1,069,526,653 1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2007 SEPT. 30,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 13.80 $ 14.38 $ 13.65 $ 12.49 $ 10.48 $ 12.13
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .13 1 .24 1 .17 1 .10 .20 .39
Net realized and unrealized gain
(loss) .92 .21 1.38 1.12 2.01 (1.38)
------------------------------------------------------------------------------------------
Total from investment operations 1.05 .45 1.55 1.22 2.21 (.99)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment
income (.15) (.24) (.12) (.06) (.17) (.28)
Tax return of capital
distribution -- -- -- -- (.03) --
Distributions from net realized
gain (.89) (.79) (.70) -- -- (.38)
------------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (1.04) (1.03) (.82) (.06) (.20) (.66)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.81 $ 13.80 $ 14.38 $ 13.65 $ 12.49 $ 10.48
==========================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE 2 7.68% 3.42% 11.66% 9.77% 21.27% (8.94)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 19,478 $ 14,933 $ 11,803 $ 8,772 $ 3,349 $ 798
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $ 17,811 $ 13,425 $ 10,278 $ 5,701 $ 1,604 $ 454
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.93% 1.76% 1.24% 0.55% 1.24% 2.49%
Total expenses 1.45% 4 1.47% 1.50% 1.58% 1.76% 1.48%
Expenses after payments and
waivers and reduction to
custodian expenses 1.44% 1.47% 1.50% 1.57% 1.62% 1.48%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 5 84% 5 73% 5 61% 5 205% 31%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended March 31, 2007 1.46%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
-----------------------------------------------------------------------------
Six Months Ended March 31, 2007 $ 420,117,728 $ 434,884,666
Year Ended September 30, 2006 1,329,963,782 1,377,730,782
Year Ended September 30, 2005 2,097,453,846 2,135,377,175
Year Ended September 30, 2004 1,069,526,653 1,026,457,980
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Balanced Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as an open end management investment company. The
Fund's investment objective is to seek high total investment return consistent
with preservation of principal. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Fund's assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. Securities traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, as identified by the portfolio pricing
service, prior to the time when the Fund's assets are valued. In the absence of
a sale, the security is valued at the official closing price on the principal
exchange. Corporate, government and municipal debt instruments having a
remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Options are
valued daily based upon the last sale price on the principal exchange on which
the option is traded. Securities (including
39 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
restricted securities) for which market quotations are not readily available are
valued at their fair value. Foreign and domestic securities whose values have
been materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Trustees. Investments in open-end registered investment companies (including
affiliated funds) are valued at that fund's net asset value. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment take place generally at least ten days or more after the
trade date. Normally the settlement date occurs within six months after the
trade date; however, the Fund may, from time to time, purchase securities whose
settlement date extends six months or more beyond trade date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains internally designated assets with a market value equal to or greater
than the amount of its purchase commitments. The purchase of securities on a
when-issued basis or forward commitment may increase the volatility of the
Fund's net asset value to the extent the Fund executes such transactions while
remaining substantially fully invested. The Fund may also sell securities that
it purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of March 31, 2007, the Fund had purchased $74,144,778
of securities issued on a when-issued basis or forward commitment and sold
$6,174,805 of securities issued on a when-issued basis or forward commitment.
In connection with its ability to purchase or sell securities on a
when-issued basis, the Fund may enter into forward roll transactions with
respect to mortgage-related securities. Forward roll transactions require the
sale of securities for delivery in the current month, and a simultaneous
agreement with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records the incremental difference between the forward purchase and sale of each
forward roll as realized gain (loss) on investments or as fee income in the case
of such transactions that have an associated fee in lieu of a difference in the
forward purchase and sale price.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the potential
pay down speed variance between the mortgage-related pools.
40 | OPPENHEIMER BALANCED FUND
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") which seeks current income and
stability of principal. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of
1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's
investment in IMMF is included in the Statement of Investments. As a
shareholder, the Fund is subject to its proportional share of IMMF's Class E
expenses, including its management fee. The Manager will waive fees and/or
reimburse Fund expenses in an amount equal to the indirect management fees
incurred through the Fund's investment in IMMF.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential
41 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
loss on a particular financial instrument is greater than the value of such
financial instrument, as reflected in the Fund's Statement of Assets and
Liabilities.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund.
As of March 31, 2007, the Fund had available for federal income tax
purposes an estimated capital loss carryforward of zero. 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. As of March 31, 2007, it is
estimated that the Fund will utilize $884,542 of capital loss carryforward to
offset realized capital gains. During the fiscal year ended September 30, 2006,
the Fund utilized $2,115,654 of capital loss carryforward to offset capital
gains realized in that fiscal year.
As of September 30, 2006, the Fund had available for federal income tax
purposes post-October foreign currency losses of $156,550 and $727,992 of
straddle losses.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the six months ended March 31, 2007, the
Fund's projected benefit obligations were increased by $38,329 and payments of
$26,014 were made to retired trustees, resulting in an accumulated liability of
$136,133 as of March 31, 2007.
The Board of Trustees has adopted a compensation deferral plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual
42 | OPPENHEIMER BALANCED FUND
compensation they are entitled to receive from the Fund. For purposes of
determining the amount owed to the Trustee under the plan, deferred amounts are
treated as though equal dollar amounts had been invested in shares of the Fund
or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares
of the funds selected for deferral by the Trustee in amounts equal to his or her
deemed investment, resulting in a Fund asset equal to the deferred compensation
liability. Such assets are included as a component of "Other" within the asset
section of the Statement of Assets and Liabilities. Deferral of trustees' fees
under the plan will not affect the net assets of the Fund, and will not
materially affect the Fund's assets, liabilities or net investment income per
share. Amounts will be deferred until distributed in accordance to the
compensation deferral plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
and paid quarterly. Capital gain distributions, if any, are declared and paid
annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund'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 Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
43 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
SIX MONTHS ENDED MARCH 31, 2007 YEAR ENDED SEPTEMBER 30, 2006
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS A
Sold 3,129,024 $ 43,826,393 6,707,218 $ 92,313,989
Dividends and/or
distributions reinvested 4,092,485 56,455,940 3,764,837 51,001,543
Acquisition-Note 13 -- -- 7,679,053 105,279,820
Redeemed (4,727,257) (66,394,727) (9,999,585) (137,201,398)
-----------------------------------------------------------
Net increase 2,494,252 $ 33,887,606 8,151,523 $ 111,393,954
===========================================================
- -----------------------------------------------------------------------------------------------------
CLASS B
Sold 568,155 $ 7,772,587 1,486,495 $ 20,023,127
Dividends and/or
distributions reinvested 473,299 6,387,648 459,149 6,095,358
Acquisition-Note 13 -- -- 852,361 11,421,633
Redeemed (1,236,309) (16,957,265) (2,519,583) (33,862,003)
-----------------------------------------------------------
Net increase (decrease) (194,855) $ (2,797,030) 278,422 $ 3,678,115
===========================================================
- -----------------------------------------------------------------------------------------------------
CLASS C
Sold 654,420 $ 8,990,560 1,733,303 $ 23,444,138
Dividends and/or
distributions reinvested 443,947 6,022,462 420,150 5,602,992
Acquisition-Note 13 -- -- 622,399 8,383,715
Redeemed (741,672) (10,255,704) (2,152,123) (28,965,509)
-----------------------------------------------------------
Net increase 356,695 $ 4,757,318 623,729 $ 8,465,336
===========================================================
- -----------------------------------------------------------------------------------------------------
CLASS N
Sold 353,126 $ 4,958,051 394,439 $ 5,367,295
Dividends and/or
distributions reinvested 89,760 1,225,724 67,430 905,224
Acquisition-Note 13 -- -- 134,474 1,824,806
Redeemed (114,208) (1,590,127) (334,942) (4,520,367)
-----------------------------------------------------------
Net increase 328,678 $ 4,593,648 261,401 $ 3,576,958
===========================================================
44 | OPPENHEIMER BALANCED FUND
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in affiliated companies, for the six
months ended March 31, 2007, were as follows:
PURCHASES SALES
-------------------------------------------------------------
Investment securities $ 265,827,443 $ 262,732,027
U.S. government and
government agency obligations 58,515,298 55,817,279
To Be Announced (TBA)
mortgage-related securities 420,117,728 434,884,666
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
-------------------------------
Up to $200 million 0.75%
Next $200 million 0.72
Next $200 million 0.69
Next $200 million 0.66
Next $700 million 0.60
Over $1.5 billion 0.58
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS or the Transfer Agent), a
division of the Manager, acts as the transfer and shareholder servicing agent
for the Fund. The Fund pays OFS a per account fee. For the six months ended
March 31, 2007, the Fund paid $751,313 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor 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 Fund under the plan are detailed in the Statement
of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares.
45 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
The Distributor also receives a service fee of 0.25% per year under each plan.
If either the Class B, Class C or Class N plan is terminated by the Fund or by
the shareholders of a class, the Board of Trustees and its independent trustees
must determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the service fee and/or asset-based sales charge in
respect to shares sold prior to the effective date of such termination. The
Distributor determines its uncompensated expenses under the plan at calendar
quarter ends. The Distributor's aggregate uncompensated expenses under the plan
at March 31, 2007 for Class B, Class C and Class N shares were $2,961,750,
$1,882,768 and $216,963, respectively. Fees incurred by the Fund under the plans
are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the 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
- -----------------------------------------------------------------------------------------------
March 31, 2007 $ 208,604 $ 2,607 $ 99,971 $ 5,079 $ 748
- --------------------------------------------------------------------------------
PAYMENTS, WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to
limit transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the six months ended March 31, 2007, the Manager waived $43,865 for
IMMF management fees.
The Distributor paid the Fund $2,270 in restitution as part of a
settlement with respect to an investigation of certain agreements between the
Distributor and various financial intermediaries that had selling agreements
with the Distributor. The payment increased the Fund's total returns by less
than 0.01%.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
46 | OPPENHEIMER BALANCED FUND
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of March 31, 2007, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations at the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
47 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS Continued
As of March 31, 2007, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS MARCH 31, 2007 (DEPRECIATION)
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Treasury Nts., 30 yr. 6/20/07 361 $ 40,161,250 $ (149,697)
--------------
CONTRACTS TO SELL
U.S. Treasury Nts., 2 yr. 6/29/07 459 94,044,797 (167,896)
U.S. Treasury Nts., 5 yr. 6/29/07 169 17,879,672 (82,074)
U.S. Treasury Nts., 10 yr. 6/20/07 127 13,731,875 44,596
--------------
(205,374)
--------------
$ (355,071)
==============
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call or put options are noted
in the Statement of Investments where applicable. Contracts subject to call or
put, expiration date, exercise price, premium received and market value are
detailed in a note to the Statement of Investments. Options written are reported
as a liability in the Statement of Assets and Liabilities. Realized gains and
losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
48 | OPPENHEIMER BALANCED FUND
Written option activity for the six months ended March 31, 2007 was as follows:
CALL OPTIONS
------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
-------------------------------------------------------
Options outstanding as of
September 30, 2006 -- $ --
Options written 956 355,641
------------------------
Options outstanding as of
March 31, 2007 956 $ 355,641
========================
- --------------------------------------------------------------------------------
8. CREDIT DEFAULT SWAP CONTRACTS
A credit default swap is a bilateral contract that enables an investor to buy or
sell protection against a defined-issuer credit event. The Fund may enter into
credit default swaps to hedge an existing position or to obtain exposure to a
security or market by purchasing or selling credit protection. The Fund may
enter into credit default swaps on a single security, or a basket of securities.
In a credit default swap contract, the purchaser of the contract will pay
a periodic interest fee, similar to an insurance premium, on the notional amount
of the swap contract to the counterparty (the seller of the contract). If there
is a credit event (for example, bankruptcy or a failure to timely pay interest
or principal), the purchaser will exercise the contract and will receive a
payment from the seller of the contract equal to the notional value of the
credit default swap contract less the value of the underlying security.
The periodic interest fees are accrued daily as a component of unrealized
appreciation (depreciation) and are recorded as realized loss (gain) upon
payment. In the event that the credit default swap is exercised due to a credit
event, the difference between the value of the underlying security and the
notional amount is recorded as realized gain (loss) and is included on the
Statement of Operations.
Credit default swaps are marked to market daily using primarily quotations
from counterparties and brokers. The value of the contracts is separately
disclosed on the Statement of Assets and Liabilities. The unrealized
appreciation (depreciation) related to the change in the valuation of the
notional amount of the swap is combined with the accrued interest due to (owed
by) the Fund at termination or settlement. The net change in this amount during
the period is included on the Statement of Operations.
Risks of credit default swaps include, but are not limited to, the cost of
paying for credit protection if there are no credit events, pricing transparency
when assessing the cost of a credit default swap, counterparty risk, adverse
pricing when purchasing bonds to satisfy its delivery obligation, and the need
to fund the delivery obligation (either cash or defaulted securities depending
on whether the Fund is the purchaser or seller of the credit default swap
contract, respectively).
49 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. CREDIT DEFAULT SWAP CONTRACTS Continued
Information regarding such credit default swaps as of March 31, 2007 is as
follows:
BUY/SELL NOTIONAL
CREDIT AMOUNT PAY/RECEIVE TERMINATION PREMIUM
COUNTERPARTY REFERENCE ENTITY PROTECTION (000S) FIXED RATE DATES PAID/(RECEIVED) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse
First Boston, Inc.:
Dow Jones CDX North
America Crossover Index Buy $ 2,485 1.650% 12/20/11 $ (46,638) $ (21,127)
Dow Jones CDX North
America Crossover Index Buy 1,990 1.650 12/20/11 (38,173) (16,918)
Dow Jones CDX North
America Crossover Index Buy 2,485 1.650 12/20/11 (39,340) (21,127)
Ford Motor Credit Co. Sell 2,205 0.500 6/20/07 -- (876)
Freescale
Semiconductor, Inc. Sell 1,010 0.600 3/20/08 -- (4,338)
Freescale
Semiconductor, Inc. Sell 1,075 0.750 3/20/08 -- (3,064)
Univision
Communications, Inc. Sell 495 0.750 3/20/08 -- (32)
- -----------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Abitibi-Consolidated
Co. of Canada Sell 1,600 1.520 9/20/07 -- 5,270
Allied Waste North
America, Inc. Sell 630 2.000 9/20/09 -- 13,034
Allied Waste North
America, Inc. Sell 990 2.000 9/20/09 -- 20,481
Bombardier, Inc. Sell 500 0.900 9/20/07 -- 1,082
CDX.NA.IG.7 Buy 3,600 0.400 12/20/11 370 (5,357)
Dow Jones CDX North
America Crossover Index Buy 2,485 1.650 12/20/11 (39,867) (35,250)
Eastman Kodak Co. Sell 1,395 1.000 12/20/08 -- 13,271
GMAC LLC Sell 510 2.300 6/20/07 -- 1,819
J.C. Penney Co., Inc. Buy 610 0.580 3/20/12 -- (2,493)
Weyerhaeuser Co. Buy 1,990 0.580 9/20/11 -- (10,038)
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital Services, Inc.:
Arrow Electronics, Inc. Buy 1,990 0.790 9/20/11 -- (25,075)
Arrow Electronics, Inc. Buy 1,000 0.770 9/20/11 -- (11,793)
ArvinMeritor, Inc. Sell 555 1.050 9/20/07 -- 951
ArvinMeritor, Inc. Sell 460 1.100 9/20/07 -- 904
ArvinMeritor, Inc. Sell 40 1.200 9/20/07 -- 99
Belo Corp. Buy 1,190 0.650 6/20/11 -- (10,488)
Belo Corp. Buy 655 0.670 6/20/11 -- (6,275)
Belo Corp. Buy 1,325 0.675 6/20/11 -- (12,948)
Bombardier, Inc. Sell 560 1.000 9/20/07 -- 2,101
Bombardier, Inc. Sell 555 1.050 9/20/07 -- 2,222
Dow Jones CDX North
America Crossover Index Buy 2,485 1.650 12/20/11 (41,410) (23,226)
El Paso Corp. Sell 2,090 0.520 3/20/10 -- 191
Ford Motor Co. Buy 990 5.300 12/20/08 -- (34,141)
Ford Motor Co. Buy 2,090 5.400 12/20/08 -- (75,491)
Ford Motor Co. Sell 990 7.050 12/20/16 -- 1,716
Ford Motor Co. Sell 2,090 7.150 12/20/16 -- 13,767
General Motors Corp. Buy 1,035 4.000 12/20/08 -- (26,951)
General Motors Corp. Buy 1,005 3.950 12/20/08 -- (25,341)
General Motors Corp. Sell 1,035 5.800 12/20/16 -- 27,982
General Motors Corp. Sell 1,005 5.750 12/20/16 -- 24,431
GMAC LLC Sell 1,290 3.150 6/20/07 -- 8,003
Hyundai Motor
Manufacturing
Alabama LLC Sell 865 0.400 6/20/07 -- 371
50 | OPPENHEIMER BALANCED FUND
BUY/SELL NOTIONAL
CREDIT AMOUNT PAY/RECEIVE TERMINATION PREMIUM
COUNTERPARTY REFERENCE ENTITY PROTECTION (000S) FIXED RATE DATES PAID/(RECEIVED) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital Services, Inc.:
Continued
Inco Ltd. Buy $ 1,065 0.630% 3/20/17 $ -- $ (5,975)
Inco Ltd. Buy 1,055 0.700 3/20/17 -- (6,133)
International Paper Co. Buy 2,065 0.409 12/20/11 -- 2,066
J.C. Penney Co., Inc. Sell 1,990 0.610 6/20/13 -- (2,498)
Vale Overseas Ltd. Sell 1,065 1.100 3/20/17 -- 9,525
Vale Overseas Ltd. Sell 1,055 1.170 3/20/17 -- 15,009
--------------------------
$ (205,058) $ (222,660)
==========================
- --------------------------------------------------------------------------------
9. TOTAL RETURN SWAP CONTRACTS
A total return swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. One cash flow stream will typically be
based on a reference interest rate or index and the other on the total return of
a reference asset such as a security, a basket of securities, or an index. The
total return includes appreciation or depreciation on the reference asset, plus
any interest or dividend payments. Payments under the swap are based on an
agreed upon principal amount but since this principal amount is not exchanged,
it represents neither an asset nor a liability to either counter-party, and is
referred to as notional. Total return swaps are marked to market daily using
primarily quotations from counterparties and brokers. The value of the contracts
is separately disclosed on the Statement of Assets and Liabilities. The
unrealized appreciation (depreciation) related to the change in the valuation of
the notional amount of the swap is combined with the amount due to (owed by) the
Fund at termination or settlement. The net change in this amount during the
period is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations. The primary risks associated with total return swaps are credit
risks (if the counterparty fails to meet its obligations) and market risk (if
there is no liquid market for the agreement or unfavorable changes occur in the
reference asset).
As of March 31, 2007, the Fund had entered into the following total return swap
agreements:
NOTIONAL
SWAP AMOUNT PAID BY RECEIVED BY TERMINATION
COUNTERPARTY (000S) THE FUND THE FUND DATE VALUE
- -------------------------------------------------------------------------------------------
If positive, the
absolute value of
If negative, the Lehman Brothers
absolute value of U.S. CMBS Index:
Lehman Brothers Aggregate AAA
Goldman Sachs U.S. CMBS Index: plus 15 basis
Capital Markets $ 4,190 Aggregate AAA points 9/1/07 $ 1,871
Abbreviation is as follows:
CMBS Commercial Mortgage Backed Securities
51 | OPPENHEIMER BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. ILLIQUID SECURITIES
As of March 31, 2007, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
- --------------------------------------------------------------------------------
11. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. If the borrower defaults on its obligation
to return the securities loaned because of insolvency or other reasons, the Fund
could experience delays and cost in recovering the securities loaned or in
gaining access to the collateral. The Fund continues to receive the economic
benefit of interest or dividends paid on the securities loaned in the form of a
substitute payment received from the borrower. As of March 31, 2007, the Fund
had on loan securities valued at $12,363,557, which are included in the
Statement of Assets and Liabilities as "Investments, at value" and, when
applicable, as "Receivable for Investments sold." Collateral of $4,991,807 was
received for the loans, all of which was received in cash and subsequently
invested in approved investments. In addition, collateral of $7,654,592 was also
received in the form of securities.
- --------------------------------------------------------------------------------
12. RECENT ACCOUNTING PRONOUNCEMENTS
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 Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund'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
March 31, 2007, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.
52 | OPPENHEIMER BALANCED FUND
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of March 31, 2007, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.
- --------------------------------------------------------------------------------
13. ACQUISITION OF OPPENHEIMER DISCIPLINED ALLOCATION FUND
On May 11, 2006, the Fund acquired all of the net assets of Oppenheimer
Disciplined Allocation Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Oppenheimer Disciplined Allocation Fund shareholders on April
20, 2006. The Fund issued (at an exchange ratio of 1.082920 for Class A,
1.125484 for Class B, 1.087721 for Class C and 1.090241 for Class N of the Fund)
to one share of Oppenheimer Disciplined Allocation Fund 7,679,053; 852,361;
622,399 and 134,474 shares of beneficial interest for Class A, Class B, Class C
and Class N, respectively, valued at $105,279,820, $11,421,633, $8,383,715 and
$1,824,806 in exchange for the net assets, resulting in combined Class A net
assets of $811,983,024, Class B net assets of $101,954,869, Class C net assets
of $95,423,574 and Class N net assets of $14,874,615 on May 11, 2006. The net
assets acquired included net unrealized appreciation of $7,913,564 and an unused
capital loss carryforward of $2,329,209 potential utilization subject to tax
limitations. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
53 | OPPENHEIMER BALANCED FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
54 | OPPENHEIMER BALANCED FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE AND EXTENT OF SERVICES. The Board considered information about the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel who provide such services. The Manager's duties
include providing the Fund with the services of the portfolio managers and the
Manager's investment team, who provide research, analysis and other advisory
services in regard to the Fund's investments; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel who are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
55 | OPPENHEIMER BALANCED FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took account of the fact that the Manager has had over forty
years of experience as an investment adviser and that its assets under
management rank it among the top mutual fund managers in the United States. The
Board evaluated the Manager's administrative, accounting, legal and compliance
services, and information the Board has received regarding the experience and
professional qualifications of the Manager's personnel and the size and
functions of its staff. In its evaluation of the quality of the portfolio
management services provided, the Board considered the experience of Christopher
Leavy, Emmanuel Ferreira and Angelo Manioudakis, and the Manager's Value and
Core-Plus investment teams and analysts. The Board members also considered their
experiences with the Manager and its officers and other personnel through their
service on the boards of the Fund and other funds advised by the Manager. The
Board considered information regarding the quality of services provided by
affiliates of the Manager, which its members have become knowledgeable about in
connection with the renewal of the Fund's service agreements. In light of the
foregoing, the Board concluded that the Fund benefits from the services provided
under the Agreement and from the Manager's experience, reputation, personnel,
operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of all other retail front-end load and
no-load mixed-asset target allocation moderate funds advised by other investment
advisers. The Board noted that the Fund's ten-year performance was better than
its peer group median. However its three-year performance was equal to its peer
group median and its one-year and five-year performance were below its peer
group median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also evaluated the comparability of the fees charged and the services provided
to the Fund to the fees and services for other clients or accounts advised by
the Manager. The independent consultant provided comparative data in regard to
the fees and expenses of the Fund, other mixed-asset target allocation moderate
funds and other funds with comparable asset levels and distribution features.
The Board noted that, although the Fund's contractual and actual management fees
are higher than its peer group median, its total expenses are equal to its peer
group median.
56 | OPPENHEIMER BALANCED FUND
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share economies of scale that may exist as the Fund grows with its
shareholders.
BENEFITS TO THE MANAGER. The Board considered information regarding the
Manager's costs in serving as the Fund's investment adviser, including the costs
associated with the personnel and systems necessary to manage the Fund, and
information regarding the Manager's profitability from its relationship with the
Fund. The Board considered that the Manager must be able to pay and retain
experienced professional personnel at competitive rates to provide services to
the Fund and that maintaining the financial viability of the Manager is
important in order for the Manager to continue to provide significant services
to the Fund and its shareholders. In addition to considering the profits
realized by the Manager, the Board considered information regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates for services
provided and research provided to the Manager in connection with permissible
brokerage arrangements (soft dollar arrangements).
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the Agreement for
another year. In arriving at this decision, the Board did not single out any
factor or factors as being more important than others, but considered all of the
factors together. The Board judged the terms and conditions of the Agreement,
including the management fee, in light of all of the surrounding circumstances.
57 | OPPENHEIMER BALANCED 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 03/31/2007, 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 Balanced Fund
By: /s/ John V. Murphy
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John V. Murphy
Principal Executive Officer
Date: 05/14/2007
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: 05/14/2007
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: 05/14/2007