Oppenheimer Asset Allocation Fund
Annual Report December 31, 1994
[photo depicting couple at art museum]
"We need the comfort that comes from diversifying in different types of
investments... but we want it from one fund."
(Logo) OppenheimerFunds
<PAGE>
This Fund is for people who want one investment
to do it allstrategically allocating their money across stocks, bonds, and
money market securities.
How Your Fund Is Managed
Oppenheimer Asset Allocation Fund uses a combination of investment styles to
seek high total return while managing risk.
The Fund seeks its goals by investing in
a combination of stocks, bonds and money market instrumentsallocated to take
advantage of current economic conditions.
Investing in stocks offers the best potential for long-term growth.
The Fund's managers invest in established U.S. and international companies
that they believe have excellent potential for appreciation.
The Fund's diversified fixed income and money market investments
seek high yields which can act as a cushion against fluctuations in the value
of the stocks in the Fund's portfolio.
Performance
Total return at net asset value for the 12 months ended 12/31/94 was -1.59%
for Class A shares and -2.50% for Class C shares.1
The financial markets had a difficult year and, like many mutual
funds, your Fund felt the effects. While difficult years are hard to accept, t
hey're an inevitable part of investing. That's why keeping a long-term
perspective is crucial to getting the most from your investment and help-ing
you through short-term market fluctuations.
Your Fund's average annual total returns at maximum offering price
for Class A shares for the 1- and 5-year periods ended 12/31/94 and since
inception of the Class on 4/24/87 were -7.24%, 6.07% and 7.07%, respectively.
For Class C shares, average annual total returns for the 1-year period ended
12/31/94 and since inception of the Class on 12/1/93 were -3.39% and -0.34%,
respectively.(2)
Outlook
"Our goal is to achieve attractive returns without assuming high risks. In
doing that, we don't try to guess directions or trends in interest rates
or the economy. Instead, we rely on broad port-folio diversification in both
bonds and equities, utilizing the skills of the Oppenheimer team. Our stock
investments are diversified by investment stylevalue, growth, contrarian,
foreign, and dividend yield. Bond investments are allocated between foreign
bonds and high yield bonds."
Richard Rubinstein, Portfolio Manager
December 31, 1994
News
"Diversification has been the key to the fund's success over the past three
years."
Morningstar Mutual Funds
12/9/94
1. Based on the change in net asset value per share from 12/31/93 to
12/31/94, without deducting any sales charges. Such performance would have
been lower if sales charges were taken into account.
2. Average annual total returns are based on a hypothetical investment held
until 12/31/94, after deducting the current maximum initial sales charge of
5.75% for Class A shares. The Fund's maximum sales charge rate for Class A
shares was lower during a portion of some of the periods shown, and actual
investment results will be different as a result of the change. Total return
for Class C shares was based on a hypothetical investment held for that
period, after deducting the 1% contingent deferred sales charge (for the 1-yea
r performance). Class A and Class C shares were first publicly offered on
4/24/87 and 12/1/93, respectively.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and
principal value on an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost.
2 Oppenheimer Asset Allocation Fund
<PAGE>
Dear OppenheimerFunds Shareholder,
The past year has been a difficult period for the stock and bond markets, one
marked above all by one of the most aggressive series of moves to raise
interest rates in the U.S. Federal Reserve's history. As interest rates moved
up, bond prices fell and the stock market followed, while investors looked
everywhere for answers to questions about directions in inflation, interest
rates, and the economy. These questions all concerned one basic issue: Is the
bull market in stocks coming to an end?
In our view, it is not. While we are not expecting major gains in
stock and bond prices in the very near term, we believe that the
uncertainties which held the market back in 1994 will recede
in 1995 as the fundamental positives in the economy are recognized. The most
important of these positives is our belief that the Fed's attempt to preempt
possible inflation, while temporarily disconcerting, will likely have its
desired effect in 1995. We believe that the economy will begin to slow, and
although short-term rates may move up modestly from their present levels,
long-term interest ratesthe ones that most affect securities pricesshould
stabilize in their current range. Long-term rates may even begin to decline
as overblown concerns about inflation abate.
Those concerns are, in fact, already fading. While the prices of some
commodities have risen over the past year and U.S. manufacturing capacity
utilization and employment rose to their highest levels in years, in today's
globally competitive environment, price increases are difficult to pass on to
either consumers or businesses. The inflation rateas measured by the Consumer
Price Index continues to run at less than 3% a year, and there's nothing on the
horizon to suggest to us that it will increase substantially anytime soon. Even
at their current levels, interest rates remain low relative to recent periods,
and in our view, pose no real threat to most companies' earnings or cash flows.
During the most recent recession, many businesses learned to operate much more
efficiently and took advantage of the extended decline in interest rates to work
down their debt loads and strengthen their financial positions. As a result,
corporate profits have soared despite higher interest rates. And we believe that
business earnings should grow even more as economies in Europe and elsewh ere
emerge from their recessions, stimulating demand for U.S. companies' goods and
services. As profits rise, we expect stocks to become more valuable.
Finally, the changing political landscape reflected in results of
the mid-term election bodes well for the markets over time. In addition to
limiting the expectation that Congress will pass potentially inflationary
government spending proposals, the realignment in Washington has raised the
possibility of tax relief in the form of an expanded deduction for individual
retirement savings or possibly a reduction in the capital gains tax rate.
What specific action, if any, Congress will take on these proposals remains
to be seen. But any action to reduce the federal deficit, cut spending, and
reduce taxes should be good news for the markets overall.
In light of all these factors, we remain bullish on stocks and bonds.
As we have noted in previous reports, we're expecting moderate gains in the
short-term and, over time, we expect stocks and bonds to perform well. Your
portfolio manager discusses the outlook for your Fund on the following pages. We
appreciate your confidence, and we look forward to helping you continue to reach
your investment goals.
Donald W. Spiro Jon S. Fossel
January 23, 1995
Donald W. Spiro
President
Oppenheimer
Asset Allocation
Fund
Jon S. Fossel
Chairman and CEO
Oppenheimer
Management
Corporation
3 Oppenheimer Asset Allocation Fund
<PAGE>
Q + A
Q Is high inflation a concern for 1995?
An interview with your Fund's manager.
1994 was a difficult year for the stock and bond markets.
What factors contributed most to the Fund's performance?
Our stock positions, notably our emphasis on technology, healthcare, and
industrial issues, helped the Fund's performance. The diversification in the
bond portfolio insulated us somewhat from higher interest rates during the
year.
In looking at the Fund's portfolio, it appears that you are focusing on
technology stocks. Why?
The U.S. dominates the technology sector. Technology gives us the tools to
improve performance no matter what the economic environment. Some technology
stocks we own, such as AT&T, MCI, and U.S. West, are "value" stocks, because
their prices are relatively low compared with our view of the companies'
assets and earnings power. And they provide inexpensive ways to participate
in the creation of the "information superhighway." Recent growth purchases
include Computer Associates, Delrina, and Symantec, whose products, profits
and stock prices we expect to benefit from the broad business push for
increased productivity.1
How about healthcare; why are you emphasizing these stocks?
HMOs and healthcare providers are out of favor today. The companies we own
are, we believe, strong competitors with good growth prospects. Other stocks,
including Eli Lilly and Bristol-Myers, have strong dividend yieldsupwards of 5%.
Why are you adding to positions in stocks in basic industries at this point
in the economic cycle?
The industrial stocks we've been buying--Georgia-Pacific and Louisiana-Pacific
in the paper industry; IMC Global, a world-class fertilizer company; Corning,
Inc., and Consolidated Freightways--have reduced
1. The Fund's portfolio is subject to change.
4 Oppenheimer Asset Allocation Fund
<PAGE>
their break-even points significantly. They're very efficient companies today,
and their earnings should benefit from even modest improvements in pricing and
business volumes.
You also have significant international holdings 21.6% of the portfolio at
last count. What makes foreign stocks so attractive?
Many economies in Europe and Asia are just beginning to come out of their
recessions. They stand at the point in the economic and earnings cycle where
the U.S. stood two years ago, and in our view, the companies we're buying
offer strong growth prospects and attractive prices. We're also seeing value
in many emerging markets in Latin America and Asia, where we've begun to
build our expo-sure. Stock prices in many of these markets have declined
to the point where we once again see excellent long-term growth potential.
While foreign investments may subject the Fund
to greater expenses and risks, such as currency fluctuations, it is important
to remember that our strategy of using a combination of investment styles is
specifically designed to help us seek high total return while managing risk.
What's your outlook for the Fund?
Over the past year, interest rates have overshadowed earnings as the factor
driving stock prices. In the months ahead, earnings should begin to re-assert
themselves. At this point, there's nothing on the horizon to suggest that we'll
be dealing with runaway inflation or interest rates any time soon. As we move
into 1995, we should see much calmer investment markets and continued gains in
corporate profits, both of which should be positive for the Fund.
Facing page
Top left:Richard Rubinstein, Portfolio Manager
Top right: The equity trading desk
Bottom: Mark Binning, Securities Coordinator, consults with Lawrence Apolito,
VP Equity Trading
This page
Top:Richard Rubinstein
Bottom:Robert Doll, Executive VP, Director of Equity Investments,
with his assistant, Pat Andrzejewski
A At this point there's nothing on the horizon to suggest runaway inflation.
5 Oppenheimer Asset Allocation Fund
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<TABLE>
<CAPTION>
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Statement of Investments December 31, 1994
------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
===================================================================================================================================
<S> <C> <C> <C>
Repurchase Agreements--3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago
Capital Markets, 6%, dated 12/30/94, to
be repurchased at $9,006,000 on 1/3/95,
collateralized by U.S. Treasury Nts.,
3.875%--8.875%, 5/31/95--8/31/05,
with a value of $8,558,896 and U.S. Treasury
Bonds, 10.75%--14.25%, 2/15/02--8/15/05,
with a value of $628,741 (Cost $9,000,000) $ 9,000,000 $ 9,000,000
===================================================================================================================================
Mortgage-Backed Obligations--0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency--0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--0.3% Federal National Mortgage Assn.:
11%, 11/1/14 17,241 18,582
11.50%, 7/1/11 257,614 278,373
11.75%, 1/1/16 282,817 309,855
------------
606,810
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--0.3% Government National Mortgage Assn.:
9%, 11/15/08 208,785 211,988
9%, 11/15/08 84,086 85,377
9%, 2/15/09 311,750 316,660
9%, 5/15/09 90,475 91,900
------------
705,925
- -----------------------------------------------------------------------------------------------------------------------------------
Private--0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Multi-Family--0.1% Resolution Trust Corp. Commercial Mtg. Pass-Through Certificates,
8%, Series 1994-C2, Cl. E, 4/25/25 415,508 332,147
------------
Total Mortgage-Backed Obligations (Cost $1,605,042) 1,644,882
===================================================================================================================================
U.S. Government Obligations--18.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--18.1% U.S. Treasury Nts.:
6.75%, 5/31/97 3,000,000 2,933,439
7.875%, 1/15/98 1,600,000 1,602,499
7.875%, 6/30/96 8,500,000 8,545,151
8.25%, 7/15/98 16,000,000 16,194,990
8.75%, 10/15/97 350,000 358,094
8.875%, 11/15/98 950,000 982,656
9.25%, 1/15/96 825,000 839,953
9.25%, 8/15/98 9,450,000 9,863,438
STRIPS, 0%, 8/15/02 6,100,000 3,385,823
------------
Total U.S. Government Obligations (Cost $44,682,711) 44,706,043
===================================================================================================================================
Foreign Government Obligations--9.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de
Deudas, Series I, 5.625%, 4/1/01(4)(6) 3,490,713 2,236,057
------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 9.75%, 12/1/01(CAD) 6,000,000 4,425,085
------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 9.75%, 6/1/01(CAD) 2,000,000 1,474,315
------------------------------------------------------------------------------------------------------
Queensland (Government of) Development Authority Global
Transferable Registered Nts., 10.50%, 5/15/03(AUD) 5,000,000 3,920,014
6 Oppenheimer Asset Allocation Fund
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------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign Government Spain (Kingdom of) Bonds, 11.45%, 8/30/98(ESP) $125,000,000 $ 943,174
Obligations ------------------------------------------------------------------------------------------------------
(continued) Spain (Kingdom of) Bonds, 13.45%, 4/15/96(ESP) 435,000,000 3,422,034
------------------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, 11%, 1/21/99(SEK) 7,500,000 1,031,972
------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds,
8.25%, 10/15/03(AUD) 3,000,000 2,030,148
------------------------------------------------------------------------------------------------------
United Mexican States Gtd. Cv. Bonds, Series B,
6.25%, 12/31/19 4,000,000 2,130,000
------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Collateralized Par Bonds, Series W-A,
6.75%, 3/31/20 1,500,000 690,000
------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Collateralized Par Bonds, Series W-B,
6.75%, 3/31/20 3,500,000 1,610,000
------------
Total Foreign Government Obligations (Cost $28,425,565) 23,912,799
===================================================================================================================================
Non-Convertible Corporate Bonds and Notes--13.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--1.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--0.5% Quantum Chemical Corp., 10.375% Fst. Mtg. Nts., 6/1/03 500,000 542,017
------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 900,000 796,500
------------
1,338,517
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--0.5% Horsehead Industries, Inc., 14% Sub. Nts., 6/1/99 400,000 398,000
------------------------------------------------------------------------------------------------------
Inland Steel Industries, Inc., 12.75% Nts., 12/15/02 400,000 432,000
------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 500,000 503,750
------------
1,333,750
- -----------------------------------------------------------------------------------------------------------------------------------
Paper and Forest Gaylord Container Corp., 0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(3) 600,000 532,500
Products--0.4% ------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.75% Sr. Nts., 6/15/00 500,000 507,500
------------
1,040,000
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Supplies and Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 725,000 610,813
Development--0.5% ------------------------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 500,000 511,250
------------
1,122,063
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Goods and Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 900,000 895,500
Services--0.7% ------------------------------------------------------------------------------------------------------
MacAndrews & Forbes Group, Inc., 12.25% Sub. Nts., 7/1/96 500,000 498,750
------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 250,000 225,000
------------
1,619,250
- -----------------------------------------------------------------------------------------------------------------------------------
Entertainment--0.2% Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., 6/30/02 400,000 425,000
- -----------------------------------------------------------------------------------------------------------------------------------
Hotels/Lodging--0.3% Host Marriott Hospitality, Inc., 9.125% Sr. Nts., Series C, 12/1/00 624,000 609,180
- -----------------------------------------------------------------------------------------------------------------------------------
Media--0.6% News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05 1,000,000 956,283
------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Nts., Series 1, 6/30/05 500,000 500,000
------------
1,456,283
7 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--3.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Food--0.7% Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 $ 1,000,000 $ 787,500
------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98 1,000,000 1,035,000
------------
1,822,500
- -----------------------------------------------------------------------------------------------------------------------------------
Food and Drug Di Giorgio Corp., 12% Sr. Nts., 2/15/03 750,000 705,000
Distribution--1.5% ------------------------------------------------------------------------------------------------------
Grand Union Co., 11.25% Sr. Nts., 7/15/00 1,000,000 890,000
------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.25% Sr. Sub. Nts., 7/15/02 500,000 491,250
------------------------------------------------------------------------------------------------------
Revco D.S., Inc., 9.125% Sr. Nts., 1/15/00 500,000 501,250
------------------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 1,700,000 1,054,000
------------
3,641,500
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare--0.9% American Medical International, Inc., 13.50% Sr. Sub. Nts., 8/15/01 500,000 548,750
------------------------------------------------------------------------------------------------------
Mediq, Inc., 7.50% Exch. Sub. Debs., 7/15/03 1,650,000 1,334,438
------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 345,000 401,925
------------
2,285,113
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--1.3% Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 400,000 430,000
------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 1,000,000 947,500
------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 750,000 836,250
------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 1,000,000 1,045,000
------------
3,258,750
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--0.8% Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03 1,000,000 1,045,000
------------------------------------------------------------------------------------------------------
Conseco, Inc., 8.125% Sr. Nts., 2/15/03 1,000,000 881,282
------------
1,926,282
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Containers--0.2% Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 500,000 490,000
- -----------------------------------------------------------------------------------------------------------------------------------
General Industrial--0.5% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 1,000,000 862,500
------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(5) 450,000 426,375
------------
1,288,875
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--0.1% Tiphook Financial Corp., 7.125% Gtd. Nts., 5/1/98 418,000 308,275
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.6% GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 750,000 577,500
------------------------------------------------------------------------------------------------------
GPA Holland, 9.75%, 6/10/96 1,000,000 940,000
------------
1,517,500
8 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Cable Television--2.0% Adelphia Communications Corp., 12.50% Sr. Nts., 5/15/02 $ 1,000,000 $ 960,000
------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12.375% Gtd. Exch. Certificates, 5/1/20 800,000 1,042,947
------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 1,000,000 900,000
------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 500,000 502,500
------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13 500,000 461,250
------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.95% Nts., 2/1/00 1,000,000 955,215
------------
4,821,912
- -----------------------------------------------------------------------------------------------------------------------------------
Communications--0.4% Centennial Cellular Corp., 8.875% Sr. Nts., 11/1/01 500,000 440,000
------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(3) 1,000,000 620,000
------------
1,060,000
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--0.6% TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,100,000 1,141,250
------------------------------------------------------------------------------------------------------
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97 400,000 434,000
------------
1,575,250
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--0.4% First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 1,000,000 906,814
------------
Total Non-Convertible Corporate Bonds and Notes
(Cost $35,699,985) 33,846,814
Shares
===================================================================================================================================
Common Stocks--50.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.1% IMC Global, Inc.(7) 24,000 1,038,000
------------------------------------------------------------------------------------------------------
Praxair, Inc. 47,300 969,650
------------------------------------------------------------------------------------------------------
Sybron Chemical Industries, Inc.(2) 42,800 663,400
------------
2,671,050
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals: Diversified--1.2% ARCO Chemical Co. 21,000 924,000
------------------------------------------------------------------------------------------------------
Bayer AG, Sponsored ADR(2) 90,000 2,084,490
------------
3,008,490
- -----------------------------------------------------------------------------------------------------------------------------------
Metal: Miscellaneous--0.8% Brush Wellman, Inc. 103,300 1,794,838
- -----------------------------------------------------------------------------------------------------------------------------------
Paper and Forest Georgia-Pacific Corp. 13,200 943,800
Products--0.8% ------------------------------------------------------------------------------------------------------
Indah Kiat 79,800 90,764
------------------------------------------------------------------------------------------------------
Louisiana-Pacific Corp. 27,900 760,275
------------------------------------------------------------------------------------------------------
PT Pabrik Kertas Tjiwi Kimia 30,000 55,960
------------
1,850,799
- -----------------------------------------------------------------------------------------------------------------------------------
Steel--0.6% Inland Steel Industries, Inc.(2)(7) 41,000 1,440,125
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--6.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Airlines--0.3% AMR Corp.(2) 14,000 745,500
- -----------------------------------------------------------------------------------------------------------------------------------
Automobiles--0.5% Fiat SpA(2) 320,000 1,187,486
------------------------------------------------------------------------------------------------------
Mahindra & Mahindra Ltd., GDR 8,000 89,260
------------
1,276,746
9 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcast Media--0.6% Comcast Corp., Cl. A Special 100,000 $1,568,750
- -----------------------------------------------------------------------------------------------------------------------------------
Entertainment--0.9% King World Productions, Inc.(2) 45,100 1,555,950
------------------------------------------------------------------------------------------------------
Sega Enterprises 13,500 778,039
------------
2,333,989
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure Time--0.9% Caesar's World, Inc.(2) (7) 18,000 1,201,500
------------------------------------------------------------------------------------------------------
Eastman Kodak Co. 21,900 1,045,725
------------
2,247,225
- -----------------------------------------------------------------------------------------------------------------------------------
Publishing--0.9% Time Warner, Inc. 40,000 1,405,000
------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 10,167 752,280
------------
2,157,280
- -----------------------------------------------------------------------------------------------------------------------------------
Retail Stores: Dillard Department Stores, Inc., Cl. A 25,000 668,750
Department Stores--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--0.7% CML Group, Inc.(7) 69,000 698,625
------------------------------------------------------------------------------------------------------
Venture Stores, Inc. 88,000 1,023,000
------------
1,721,625
- -----------------------------------------------------------------------------------------------------------------------------------
Textiles: Apparel Authentic Fitness Corp.(2) 77,300 1,072,538
Manufacturers--0.8% ------------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A(2) 56,400 972,900
------------
2,045,438
- -----------------------------------------------------------------------------------------------------------------------------------
Toys--1.0% Mattel, Inc.(7) 63,000 1,582,875
------------------------------------------------------------------------------------------------------
Nintendo Co. 15,000 810,364
------------
2,393,239
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--9.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages: Alcoholic--0.4% Guinness PLC 160,000 1,126,440
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages: Soft Drinks--0.7% Whitman Corp. 104,300 1,799,175
- -----------------------------------------------------------------------------------------------------------------------------------
Cosmetics--0.2% Maybelline, Inc. 22,800 410,400
- -----------------------------------------------------------------------------------------------------------------------------------
Drugs--1.5% Agouron Pharmaceuticals, Inc.(2) 24,000 270,000
------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 37,250 962,057
------------------------------------------------------------------------------------------------------
Ciba-Geigy AG 1,825 1,089,148
------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co.(7) 9,000 590,625
------------------------------------------------------------------------------------------------------
Medeva PLC 342,715 873,969
------------
3,785,799
- -----------------------------------------------------------------------------------------------------------------------------------
Food Processing--1.0% Chiquita Brands International, Inc. 2 27
------------------------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 30,000 1,429,323
------------------------------------------------------------------------------------------------------
Sara Lee Corp. 40,000 1,010,000
------------
2,439,350
10 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare: Abbott Laboratories 26,200 $ 854,775
Diversified--1.6% ------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 33,000 1,909,875
------------------------------------------------------------------------------------------------------
Schering AG 1,825 1,195,068
------------
3,959,718
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare: Amgen, Inc.(2)(7) 12,900 761,100
Miscellaneous--2.3% ------------------------------------------------------------------------------------------------------
Biosys, Inc.(2) 74,400 167,400
------------------------------------------------------------------------------------------------------
Chiron Corp.(2)(7) 8,100 651,038
------------------------------------------------------------------------------------------------------
Genzyme Corp.(2)(7) 28,100 885,150
------------------------------------------------------------------------------------------------------
Manor Care, Inc. 40,000 1,095,000
------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc.(7) 50,000 2,062,500
------------
5,622,188
- -----------------------------------------------------------------------------------------------------------------------------------
Hospital Management--0.2% Novacare, Inc.(2) 72,500 525,625
- -----------------------------------------------------------------------------------------------------------------------------------
Medical Products--1.1% Medtronic, Inc. 19,200 1,068,000
------------------------------------------------------------------------------------------------------
Mitek Surgical Products, Inc.(2) 26,400 653,400
------------------------------------------------------------------------------------------------------
Nellcor, Inc.(2) 28,000 924,000
------------
2,645,400
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--0.5% Philip Morris Cos., Inc. 22,000 1,265,000
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--2.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Coal--0.5% Ashland Coal, Inc. 42,400 1,208,400
- -----------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated Atlantic Richfield Co. 9,400 956,450
Domestic--1.1% ------------------------------------------------------------------------------------------------------
Unocal Corp. 62,000 1,689,500
------------
2,645,950
- -----------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated Royal Dutch Petroleum Co. 7,000 752,500
International--0.6% ------------------------------------------------------------------------------------------------------
Saga Petroleum AS, Cl. B 70,000 724,422
------------
1,476,922
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--7.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Building Materials Owens-Corning Fiberglass Corp.(2) 68,000 2,176,000
Group--0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Conglomerates--1.1% Jardine Matheson Holdings Ltd. 70,936 506,552
------------------------------------------------------------------------------------------------------
Tenneco, Inc. 33,000 1,402,500
------------------------------------------------------------------------------------------------------
Wharf Holdings 205,000 691,543
------------
2,600,595
11 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Containers: Metal Corning, Inc. 27,200 $ 812,600
And Glass--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--0.5% General Electric Co. 26,400 1,346,400
- -----------------------------------------------------------------------------------------------------------------------------------
Engineering Empresas ICA Sociedad Controladora SA de C.V.(7) 40,600 629,300
And Construction--0.6% ------------------------------------------------------------------------------------------------------
Huarte SA 88,350 825,575
------------
1,454,875
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing: Mannesmann AG 7,412 2,008,392
Diversified ------------------------------------------------------------------------------------------------------
Industrials--1.3% Siemens AG, ADR 14,200 1,189,124
------------
3,197,516
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution Control--0.3% Waste Management International PLC, Sponsored ADR(2) 55,000 625,625
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads--0.9% Burlington Northern, Inc. 33,900 1,631,438
------------------------------------------------------------------------------------------------------
Chicago & North Western Holdings Corp.(2) 34,700 667,975
------------
2,299,413
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation: Consolidated Freightways, Inc. 52,000 1,163,500
Miscellaneous--1.1% ------------------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisbona SA(2) 15,000 73,492
------------------------------------------------------------------------------------------------------
OMI Corp.(2) 25,900 171,588
------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA(2) 65,000 1,340,625
------------------------------------------------------------------------------------------------------
Westmont Berhad 11,000 68,493
------------
2,817,698
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--6.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Finance--0.3% SG Warburg & Co., Inc. Ords 76,500 827,018
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services: American Express Co.(7) 28,000 826,000
Miscellaneous--1.3% ------------------------------------------------------------------------------------------------------
CMAC Investment Corp. 41,300 1,192,538
------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 37,000 1,322,750
------------
3,341,288
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Life--0.4% Bankers Life Holding Corp. 45,800 870,200
------------------------------------------------------------------------------------------------------
National Mutual Asia Ltd.(2) 120,000 79,100
------------
949,300
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Multi-Line--1.3% Aetna Life & Casualty Co. 16,800 791,700
------------------------------------------------------------------------------------------------------
American International Group, Inc. 10,400 1,019,200
------------------------------------------------------------------------------------------------------
AmericanRe Corp.(2) 40,000 1,290,000
------------
3,100,900
- -----------------------------------------------------------------------------------------------------------------------------------
Major Banks: Other--0.5% Banco Frances del Rio Plata 9,000 64,125
------------------------------------------------------------------------------------------------------
Deutsche Bank AG, ADR 2,250 1,045,151
------------------------------------------------------------------------------------------------------
Korea First Bank 12,357 172,387
------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS, Sponsored ADR(5) 8,000 20,258
------------
1,301,921
12 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Major Banks: Regional--1.0% NationsBank Corp. 53,200 $ 2,400,650
- -----------------------------------------------------------------------------------------------------------------------------------
Money Center Banks--1.3% Bankers Trust New York Corp.(7) 26,000 1,439,750
------------------------------------------------------------------------------------------------------
Chemical Banking Corp. 52,400 1,879,850
------------
3,319,600
- -----------------------------------------------------------------------------------------------------------------------------------
Savings and Loans/ Golden West Financial Corp. 25,000 881,250
Holding Cos.--0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--11.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.1% General Dynamics Corp.(7) 24,300 1,057,050
------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp.(7) 11,000 1,562,000
------------
2,619,050
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software Bay Networks, Inc.(2)(7) 42,920 1,266,140
And Services--4.7% ------------------------------------------------------------------------------------------------------
BMC Software, Inc.(2)(7) 25,700 1,461,688
------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.(7) 28,700 1,391,950
------------------------------------------------------------------------------------------------------
Delrina Corp.(2) 52,000 643,500
------------------------------------------------------------------------------------------------------
Electronic Arts, Inc.(2) 63,000 1,212,750
------------------------------------------------------------------------------------------------------
Landmark Graphics Corp.(2) 36,900 664,200
------------------------------------------------------------------------------------------------------
Lotus Development Corp.(2)(7) 18,000 738,000
------------------------------------------------------------------------------------------------------
Marcam Corp.(2) 69,300 701,663
------------------------------------------------------------------------------------------------------
Microsoft Corp.(2)(7) 18,600 1,136,925
------------------------------------------------------------------------------------------------------
Novell, Inc.(2) 52,500 899,063
------------------------------------------------------------------------------------------------------
Pyxis Corp.(2)(7) 34,000 646,000
------------------------------------------------------------------------------------------------------
Symantec Corp.(2) 55,000 962,500
------------
11,724,379
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Systems--1.2% Sun Microsystems, Inc.(2)(7) 41,500 1,473,250
------------------------------------------------------------------------------------------------------
Tandem Computers, Inc.(2)(7) 87,800 1,503,575
------------
2,976,825
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics: Hewlett-Packard Co.(7) 14,300 1,428,213
Instrumentation--0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics: Intel Corp. 40,000 2,555,000
Semiconductors--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Office Equipment and Xerox Corp. 11,100 1,098,900
Supplies--0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications--2.8% AirTouch Communications, Inc.(2)(7) 36,500 1,063,060
------------------------------------------------------------------------------------------------------
AT&T Corp. 22,700 1,140,675
------------------------------------------------------------------------------------------------------
ECI Telecommunications Ltd. 62,000 844,750
------------------------------------------------------------------------------------------------------
MCI Communications Corp. 116,800 2,146,200
------------------------------------------------------------------------------------------------------
Rogers Cantel Mobile Communications, Inc., Sub. Cl. B(2) 54,000 1,574,440
------------------------------------------------------------------------------------------------------
Technology Resources Industries(2) 20,000 63,833
------------
6,832,958
13 Oppenheimer Asset Allocation Fund
<PAGE>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Companies--0.8% Central Puerto SA, ADR(5) 2,000 $ 49,497
------------------------------------------------------------------------------------------------------
Korea Electric Power Co. 25,000 862,397
------------------------------------------------------------------------------------------------------
Verbund Oest Electriz 19,000 1,097,409
------------
2,009,303
- -----------------------------------------------------------------------------------------------------------------------------------
Natural Gas--0.4% Hong Kong & China Gas 619,200 1,000,382
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone--1.3% BCE, Inc. 34,000 1,092,250
------------------------------------------------------------------------------------------------------
US West, Inc. 54,800 1,952,250
------------
3,044,500
------------
Total Common Stocks (Cost $106,384,302) 125,576,370
===================================================================================================================================
Preferred Stocks--3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Advanced Micro Devices, Inc., Depositary Cv. Exchangeable
Preferred Shares Each Representing 1/10th Share of $30 Cv
Exchangeable Preferred Shares 13,700 719,250
------------------------------------------------------------------------------------------------------
Alumax, Inc., $19.50 Cv., Series A 7,333 885,460
------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc., $1.32 Depositary Shares 50,000 687,500
------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 17,666 1,031,251
------------------------------------------------------------------------------------------------------
Delta Airlines, Inc., $3.50 Cv. Depositary Shares, Series C 29,000 1,268,750
------------------------------------------------------------------------------------------------------
First Chicago Corp., Debt Exchangeable for Common Stock
of Nextel Communications, Inc., 5.50%, 2/15/97 25,000 437,500
------------------------------------------------------------------------------------------------------
FHP International Corp., Series A 71,500 1,751,750
------------------------------------------------------------------------------------------------------
Sap AG 1,180 672,974
------------
Total Preferred Stocks (Cost $6,793,340) 7,454,435
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $232,590,945) 99.7% 246,141,343
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.3 811,529
------------ ------------
Net Assets 100.0% $246,952,872
============ ============
<FN>
1. Face amount is reported in local currency. Foreign currency abbreviations are as follows:
AUD--Australian Dollar
CAD--Canadian Dollar
ESP--Spanish Peseta
SEK--Swedish Krona
2. Non-income producing security.
3. Represents a zero coupon bond that converts to a fixed rate of interest at a designated future date.
4. Represents the current interest rate for a variable rate security.
5. Restricted security--See Note 6 of Notes to Financial Statements.
6. Interest or dividend is paid in kind.
<PAGE>
7. Securities with an aggregate market value of $8,769,900 are held in escrow to cover outstanding
call options, as follows:
</FN>
</TABLE>
14 Oppenheimer Asset Allocation Fund
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Market
Shares Subject Expiration Exercise Premium Value
to Call Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Airtouch Communications, Inc. 9,000 1/95 $ 30.00 $ 9,292 $ 3,375
American Express Co. 5,600 4/95 35.00 8,932 1,400
Amgen, Inc. 4,000 4/95 60.00 19,880 16,000
BMC Software, Inc. 7,500 4/95 60.00 28,874 37,500
Bankers Trust New York Corp. 5,200 1/95 70.00 23,243 325
Bay Networks, Inc. 8,400 3/95 30.00 18,647 23,625
CML Group, Inc. 14,000 1/95 12.50 15,329 1,750
Caesar's World, Inc. 4,200 2/95 50.00 14,574 73,500
Chiron Corp. 2,000 1/95 75.00 7,690 10,500
Chiron Corp. 3,000 4/95 80.00 20,159 3,375
Computer Associates
International, Inc. 5,500 4/95 50.00 27,472 19,938
Empresas ICA Sociedad Controladora
SA de C.V 14,000 1/95 35.00 31,954 875
General Dynamics Corp. 5,000 2/95 45.00 12,037 6,250
General Dynamics Corp. 5,000 5/95 50.00 8,705 5,313
Genzyme Corp. 5,400 1/95 40.00 7,792 338
Hewlett-Packard Co. 3,000 5/95 105.00 18,659 15,000
Hewlett-Packard Co. 3,000 5/95 95.00 23,534 34,125
IMC Global, Inc. 4,800 4/95 45.00 14,256 13,200
Inland Steel Industries, Inc. 7,600 3/95 45.00 11,172 1,425
Lilly (Eli) & Co. 4,500 4/95 60.00 19,552 34,875
Lotus Development Corp. 4,400 1/95 50.00 15,817 1,375
Lotus Development Corp. 6,600 1/95 50.00 21,251 413
Lotus Development Corp. 7,000 4/95 50.00 31,289 12,250
Mattel, Inc. 16,000 1/95 30.00 28,519 2,000
McDonnell Douglas Corp. 3,000 5/95 140.00 31,409 34,122
Microsoft Corp. 2,200 4/95 65.00 5,434 5,225
Pyxis Corp. 9,600 4/95 30.00 34,511 9,000
Sun Microsystems, Inc. 7,000 1/95 30.00 10,727 41,125
Sun Microsystems, Inc. 7,000 4/95 35.00 12,040 24,500
Sun Microsystems, Inc. 7,000 7/95 40.00 13,352 16,625
Tandem Computers, Inc. 15,800 4/95 17.50 19,275 23,700
U.S. Healthcare, Inc. 10,000 1/95 45.00 29,074 2,500
U.S. Healthcare, Inc. 10,000 4/95 50.00 38,449 8,750
Upjohn Co.(8) 4,500 1/95 40.00 7,177 564
-------- --------
$640,077 $484,838
======== ========
<FN>
8. The Fund owns U.S. Treasury Nts., 6.75%, 5/31/97, that are acceptable for the escrow arrangements
required for written call options. See accompanying Notes to Financial Statements.
</FN>
</TABLE>
15 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1994
------------------------------------------------------------------------------------------------------
===================================================================================================================================
<S> <C> <C>
Assets Investments, at value (cost $232,590,945)--see accompanying statement $ 246,141,343
------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 3,340,358
Investments sold 890,847
Shares of beneficial interest sold 246,818
------------------------------------------------------------------------------------------------------
Other 83,508
--------------
Total assets 250,702,874
===================================================================================================================================
Liabilities Bank overdraft 449,157
------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $640,077)--
see accompanying statement--Note 4 484,838
------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends and distributions 1,253,245
Shares of beneficial interest redeemed 853,673
Investments purchased 264,058
Distribution and service plan fees--Note 5 118,238
Other 326,793
--------------
Total liabilities 3,750,002
===================================================================================================================================
Net Assets $ 246,952,872
==============
===================================================================================================================================
Composition of Paid-in capital $234,046,423
Net Assets ------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income (610,110)
------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) from investment,
written option and foreign currency transactions (189,381)
------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments, options written and
translation of assets and liabilities denominated in foreign currencies--Note 3 13,705,940
--------------
Net assets $ 246,952,872
==============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of $237,771,276 and
20,632,622 shares of beneficial interest outstanding) $11.52
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $12.22
------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $9,181,596 and 798,980 shares of beneficial interest outstanding) .$11.49
See accompanying Notes to Financial Statements.
</TABLE>
16 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------
===================================================================================================================================
<S> <C> <C>
Investment Income Interest (net of withholding taxes of $17,780) $ 11,314,536
------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of $78,254) 2,533,954
------------
Total income 13,848,490
===================================================================================================================================
Expenses Management fees--Note 5 1,869,498
------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 5 386,300
Class C--Note 5 55,806
------------------------------------------------------------------------------------------------------
Shareholder reports 241,215
------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 213,430
------------------------------------------------------------------------------------------------------
Legal and auditing fees 56,127
------------------------------------------------------------------------------------------------------
Custodian fees and expenses 55,003
------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 27,993
------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 341
Class C 3,112
------------------------------------------------------------------------------------------------------
Other 51,749
------------
Total expenses 2,960,574
===================================================================================================================================
Net Investment Income (Loss) 10,887,916
===================================================================================================================================
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) on Investments, Investments 15,341,281
Options Written and Closing and expiration of option contracts written--Note 4 1,326,659
Foreign Currency Foreign currency transactions 315,662
Transactions ------------
Net realized gain (loss) 16,983,602
------------
------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written (33,297,605)
Translation of assets and liabilities denominated in foreign currencies 946,267
------------
Net change (32,351,338)
------------
Net realized and unrealized gain (loss) on investments, options written
and foreign currency transactions (15,367,736)
===================================================================================================================================
Net Increase (Decrease) in Net Assets Resulting From Operations $ (4,479,820)
============
See accompanying Notes to Financial Statements
</TABLE>
17 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
------------------------------------------------------------------------------------------------------
Year Ended December 31,
1994 1993
===================================================================================================================================
<S> <C> <C> <C>
Operations Net investment income (loss) $ 10,887,916 $ 9,755,468
------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments, options written
and foreign currency transactions 16,983,602 8,616,993
------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments, options written and translation of
assets and liabilities denominated in foreign currencies (32,351,338) 22,617,333
------------ ------------
Net increase (decrease) in net assets resulting
from operations (4,479,820) 40,989,794
===================================================================================================================================
Dividends and Dividends from net investment income:
Distributions to Class A ($.532 and $.438 per share, respectively) (10,574,115) (9,529,080)
Shareholders Class C ($.443 and $.12 per share, respectively) (258,031) (2,987)
------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments,
options written and foreign currency transactions:
Class A ($.787 and $.012 per share, respectively) (15,027,395) (254,071)
Class C ($.787 and $.012 per share, respectively) (578,336) (298)
===================================================================================================================================
Beneficial Interest Net increase (decrease) in net assets resulting from
Transactions Class A beneficial interest transactions--Note 2 (10,144,316) (20,002,391)
------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
Class C beneficial interest transactions--Note 2 9,705,207 395,601
===================================================================================================================================
Net Assets Total increase (decrease) (31,356,806) 11,596,568
------------------------------------------------------------------------------------------------------
Beginning of period 278,309,678 266,713,110
------------ ------------
End of period (including overdistributed net investment
income of $610,110 and $340,955, respectively) $246,952,872 $278,309,678
============ ============
See accompanying Notes to Financial Statements.
</TABLE>
18 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------
Class A Class C
------------------------------------------------------------------------------- ------------------
Year Period
Year Ended Ended Ended
December 31, Dec.31, Dec.31,
1994 1993 1992 1991(3) 1990 1989 1988 1987(2) 1994 1993(1)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $ 13.05 $ 11.63 $ 11.22 $ 10.19 $ 10.67 $ 9.78 $ 8.89 $ 10.00 $ 13.05 $ 12.86
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .54 .44 .39 .40 .53 .49 .39 .27 .44 (.97)
Net realized and unrealized
gain (loss) on investments,
options written and
foreign currency transactions (.75) 1.43 .44 1.06 (.43) 1.17 1.09 (1.11) (.77) 1.29
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations (.21) 1.87 .83 1.46 .10 1.66 1.48 (.84) (.33) .32
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.53) (.44) (.42) (.43) (.52) (.48) (.40) (.26) (.44) (.12)
Distributions from net
realized gain on investments,
options written, and
foreign currency transactions (.79) (.01) -- -- (.06) (.29) (.19) (.01) (.79) (.01)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions to shareholders (1.32) (.45) (.42) (.43) (.58) (.77) (.59) (.27) (1.23) (.13)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.52 $ 13.05 $11.63 $11.22 $ 10.19 $ 10.67 $ 9.78 $ 8.89 $ 11.49 $ 13.05
======= ======= ====== ====== ======= ======= ======= ======= ======= =======
===================================================================================================================================
Total Return,
at Net Asset Value(4) (1.59)% 16.30% 7.54% 14.67% .93% 18.21% 15.88% (8.60)% (2.50)% 2.51%
===================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $237,771 $277,914 $266,713 $276,800 $83,292 $81,194 $51,602 $32,718 $9,182 $ 396
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)$260,767 $272,303 $269,096 $192,870 $82,490 $68,134 $40,662 $31,407 $5,601 $ 194
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 20,633 21,302 22,938 24,666 8,171 7,611 5,275 3,679 799 30
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.10% 3.58% 3.41% 3.78% 5.14% 4.71% 4.30% 3.84%(5) 3.30% 2.19%(5)
Expenses 1.09% 1.14% 1.17% 1.27% 1.36% 1.47% 1.50% 1.60%(5) 2.00% 2.50%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 31.5% 32.7% 60.3% 102.0% 71.3% 60.2% 185.5% 83.7% 31.5% 32.7%
<FN>
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993.
2. For the period from April 24, 1987 (commencement of operations) to December 31, 1987.
3. Per share amounts calculated based on the weighted average number of shares outstanding during
the year.
4. Assumes a hypothetical initial 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.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly
average of the market value of portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding short-term securities) for
the year ended December 31, 1994 were $80,945,381 and $94,867,765, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
19 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant
Accounting Policies
Oppenheimer Asset Allocation Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers both Class A and Class C shares.
Class A shares are sold with a front-end sales charge. Class C shares may be
subject to a contingent deferred sales charge. Both classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters affecting a
single class. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York
time) on each trading day. Listed and unlisted securities for which such
information is regularly reported are valued at the last sale price of the day
or, in the absence of sales, at values based on the closing bid or asked price
or the last sale price on the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the Board of Trustees.
Long-term debt securities which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the quotes
reflect current market value, or under consistently applied procedures
established by the Board of Trustees to determine fair value in good faith.
Short-term debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Options are valued based upon the last sale
price on the principal exchange on which the option is traded or, in the absence
of any transactions that day, the value is based upon the last sale on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid or asked
price closest to the last reported sale price is used.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rate of exchange prevailing on the respective dates of such transactions.
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 results of operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily 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 Income Taxes. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required. At December 31, 1994, the Fund had
available for federal income tax purposes an unused capital loss carryover of
approximately $1,781,000, $891,000 of which will expire in 1996, $445,000 in
1997 and $445,000 in 1998, the usage of which is subject to certain limitations.
20 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
1. Significant
Accounting Policies
(continued)
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
December 31, 1994, the Fund's projected benefit obligations were reduced by
$38,525, resulting in an accumulated liability of $110,974 at December 31, 1994.
No payments have been made under the plan.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Change in Accounting Classification of Distributions to Shareholders. Net
investment income (loss) and net realized gain (loss) may differ for financial
statement and tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of the distributions made during the 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
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain (loss) was recorded by the
Fund. Effective January 1, 1994, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly,
subsequent to December 31, 1993, amounts have been reclassified to reflect an
increase in paid-in capital of $2,394,578, a decrease in undistributed net
investment income of $235,825, and a decrease in accumulated net realized gain
on investments of $2,158,753. During the year ended December 31, 1994, in
accordance with Statement of Position 93-2, undistributed net investment income
was decreased by $89,100, accumulated net realized gain on investments was
decreased by $356,108, and paid-in capital was increased by $445,208.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
================================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1994 December 31, 1993 (1)
----------------------------- ---------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,464,805 $ 18,650,064 1,309,237 $ 16,208,603
Dividends and distributions
reinvested 1,895,898 22,211,167 593,184 7,426,650
Redeemed (4,030,121) (51,005,547) (3,538,545) (43,637,644)
--------- ------------ ---------- ------------
Net decrease (669,418) $(10,144,316) (1,636,124) $(20,002,391)
========= ============ ========== ============
------------------------------------------------------------------------------------------------------
Class C:
Sold 757,806 $ 9,618,332 30,068 $ 392,326
Dividends and distributions
reinvested 62,679 725,448 251 3,275
Redeemed (51,824) (638,573) -- --
--------- ------------ ---------- ------------
Net increase 768,661 $ 9,705,207 30,319 $ 395,601
========= ============ ========== ============
<FN>
1. For the year ended December 31, 1993 for Class A shares and for the period from December 1, 1993
(inception of offering) to December 31, 1993 for Class C shares.
</FN>
</TABLE>
================================================================================
3. Unrealized Gains and
Losses on Investments
At December 31, 1994, net unrealized appreciation on investments and options
written of $13,705,940 was composed of gross appreciation of $27,640,976, and
gross depreciation of $13,935,036. And Options Written
21 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued
- --------------------------------------------------------------------------------
================================================================================
4. Option Activity
The Fund may buy and sell put and call options, or write 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.
The Fund segregates assets to cover its obligations under option contracts.
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.
In this report, securities segregated to cover outstanding call options are
noted in the Statement of Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are detailed in a footnote to
the Statement of Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. 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.
Call option activity for the year ended December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Number Amount
of Options of Premiums
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1993 4,564 $ 1,222,221
------------------------------------------------------------------------------------------------------
Options written 5,769 1,805,614
------------------------------------------------------------------------------------------------------
Options cancelled in closing purchase transactions (3,274) (1,055,031)
------------------------------------------------------------------------------------------------------
Options exercised (1,744) (561,301)
------------------------------------------------------------------------------------------------------
Options expired prior to exercise (3,007) (771,426)
----- -----------
Options outstanding at December 31, 1994 2,308 $ 640,077
===== ===========
</TABLE>
================================================================================
5. Management Fees and
Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provided for an annual fee of 1% on the
first $50 million of net assets, .75% on the next $150 million with a reduction
of .05% on each $200 million thereafter, to .60% on net assets in excess of $600
million. Effective June 27, 1994, management fees were reduced to .75% on the
first $200 million of net assets with a reduction of .03% on each $200 million
thereafter to $800 million, and .60% on net assets in excess of $800 million.
The Manager has agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent applicable regulatory limit on
Fund expenses.
For the year ended December 31, 1994, commissions (sales charges paid by
investors) on sales of Class A shares totaled $446,064, of which $160,107 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. During the
year ended December 31, 1994, OFDI received contingent deferred sales charges of
$2,135 upon redemption of Class C shares, as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing such services are allocated
ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund (prior
to July 1, 1994, Class A reimbursement were made with respect to shares sold
subsequent to April 1, 1988), including amounts paid to brokers, dealers, banks
and other institutions. In addition, Class C shares are subject to an
asset-based sales charge of .75% of net assets annually, to reimburse OFDI for
sales commissions paid from its own resources at the time of sale and associated
financing costs. In the event of termination or discontinuance of the Class C
plan, the Board of Trustees may allow the Fund to continue
22 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
5. Management Fees and
Other Transactions
(continued)
payment of the asset-based sales charge to OFDI for distribution expenses
incurred on Class C shares sold prior to termination or discontinuance of the
plan. During the year ended December 31, 1994, OFDI With Affiliates paid
$103,221 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses and retained $55,744 as reimbursement for Class
C sales commissions and service fee advances, as well as financing costs.
================================================================================
6. Restricted Securities
The Fund owns securities purchased in private placement transactions, without
registration under the Securities Act of 1933 (the Act). The securities are
valued under methods approved by the Board of Trustees as reflecting fair value.
The Fund intends to invest no more than 10% of its net assets (determined at the
time of purchase) in restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that are determined to be
liquid by the Board of Trustees or by the Manager under Board-approved
guidelines. Illiquid and/or restricted securities, including those restricted
securities that are transferable under Rule 144A of the Act are listed below.
<TABLE>
<CAPTION>
Valuation Per Unit as of
Security Acquisition Date Cost Per Unit December 31, 1994
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Central Puerto SA, ADR(1) 7/21/94--7/25/94 $ 31.81 $ 24.75
------------------------------------------------------------------------------------------------------
Terex Corp., 13% Sr. Nts., 8/1/96(1) 11/16/94 $ 0.98 $ 0.95
------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS,
Sponsored ADR(1) 7/21/94--10/26/94 $ 2.16 $ 2.53
<FN>
1. Transferable under Rule 144A of the Act.
</FN>
</TABLE>
23 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Asset Allocation Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Asset Allocation Fund as of December 31, 1994, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the seven-year period then
ended and the period from April 24, 1987 (commencement of operations) to
December 31, 1987. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Asset Allocation Fund as of December 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the seven-year period then ended and the period from April
24, 1987 (commencement of operations) to December 31, 1987, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
January 23, 1995
24 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1995, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1994. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
A distribution of $.787 per share was paid on December 29, 1994, which was
designated as a "capital gain distribution" for federal income tax purposes.
Whether received in stock or cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets held for more
than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended December 31, 1994
which are not designated as capital gain distributions should be multiplied by
21.4% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
25 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Asset Allocation Fund
- --------------------------------------------------------------------------------
================================================================================
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
David P. Negri, Vice President
Richard H. Rubinstein, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor Oppenheimer Management Corporation
================================================================================
Distributor Oppenheimer Funds Distributor, Inc.
================================================================================
Transfer and Shareholder Oppenheimer Shareholder Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors KPMG Peat Marwick LLP
================================================================================
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Asset Allocation Fund. This report must
be preceded or accompanied by a Prospectus of
Oppenheimer Asset Allocation Fund. For material
information concerning the Fund, see the
Prospectus.
26 Oppenheimer Asset Allocation Fund
<PAGE>
OppenheimerFunds Family
OppenheimerFunds offers over 35 funds designed to fit
virtually every investment goal. Whether you're investing
for retirement, your children's education or tax-free
income, we have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel
comfortable knowing that you are investing with a respected
financial institution with over 30 years of experience in
helping people just like you reach their financial goals.
And you're investing with a leader in global, growth stock
and flexible fixed income investmentswith over 1.8 million
shareholder accounts and more than $29 billion under
Oppenheimer's management and that of our affiliates.
As an OppenheimerFunds shareholder, you can easily exchange
shares of eligible funds of the same class by mail or by
telephone for a small administrative fee.1 For more
information on OppenheimerFunds, please contact your
financial advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address shown on
the back cover. As always, please read the prospectus
carefully before you invest.
Stock Funds Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Time Fund Value Stock Fund
Target Fund Gold & Special Minerals Fund
Growth Fund(3)
Stock & Bond Funds Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
Bond Funds High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund Investment Grade Bond Fund
Strategic Income & Growth Fund Mortgage Income Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Fund Limited-Term
Government Fund Strategic Investment Grade Bond Fund
Tax-Exempt Funds New York Tax-Exempt Fund(4) New Jersey Tax-Exempt Fund(4)
California Tax-Exempt Fund(4) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(4) Insured Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(4) Intermediate Tax-Exempt Bond Fund
Money Market Funds Money Market Fund Cash Reserves
1. The fee is waived for PhoneLink exchanges between
existing accounts. Exchange privileges are subject to change
or termination.
2. Formerly Global Bio-Tech Fund and Global Environment
Fund.
3. Formerly Special Fund.
4. Availableonly to residents of those states.
OppenheimerFunds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York,
NY10048-0203.
(C)Copyright 1995 Oppenheimer Management Corporation. All
rights reserved.
27 Oppenheimer Asset Allocation Fund
<PAGE>
"How may I help you?"
As an OppenheimerFunds shareholder, some special privileges are available to
you. Whether it's automatic investment plans, informative newsletters and
hotlines, or ready account access, you can benefit from services designed to
make investing simple.
And when you need help, our Customer Service Representatives are
only a toll-free phone call away. They can provide information about your
account and handle administrative requests. You can reach them at our General
Information number.
When you want to make a transaction, you can do it easily by calling
our toll-free Telephone Transactions number. And, by enrolling in
AccountLink, a convenient service that "links" your OppenheimerFunds accounts
and your bank checking or savings account, you can use the Telephone
Transactions number to make investments.
For added convenience, you can get auto-mated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market infor-
mation. It also gives you the ability to make transactions using your touch-tone
phone. Of course, you can always speak with a Customer Service Representative
during business hours.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, non-profit
organization made up of over 3,200 customer service management professionals
from around the country, honored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
Information
General Information
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
Telephone Transactions
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PhoneLink
24 hours a day, automated information and transactions
1-800-533-3310
Telecommunications Device
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful messages on the economy and issues
that affect your investments
1-800-835-3104
RA0240.001.0295
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