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 811-21920
---------
Oppenheimer Transition 2010 Fund
--------------------------------
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: February 28
-----------
Date of reporting period: 08/31/2007
----------
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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- --------------------------------------------------------------------------------
ASSET CLASS ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Equity Funds 56.3%
Fixed Income Funds 24.8
Global Equity Fund 13.9
Alternative Investment Fund 5.0
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2007, and are based on the total market value of investments in
affiliated companies.
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9 | OPPENHEIMER TRANSITION 2010 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 12/15/06. Class A
returns include the current maximum initial sales charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 12/15/06. Class B
returns include the applicable contingent deferred sales charge of 5%. 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 12/15/06. Class C
returns include the contingent deferred sales charge of 1%. 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 12/15/06. Class N
shares are offered only through retirement plans. Unless otherwise noted, Class
N returns include the contingent deferred sales charge of 1%. Class N shares are
subject to an annual 0.25% asset-based sales charge.
10 | OPPENHEIMER TRANSITION 2010 FUND
CLASS Y shares of the Fund were first publicly offered on 12/15/06. Class Y
shares are offered only to certain institutional investors under special
agreements with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
11 | OPPENHEIMER TRANSITION 2010 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 August 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 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.
12 | OPPENHEIMER TRANSITION 2010 FUND
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/07) (8/31/07) AUGUST 31, 2007
- ---------------------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,051.50 $ 4.66
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Class A Hypothetical 1,000.00 1,020.67 4.59
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Class B Actual 1,000.00 1,046.60 8.55
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Class B Hypothetical 1,000.00 1,016.89 8.42
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Class C Actual 1,000.00 1,046.60 8.55
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Class C Hypothetical 1,000.00 1,016.89 8.42
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Class N Actual 1,000.00 1,048.60 5.49
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Class N Hypothetical 1,000.00 1,019.86 5.41
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Class Y Actual 1,000.00 1,051.50 3.21
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Class Y Hypothetical 1,000.00 1,022.08 3.16
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding all underlying fund expenses, based on the 6-month period ended August
31, 2007 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------------
Class A 0.90%
- ---------------------------------
Class B 1.65
- ---------------------------------
Class C 1.65
- ---------------------------------
Class N 1.06
- ---------------------------------
Class Y 0.62
The expense ratios reflect reduction to custodian expenses and voluntary waivers
or reimbursements by the Fund's Manager and Transfer Agent that can be
terminated at any time, without advance notice. The "Financial Highlights"
tables in the Fund's financial statements, included in this report, also show
the gross expense ratios, without such waivers or reimbursements and reduction
to custodian expenses, if applicable.
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13 | OPPENHEIMER TRANSITION 2010 FUND
STATEMENT OF INVESTMENTS August 31, 2007 / Unaudited
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VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--99.9% 1
- ------------------------------------------------------------------------------------------------
ALTERNATIVE INVESTMENT FUND--5.0%
Oppenheimer Commodity Strategy Total Return Fund, Cl. Y 41,974 $ 293,820
- ------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS--24.7%
Oppenheimer Champion Income Fund, Cl. Y 12,428 112,965
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Oppenheimer Core Bond Fund, Cl. Y 120,237 1,214,398
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Oppenheimer U.S. Government Trust, Cl. Y 12,333 116,297
------------
1,443,660
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GLOBAL EQUITY FUND--13.9%
Oppenheimer Global Fund, Cl. Y 10,438 812,808
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U.S. EQUITY FUNDS--56.3%
Oppenheimer Capital Appreciation Fund, Cl. Y 2 11,398 594,972
- ------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 13,497 586,449
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Oppenheimer Main Street Opportunity Fund, Cl. Y 7,349 116,844
- ------------------------------------------------------------------------------------------------
Oppenheimer MidCap Fund, Cl. Y 2 22,356 466,353
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Oppenheimer Small- & Mid- Cap Value Fund, Cl. Y 11,324 466,534
- ------------------------------------------------------------------------------------------------
Oppenheimer Value Fund, Cl. Y 36,243 1,055,760
------------
3,286,912
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TOTAL INVESTMENTS, AT VALUE (COST $5,743,968) 99.9% 5,837,200
- ------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.1 4,246
----------------------
NET ASSETS 100.0% $ 5,841,446
======================
14 | OPPENHEIMER TRANSITION 2010 FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended August 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
FEBRUARY 28, GROSS GROSS AUGUST 31,
2007 ADDITIONS REDUCTIONS 2007
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y 3,158 8,367 127 11,398
Oppenheimer Champion Income Fund, Cl. Y 3,224 9,339 135 12,428
Oppenheimer Commodity Strategy
Total Return Fund, Cl. Y 11,604 30,837 467 41,974
Oppenheimer Core Bond Fund, Cl. Y 31,388 90,169 1,320 120,237
Oppenheimer Global Fund, Cl. Y 2,871 7,683 116 10,438
Oppenheimer Institutional Money Market Fund, Cl. E -- 3,253,408 3,253,408 --
Oppenheimer Main Street Fund, Cl. Y 3,707 9,940 150 13,497
Oppenheimer Main Street Opportunity Fund, Cl. Y 2,020 5,411 82 7,349
Oppenheimer MidCap Fund, Cl. Y 6,137 16,469 250 22,356
Oppenheimer Small- & Mid- Cap Value Fund, Cl. Y 3,237 8,211 124 11,324
Oppenheimer U.S. Government Trust, Cl. Y 3,226 9,243 136 12,333
Oppenheimer Value Fund, Cl. Y 10,276 26,367 400 36,243
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME LOSS
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund, Cl. Y $ 594,972 $ -- $ 132
Oppenheimer Champion Income Fund, Cl. Y 112,965 2,487 23
Oppenheimer Commodity Strategy Total Return Fund, Cl. Y 293,820 -- 59
Oppenheimer Core Bond Fund, Cl. Y 1,214,398 19,011 144
Oppenheimer Global Fund, Cl. Y 812,808 3,229 222
Oppenheimer Institutional Money Market Fund, Cl. E -- 1,157 --
Oppenheimer Main Street Fund, Cl. Y 586,449 -- 136
Oppenheimer Main Street Opportunity Fund, Cl. Y 116,844 -- 28
Oppenheimer MidCap Fund, Cl. Y 466,353 -- 141
Oppenheimer Small- & Mid- Cap Value Fund, Cl. Y 466,534 -- 135
Oppenheimer U.S. Government Trust, Cl. Y 116,297 1,685 13
Oppenheimer Value Fund, Cl. Y 1,055,760 -- 250
--------------------------------------
$ 5,837,200 $ 27,569 $ 1,283
======================================
2. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15 | OPPENHEIMER TRANSITION 2010 FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
August 31, 2007
- -------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments--
affiliated companies (cost $5,743,968) $ 5,837,200
- -------------------------------------------------------------------------------------------------------------
Cash 95
- -------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 40,782
Dividends 6,166
Other 1,784
------------
Total assets 5,886,027
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LIABILITIES
- -------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 14,916
Shareholder communications 13,142
Legal, auditing and other professional fees 8,189
Investments purchased 6,788
Distribution and service plan fees 1,216
Transfer and shareholder servicing agent fees 326
Trustees' compensation 4
------------
Total liabilities 44,581
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NET ASSETS $ 5,841,446
============
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 552
- -------------------------------------------------------------------------------------------------------------
Additional paid-in capital 5,737,138
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Accumulated net investment income 11,807
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Accumulated net realized loss on investments (1,283)
- -------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 93,232
------------
NET ASSETS $ 5,841,446
============
16 | OPPENHEIMER TRANSITION 2010 FUND
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NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$3,560,292 and 335,680 shares of beneficial interest outstanding) $ 10.61
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 11.26
- -------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $363,498
and 34,460 shares of beneficial interest outstanding) $ 10.55
- -------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $692,537
and 65,644 shares of beneficial interest outstanding) $ 10.55
- -------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,175,724
and 111,095 shares of beneficial interest outstanding) $ 10.58
- -------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $49,395 and 4,650 shares of beneficial interest outstanding) $ 10.62
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER TRANSITION 2010 FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended August 31, 2007
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------
Dividends from affiliated companies $ 27,569
- -------------------------------------------------------------------------------------------------------------
Interest 169
---------
Total investment income 27,738
- -------------------------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,138
Class B 689
Class C 1,571
Class N 1,116
- -------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 951
Class B 120
Class C 208
Class N 110
Class Y 26
- -------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 4,452
Class B 1,604
Class C 2,598
Class N 405
Class Y 34
- -------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 8,363
- -------------------------------------------------------------------------------------------------------------
Registration and filing fees 607
- -------------------------------------------------------------------------------------------------------------
Insurance expenses 173
- -------------------------------------------------------------------------------------------------------------
Trustees' compensation 28
- -------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 4
- -------------------------------------------------------------------------------------------------------------
Other 1,128
---------
Total expenses 25,325
Less reduction to custodian expenses (3)
Less waivers and reimbursements of expenses (7,186)
---------
Net expenses 18,136
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,602
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
Net realized loss on investments--affiliated companies (1,283)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 85,916
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 94,235
=========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | OPPENHEIMER TRANSITION 2010 FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
(UNAUDITED) 2007 1
- -------------------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
Net investment income $ 9,602 $ 1,797
- -------------------------------------------------------------------------------------------------------------------
Net realized loss (1,283) --
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 85,916 7,316
-------------------------------
Net increase in net assets resulting from operations 94,235 9,113
- -------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 2,065,348 1,297,418
Class B 352,282 10,000
Class C 553,453 133,406
Class N 1,175,015 --
Class Y 47,176 --
-------------------------------
4,193,274 1,440,824
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Total increase 4,287,509 1,449,937
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 1,553,937 104,000 2
-------------------------------
End of period (including accumulated net investment income of
$11,807 and $2,205, respectively) $ 5,841,446 $ 1,553,937
===============================
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Reflects the value of the Manager's initial seed money investment on August
21, 2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER TRANSITION 2010 FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
CLASS A (UNAUDITED) 2007 1
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.09 $ 10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .03 .02
Net realized and unrealized gain .49 .07
----------------------------
Total from investment operations .52 .09
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.61 $ 10.09
============================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 5.15% 0.90%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 3,560 $ 1,407
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 2,594 $ 1,164
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.62% 0.75%
Total expenses 5 1.10% 8.49% 6
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses 0.90% 0.90%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 0%
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses paid including all underlying fund expenses were as follows:
Six Months Ended August 31, 2007 1.69%
Period Ended February 28, 2007 9.09%
6. The fiscal 2007 total expenses ratio is higher than the anticipated total
expense ratio of the class for future years due to the Fund's limited operating
history at February 28, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER TRANSITION 2010 FUND
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
CLASS B (UNAUDITED) 2007 1
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.08 $ 10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss 2 -- 3 -- 3
Net realized and unrealized gain .47 .08
----------------------------
Total from investment operations .47 .08
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.55 $ 10.08
============================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 4.66% 0.80%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 363 $ 11
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 140 $ 4
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment loss (0.07)% (0.07)%
Total expenses 6 3.91% 82.86% 7
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses 1.65% 1.54%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 0%
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods 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.
5. Annualized for periods less than one full year.
6. Total expenses paid including all underlying fund expenses were as follows:
Six Months Ended August 31, 2007 4.50%
Period Ended February 28, 2007 83.46%
7. The fiscal 2007 total expenses ratio is higher than the anticipated total
expense ratio of the class for future years due to the Fund's limited operating
history at February 28, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER TRANSITION 2010 FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
CLASS C (UNAUDITED) 2007 1
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.08 $ 10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss 2 -- 3 (.01)
Net realized and unrealized gain .47 .09
----------------------------
Total from investment operations .47 .08
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.55 $ 10.08
============================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 4.66% 0.80%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 693 $ 134
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 315 $ 55
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment loss (0.06)% (0.24)%
Total expenses 6 3.29% 24.30% 7
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses 1.65% 1.65%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 0%
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods 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.
5. Annualized for periods less than one full year.
6. Total expenses paid including all underlying fund expenses were as follows:
Six Months Ended August 31, 2007 3.88%
Period Ended February 28, 2007 24.90%
7. The fiscal 2007 total expenses ratio is higher than the anticipated total
expense ratio of the class for future years due to the Fund's limited operating
history at February 28, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER TRANSITION 2010 FUND
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
CLASS N (UNAUDITED) 2007 1
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.09 $ 10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .03 .01
Net realized and unrealized gain .46 .08
----------------------------
Total from investment operations .49 .09
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.58 $ 10.09
============================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 4.86% 0.90%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,176 $ 1
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 457 $ 1
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.60% 0.53%
Total expenses 5 1.17% 141.69% 6
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses 1.06% 1.14%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 0%
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses paid including all underlying fund expenses were as follows:
Six Months Ended August 31, 2007 1.76%
Period Ended February 28, 2007 142.29%
6. The fiscal 2007 total expenses ratio is higher than the anticipated total
expense ratio of the class for future years due to the Fund's limited operating
history at February 28, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER TRANSITION 2010 FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
AUGUST 31, 2007 FEBRUARY 28,
CLASS Y (UNAUDITED) 2007 1
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.10 $ 10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .05 .02
Net realized and unrealized gain .47 .08
----------------------------
Total from investment operations .52 .10
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.62 $ 10.10
============================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 5.15% 1.00%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 49 $ 1
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 54 $ 1
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.87% 1.00%
Total expenses 5 0.78% 140.80% 6
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses 0.62% 0.49%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 2% 0%
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses paid including all underlying fund expenses were as follows:
Six Months Ended August 31, 2007 1.37%
Period Ended February 28, 2007 141.40%
6. The fiscal 2007 total expenses ratio is higher than the anticipated total
expense ratio of the class for future years due to the Fund's limited operating
history at February 28, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER TRANSITION 2010 FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Transition 2010 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 total return until the target
retirement date included in its name and then seeks income and secondarily
capital growth. The Fund is a special type of mutual fund known as a "fund of
funds" because it invests in other mutual funds. The Fund normally invests in a
portfolio consisting of a target weighted allocation in Class A or Class Y
shares of other Oppenheimer funds (the "Underlying Funds"). The Fund's
investment advisor is OppenheimerFunds, Inc. (the "Manager").
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of each class of
shares based upon the net asset value of the applicable Underlying Funds. For
each Underlying Fund, the net asset value per share for a class of shares on a
"regular business day" is determined by dividing the value of the Underlying
Fund's net assets attributable to that class by the number of shares of that
class outstanding on that day. To determine net asset values, the Underlying
Fund assets are valued primarily on the basis of current market quotations. If
market quotations are not readily available or do not accurately reflect fair
value for a security (in the Manager's judgment) or if a security's value has
been materially affected by events occurring after the close of the exchange or
market on which the security is principally traded, that security may be valued
by another method that the Underlying Fund's Board of Trustees/Directors
believes accurately reflects the fair value. Because some foreign securities
trade in markets and on exchanges that operate on weekends and U.S. holidays,
the values of some of the Underlying Fund's foreign investments may change on
days when investors cannot buy or redeem Underlying Fund shares.
Short-term "money market type" debt securities with remaining maturities
of sixty days or less are valued at amortized cost (which approximates market
value).
25 | OPPENHEIMER TRANSITION 2010 FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, if applicable.
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.
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Fund invests has its own investment risks, and those risks can affect
the value of the Fund's investments and therefore the value of the Fund's
shares. To the extent that the Fund invests more of its assets in one Underlying
Fund than in another, the Fund will have greater exposure to the risks of that
Underlying Fund.
- --------------------------------------------------------------------------------
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 August 31, 2007, the Fund had available for federal income tax
purposes an estimated capital loss carryforward of $1,283 expiring by 2015. This
estimated capital loss carryforward represents carryforward as of the end of the
last fiscal year, increased for losses deferred under tax accounting rules to
the current fiscal year and is increased or decreased by capital losses or gains
realized in the first six months of the current fiscal year. As of August 31,
2007, it is estimated that the Fund will not utilize any capital loss
carryforward to offset realized capital gains. During the fiscal year ended
February 28,
26 | OPPENHEIMER TRANSITION 2010 FUND
2007, the Fund did not utilize any capital loss carryforward to offset capital
gains realized in that fiscal year.
- --------------------------------------------------------------------------------
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 August 31, 2007, the
Fund's projected benefit obligations were increased by $8 and payments of $14
were made to retired trustees, resulting in a liability of zero as of August 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 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 and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the 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.
27 | OPPENHEIMER TRANSITION 2010 FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The 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.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
SIX MONTHS ENDED AUGUST 31, 2007 PERIOD ENDED FEBRUARY 28, 2007 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
CLASS A
Sold 201,009 $ 2,115,202 129,806 $ 1,301,950
Redeemed (4,696) (49,854) (439) (4,532)
---------------------------------------------------------------
Net increase 196,313 $ 2,065,348 129,367 $ 1,297,418
===============================================================
- -------------------------------------------------------------------------------------------------------
CLASS B
Sold 33,678 $ 355,530 984 $ 10,000
Redeemed (302) (3,248) -- --
---------------------------------------------------------------
Net increase 33,376 $ 352,282 984 $ 10,000
===============================================================
- -------------------------------------------------------------------------------------------------------
CLASS C
Sold 54,724 $ 578,809 13,207 $ 133,406
Redeemed (2,387) (25,356) -- --
---------------------------------------------------------------
Net increase 52,337 $ 553,453 13,207 $ 133,406
===============================================================
- -------------------------------------------------------------------------------------------------------
CLASS N
Sold 111,061 $ 1,175,685 -- $ --
Redeemed (66) (670) -- --
---------------------------------------------------------------
Net increase 110,995 $ 1,175,015 -- $ --
===============================================================
28 | OPPENHEIMER TRANSITION 2010 FUND
SIX MONTHS ENDED AUGUST 31, 2007 PERIOD ENDED FEBRUARY 28, 2007 1, 2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
CLASS Y
Sold 8,789 $ 92,078 -- $ --
Redeemed (4,239) (44,902) -- --
---------------------------------------------------------------
Net increase 4,550 $ 47,176 -- $ --
===============================================================
1. For the period from December 15, 2006 (commencement of operations) to
February 28, 2007.
2. The Fund sold 10,000 shares of Class A at a value of $100,000 and 100 shares
each of Class B, Class C, Class N and Class Y at a value of $1,000,
respectively, to the Manager upon seeding of the Fund on August 21, 2006.
- --------------------------------------------------------------------------------
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 IMMF, for the six months ended
August 31, 2007, were as follows:
PURCHASES SALES
---------------------------------------------------------
Investment securities $ 4,281,968 $ 64,046
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets of
the Fund for the six months ended August 31, 2007 were 0.54%.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the six months ended August 31, 2007, the Fund paid
$1,041 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
OFFERING AND ORGANIZATIONAL COSTS. The Manager paid all offering and
organizational costs associated with the registration and seeding of 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
29 | OPPENHEIMER TRANSITION 2010 FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions periodically for providing personal services and
maintenance of accounts of their customers that hold Class A shares. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent 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. 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 June 30, 2007
for Class B, Class C and Class N shares were $4,150, $2,648 and $7,114,
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
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------
August 31, 2007 $ 8,172 $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a
total expense limitation on the aggregate amount of combined direct
(fund-of-funds level) and indirect expense so that as a percentage of average
daily net assets they will not exceed the following annual rates: 1.50%, 2.25%,
2.25%, 1.75% and 1.25%, for Class A, Class B, Class C, Class N and Class Y,
respectively. During the six months ended August 31, 2007, the Manager
reimbursed the Fund $2,686, $1,521, $2,596, $248 and $43 for the Class
30 | OPPENHEIMER TRANSITION 2010 FUND
A, Class B, Class C, Class N and Class Y shares, respectively. The Manager may
modify or terminate this undertaking at any time without notice to shareholders.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the six months ended August 31, 2007, OFS waived $65 for Class B shares.
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 August 31, 2007, the Manager waived $27 for
IMMF management fees.
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT
In September 2006, Financial Accounting Standards Board 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 August 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.
31 | OPPENHEIMER TRANSITION 2010 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.
32 | OPPENHEIMER TRANSITION 2010 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 asset allocation team, who provide research, analysis and other
advisory services in regard to the Fund's investments; 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.
33 | OPPENHEIMER TRANSITION 2010 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 Rudi
Schadt, Jerry Webman and Kurt Wolfgruber, the portfolio managers of the Fund,
and the experience of the portfolio managers and the investment performance of
the investment companies in which the Fund may invest (the "Underlying Funds").
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 FUND. The Manager provided information on
the year-to-date investment performance of the Fund, including comparative
information indicating that the Fund's year-to-date performance was better than
its peer group. Performance information was not available for any longer period
since the Fund has not yet completed a full year of operations.
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
noted that the Fund does not pay a direct management fee but that the Fund
indirectly bears its share of the management fees of the Underlying Funds. The
Board also considered 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 2010 funds
of funds and other funds of funds with comparable asset levels and distribution
features. The Board noted that the Manager has agreed to voluntarily limit the
aggregate amount of combined direct (fund-of-funds level) and indirect expense
so that as a percentage of average daily net assets they will not exceed the
following annual
34 | OPPENHEIMER TRANSITION 2010 FUND
rates: 1.50% for Class A, 2.25% for Class B, 2.25% for Class C, 1.75% for Class
N and 1.25% for Class Y. The Manager may modify or terminate this undertaking at
any time without notice to shareholders. The Board noted that the Fund's total
direct and indirect expenses are higher than its peer group median.
ECONOMIES OF SCALE. The Board considered the extent to which the Manager
may realize economies of scale in managing and supporting the Fund and the
Underlying Funds, and the extent to which those economies of scale would benefit
the Fund's 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 and its affiliates for
services provided to the Fund and to the Underlying Funds.
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.
35 | OPPENHEIMER TRANSITION 2010 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 08/31/2007, 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 Transition 2010 Fund
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 10/09/2007
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: 10/09/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 10/09/2007