<PAGE> 1
ANNUAL REPORT OCTOBER 31, 1998
OPPENHEIMER
QUEST VALUE
FUND, INC.
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 An Interview
with Your Fund's
Manager
9 Fund Performance
13 Financial Statements
31 Report of
Independent
Accountants
32 Federal
Income Tax
Information
33 Officers and
Directors
36 Information and
Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - THE FUND SEEKS HIGH-QUALITY COMPANIES WITH STRONG RETURNS on capital whose
true business worth is not reflected in their stock prices.
- - THE RECENT STOCK MARKET CORRECTION HAS CREATED OPPORTUNITIES TO BUY sound
businesses at attractive prices.
- - WE HAVE FAVORED COMPANIES that demonstrate a commitment to creating
shareholder value through stock repurchase programs.
AVG ANNUAL TOTAL RETURNS
For the 1-Year Period
Ended 10/31/98
CLASS A
Without With
Sales Chg.(1) Sales Chg.(2)
9.87% 3.56%
CLASS B
Without With
Sales Chg.(1) Sales Chg.(2)
9.38% 4.38%
CLASS C
Without With
Sales Chg.(1) Sales Chg.(2)
9.32% 8.32%
CLASS Y
Without With
Sales Chg.(1) Sales Chg.(2)
10.36% 10.36%
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER 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. BECAUSE OF ONGOING
MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL
SHORT-TERM CHANGES. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR
FINANCIAL ADVISOR, CALL US AT 1-800-525-7048 OR VISIT OUR WEBSITE,
WWW.OPPENHEIMERFUNDS.COM. OppenheimerFunds, Inc. became the Fund's advisor on
11/22/95. The Fund's subadvisor is OpCap Advisors, which was the Fund's advisor
prior to 11/22/95. The portfolio manager is employed by the Fund's subadvisor.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2. Class A return includes the current maximum initial sales charge of
5.75%. Class B return includes the applicable contingent deferred sales charge
of 5%. Class C return includes the applicable contingent deferred sales charge
of 1%. Class Y shares were first publicly offered on 12/16/96 and are not
available for sale to individual shareholders. Class B and C shares are subject
to an annual 0.75% asset-based sales charge and Class A shares are subject to an
annual 0.25% asset-based sales charge. An explanation of the different
performance calculations is in the Fund's prospectus.
2 Oppenheimer Quest Value Fund, Inc.
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Quest Value Fund, Inc.
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
In retrospect, 1998 has been an unsettling year for the financial markets.
Around the world, stock and bond markets experienced considerable instability,
with particular tumult being felt in Southeast Asia, Russia and Latin America.
The U.S. stock market was not immune from the extreme volatility, as it climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter. In the bond market, yields on
U.S. Treasury securities declined to record lows before rising modestly late in
the year.
Does the swift recovery of the U.S. stock market and the favorable
economic environment for the bond market mean that domestic stocks and bonds
will continue to prosper? We are optimistic over the long term, but we do expect
that concerns about corporate earnings growth in a slow-growth economy will
contribute to more stock market volatility in 1999. In the bond market, the
Federal Reserve Board's decisions to reduce short-term interest rates should
help create a positive climate for fixed-income securities. While lower interest
rates are generally good for bond prices, it will become more difficult for bond
funds to maintain their dividends at current levels if yields decline further.
As an Oppenheimer fund shareholder, you may wonder how this potential
volatility will affect you. If you maintain a long-term perspective, as we do,
short-term volatility over the coming months should have little bearing on your
ability to achieve your future financial goals. That's why we continue to
suggest that you adhere to your long-term investment plan. In fact, we are very
encouraged that most of our shareholders stayed the course during last summer's
stock market correction, avoiding the temptation of selling into a temporarily
declining market.
Finally, I would like to thank those shareholders who contacted us about
our revised account statement. Response has been very positive, and we are
pleased that many of you find the new format easier to read and more
informative. If you have any questions about the new statement or any other
matter, please don't hesitate to call us at 1-800-525-7048. In the meantime,
thank you for choosing OppenheimerFunds, The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
November 20, 1998
3 Oppenheimer Quest Value Fund, Inc.
<PAGE> 4
"WE LOOK FOR COMPANIES WITH HIGH RETURNS ON CAPITAL WHOSE TRUE BUSINESS WORTH IS
NOT REFLECTED IN THEIR STOCK PRICES."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM OVER THE ONE-YEAR PERIOD THAT ENDED OCTOBER 31, 1998?
The fiscal year that ended October 31, 1998, proved to be an exceptionally
difficult period for value stocks, precisely the types of stocks on which the
Fund focuses. Specifically, the Fund's performance was hurt by our large
exposure to financial stocks, which have underperformed this year.
HOW HAVE THE FUND'S HOLDINGS FARED DURING THE STOCK MARKET CORRECTION THAT BEGAN
IN MID-JULY?
The stock market decline touched almost all stocks, and the value-oriented
stocks in the Fund's portfolio were not immune. Some holdings declined in line
with the market, although others held up quite well. In the subsequent recovery
period, our stocks have performed quite strongly.
We believe it is always important to adhere to our value investment
discipline, but even more so in volatile markets. These periods provide
excellent opportunities for us to identify well-positioned companies which are
temporarily out of favor with the market.
HOW DO YOU SEEK TO MANAGE RISK IN THE PORTFOLIO?
We employ two primary risk management tools. First, is to insist upon high
quality in the businesses in which we invest. We measure quality by the ability
of a company to sustain superior profitability over the course of a business
cycle. A strong competitive position is the key to accomplishing this. Second,
we seek to reduce valuation risk by using a strict discipline that limits the
price we will pay for even the most attractive business. In our view, even a
great business can be a poor investment if the price is too high.
4 Oppenheimer Quest Value Fund, Inc.
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
(L to R)
David Phillips,
Eileen Rominger
(Portfolio Manager)
HAS RECENT MARKET VOLATILITY CREATED ANY ATTRACTIVE VALUES IN THE MARKET?
The market volatility in September and October created some terrific
opportunities to build positions in very solid companies. The market's weakness
during the period was not particularly selective, so we found very high quality
companies that were selling at bargain prices.
ARE THERE SPECIFIC TYPES OF COMPANIES OR INDUSTRIES IN WHICH YOU ARE FINDING
PARTICULARLY ATTRACTIVE VALUES?
Our investment approach is to build the portfolio one stock at a time, from the
bottom-up. However, this approach has led to a larger number of holdings in
certain market sectors. For example, the property-casualty industry is one in
which a few select companies appear to represent attractive values. It is a
cyclical industry in which competitors are currently staging a "price war" to
increase their market share. But for some companies, cash flow remains very
strong and that cash flow is being used in ways to create value for
shareholders. These companies have little sensitivity to any potential weakness
in the general economy, and may indeed have seen the worst of their own business
cycle. At current prices we believe certain property-casualty businesses
represent good potential on the upside.
5 Oppenheimer Quest Value Fund, Inc.
<PAGE> 6
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 9/30/98(1)
<TABLE>
<CAPTION>
CLASS A
1 year 5 year 10 year
<S> <C> <C>
- -6.22% 14.92% 14.02%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Since
1 year 5 year Inception
<S> <C> <C>
- -5.75% 15.47% 15.06%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Since
1 year 5 year Inception
<S> <C> <C>
- -1.97% 15.70% 15.17%
</TABLE>
<TABLE>
<CAPTION>
CLASS Y
Since
1 year 5 year Inception
<S> <C>
- -0.12% N/A 13.87%
</TABLE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
We are also attracted to companies that are returning excess cash flow to
shareholders in the form of share repurchase programs. Companies who repurchase
shares during periods of market uncertainty are sending a clear message that
they have confidence in the future strength of their businesses. For most
companies, the financial impact of this is the increased value of their stock.
Measures such as cash flow per share and earnings per share are enhanced. Share
repurchase programs represent a powerful and flexible financial tool that we
always look for, but particularly during periods of market uncertainty.
HAVE YOU CHANGED THE FUND'S COMPOSITION SUBSTANTIALLY BECAUSE OF THE CORRECTION?
Changes in the portfolio have been incremental. We take a long-term view of the
companies in which we invest. Indeed, a number of stocks have been strong
contributors in the portfolio for five and even ten years. On average, the
holding period has tended to be about three years.
We try to avoid making dramatic portfolio changes based on only a
short-term outlook, even during periods of transition in the market. Rather, we
try to make sure that the portfolio is positioned optimally in terms of
potential risk and reward over the coming year or so.
6 Oppenheimer Quest Value Fund, Inc.
<PAGE> 7
THE FUND'S CASH POSITION IS APPROXIMATELY 20% OF ASSETS AS OF OCTOBER 31. DO YOU
PLAN TO DEPLOY THOSE ASSETS ANYTIME SOON?
We are eager to find opportunities to put our cash to work, but we won't do so
indiscriminately. So far during this correction, purchases of new holdings have
been offset by sales of existing positions, so we have not yet tapped our cash
reserves.
WHAT DO YOU BELIEVE THE NEXT FEW MONTHS HAVE IN STORE FOR INVESTORS?
We are very optimistic about the prospects for the value style of investing. In
fact, we believe that the opportunity to find compelling values in the stock
market is the best we've seen in ten years. In our view, the market is in the
midst of a period of disarray, creating opportunities for investors willing to
evaluate companies according to objective criteria such as returns on capital.
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 4/30/80. The Fund's maximum
sales charge for Class A shares was lower prior to 11/24/95, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 1% (since inception on
9/1/93). Class C returns for the one-year result include the contingent deferred
sales charge of 1%. Class C shares have an inception date of 9/1/93. Class Y
shares were first publicly offered on 12/16/96 and are not available for sale to
individual shareholders. Class B and C shares are subject to an annual 0.75%
asset-based sales charge and Class A shares are subject to an annual 0.25%
asset-based sales charge. An explanation of the different performance
calculations is in the Fund's prospectus.
7 Oppenheimer Quest Value Fund, Inc.
<PAGE> 8
ASSET ALLOCATION(2)
<TABLE>
GRAPHIC (PIE CHART)
<S> <C>
- - Equities 78.5%
- - Cash Equivalents 21.5
</TABLE>
By objectively evaluating companies one at a time, we can overlook short-term
emotional influences and focus instead on producing attractive long-term returns
while controlling risk. We believe our time-tested, value-oriented management
style is part of The Right Way to Invest in these uncertain markets.
<TABLE>
<CAPTION>
TOP 10 STOCK HOLDINGS(2)
- --------------------------------------------------------------------------------
<S> <C>
Exel Ltd., Cl. A 5.9%
- --------------------------------------------------------------------------------
ACE Ltd. 4.5
- --------------------------------------------------------------------------------
Philip Morris Cos., Inc. 3.1
- --------------------------------------------------------------------------------
Conseco, Inc. 2.9
- --------------------------------------------------------------------------------
Textron, Inc. 2.7
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 2.6
- --------------------------------------------------------------------------------
Freddie Mac 2.6
- --------------------------------------------------------------------------------
Dover Corp. 2.6
- --------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 2.6
- --------------------------------------------------------------------------------
McDonald's Corp. 2.5
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOP 5 INDUSTRIES(2)
- --------------------------------------------------------------------------------
<S> <C>
Insurance 20.3%
- --------------------------------------------------------------------------------
Manufacturing 13.3
- --------------------------------------------------------------------------------
Leisure & Entertainment 5.8
- --------------------------------------------------------------------------------
Diversified Financial 4.2
- --------------------------------------------------------------------------------
Banks 4.2
- --------------------------------------------------------------------------------
</TABLE>
2. Portfolio is subject to change. Percentages are as of October 31, 1998, and
are based on total market value of investments.
8 Oppenheimer Quest Value Fund, Inc.
<PAGE> 9
FUND PERFORMANCE
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended October 31,1998, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
- MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the Fund's fiscal year
that ended October 31, 1998, Oppenheimer Quest Value Fund, Inc.'s performance
was strongly influenced by the management team's value-oriented investment
approach and a difficult environment for value stocks. By seeking businesses
with strong returns on capital and undervalued stock prices, the Fund's
management was able to participate in the stock market's gains during most of
the year. Later in the year, when the stock market experienced a sharp
correction, the Fund's performance was hurt by its large exposure to financial
stocks. However, the Fund's management was able to find some inexpensive
securities with potential for strong returns on capital. The Fund's portfolio
holdings, allocations and management strategies are subject to change.
- COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow
show the performance of a hypothetical $10,000 investment in each class of
shares of the Fund held until October 31, 1998. In the case of Class A shares,
performance is measured over a 10-year period. In the case of Class B shares and
Class C shares, performance is measured from inception of those classes on
September 1, 1993. In the case of Class Y shares, performance is measured from
the inception of the class on December 16, 1996. The Fund's performance reflects
the deduction of the 5.75% maximum initial sales charge on Class A shares, the
5% (1-year) and 1% (since inception) applicable contingent deferred sales charge
for Class B, and the 1% (1-year) contingent deferred sales charge for Class C
shares. The graphs assume that all dividends and capital gains distributions
were reinvested in additional shares.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effects of
Fund business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the index.
9 Oppenheimer Quest Value Fund, Inc.
<PAGE> 10
FUND PERFORMANCE
- --------------------------------------------------------------------------------
[The following table was originally a line graph in the printed materials.]
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc. (Class A) and S&P 500 Index
<TABLE>
<CAPTION>
Oppenheimer Quest S&P
Value Fund, Inc. 500
Date Class A Index
<S> <C> <C>
1988 943 1000
1989 1090 1264
1990 944 1169
1991 1302 1560
1992 1542 1715
1993 1731 1971
1994 1818 2047
1995 2268 2587
1996 2912 3210
1997 3652 4240
1998 4013 5173
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 10/31/98(1)
1 YEAR 3.56% 5 YEAR 16.91% 10 YEAR 14.91%
[The following table was originally a line graph in the printed materials.]
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc. (Class B) and S&P 500 Index
<TABLE>
<CAPTION>
Oppenheimer Quest S&P
Value Fund, Inc. 500
Date Class B Index
<S> <C> <C>
1993 10000 10000
10/1993 9882 10128
1994 10319 10519
1995 12805 13297
1996 16359 16499
1997 20403 21796
1998 22216 26589
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 10/31/98(2)
1 YEAR 4.38% 5 YEAR 17.49% 10 YEAR 16.71%
The returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information for S&P 500 Index in the graphs begins on 10/31/88
for Class A, 8/31/93 for both Class B and Class C, and 12/31/96 for Class Y.
1. The average annual total returns are shown net of the applicable 5.75%
maximum initial sales charge.
2. Class B shares of the Fund were first publicly offered on 9/1/93. The average
annual total returns are shown net of the applicable 5% and 1% contingent
deferred sales charges, respectively, for the one-year period and the life of
the class. The ending account value in the graph is net of the applicable 1%
contingent deferred sales charge.
10 Oppenheimer Quest Value Fund, Inc.
<PAGE> 11
[The following table was originally a line graph in the printed materials.]
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc. (Class C) and S&P 500 Index
<TABLE>
<CAPTION>
Oppenheimer Quest S&P
Value Fund, Inc. 500
Date Class C Index
<S> <C> <C>
1993 10000 10000
10/1993 9874 10128
1994 10313 10519
1995 12798 13297
1996 16347 16499
1997 20400 21796
1998 22301 26589
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 10/31/98(3)
1 YEAR 8.32% 5 YEAR 17.70% LIFE 16.79%
[The following table was originally a line graph in the printed materials.]
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc. (Class Y) and S&P 500 Index
<TABLE>
<CAPTION>
Oppenheimer Quest S&P
Value Fund, Inc. 500
Date Class Y Index
<S> <C> <C>
1996 10000 10000
10/1997 12455 12531
1998 13745 15286
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS Y SHARES OF THE FUND AT 10/31/98(4)
1 YEAR 10.36% LIFE 18.49%
3. Class C shares of the Fund were first publicly offered on 9/1/93. The average
annual total returns are shown net of the applicable 1% contingent deferred
sales charge for the one-year period.
4. Class Y shares were first publicly offered on 12/16/96 and are not available
for sale to individual shareholders.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
11 Oppenheimer Quest Value Fund, Inc.
<PAGE> 12
FINANCIALS
- --------------------------------------------------------------------------------
12 Oppenheimer Quest Value Fund, Inc.
<PAGE> 13
STATEMENT OF INVESTMENTS October 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--79.4%
- --------------------------------------------------------------------------------
BASIC MATERIALS--3.0%
- --------------------------------------------------------------------------------
CHEMICALS--2.2%
Du Pont (E.I.) De Nemours & Co. 410,000 $23,575,000
- --------------------------------------------------------------------------------
International Flavors & Fragrances, Inc. 320,000 11,980,000
-----------
35,555,000
- --------------------------------------------------------------------------------
PAPER--0.8%
Champion International Corp. 430,000 13,733,125
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS--12.0%
- --------------------------------------------------------------------------------
AUTOS & HOUSING--0.3%
Security Capital Group, Inc., Cl. B(1) 262,878 4,189,618
- --------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--5.8%
AMR Corp.(1) 434,000 29,078,000
- --------------------------------------------------------------------------------
Carnival Corp. 760,000 24,605,000
- --------------------------------------------------------------------------------
McDonald's Corp. 630,000 42,131,250
-----------
95,814,250
- --------------------------------------------------------------------------------
MEDIA--3.6%
Hollinger International, Inc. 125,800 1,635,400
- --------------------------------------------------------------------------------
Omnicom Group, Inc. 511,000 25,262,562
- --------------------------------------------------------------------------------
Reed International plc, Sponsored ADR 390,000 13,065,000
- --------------------------------------------------------------------------------
WPP Group plc, Sponsored ADR 366,000 18,208,500
-----------
58,171,462
- --------------------------------------------------------------------------------
RETAIL: GENERAL--2.3%
May Department Stores Cos. 623,000 38,003,000
</TABLE>
13 Oppenheimer Quest Value Fund, Inc.
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--8.1%
- --------------------------------------------------------------------------------
FOOD--1.5%
Diageo plc, Sponsored ADR 551,120 $24,214,835
- --------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES--3.4%
Becton, Dickinson & Co. 671,000 28,265,875
- --------------------------------------------------------------------------------
Tenet Healthcare Corp.(1) 985,500 27,532,406
-----------
55,798,281
- --------------------------------------------------------------------------------
TOBACCO--3.2%
Philip Morris Cos., Inc. 1,015,000 51,891,875
- --------------------------------------------------------------------------------
ENERGY--0.5%
- --------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--0.5%
Anadarko Petroleum Corp. 238,600 8,082,575
- --------------------------------------------------------------------------------
OIL-INTEGRATED--0.0%
PanCanadian Petroleum Ltd. 24,500 322,431
- --------------------------------------------------------------------------------
FINANCIAL--29.0%
- --------------------------------------------------------------------------------
BANKS--4.2%
BankBoston Corp. 546,000 20,099,625
- --------------------------------------------------------------------------------
Citigroup, Inc. 500,000 23,531,250
- --------------------------------------------------------------------------------
Wells Fargo & Co. 69,666 25,776,420
-----------
69,407,295
</TABLE>
14 Oppenheimer Quest Value Fund, Inc.
<PAGE> 15
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
DIVERSIFIED FINANCIAL--4.3%
Countrywide Credit Industries, Inc. 627,500 $27,100,156
- --------------------------------------------------------------------------------
Freddie Mac 752,000 43,240,000
-------------
70,340,156
- --------------------------------------------------------------------------------
INSURANCE--20.5%
ACE Ltd. 2,219,200 75,175,400
- --------------------------------------------------------------------------------
AFLAC, Inc. 738,100 28,140,062
- --------------------------------------------------------------------------------
American International Group, Inc. 132,750 11,316,937
- --------------------------------------------------------------------------------
Conseco, Inc. 1,397,998 48,493,056
- --------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 1,240,000 42,702,500
- --------------------------------------------------------------------------------
Exel Ltd., Cl. A 1,280,721 97,895,111
- --------------------------------------------------------------------------------
General Re Corp. 144,000 31,635,000
- --------------------------------------------------------------------------------
LandAmerica Financial Group, Inc. 7,300 379,144
- --------------------------------------------------------------------------------
Terra Nova (Bermuda) Holdings Ltd., Cl. A 13,200 366,300
------------
$336,103,510
- --------------------------------------------------------------------------------
INDUSTRIAL--18.6%
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--2.5%
Rockwell International Corp. 1,015,000 41,678,438
- --------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.5%
Armstrong World Industries, Inc. 120,000 7,440,000
- --------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.7%
Donnelley (R.R.) & Sons Co. 280,000 12,075,000
</TABLE>
15 Oppenheimer Quest Value Fund, Inc.
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING--13.4%
AlliedSignal, Inc. 999,300 $ 38,910,244
- --------------------------------------------------------------------------------
Caterpillar, Inc. 580,000 26,100,000
- --------------------------------------------------------------------------------
Dover Corp. 1,360,000 43,180,000
- --------------------------------------------------------------------------------
LucasVarity plc, ADR 820,100 28,703,500
- --------------------------------------------------------------------------------
Minnesota Mining & Manufacturing Co. 470,000 37,600,000
- --------------------------------------------------------------------------------
Textron, Inc. 610,000 45,368,750
--------------
219,862,494
- --------------------------------------------------------------------------------
TRANSPORTATION--1.5%
Canadian Pacific Ltd. (New) 1,087,500 24,604,688
- --------------------------------------------------------------------------------
TECHNOLOGY--6.9%
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE--4.0%
General Dynamics Corp. 370,000 21,899,375
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 390,000 43,436,250
--------------
65,335,625
- --------------------------------------------------------------------------------
ELECTRONICS--2.9%
Arrow Electronics, Inc.(1) 159,000 3,468,188
- --------------------------------------------------------------------------------
Avnet, Inc. 381,000 18,954,750
- --------------------------------------------------------------------------------
Solectron Corp.(2) 430,000 24,617,500
--------------
47,040,438
- --------------------------------------------------------------------------------
UTILITIES--1.3%
- --------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.3%
Sprint Corp. 285,200 21,889,100
--------------
Total Common Stocks (Cost $1,006,165,674) 1,301,553,196
</TABLE>
16 Oppenheimer Quest Value Fund, Inc.
<PAGE> 17
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM NOTES--21.7%(2)
- ---------------------------------------------------------------------------------------
Amex Credit Corp., 5.20%, 11/9/98 $31,855,000 $ 31,818,190
- ---------------------------------------------------------------------------------------
Daimler-Benz NA, 5.30%, 11/12/98 35,000,000 34,943,319
- ---------------------------------------------------------------------------------------
Federal Home Loan Bank, 4.78%, 11/18/98 6,855,000 6,839,527
- ---------------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.06%, 11/16/98 50,000,000 49,894,583
- ---------------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.22%, 11/4/98 10,750,000 10,745,324
- ---------------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.27%, 11/13/98 195,000 194,657
- ---------------------------------------------------------------------------------------
General Electric Capital Corp., 5.50%, 11/16/98 36,933,000 36,852,517
- ---------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.09%, 12/2/98 26,166,000 26,051,313
- ---------------------------------------------------------------------------------------
Household Finance Corp., 5%, 12/3/98 3,299,000 3,284,338
- ---------------------------------------------------------------------------------------
Household Finance Corp., 5.09%, 11/12/98 7,805,000 7,792,861
- ---------------------------------------------------------------------------------------
Household Finance Corp., 5.25%, 11/12/98 13,230,000 13,208,777
- ---------------------------------------------------------------------------------------
Household Finance Corp., 5.28%, 11/16/98 23,560,000 23,508,168
- ---------------------------------------------------------------------------------------
IBM Credit Corp., 5.20%, 11/2/98 50,000,000 49,992,778
- ---------------------------------------------------------------------------------------
John Deere Capital Corp., 5.27%, 11/9/98 17,494,000 17,473,513
- ---------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.09%, 12/7/98 7,187,000 7,150,418
- ---------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.12%, 12/10/98 37,149,000 36,942,947
--------------
Total Short-Term Notes (Cost $356,693,230) 356,693,230
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,362,858,904) 101.1% 1,658,246,426
- ---------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.1) (18,209,526)
---------- --------------
NET ASSETS 100.0% $1,640,036,900
========== ==============
</TABLE>
1. Non-income producing security.
2. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
17 Oppenheimer Quest Value Fund, Inc.
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES October 31, 1998
<TABLE>
<S> <C>
=================================================================================================
ASSETS
Investments, at value (cost $1,362,858,904)---see accompanying statement $1,658,246,426
- -------------------------------------------------------------------------------------------------
Cash 5,326,293
- -------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 4,510,610
Interest and dividends 1,324,669
Other 7,694
==============
Total assets 1,669,415,692
=================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 26,650,682
Shares of capital stock redeemed 1,991,616
Distribution and service plan fees 316,147
Transfer and shareholder servicing agent fees 176,991
Directors' fees 24,685
Other 218,671
==============
Total liabilities 29,378,792
=================================================================================================
NET ASSETS $1,640,036,900
==============
=================================================================================================
COMPOSITION OF NET ASSETS
Par value of shares of capital stock $ 76,976,346
- -------------------------------------------------------------------------------------------------
Additional paid-in capital 1,193,461,374
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 8,975,648
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 65,236,010
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 295,387,522
--------------
Net assets $1,640,036,900
==============
</TABLE>
18 Oppenheimer Quest Value Fund, Inc.
<PAGE> 19
<TABLE>
<S> <C>
=========================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $976,655,252 and 45,508,537 shares of capital stock outstanding) $21.46
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $22.77
- ------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $512,884,897 and
24,335,552 shares of capital stock outstanding) $21.08
- ------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $140,460,735
and 6,666,294 shares of capital stock outstanding) $21.07
- ------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $10,036,016 and 465,963 shares of capital stock outstanding) $21.54
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Quest Value Fund, Inc.
<PAGE> 20
STATEMENT OF OPERATIONS For the Year Ended October 31, 1998
<TABLE>
<S> <C>
================================================================================
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $269,352) $19,766,748
- --------------------------------------------------------------------------------
Interest 14,000,880
==========
Total income 33,767,628
================================================================================
EXPENSES
Management fees--Note 4 12,618,225
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 4,261,498
Class B 4,164,224
Class C 1,160,000
- --------------------------------------------------------------------------------
Transfer agent fees--Note 4:
Class A 996,010
Class B 483,281
Class C 137,011
Class Y 8,041
- --------------------------------------------------------------------------------
Shareholder reports 308,440
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 166,169
Class B 102,839
Class C 28,217
Class Y 2,446
- --------------------------------------------------------------------------------
Directors' fees and expenses 68,773
- --------------------------------------------------------------------------------
Accounting service fees--Note 4 55,000
- --------------------------------------------------------------------------------
Custodian fees and expenses 52,041
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 39,513
- --------------------------------------------------------------------------------
Other 141,778
----------
Total expenses 24,793,506
================================================================================
NET INVESTMENT INCOME 8,974,122
================================================================================
REALIZED AND UNREALIZED GAIN
Net realized gain on investments 65,256,883
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 25,203,846
----------
Net realized and unrealized gain 90,460,729
================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $99,434,851
===========
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Quest Value Fund, Inc.
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1998 1997
================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 8,974,122 $ 4,771,423
- ----------------------------------------------------------------------------------------------------------------
Net realized gain 65,256,883 47,887,290
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 25,203,846 127,277,273
-------------- -------------
Net increase in net assets resulting from operations 99,434,851 179,935,986
================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (3,823,240) (1,801,385)
Class B (722,471) (107,344)
Class C (193,326) (27,574)
Class Y (30,052) --
- ----------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (30,482,358) (22,962,861)
Class B (13,497,474) (6,696,217)
Class C (3,754,824) (1,768,806)
Class Y (142,429) --
================================================================================================================
CAPITAL STOCK TRANSACTIONS
Net increase in net assets resulting from capital
stock transactions---Note 2:
Class A 244,992,480 186,699,902
Class B 203,694,646 151,470,057
Class C 55,117,897 42,571,844
Class Y 6,679,862 2,817,095
================================================================================================================
NET ASSETS
Total increase 557,273,562 530,130,697
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 1,082,763,338 552,632,641
-------------- --------------
End of period (including undistributed net investment
income of $8,975,648 and $4,754,927, respectively) $1,640,036,900 $1,082,763,338
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Quest Value Fund, Inc.
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1998 1997 1996(2) 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $20.49 $17.30 $14.51 $12.59 $12.51
- ---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .15 .11 .08 .12 (3) .09(3)
Net realized and unrealized gain 1.80 4.07 3.79 2.71 .50
------- ------- ------- ------- -------
Total income from investment
operations 1.95 4.18 3.87 2.83 .59
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.11) (.07) (.10) (.08) (.04)
Distributions from net realized gain (.87) (.92) (.98) (.83) (.47)
------- ------- ------- ------- -------
Total dividends and distributions
to shareholders (.98) (.99) (1.08) (.91) (.51)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.46 $20.49 $17.30 $14.51 $12.59
===== ===== ===== ===== =====
===============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 9.87% 25.41% 28.39% 24.74% 5.01%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $976,655 $699,230 $412,246 $282,615 $238,085
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $853,061 $560,582 $338,429 $257,240 $237,923
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.83% 0.74% 0.58% 0.90% 0.72%
Expenses 1.59% 1.60% 1.71% 1.68% 1.71%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 21.2% 19.7% 36.0% 36.0% 49.0%
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
3. Based on average shares outstanding for the period.
4. 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.
22 Oppenheimer Quest Value Fund, Inc.
<PAGE> 23
<TABLE>
<CAPTION>
CLASS B CLASS C
- ---------------------------------------------------------------------------- --------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1998 1997 1996(2) 1995 1994 1998 1997
============================================================================ ==========================
<C> <C> <C> <C> <C> <C> <C>
$20.17 $17.08 $14.37 $12.53 $12.51 $20.17 $17.07
- ---------------------------------------------------------------------------- -----------------------
.07 .05 .05 .05 (3) .02 (3) .07 .05
1.76 3.97 3.71 2.69 .50 1.75 3.98
------- ------- ------- ------- ------- ------- -------
1.83 4.02 3.76 2.74 .52 1.82 4.03
- ---------------------------------------------------------------------------- -----------------------
(.05) (.01) (.07) (.07) (.03) (.05) (.01)
(.87) (.92) (.98) (.83) (.47) (.87) (.92)
------- ------- ------- ------- ------- ------- -------
(.92) (.93) (1.05) (.90) (.50) (.92) (.93)
- ---------------------------------------------------------------------------- -----------------------
$21.08 $20.17 $17.08 $14.37 $12.53 $21.07 $20.17
===== ===== ===== ===== ===== ===== =====
============================================================================ ==========================
9.38% 24.71% 27.76% 24.08% 4.43% 9.32% 24.79%
============================================================================ ==========================
$512,885 $298,348 $111,130 $38,557 $14,373 $140,461 $82,098
- ---------------------------------------------------------------------------- -------------------------
$417,011 $200,752 $ 68,175 $25,393 $ 8,341 $116,160 $55,969
- ---------------------------------------------------------------------------- -------------------------
0.33% 0.25% 0.06% 0.36% 0.14% 0.33% 0.25%
2.09% 2.10% 2.26% 2.21% 2.24% 2.10% 2.10%
- ---------------------------------------------------------------------------- -------------------------
21.2% 19.7% 36.0% 36.0% 49.0% 21.2% 19.7%
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1998, were $558,042,496 and $239,842,479, respectively.
23 Oppenheimer Quest Value Fund, Inc.
<PAGE> 24
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C (continued) CLASS Y
-------------------------------------- ----------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1998 1997(1)
================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $14.35 $12.52 $12.50 $20.55 $16.50
- ----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .04(3) .01(3) .21 .10
Net realized and unrealized gain 3.71 2.70 .51 1.83 3.95
---------- ----------- ----------- ----------- -----------
Total income from investment
operations 3.75 2.74 .52 2.04 4.05
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.05) (.08) (.03) (.18) --
Distributions from net realized gain (.98) (.83) (.47) (.87) --
---------- ----------- ----------- ----------- -----------
Total dividends and distributions
to shareholders (1.03) (.91) (.50) (1.05) --
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.07 $14.35 $12.52 $21.54 $20.55
===== ===== ===== ===== =====
================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 27.73% 24.10% 4.45% 10.36% 24.55%
================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $29,256 $10,140 $3,581 $10,036 $3,086
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $18,099 $ 6,711 $1,725 $ 5,673 $1,372
Ratios to average net assets:
Net investment income 0.06% 0.31% 0.09% 1.30% 1.20%(5)
Expenses 2.20% 2.26% 2.28% 1.14% 1.19%(5)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 36.0% 36.0% 49.0% 21.2% 19.7%
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
3. Based on average shares outstanding for the period.
4. 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.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1998 were $558,042,496 and $239,842,479, respectively.
See accompanying Notes to Financial Statements.
24 Oppenheimer Quest Value Fund, Inc.
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Value Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek capital
appreciation. The Fund seeks its investment objective through investment in
securities (primarily equity securities) of companies believed by management to
be undervalued in the marketplace in relation to factors such as the companies'
assets, earnings, growth potential and cash flows. The Fund's investment advisor
is OppenheimerFunds, Inc. (the Manager). The Manager has entered into a
sub-advisory agreement with OpCap Advisors. The Fund offers Class A, Class B,
Class C and Class Y 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 classes of shares have identical rights to earnings, assets and
voting privileges, except that each class has its own expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Classes A, B and C have separate distribution and/or
service plans. No such plan has been adopted for Class Y shares. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
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 Directors. Such securities which cannot be valued by an
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 Directors 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.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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.
25 Oppenheimer Quest Value Fund, Inc.
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
- --------------------------------------------------------------------------------
DIRECTORS' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
October 31, 1998, a provision of $24,685 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $24,685 as of
October 31, 1998.
- --------------------------------------------------------------------------------
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 its 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 fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts 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
year ended October 31, 1998, amounts have been reclassified to reflect a
decrease in additional paid-in capital of $25,475, an increase in undistributed
net investment income of $15,688 and an increase in accumulated net realized
gain on investments of $9,787.
- --------------------------------------------------------------------------------
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. Interest income is accrued on a daily basis. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
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.
26 Oppenheimer Quest Value Fund, Inc.
<PAGE> 27
================================================================================
2. CAPITAL STOCK
The Fund has authorized 100 million shares of $1.00 par value capital stock in
the aggregate to be apportioned among each class of shares. Transactions in
shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 1998 YEAR ENDED OCTOBER 31, 1997(1)
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 16,583,852 $ 357,559,555 15,030,841 $ 278,180,029
Dividends and
distributions reinvested 1,630,228 32,669,682 1,380,466 23,316,006
Issued in conjunction with the
acquisition of Oppenheimer Quest
Officers Value Fund--Note 6 314,171 7,009,162 -- --
Redeemed (7,150,327) (152,245,919) (6,112,033) (114,796,133)
---------- ------------- ---------- -------------
Net increase 11,377,924 $ 244,992,480 10,299,274 $ 186,699,902
========== ============= ========== =============
- ---------------------------------------------------------------------------------------------------------------
Class B:
Sold 11,429,512 $ 243,714,221 9,222,271 $ 169,517,668
Dividends and
distributions reinvested 679,452 13,432,763 382,280 6,387,808
Redeemed (2,562,176) (53,452,338) (1,323,617) (24,435,419)
---------- ------------- ---------- -------------
Net increase 9,546,788 $ 203,694,646 8,280,934 $ 151,470,057
========== ============= ========== =============
- ---------------------------------------------------------------------------------------------------------------
Class C:
Sold 3,514,464 $ 74,782,338 2,955,467 $ 54,066,076
Dividends and
distributions reinvested 192,925 3,812,187 105,641 1,764,202
Redeemed (1,111,708) (23,476,628) (704,333) (13,258,434)
---------- ------------- ---------- -------------
Net increase 2,595,681 $ 55,117,897 2,356,775 $ 42,571,844
========== ============= ========== =============
- ---------------------------------------------------------------------------------------------------------------
Class Y:
Sold 401,966 $ 8,582,342 176,674 $ 3,355,435
Dividends and
distributions reinvested 8,611 172,481 -- --
Redeemed (94,838) (2,074,961) (26,450) (538,340)
---------- ------------- ---------- -------------
Net increase 315,739 $ 6,679,862 150,224 $ 2,817,095
========== ============= ========== =============
</TABLE>
1. For the year ended October 31, 1997 for Class A, B and C and for the period
from December 16, 1996 (inception of offering) to October 31, 1997 for Class Y
shares.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of October 31, 1998, net unrealized appreciation on investments of
$295,387,522 was composed of gross appreciation of $340,907,766, and gross
depreciation of $45,520,244.
27 Oppenheimer Quest Value Fund, Inc.
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 1.00% of the first
$400 million of average annual net assets, 0.90% of the next $400 million of
average annual net assets, 0.85% of the next $3.2 billion of average annual net
assets, 0.80% of the next $4 billion of the Fund's average annual net assets,
and 0.75% of average annual net assets over $8 billion. The Manager acts as the
accounting agent for the Fund at an annual fee of $55,000, plus out-of-pocket
costs and expenses reasonably incurred. The Fund's management fee for the year
ended October 31, 1998 was 0.91% of the average annual net assets for Class A,
Class B, Class C and Class Y shares.
The Manager pays OpCap Advisors (the Sub-Advisor) based on the fee
schedule set forth in the Prospectus. For the year ended October 31, 1998, the
Manager paid $4,135,963 to the Sub-Advisor.
For the year ended October 31, 1998, commissions (sales charges paid by
investors) on sales of Class A shares totaled $4,331,484, of which $1,152,891
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 A, Class
B and Class C shares totaled $500,868, $7,537,928 and $633,692, respectively.
Amounts paid to an affiliated broker/dealer for Class B and Class C shares were
$480,249 and $8,638, respectively. During the year ended October 31, 1998, OFDI
received contingent deferred sales charges of $682,890 and $45,642,
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 other Oppenheimer
funds. The Fund pays OFS an annual maintenance fee of $18.00 for each Fund
shareholder account and reimburses OFS for its out-of-pocket expenses. During
the year ended October 31, 1998, the Fund paid OFS $1,482,025. Effective May 1,
1998, the Board of Directors approved an increase in the annual maintenance fee
from $14.85 to $18.00 for each shareholder account.
28 Oppenheimer Quest Value Fund, Inc.
<PAGE> 29
================================================================================
The Fund has adopted a Distribution and Service Plan for Class A shares to
compensate OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Under the Plan, the Fund pays an annual asset-based sales charge to OFDI
of 0.25% per year on Class A shares. The Fund also pays a service fee to OFDI of
0.25% per year. Each fee is computed on the average annual net assets of Class A
shares of the Fund, determined as of the close of each regular business day.
OFDI uses all of the service fee and a portion of the asset-based sales charge
to compensate brokers, dealers, banks and other financial institutions quarterly
for providing personal service and maintenance of shareholder accounts of their
customers that hold Class A shares. OFDI retains the balance of the asset-based
sales charge to reimburse itself for its other expenditures under the Plan.
During the year ended October 31, 1998, OFDI paid $99,898 to an affiliated
broker/dealer as compensation for Class A personal service and maintenance
expenses and retained $1,581,905 as compensation for Class A sales commissions
and service fee advances, as well as financing costs.
The Fund has adopted Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for
it's services rendered in distributing Class B and Class C 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 and Class C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the year ended
October 31, 1998, OFDI paid $16,987 and $7,261, respectively, to an affiliated
broker/dealer as compensation for Class B and Class C personal service and
maintenance expenses and retained $3,580,295 and $761,621, respectively, as
compensation for Class B and Class C sales commissions and service fee advances,
as well as financing costs. If either Plan is terminated by the Fund, the Board
of Directors may allow the Fund to continue payments of the asset-based sales
charge to OFDI for distributing shares before the Plan was terminated. As of
October 31, 1998, OFDI had incurred excess distribution and servicing costs of
$12,541,852 for Class B and $1,402,082 for Class C.
29 Oppenheimer Quest Value Fund, Inc.
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
5. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended October 31,
1998.
================================================================================
6. ACQUISITION OF OPPENHEIMER QUEST OFFICERS VALUE FUND
On June 12, 1998, Oppenheimer Quest Value Fund, Inc. acquired all the net assets
of Oppenheimer Quest Officers Value Fund, pursuant to an agreement and plan of
reorganization approved by the Oppenheimer Quest Officers Value Fund
shareholders on February 18, 1998. The Fund issued (at an exchange ratio of
0.643267 shares of the Fund to one share of Oppenheimer Quest Officers Value
Fund) 314,171 shares of capital stock valued at $7,009,162 in exchange for the
net assets of Oppenheimer Quest Officers Value Fund, resulting in combined net
assets of $1,516,410,126 on June 12, 1998. The net assets acquired included net
unrealized appreciation of $1,143,229. The exchange qualified as a tax-free
reorganization for federal income tax purposes.
================================================================================
7. OTHER MATTERS
Effective September 24, 1998, the Fund changed its custodian bank from State
Street Bank and Trust Company to Citibank, N.A.
================================================================================
8. SUBSEQUENT EVENT
Effective November 1, 1998, the Manager discontinued the accounting services fee
charged to the Fund. The Manager will continue to act as accounting agent for
the Fund.
30 Oppenheimer Quest Value Fund, Inc.
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Board of Directors and Shareholders of
Oppenheimer Quest Value Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Oppenheimer Quest Value Fund, Inc.
(the Fund) at October 31, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
financial statements) are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above. The financial statements of the Fund for the year
ended October 31, 1995 were audited by other independent accountants whose
report dated December 20, 1995 expressed an unqualified opinion on those
statements.
PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
November 20, 1998
31 Oppenheimer Quest Value Fund, Inc.
<PAGE> 32
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1999 shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1998.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Distributions of $0.9836, $0.9209, $0.9191 and $1.0585 per share were
paid to Class A, Class B, Class C and Class Y shareholders, respectively, on
December 12, 1997, of which, for each class of shares, $0.3939 was designated as
a capital gain distribution in the "28% Rate Group" and $0.3239 was designated
as a capital gain distribution in the "20% Rate Group" for federal income tax
purposes. Whether received in stock or cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of capital assets.
Dividends paid by the Fund during the fiscal year ended October 31, 1998,
which are not designated as capital gain distributions should be multiplied by
100.00% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
32 Oppenheimer Quest Value Fund, Inc.
<PAGE> 33
OPPENHEIMER QUEST VALUE FUND, INC.
<TABLE>
==================================================================================================
<S> <C>
OFFICERS AND DIRECTORS Bridget A. Macaskill, Chairman of the Board of Directors and President
Paul Y. Clinton, Director
Thomas W. Courtney, Director
Robert G. Galli, Director
Lacy B. Herrmann, Director
George Loft, Director
Robert C. Doll, Jr., 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 ADVISOR OppenheimerFunds, Inc.
==================================================================================================
SUB-ADVISOR OpCap Advisors
==================================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
==================================================================================================
TRANSFER AND SHAREHOLDER OppenheimerFunds Services
SERVICING AGENT
==================================================================================================
CUSTODIAN OF PricewaterhouseCoopers LLP
PORTFOLIO SECURITIES
==================================================================================================
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Quest Value Fund, Inc. This report
must be preceded or accompanied by a
Prospectus of Oppenheimer Quest Value Fund,
Inc. 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, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
33 Oppenheimer Quest Value Fund, Inc.
<PAGE> 34
OPPENHEIMERFUNDS FAMILY
<TABLE>
=========================================================================================================
<S> <C> <C>
REAL ASSET FUNDS
- ---------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
====================================================================================================
GLOBAL STOCK FUNDS
- ----------------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
====================================================================================================
STOCK FUNDS
- ----------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
====================================================================================================
STOCK & BOND FUNDS
- ----------------------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund(1) Convertible Securities Fund(2)
Value Fund Equity Income Fund
====================================================================================================
TAXABLE BOND FUNDS
- ---------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
====================================================================================================
MUNICIPAL BOND FUNDS
- ----------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
====================================================================================================
MONEY MARKET FUNDS (4)
- ----------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
34 Oppenheimer Quest Value Fund, Inc.
<PAGE> 35
INTERNET
24-hr access to account
information. Online
transactions now available
WWW.OPPENHEIMERFUNDS.COM
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
ACCOUNT TRANSACTIONS
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1-800-852-8457
PHONELINK
24-hr automated information
and automated transactions
1-800-533-3310
TELECOMMUNICATION DEVICE
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Mon-Fri 8:30am-2pm ET
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OPPENHEIMERFUNDS
INFORMATION HOTLINE
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insightful messages on the
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affect your investments
1-800-835-3104
Information and services
- --------------------------------------------------------------------------------
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 or by visiting our website. 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 or website 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, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OPPENHEIMERFUNDS LOGO]
RA0225.001.1098 December 30, 1998
