<PAGE>
OPPENHEIMER ASSET ALLOCATION FUND
ANNUAL REPORT SEPTEMBER 30, 1996
[Photograph]
"We need the comfort that comes from diversifying across different types of
investments--but we want it from one fund."
[Logo]
<PAGE>
NEWS
BEAT THE AVERAGE
Cumulative Total Return for the
5-Year Period Ended 9/30/96:
Oppenheimer Asset Allocation Fund
Class A (at net asset value)(1)
77.40%
Lipper Flexible Portfolio Funds
Average for 45 Funds for the
5-Year Period(3)
71.56%
THIS FUND IS FOR PEOPLE WHO WANT AN INVESTMENT THAT'S STRATEGICALLY ALLOCATED TO
PURSUE GROWTH WITH LESS RISK.
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 to achieve its goals by investing in a combination of
stocks, bonds and money market instruments--strategically allocated to take
advantage of current economic conditions.
Investing in stocks can offer 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.
And the Fund seeks income from diversified fixed income and money market
investments which can act as a cushion against fluctuations in the value of the
stocks in the Fund's portfolio.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/96 were 13.70% for
Class A shares, 12.55% for Class B shares, and 12.71% for Class C shares.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/96 and since inception
on 4/24/87 were 7.16%, 10.83% and 9.28%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 9/30/96 and since
inception on 8/29/95 were 7.55% and 10.33%, respectively. For Class C shares,
average annual total returns for the 1-year period ended 9/30/96 and since
inception on 12/1/93 were 11.71% and 10.90%, respectively.(2)
OUTLOOK
"Our outlook remains optimistic. We are looking to our international investments
to provide solid growth and diversification and believe we may begin to see
stronger growth as those countries move through their economic cycles."
Richard Rubinstein, Portfolio Manager
September 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. In reviewing the notes that follow on performance
and rankings, please be aware that past performance does not guarantee future
results. Investment return and principal value of 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.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 9/30/95, 9/30/91
and 4/24/87 (inception of class), after deducting the current maximum initial
sales charge of 5.75%. Prior to 4/1/91, the Fund's maximum sales charge rate for
Class A shares was higher, so that actual account results would have been less.
Class B returns show results of hypothetical investments on 9/30/95 and 8/29/95
(inception of class), after the deduction of the applicable contingent deferred
sales charge of 5% (1-year) and 4% (since inception). Class C returns show
results of hypothetical investments on 9/30/95 and 12/1/93 (inception of class),
after the deduction of the 1% contingent deferred sales for the 1-year result.
An explanation of the different performance calculations is in
the Fund's prospectus.
3. Source: Lipper Analytical Services, 9/30/96, an independent mutual fund
monitoring service. The average is shown for comparative purposes only.
Oppenheimer Asset Allocation Fund is characterized by Lipper as a flexible
portfolio fund. Lipper performance does not take sales charges into
consideration.
2 Oppenheimer Asset Allocation Fund
<PAGE>
[Photograph]
Bridget A. Macaskill
President
Oppenheimer
Asset Allocation Fund
DEAR SHAREHOLDER,
So far, 1996 has been a good year for investors seeking diversification across
market sectors. It has also been a tough year full of anticipation. The U.S.
markets have been waiting anxiously for a correction or downturn believed by
many to be imminent after six years of a bullish stock market, and with emotions
running high, the market has reacted to announcements of each new economic
indicator with fervor.
Aside from the decline in late July, the long-awaited correction has not
come. Instead, we have seen economic indicators that show an economy growing at
a pace just steady enough to keep inflation in check and prevent the Federal
Reserve from raising interest rates.
We have seen volatile but continued growth from the U.S. equity market
through the first three quarters of 1996, bringing the Dow Jones Industrial
Average to new highs. Perhaps due to concerns of a correction, the market has
edged away from technology and small-cap growth stocks and leaned more heavily
toward larger blue chip growth companies. We remain optimistic on the domestic
equities market, but are keeping in mind that the U.S. is in the late stages of
its economic cycle and high returns such as we saw last year cannot continue
unabated forever. More realistically, we anticipate a return to the high single-
digit returns of the "normal nineties."
In the bond market, fears of rising interest rates led to volatility
during the first nine months of the year. This interest rate uncertainty
fueled a decline in bond prices and forced yields to rise. Although it has
been a tough period for fixed-income investors, we consider this period's
devaluation in bonds as an opportunity to find good value at cheaper prices.
More recent indicators have shown that the economy should continue on its
course of steady growth and low inflation. As a result, we could see a
decline in interest rates in the coming twelve months, which could lead to a
rebound in the bond market.
When you look at the opportunities available in both the U.S. fixed-income
and equity markets, the outlook for diversified investing is very positive.
Using a mutual fund that invests in both stocks and bonds gives you access to
professional managers who are continually evaluating the appropriate mixture of
stocks and bonds. Although stocks tend to produce the highest returns, they also
typically present the greatest risk. Bonds, on the other hand, will produce more
stable returns, but tend to fluctuate less on the downside than do stocks.
Your portfolio managers discuss the outlook for your Fund in light of these
broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping your reach your investment goals in
the future.
/s/ Bridget A. Macaskill
Bridget A. Macaskill
October 21, 1996
3 Oppenheimer Asset Allocation Fund
<PAGE>
Q & A [Photograph] [Photograph]
Q - WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW DID THE FUND PERFORM OVER THE PERIOD?
The portfolio has performed well over the period while keeping within its
objectives of seeking high total investment return, which includes current
income as well as capital appreciation. The portfolio is structured to perform
in many market environments. The Fund's Class A shares are ranked 62nd out of
178 funds in its category rated by Lipper Analytical Services for the
1-year period ended 9/30/96. This ranking put the Fund in the second quartile
versus its competitors.(1)
[Photograph]
WHAT WERE THE PRIMARY REASONS FOR THE FUND'S STRONG PERFORMANCE?
Our domestic stock and bond holdings were the primary drivers of our
performance. Our energy stocks also proved an important source of return. During
the period, we increased the portfolio's energy holdings anticipating better
profits. We expected that higher oil prices and cheaper finding costs would
increase profits. We saw higher than expected demand from the emerging markets
and unexpected political events in Iraq and Saudi Arabia. These incidents
combined to increase the price of oil and provide higher returns to our fund.
Another reason for the Fund's strong performance was our exposure to
emerging markets, in particular, our investments in Brady Bonds, which are U.S.
dollar-denominated bonds. Also, high yield bonds were another significant
contributor to the Fund's positive return. However, investors in high yield
bonds are subject to a greater risk that the issuer will default in its
principal or interest payments. But over time, we expect the long-term returns
will more than compensate for temporary risks.
1. Source:Lipper Analytical Services, 9/30/96. Oppenheimer Asset Allocation Fund
is characterized by Lipper as a flexible portfolio fund. This comparison does
not take sales charges into consideration.
4 Oppenheimer Asset Allocation Fund
<PAGE>
FACING PAGE
Top left: Richard Rubinstein, Portfolio Manager, with Robert Doll,
Executive VP, Director of Equity Investments
Top right: Paul LaRocco, Member of Equity Investments Team
Bottom: Robert Doll
THIS PAGE
Top: Richard Rubinstein
Bottom: Bruce Bartlett, Member of Equity Investments Team
A - OUR DOMESTIC STOCK AND BOND HOLDINGS WERE THE PRIMARY DRIVERS OF OUR
PERFORMANCE.
WERE THERE ANY INVESTMENTS THAT DIDN'T PERFORM AS EXPECTED?
Though we remain committed to the international sector, many of our foreign
holdings have continued to underperform the U.S. equity markets. International
investments are good diversifiers of risk and over the long term, have the
potential to grow faster than many of our U.S. companies.
Some of our technology holdings didn't perform as well as we had expected.
We attribute this, in part, to the hefty competition in the technology sector
and pricing wars between competitors.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We are targeting companies related to agriculture. We believe that the growth of
emerging markets will lead to an increase in food consumption, which will keep
agricultural prices high. As a result, we are seeking companies that stand to
benefit from higher grain prices, like fertilizer companies and equipment
manufacturers.
[Photograph]
Additionally, we have recently added to our technology sector. Technology
stocks, despite temporary declines, are currently undervalued. We feel there is
good upside potential in this sector over the long term for the dominant
companies.(2)
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our outlook remains optimistic. The domestic equity markets have performed well,
though we may be due for another correction over the next twelve months. We are
also looking to our international investments to provide solid growth and
diversification and believe we may begin to see stronger growth as those
countries move through their economic cycles.
[Photograph]
2. The Fund's portfolio is subject to change.
5 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1996
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11.50%, 7/1/11 $ 146,907 $ 162,530
11.75%, 1/1/16 175,012 196,833
-------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 9%, 11/15/08--5/15/09 524,930 558,216
-------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 375,127 364,225
-------------
Total Mortgage-Backed Obligations (Cost $1,162,963) 1,281,804
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--11.9%
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, Zero Coupon:
7.10%, 11/15/18(2) 17,000,000 3,502,476
7.313%, 8/15/19(2) 18,700,000 3,651,736
-------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
8.25%, 7/15/98 16,000,000 16,590,000
8.875%, 11/15/98 950,000 1,001,062
9.25%, 8/15/98 9,450,000 9,972,697
-------------
Total U.S. Government Obligations (Cost $34,052,281) 34,717,971
- ----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--14.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of):
Bonds, Bonos de Consolidacion de Deudas, Series I, 5.461%, 4/1/01(3)(4) 1,544,136 1,408,007
Par Bonds, 5.25%, 3/31/23(5) 10,000,000 5,850,000
Past Due Interest Bonds, Series L, 6.625%, 3/31/05(3) 5,880,000 4,931,850
-------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon,
48.252%, 10/3/96(2) MXP 4,384,900 579,822
-------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Par Bonds, 5%, 4/15/24(5) 7,500,000 4,476,563
-------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds:
9.75%, 12/1/01 CAD 6,000,000 5,068,535
9.75%, 6/1/01 CAD 2,000,000 1,677,282
-------------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Bonds, 8%, 3/15/06 DKK 21,900,000 4,004,914
-------------------------------------------------------------------------------------------------------
Eskom Depositary Receipts, Series E168, 11%, 6/1/08 ZAR 6,430,000 1,093,837
-------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Poliennali, 8.50%, 8/1/99 ITL 1,800,000,000 1,204,257
-------------------------------------------------------------------------------------------------------
New Zealand Government Bonds, 8%, 2/15/01 NZD 7,460,000 5,203,616
-------------------------------------------------------------------------------------------------------
Poland (Republic of) Treasury Bills, Zero Coupon:
20.70%, 1/8/97(2) PLZ 2,360,000 799,056
24.131%, 11/13/96(2) PLZ 2,300,000 801,216
-------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 10.50%, 5/15/03 AUD 2,500,000 2,263,395
-------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03 AUD 1,500,000 1,219,490
-------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%, 7/14/00 GBP 1,050,000 1,967,831
-------------
Total Foreign Government Obligations (Cost $39,944,054) 42,549,671
</TABLE>
6 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--12.4%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--2.2%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.5% Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 $ 500,000 $ 546,146
-------------------------------------------------------------------------------------------------------
Viridian, Inc., 9.75% Nts., 4/1/03 750,000 780,000
-------------
1,326,146
- ----------------------------------------------------------------------------------------------------------------------------------
METALS--0.2% Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 500,000 545,000
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER--1.5% Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 750,000 826,875
-------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.875% Second Priority Sr. Nts., 5/1/06 1,000,000 985,000
-------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.875% Sr. Sub. Nts., 4/1/08 1,000,000 990,000
-------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 1,000,000 1,083,750
-------------------------------------------------------------------------------------------------------
Tembec Finance Corp., 9.875% Gtd. Sr. Nts., 9/30/05 500,000 485,000
-------------
4,370,625
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--4.1%
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.6% Hovnanian K. Enterprises, Inc., 11.25% Sub. Gtd. Nts., 4/15/02 725,000 712,312
-------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 1,000,000 1,047,500
-------------
1,759,812
LEISURE &
ENTERTAINMENT--0.2% Apple South, Inc., 9.75% Sr. Nts., 6/1/06 500,000 495,000
-------------------------------------------------------------------------------------------------------
Gillett Holdings, Inc., 12.25% Sr. Sub. Nts., Series A, 6/30/02(6) 213,908 223,266
-------------
718,266
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIA--2.8% Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04(7) 200,000 153,500
-------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 1,000,000 1,030,000
-------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 500,000 518,125
-------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05 1,000,000 1,061,373
-------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(7) 1,250,000 1,137,500
-------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Sr. Sec. Second Priority Debs., 12/1/07 1,000,000 1,005,000
-------------------------------------------------------------------------------------------------------
SCI Television, Inc., 11% Sr. Nts., 6/30/05 500,000 535,625
-------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.95% Nts., 2/1/00 1,000,000 1,028,109
-------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,100,000 1,221,967
-------------------------------------------------------------------------------------------------------
United International Holdings, Inc.,
Zero Coupon Sr. Sec. Disc. Nts., 12.819%, 11/15/99(2) 550,000 385,000
-------------
8,076,199
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.3% Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 900,000 976,500
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--0.2% Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 500,000 534,375
</TABLE>
7 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS--1.5%
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD--0.7% Grand Union Co., 12% Sr. Nts., 9/1/04 $ 1,137,000 $ 1,152,634
-------------------------------------------------------------------------------------------------------
Ralph's Grocery Co.:
10.45% Sr. Nts., 6/15/04 500,000 511,250
11% Sr. Sub. Nts., 6/15/05 500,000 505,625
-------------
2,169,509
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES &
SERVICES--0.5% Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04 1,000,000 1,095,000
-------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 345,000 383,813
-------------
1,478,813
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.3% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 12.09%, 5/27/98(2) 1,000,000 855,000
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY--1.6%
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & Global Marine, Inc., 12.75% Sr. Sec. Nts., 12/15/99 400,000 434,000
PRODUCERS--1.6% -------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 1,000,000 1,022,500
-------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 1,000,000 1,045,000
-------------------------------------------------------------------------------------------------------
Mesa Operating Co., 10.625% Gtd. Sr. Sub. Nts., 7/1/06 1,000,000 1,056,250
-------------------------------------------------------------------------------------------------------
TransTexas Gas Corp., 11.50% Sr. Sec. Gtd. Nts., 6/15/02 1,000,000 1,065,000
-------------
4,622,750
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED
FINANCIAL--0.4% GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 1,250,000 1,262,500
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--0.4% Conseco, Inc., 8.125% Sr. Nts., 2/15/03 1,000,000 1,023,948
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL
MATERIALS--0.4% Owens-Illinois, Inc.:
10% Sr. Sub. Nts., 8/1/02 500,000 521,250
11% Sr. Debs., 12/1/03 650,000 713,375
-------------
1,234,625
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.3% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 1,000,000 955,000
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.4% Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 1,000,000 1,092,500
-------------------------------------------------------------------------------------------------------
Unisys Corp., 15% Credit Sensitive Nts., 7/1/97(3) 200,000 212,000
-------------
1,304,500
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS- Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts.,
Series B, 4/15/03(7)(8) 500,000 307,500
-------------------------------------------------------------------------------------------------------
TECHNOLOGY--0.4% PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(7) 1,000,000 815,000
-------------
1,122,500
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.4% First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 1,000,000 1,057,500
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--0.3% Western Wireless Corp., 10.50% Sr. Sub. Nts., 6/1/06 750,000 770,625
-------------
Total Non-Convertible Corporate Bonds and Notes (Cost $35,105,263) 36,164,193
- ----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIQ, Inc., 7.50% Exchangeable Sub. Debs., 7/15/03 (Cost $1,552,096) 1,650,000 1,476,750
</TABLE>
8 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--51.0%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--2.6%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.5% Agrium, Inc. 80,000 $ 1,086,250
-------------------------------------------------------------------------------------------------------
Bayer AG, Sponsored ADR 90,000 3,304,341
-------------
4,390,591
- ----------------------------------------------------------------------------------------------------------------------------------
METALS--0.5% Brush Wellman, Inc. 72,300 1,391,775
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER--0.6% Aracruz Celulose SA, Sponsored ADR, Cl. B 99,000 866,250
-------------------------------------------------------------------------------------------------------
Stone Container Corp. 54,200 846,875
-------------
1,713,125
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--9.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--0.8% Duracell International, Inc. 16,000 1,026,000
-------------------------------------------------------------------------------------------------------
General Motors Corp. 18,000 864,000
-------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones, SA 193,056 563,796
-------------
2,453,796
- ----------------------------------------------------------------------------------------------------------------------------------
LEISURE &
ENTERTAINMENT--4.8% Alaska Air Group, Inc.(9) 77,000 1,645,875
-------------------------------------------------------------------------------------------------------
AMR Corp.(9)(10) 17,600 1,401,400
-------------------------------------------------------------------------------------------------------
Carnival Corp., Cl. A 43,800 1,357,800
-------------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc.(9) 18,000 636,750
-------------------------------------------------------------------------------------------------------
Cracker Barrel Old Country Store, Inc. 55,300 1,251,162
-------------------------------------------------------------------------------------------------------
Eastman Kodak Co. 22,000 1,727,000
-------------------------------------------------------------------------------------------------------
International Game Technology 68,000 1,394,000
-------------------------------------------------------------------------------------------------------
King World Productions, Inc.(9) 27,000 995,625
-------------------------------------------------------------------------------------------------------
Mattel, Inc. 39,437 1,020,432
-------------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(9) 2,400 57,900
-------------------------------------------------------------------------------------------------------
Shangri-La Asia Ltd. 550,000 732,573
-------------------------------------------------------------------------------------------------------
Shimano, Inc. 54,000 1,003,636
-------------------------------------------------------------------------------------------------------
U S West Media Group(9) 47,000 793,125
-------------
14,017,278
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIA--1.6% Comcast Corp., Cl. A Special 112,800 1,734,300
-------------------------------------------------------------------------------------------------------
Dow Jones & Co., Inc. 21,000 777,000
-------------------------------------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 1,440,000 1,070,733
-------------------------------------------------------------------------------------------------------
Time Warner, Inc. 30,000 1,158,750
-------------
4,740,783
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--1.2% Cone Mills Corp.(9) 161,500 1,271,812
-------------------------------------------------------------------------------------------------------
Donna Karan International, Inc.(9) 44,500 1,017,937
-------------------------------------------------------------------------------------------------------
Price/Costco, Inc.(9) 54,300 1,113,150
-------------
3,402,899
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--0.7% Gymboree Corp.(9)(10) 33,000 1,002,375
-------------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(9)(10) 32,600 949,475
-------------
1,951,850
</TABLE>
9 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS--8.9%
- ----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES--0.4% Guinness PLC 144,000 $ 1,029,967
-------------------------------------------------------------------------------------------------------
Whitman Corp. 11,500 265,938
-------------
1,295,905
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD--1.3% Chiquita Brands International, Inc. 45,000 551,250
-------------------------------------------------------------------------------------------------------
Groupe Danone 3,707 541,550
-------------------------------------------------------------------------------------------------------
IBP, Inc.(10) 27,000 627,750
-------------------------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 20,000 1,115,232
-------------------------------------------------------------------------------------------------------
Sara Lee Corp. 30,000 1,072,500
-------------
3,908,282
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--4.3% Abbott Laboratories 20,000 985,000
-------------------------------------------------------------------------------------------------------
American Home Products Corp. 15,400 981,750
-------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 23,000 971,240
-------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co.(10) 21,400 2,062,425
-------------------------------------------------------------------------------------------------------
Ciba-Geigy AG 2,275 2,911,013
-------------------------------------------------------------------------------------------------------
Genzyme Corp.(9) 42,000 1,071,000
-------------------------------------------------------------------------------------------------------
Johnson & Johnson 36,800 1,886,000
-------------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 45,800 784,325
-------------------------------------------------------------------------------------------------------
SmithKline Beecham PLC, ADR 16,000 974,000
-------------
12,626,753
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & Manor Care, Inc.(10) 21,600 828,900
SERVICES--1.3% -------------------------------------------------------------------------------------------------------
Medtronic, Inc.(10) 19,800 1,269,675
-------------------------------------------------------------------------------------------------------
Nellcor Puritan Bennett, Inc.(9) 36,000 792,000
-------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(9) 30,009 975,293
-------------
3,865,868
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--1.0% Kimberly-Clark Corp. 9,800 863,625
-------------------------------------------------------------------------------------------------------
Procter & Gamble Co. 12,000 1,170,000
-------------------------------------------------------------------------------------------------------
Wella AG 1,350 812,515
-------------
2,846,140
- ----------------------------------------------------------------------------------------------------------------------------------
TOBACCO--0.6% Philip Morris Cos., Inc. 20,600 1,848,850
- ----------------------------------------------------------------------------------------------------------------------------------
Energy--3.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Energy Services & Kerr-McGee Corp. 9,000 547,875
Producers--0.7% -------------------------------------------------------------------------------------------------------
Landmark Graphics Corp.(9) 28,600 840,125
-------------------------------------------------------------------------------------------------------
Weatherford Enterra, Inc.(9) 27,000 739,125
-------------
2,127,125
</TABLE>
10 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED--2.9% Atlantic Richfield Co. 13,500 $ 1,721,250
-------------------------------------------------------------------------------------------------------
Enterprise Oil PLC 90,000 768,254
-------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co. 12,000 631,500
-------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 6,300 983,588
-------------------------------------------------------------------------------------------------------
Saga Petroleum AS, Cl. B 63,000 925,397
-------------------------------------------------------------------------------------------------------
Total SA, Sponsored ADR 17,800 696,425
-------------------------------------------------------------------------------------------------------
Unocal Corp. 50,000 1,800,000
-------------------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Cl. D, ADR 35,000 800,625
-------------
8,327,039
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--8.4%
- ----------------------------------------------------------------------------------------------------------------------------------
BANKS--5.4% Akbank T.A.S. 1,995,500 204,215
-------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 81,675 710,663
-------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New)(10) 90,000 7,211,250
-------------------------------------------------------------------------------------------------------
Citicorp(10) 9,900 897,188
-------------------------------------------------------------------------------------------------------
Deutsche Bank, Sponsored ADR 22,500 1,060,634
-------------------------------------------------------------------------------------------------------
NationsBank Corp.(10) 65,200 5,664,250
-------------
15,748,200
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED
FINANCIAL--1.0% American Express Co. 29,000 1,341,250
-------------------------------------------------------------------------------------------------------
Dean Witter, Discover & Co. 14,000 770,000
-------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 8,600 841,725
-------------
2,952,975
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.0% ACE Ltd. 20,000 1,057,500
-------------------------------------------------------------------------------------------------------
American International Group, Inc.(10) 8,100 816,075
-------------------------------------------------------------------------------------------------------
American Re Corp.(10) 36,000 2,286,000
-------------------------------------------------------------------------------------------------------
Skandia Forsakrings AB 27,000 747,206
-------------------------------------------------------------------------------------------------------
UNUM Corp. 12,000 769,500
-------------
5,676,281
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--4.8%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL
EQUIPMENT--0.4% General Electric Co. 13,400 1,219,400
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL
MATERIALS--1.2% Owens Corning 54,000 1,991,250
-------------------------------------------------------------------------------------------------------
Rubbermaid, Inc. 25,300 619,850
-------------------------------------------------------------------------------------------------------
Wolverine Tube, Inc.(9) 23,500 1,010,500
-------------
3,621,600
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--1.8% AGCO Corp. 32,400 826,200
-------------------------------------------------------------------------------------------------------
Mannesmann AG 3,500 1,312,100
-------------------------------------------------------------------------------------------------------
Pacific Dunlop Ltd. 333,000 690,320
-------------------------------------------------------------------------------------------------------
Tenneco, Inc. 38,000 1,904,750
-------------------------------------------------------------------------------------------------------
Westinghouse Air Brake Co. 42,600 479,250
-------------
5,212,620
</TABLE>
11 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--1.4% Burlington Northern Santa Fe Corp. 24,500 $2,067,188
-------------------------------------------------------------------------------------------------------
Canadian National Railway Co. 27,000 554,949
-------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA 58,200 909,375
-------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 25,650 400,781
-------------
3,932,293
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--11.3%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.3% Rockwell International Corp. 15,000 845,625
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--1.5% Digital Equipment Corp.(9)(10) 17,000 607,750
-------------------------------------------------------------------------------------------------------
International Business Machines Corp. 12,300 1,531,350
-------------------------------------------------------------------------------------------------------
Moore Corp. Ltd. 40,000 735,000
-------------------------------------------------------------------------------------------------------
Xerox Corp.(10) 30,000 1,608,750
-------------
4,482,850
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--4.1% America Online, Inc.(9) 23,600 840,750
-------------------------------------------------------------------------------------------------------
Business Objects SA, Sponsored ADR(9) 50,000 962,500
-------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.(10) 54,300 3,244,425
-------------------------------------------------------------------------------------------------------
Electronic Arts, Inc.(9)(10) 38,500 1,438,938
-------------------------------------------------------------------------------------------------------
Microsoft Corp.(9)(10) 6,700 883,563
-------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 31,500 2,022,222
-------------------------------------------------------------------------------------------------------
Novell, Inc.(9) 97,000 1,067,000
-------------------------------------------------------------------------------------------------------
Sybase, Inc.(9) 32,000 476,000
-------------------------------------------------------------------------------------------------------
Symantec Corp.(9) 90,502 984,209
-------------
11,919,607
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--3.5% Hewlett-Packard Co. 31,500 1,535,625
-------------------------------------------------------------------------------------------------------
Intel Corp.(10) 54,000 5,153,625
-------------------------------------------------------------------------------------------------------
Kyocera Corp. 12,000 856,566
-------------------------------------------------------------------------------------------------------
LSI Logic Corp.(9) 36,500 848,625
-------------------------------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares(10) 20,500 907,125
-------------------------------------------------------------------------------------------------------
VLSI Technology, Inc.(9) 51,200 832,000
-------------
10,133,566
</TABLE>
12 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS- Airtouch Communications, Inc.(9) 32,900 $ 908,863
TECHNOLOGY--1.9% -------------------------------------------------------------------------------------------------------
Bay Networks, Inc.(9) 19,180 522,655
-------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(9) 13,700 850,256
-------------------------------------------------------------------------------------------------------
ECI Telecommunications Ltd.(10) 45,000 945,000
-------------------------------------------------------------------------------------------------------
MCI Communications Corp. 89,000 2,280,625
-------------
5,507,399
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.3%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.0% Korea Electric Power Corp. 15,800 522,203
-------------------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 42,000 1,123,500
-------------------------------------------------------------------------------------------------------
Verbund Oest Electriz 17,100 1,182,642
-------------
2,828,345
- ----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.2% Hong Kong & China Gas Co. Ltd. 374,488 636,817
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.1% BCE, Inc. 30,600 1,308,150
-------------------------------------------------------------------------------------------------------
Portugal Telecom SA 10,500 270,107
-------------------------------------------------------------------------------------------------------
U S West Communications Group 50,000 1,487,500
-------------
3,065,757
-------------
Total Common Stocks (Cost $103,868,767) 148,691,394
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--0.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Alumax, Inc., $4.00 Cv., Series A 6,333 861,288
-------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 17,666 925,257
-------------------------------------------------------------------------------------------------------
Time Warner, Inc., 10.25% Cum., Series K, Exchangeable Preferred Stock(4)(6) 734 774,370
-------------
Total Preferred Stocks (Cost $1,973,515) 2,560,915
</TABLE>
<TABLE>
<CAPTION>
UNITS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Hong Kong & China Gas Wts., Exp. 9/97 57,874 17,587
-------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(6) 500 5,000
-------------
Total Rights, Warrants and Certificates (Cost $15,337) 22,587
</TABLE>
13 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT--8.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank,
5.62%, dated 9/30/96, to be repurchased at $24,003,747 on
10/1/96, collateralized by U.S. Treasury Nts., 5.75%--8.875%,
5/15/97--8/15/04, with a value of $24,493,438 (Cost $24,000,000) $24,000,000 $24,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $241,674,276) 100.0% 291,465,285
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0) (23,538)
------------- -------------
NET ASSETS 100.0% $ 291,441,747
------------- -------------
------------- -------------
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies:
AUD -- Australian Dollar MXP -- Mexican Peso
CAD -- Canadian Dollar NZD -- New Zealand Dollar
DKK -- Danish Krone PLZ -- Polish Zloty
GBP -- British Pound Sterling ZAR -- South African Rand
ITL -- Italian Lira
2. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase.
3. Represents the current interest rate for a variable rate security.
4. Interest or dividend is paid in kind.
5. Represents the current interest rate for an increasing rate security.
6. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial Statements.
7. Denotes a step bond: a zero coupon bond that converts to a fixed rate of interest at a designated
future date.
8. Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act
of 1933, as amended. This security has been determined to be liquid under guidelines established by the
Board of Trustees. This security amounts to $307,500 or 0.11% of the Fund's net assets, at September 30,
1996.
9. Non-income producing security.
10. A sufficient amount of securities has been designated to cover outstanding call options, as follows:
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AMR Corp. 3,200 1/97 $95 $8,300 $3,200
- ------------------------------------------------------------------------------------------------------------------------------------
American International Group, Inc. 1,600 2/97 100 5,752 9,400
- ------------------------------------------------------------------------------------------------------------------------------------
American Re Corp. 7,200 1/97 50 25,175 106,200
- ------------------------------------------------------------------------------------------------------------------------------------
American Re Corp. 4,500 10/96 65 4,927 563
- ------------------------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 4,400 12/96 95 7,568 18,700
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 19,000 3/97 80 73,053 114,000
- ------------------------------------------------------------------------------------------------------------------------------------
Citicorp 2,000 1/97 90 9,440 11,750
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 10,800 1/97 55 34,775 87,750
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 10,800 1/97 60 50,974 67,500
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Equipment Corp. 3,400 1/97 45 7,123 4,250
- ------------------------------------------------------------------------------------------------------------------------------------
ECI Telecommunications Ltd. 9,000 2/97 25 16,604 12,375
- ------------------------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc. 8,400 3/97 30 30,197 87,150
- ------------------------------------------------------------------------------------------------------------------------------------
Gymboree Corp. 6,600 1/97 35 8,877 14,438
- ------------------------------------------------------------------------------------------------------------------------------------
IBP, Inc. 27,000 11/96 25 59,938 10,125
- ------------------------------------------------------------------------------------------------------------------------------------
Intel Corp. 10,800 1/97 90 33,425 113,400
- ------------------------------------------------------------------------------------------------------------------------------------
Manor Care, Inc. 4,200 4/97 40 5,649 9,713
- ------------------------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 3,800 2/97 55 12,236 40,850
- ------------------------------------------------------------------------------------------------------------------------------------
Microsoft Corp. 6,700 1/97 125 60,097 97,150
- ------------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 13,000 2/97 90 67,858 47,124
- ------------------------------------------------------------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares 4,000 4/97 45 10,880 18,500
- ------------------------------------------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc. 6,400 3/97 35 6,608 3,200
- ------------------------------------------------------------------------------------------------------------------------------------
Xerox Corp. 6,000 1/97 55 12,738 18,750
---------- ----------
$ 552,194 $ 896,088
---------- ----------
---------- ----------
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS Investments, at value (cost $241,674,276)--see accompanying statement $ 291,465,285
-------------------------------------------------------------------------------------------------------
Cash 397,482
-------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 974
-------------------------------------------------------------------------------------------------------
Receivables:
Interest, dividends and principal paydowns 2,638,803
Investments sold 679,786
Shares of beneficial interest sold 286,715
-------------------------------------------------------------------------------------------------------
Other 19,537
-------------
Total assets 295,488,582
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Options written, at value (premiums received $552,194)--
see accompanying statement--Note 6 896,088
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,918,420
Shares of beneficial interest redeemed 629,197
Trustees' fees 182,123
Distribution and service plan fees 144,390
Shareholder reports 56,678
Transfer and shareholder servicing agent fees 26,623
Other 193,316
-------------
Total liabilities 4,046,835
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 291,441,747
-------------
-------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $ 225,707,312
NET ASSETS -------------------------------------------------------------------------------------------------------
Undistributed net investment income 615,057
-------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 15,672,173
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 49,447,205
-------------
Net assets $ 291,441,747
-------------
-------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE -------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share (based on net assets
of $264,358,580 and 18,756,434 shares of beneficial interest outstanding) $14.09
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $14.95
-------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $5,996,160 and 428,130 shares of beneficial interest outstanding) $14.01
-------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $21,087,007 and 1,503,813 shares of beneficial interest outstanding) $14.02
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Asset Allocation Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Nine Months Ended September 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME Interest (net of foreign withholding taxes of $9,260) $ 9,646,866
-------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $77,444) 2,710,998
-------------
Total income 12,357,864
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 1,544,001
-------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 345,838
Class B 26,446
Class C 133,941
-------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 263,045
-------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 98,917
-------------------------------------------------------------------------------------------------------
Shareholder reports 98,446
-------------------------------------------------------------------------------------------------------
Custodian fees and expenses 72,595
-------------------------------------------------------------------------------------------------------
Legal and auditing fees 49,590
-------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 2,428
Class C 4,485
-------------------------------------------------------------------------------------------------------
Other 22,415
-------------
Total expenses 2,662,147
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,695,717
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on:
GAIN (LOSS) Investments and options written (including premiums on options exercised) 14,287,148
Closing and expiration of options written 836,046
Foreign currency transactions 421,291
-------------
Net realized gain 15,544,485
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 5,331,900
Translation of assets and liabilities denominated in foreign currencies (938,617)
-------------
Net change 4,393,283
-------------
Net realized and unrealized gain 19,937,768
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 29,633,485
-------------
-------------
The Fund changed its fiscal year end from December 31 to September 30.
See accompanying Notes to Financial Statements.
</TABLE>
16 Oppenheimer Asset Allocation Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED SEPT. 30, DECEMBER 31,
1996(1) 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS Net investment income $ 9,695,717 $ 10,269,144
-------------------------------------------------------------------------------------------------------
Net realized gain 15,544,485 11,752,299
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 4,393,283 31,347,982
--------------- ---------------
Net increase in net assets resulting from operations 29,633,485 53,369,425
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A (8,029,426) (9,264,819)
SHAREHOLDERS Class B (114,496) (14,574)
Class C (478,886) (386,395)
-------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (10,313,461)
Class B -- (52,208)
Class C -- (630,243)
- ----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions--Note 2:
Class A (6,428,157) (18,002,247)
Class B 4,480,009 1,310,712
Class C 4,355,405 5,054,751
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 23,417,934 21,070,941
-------------------------------------------------------------------------------------------------------
Beginning of period 268,023,813 246,952,872
--------------- ---------------
End of period [including undistributed (overdistributed) net
investment income of $615,057 and $(621,120), respectively] $ 291,441,747 $ 268,023,813
--------------- ---------------
--------------- ---------------
1. The Fund changed its fiscal year end from December 31 to September 30.
See accompanying Notes to Financial Statements.
</TABLE>
17 Oppenheimer Asset Allocation Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1996(2) 1995 1994 1993 1992 1991(4)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.07 $11.52 $13.05 $11.63 $11.22 $10.19
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .49 .52 .54 .44 .39 .40
Net realized and unrealized gain (loss) .96 2.08 (.75) 1.43 .44 1.06
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations 1.45 2.60 (.21) 1.87 .83 1.46
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.43) (.49) (.53) (.44) (.42) (.43)
Distributions from net realized gain -- (.56) (.79) (.01) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.43) (1.05) (1.32) (.45) (.42) (.43)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.09 $13.07 $11.52 $13.05 $11.63 $11.22
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.22% 22.79% (1.59)% 16.30% 7.54% 14.67%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $264,359 $251,353 $237,771 $277,914 $266,713 $276,800
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $256,765 $249,660 $260,767 $272,303 $269,096 $192,870
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.73%(6) 3.97% 4.10% 3.58% 3.41% 3.78%
Expenses 1.21%(6) 1.15% 1.09% 1.14% 1.17% 1.27%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 31.7% 28.5% 31.5% 32.7% 60.3% 102.0%
Average brokerage commission rate(8) $0.0336 $0.0350 -- -- -- --
18 Oppenheimer Asset Allocation Fund
<PAGE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------------------------------
NINE MONTHS NINE MONTHS
ENDED PERIOD ENDED ENDED
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1996(2) 1995(3) 1996(2) 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.03 $13.28 $13.01 $11.49 $13.05 $12.86
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .41 .17 .40 .40 .44 (.97)
Net realized and unrealized gain (loss) .93 .41 .96 2.07 (.77) 1.29
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations 1.34 .58 1.36 2.47 (.33) .32
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.36) (.27) (.35) (.39) (.44) (.12)
Distributions from net realized gain -- (.56) -- (.56) (.79) (.01)
-------- -------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.36) (.83) (.35) (.95) (1.23) (.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.01 $13.03 $14.02 $13.01 $11.49 $13.05
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 10.37% 4.44% 10.55% 21.69% (2.50)% 2.51%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $5,996 $1,265 $21,087 $15,405 $9,182 $396
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,546 $ 520 $17,898 $11,827 $5,601 $194
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.69%(6) 2.62%(6) 3.84%(6) 3.08% 3.30% 2.19%(6)
Expenses 2.12%(6) 2.27%(6) 2.07%(6) 1.99% 2.00% 2.50%(6)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 31.7% 28.5% 31.7% 28.5% 31.5% 32.7%
Average brokerage commission rate(8) $0.0336 $0.0350 $0.0336 $0.0350 -- --
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to
December 31, 1993.
2. The Fund changed its fiscal year end from December 31 to September 30.
3. For the period from August 29, 1995 (inception of offering) to
December 31, 1995.
4. Per share amounts calculated based on the weighted average number of shares
outstanding during the year.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. 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 period
ended September 30, 1996 were $80,364,625 and $89,523,738, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
19 Oppenheimer Asset Allocation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Asset Allocation Fund (the Fund) is
ACCOUNTING POLICIES registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management
investment company. On August 15, 1996, the Board of
Trustees elected to change the fiscal year end of the
Fund from December 31 to September 30. Accordingly,
these financial statements include information for
the nine month period from January 1, 1996 to
September 30, 1996. The Fund's investment objective
is to seek high total investment return (current
income and capital appreciation in the value of its
shares). The Fund's investment adviser is
OppenheimerFunds, Inc. (the Manager). The Fund offers
Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent
deferred sales charge. All three classes of shares
have identical rights to earnings, assets and voting
privileges, except that each class has its own
distribution and/or service plan, expenses directly
attributable to a particular class and exclusive
voting rights with respect to matters affecting a
single class. Class B shares will automatically
convert to Class A shares six years after the date of
purchase. The following is a summary of significant
accounting policies consistently followed by the
Fund.
-----------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange 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 the last
sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Such 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 are valued under
consistently applied procedures established by the
Board of Trustees to determine fair value in good
faith. Short-term "money market type" 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. Forward foreign currency exchange
contracts are valued based on the closing prices of
the forward currency contracts rates in the London
foreign exchange markets on a daily basis as provided
by a reliable bank or dealer. 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 price 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 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 Statement 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.
20 Oppenheimer Asset Allocation Fund
<PAGE>
1. SIGNIFICANT Allocation of Income, Expenses, and Gains and Losses.
ACCOUNTING POLICIES Income, expenses (other than those attributable to a
(CONTINUED) 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 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 or excise tax provision is required. At
September 30, 1996, the Fund had available for
federal income tax purposes an unused capital loss
carryover of approximately $890,000, which expires in
1997 and 1998.
-----------------------------------------------------
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 nine months ended September 30,
1996, a provision of $58,255 was made for the Fund's
projected benefit obligations, and payments of $4,853
were made to retired trustees, resulting in an
accumulated liability of $166,286 at September 30,
1996.
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
-----------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and 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.
During the nine months ended September 30,
1996, the Fund adjusted the classification of
distributions to shareholders to reflect the
differences between financial statement amounts and
distributions determined in accordance with income
tax regulations. Accordingly, during the nine months
ended September 30, 1996, amounts have been
reclassified to reflect an increase in paid-in
capital of $445,208, an increase in undistributed net
investment income of $15,671, and a decrease in
accumulated net realized gain on investments of
$460,879. In addition, to properly reflect foreign
currency gain in the components of capital, $147,597
of foreign exchange gain determined according to U.S.
federal income tax rules has been reclassified from
net realized gain to net investment income.
-----------------------------------------------------
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.
Dividends in kind are recognized as income on the ex-
dividend date, at the current market value of the
underlying security. Interest on payment-in-kind debt
instruments is accrued as income at the coupon rate
and a market adjustment is made periodically.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial
statements and the reported amounts of income and
expenses during the reporting period. Actual results
could differ from those estimates.
21 Oppenheimer Asset Allocation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest for each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30, 1996(2) YEAR ENDED DECEMBER 31, 1995(1)
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 860,353 $ 11,689,114 1,154,810 $ 14,750,208
Dividends and distributions reinvested 524,674 7,190,397 1,346,436 17,504,698
Redeemed (1,862,109) (25,307,668) (3,900,352) (50,257,153)
------------- ------------- ------------- -------------
Net decrease (477,082) $ (6,428,157) (1,399,106) $ (18,002,247)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
- ------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 366,656 $ 4,968,484 93,459 $ 1,262,882
Dividends and distributions reinvested 6,864 93,829 4,293 55,836
Redeemed (42,546) (582,304) (596) (8,006)
------------- ------------- ------------- -------------
Net increase 330,974 $ 4,480,009 97,156 $ 1,310,712
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
- ------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 448,796 $ 6,095,106 556,244 $ 7,139,931
Dividends and distributions reinvested 33,327 455,037 74,748 969,689
Redeemed (162,380) (2,194,738) (245,902) (3,054,869)
------------- ------------- ------------- -------------
Net increase 319,743 $ 4,355,405 385,090 $ 5,054,751
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
1. For the year ended December 31, 1995 for Class A
and Class C shares and for the period from August 29,
1995 (inception of offering) to December 31, 1995 for
Class B shares.
2. The Fund changed its fiscal year end from December
31 to September 30.
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At September 30, 1996, net unrealized appreciation on
LOSSES ON INVESTMENTS investments and options written of $49,447,115 was
AND OPTIONS WRITTEN composed of gross appreciation of $53,680,163, and
gross depreciation of $4,233,048.
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager are in accordance
AND OTHER TRANSACTIONS with the investment advisory agreement with the Fund
WITH AFFILIATES which provides for a fee of 0.75% of the first $200
million of average annual net assets, 0.72% of the
next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, and 0.60% of
aggregate 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 nine months ended September 30, 1996,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $286,317, of which
$100,671 was retained by OppenheimerFunds
Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to
broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $169,693 and $59,436, of
which $6,767 and $1,886, respectively, was paid to an
affiliated broker/dealer. During the nine months
ended September 30, 1996, OFDI received contingent
deferred sales charges of $1,119 and $3,419,
respectively, upon redemption of Class B and Class C
shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division
of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of
providing such services are allocated ratably to
these companies.
The Fund has adopted a Service Plan for Class
A shares to reimburse OFDI for a portion of its costs
incurred in connection with the personal service and
maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate
that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the
service fee to reimburse brokers, dealers, banks and
other financial institutions quarterly for providing
personal service and maintenance of accounts of their
customers that hold Class A shares. During the nine
months ended September 30, 1996, OFDI paid $34,848 to
an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.
22 Oppenheimer Asset Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES The Fund has adopted a compensation type Distribution
AND OTHER TRANSACTIONS and Service Plan for Class B shares to compensate
WITH AFFILIATES OFDI for its services and costs in distributing Class
(CONTINUED) B shares and servicing accounts. Under the Plan, the
Fund pays OFDI an annual asset-based sales charge of
0.75% per year on Class B shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers
for providing personal services for accounts that
hold Class B shares. Both fees are computed on the
average annual net assets of Class B shares,
determined as of the close of each regular business
day. If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments
of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plan was terminated.
During the nine months ended September 30, 1996, OFDI
retained $25,989 as compensation for Class B sales
commissions and service fee advances, as well as
financing costs. As of September 30, 1996, OFDI had
incurred unreimbursed expenses of $227,661 for
Class B.
The Fund has adopted a reimbursement type
Distribution and Service Plan for Class C shares to
reimburse OFDI for its services and costs in
distributing Class C shares and servicing accounts.
Under the Plan, the Fund pays OFDI an annual asset-
based sales charge of 0.75% per year on Class C
shares. OFDI also receives a service fee of 0.25% per
year to reimburse dealers for providing personal
services for accounts that hold Class C shares. Both
fees are computed on the average annual net assets of
Class C shares, determined as of the close of each
regular business day. If the Plan is terminated by
the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to
OFDI for certain expenses it incurred before the Plan
was terminated. During the nine months ended
September 30, 1996, OFDI paid $6,442 to an affiliated
broker/dealer as reimbursement for Class C personal
service and maintenance expenses and retained $53,420
as reimbursement for Class C sales commissions and
service fee advances, as well as financing costs. As
of September 30, 1996, OFDI had incurred unreimbursed
expenses of $201,723 for Class C.
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward
contract) is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated
rate.
The Fund uses forward contracts to seek to
manage foreign currency risks. They may also be used
to tactically shift portfolio currency risk. The Fund
generally enters into forward contracts as a hedge
upon the purchase or sale of a security denominated
in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes
in foreign currency exchange rates on portfolio
positions.
Forward contracts are valued based on the
closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily
basis as provided by a reliable bank or dealer. The
Fund will realize a gain or loss upon the closing or
settlement of the forward transaction.
Securities held in segregated accounts to
cover net exposure on outstanding forward contracts
are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation
on forward contracts is reported in the Statement of
Assets and Liabilities. Realized gains and losses are
reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
Risks include the potential inability of the
counterparty to meet the terms of the contract and
unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At September 30, 1996, outstanding forward currency
exchange contracts to sell foreign currencies were as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized
Date Amounts (000s) Sept. 30, 1996 Appreciation
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Italian Lira (ITL) 10/1/96 412,344 ITL $270,914 $974
</TABLE>
23 Oppenheimer Asset Allocation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
6. OPTION ACTIVITY The Fund may buy and sell put and call options, or
write put and covered call options on portfolio
securities in order to produce incremental earnings
or protect against changes in the value of portfolio
securities.
The Fund generally purchases put options or
writes covered call options to hedge against adverse
movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and
becomes obligated to sell or purchase the underlying
security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last
sale price on the principal exchange on which the
option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a
gain or loss upon the expiration or closing of the
option transaction. When an option is exercised, the
proceeds on sales for a written call option, the
purchase cost for a written put option, or the cost
of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding
call options are noted in the Statement of
Investments where applicable. 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.
Written option activity for the nine months ended
September 30, 1996 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
---------------------------------------------------------------------
NUMBER AMOUNT
OF OPTIONS OF PREMIUMS
---------------------------------------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1995 3,206 $ 948,975
---------------------------------------------------------------------
Options written 3,997 1,112,991
---------------------------------------------------------------------
Options closed or expired (4,750) (1,234,937)
---------------------------------------------------------------------
Options exercised (725) (274,835)
---------- -----------
Options outstanding at September 30, 1996 1,728 $552,194
---------- -----------
---------- -----------
</TABLE>
7. ILLIQUID AND At September 30, 1996, investments in securities
RESTRICTED SECURITIES included issues that are illiquid or restricted.
Restricted securities are often purchased in private
placement transactions, are not registered under the
Securities Act of 1933, may have contractual
restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair
value. A security may be considered illiquid if it
lacks a readily-available market or if its valuation
has not changed for a certain period of time. The
Fund intends to invest no more than 10% of its net
assets (determined at the time of purchase and
reviewed from time to time) in illiquid or restricted
securities. Certain restricted securities, eligible
for resale to qualified institutional investors, are
not subject to that limit. The aggregate value of
illiquid or restricted securities subject to this
limitation at September 30, 1996 was $1,002,636 which
represents 0.34% of the Fund's net assets.
24 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 September 30, 1996, and
the related statement of operations for the nine month period then ended, the
statements of changes in net assets for the nine month period then ended and the
year ended December 31, 1995, and the financial highlights for the nine month
period ended September 30, 1996 and for each of the years in the five year
period ended December 31, 1995. 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
September 30, 1996, 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 September 30, 1996, the results of its
operations for the nine month period then ended, the changes in its net assets
for the nine month period then ended and the year ended December 31, 1995, and
the financial highlights for the nine month period ended September 30, 1996 and
for each of the years in the five year period ended December 31, 1995, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 21, 1996
25 Oppenheimer Asset Allocation Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
- --------------------------------------------------------------------------------
In early 1997, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1996. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends paid by the Fund during the nine month period ended September 30,
1996 which are not designated as capital gain distributions should be multiplied
by 11.36% 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 adviser for specific guidance.
26 Oppenheimer Asset Allocation Fund
<PAGE>
OPPENHEIMER ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
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
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Richard H. Rubinstein, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
Distributor OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER
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. Shares
of Oppenheimer funds are not deposits or obligations of
any bank, are not guaranteed by any bank, and are not
insured by the FDIC or any other agency, and involve
investment risks, including possible loss of the
principal amount invested.
27 Oppenheimer Asset Allocation Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
OPPENHEIMER FUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RA0240.001.0996 November 30, 1996
[Photograph]
Customer Service Representative
OppenheimerFunds Services
"HOW MAY I HELP YOU?"
As an Oppenheimer fund shareholder, you have some special privileges. 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 Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated 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
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- --------------------------------------------------------------------------------
[Logo] OppenheimerFunds Distributor, Inc. ---------------
P.O. Box 5270 Bulk Rate
Denver, CO 80217-5270 U.S. Postage
PAID
Permit No. 130
Torrington, CT
---------------
