--------------------------------------------
Annual Report October 31, 1997
--------------------------------------------
OPPENHEIMER
Disciplined
Value Fund
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[LOGO]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
9 Statement of Investments
14 Statement of Assets & Liabilities
16 Statement of Operations
17 Statements of Changes in Net Assets
18 Financial Highlights
20 Notes to Financial Statements
25 Independent Auditors' Report
26 Federal Income Tax Information
27 Officers & Directors
28 Information & Services
- --------------------------------------------------------------------------------
Report highlights
- --------------------------------------------------------------------------------
o The Fund's discipline is to find undervalued stocks issued by companies that
have reported better-than-expected earnings.
o 4-Star Ranking: Morningstar Mutual Funds gave the Fund's Class A shares a
four-star overall ranking for the combined 3-, 5- and 10-year periods ended
September 30, 1997.(1)
o Technology, financial and energy stocks led the Fund's strong performance
during the past year.
- ---------------------------------------
Avg Annual Total Returns
- ---------------------------------------
For the 1-year period ended 10/31/97
without sales charges(2)
Class A
- ---------------------------------------
27.60%
- ---------------------------------------
Class B
- ---------------------------------------
26.61%
- ---------------------------------------
Class C
- ---------------------------------------
26.64%
- ---------------------------------------
Class Y
(Since inception on 12/16/96)
- ---------------------------------------
23.62%
- ---------------------------------------
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.
Prior to March 1, 1996, the Fund had a different investment advisor. However,
the prior portfolio management team is now employed by OppenheimerFunds, Inc.,
the current advisor.
1. Source: Morningstar, Inc. 9/30/97. Morningstar ranks mutual funds in broad
investment classes, based on risk-adjusted returns after considering sales
charges and expenses. Return and risk are measured as performance above and
below 90-day U.S. Treasury bill returns, respectively. Current star rankings are
based on the weighted average of 3-, 5- and 10-year (if applicable) rankings for
a fund or class and are subject to change monthly. Top 10%: 5 stars. Next 22.5%:
4 stars. Middle 35%: 3 stars. Next 22.5%: 2 stars. Bottom 10%: 1 star. The Fund
is ranked 4 stars (3-year), 4 stars (5-year) and 4 stars (10-year), weighted
20%/30%/50%, respectively.
2. 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 Oppenheimer Disciplined Value Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
Bridget A. Macaskill
President
Oppenheimer Disciplined Value Fund
As you are no doubt aware, during the end of October and early November many
stock markets around the world recorded their all-time largest point declines,
followed by subsequent gains and continued volatility, leaving investors
uncertain about what would occur next.
To put those events in focus, let's look at a "snapshot" of the two-week
time period. Sharp declines in the overseas stock markets, particularly in Asia,
triggered a series of sell-offs throughout Europe, Latin America and the United
States. In response, the U.S. stock market, as measured by the Dow Jones
Industrial Average, dropped 554 points on October 27, its largest point decline
in history. However, almost as quickly, the U.S. stock market bounced back over
the succeeding few days, regaining nearly all of its losses.
While no one could have predicted the timing or extent of these
fluctuations, many analysts, including our fund managers here at
OppenheimerFunds, had warned of a correction for several months. We believed
that U.S. valuations were too high, stocks were expensive relative to bonds,
recent corporate earnings were somewhat disappointing and that Federal Reserve
Chairman Alan Greenspan could possibly seek a short-term interest rate hike.
While only one short-term interest rate hike occurred in March of 1997, the
other factors have held true.
We'd like to take this opportunity to remind shareholders that stock
market volatility is a normal and expected part of the business cycle. As Alan
Greenspan suggested, in years to come this period will likely be remembered as a
positive change for a market that was growing too quickly.
For frequent market updates, please visit our website at
www.oppenheimerfunds.com or call 1-800-835-3104 to listen to our recorded
messages. In the meantime, thank you for your confidence in OppenheimerFunds,
The Right Way to Invest. We look forward to helping you reach your investment
goals in the future.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 21, 1997
3 Oppenheimer Disciplined Value Fund
<PAGE>
- ---------------------------------------
Avg Annual Total Returns
- ---------------------------------------
For the Period Ended 9/30/97(1)
Class A
1 year 5 year 10 year
- ---------------------------------------
28.48% 20.45% 14.29%
- ---------------------------------------
Class B
Since
1 year 5 year Inception
- ---------------------------------------
30.23% N/A 24.16%
- ---------------------------------------
Class C
Since
1 year 5 year Inception
- ---------------------------------------
34.29% N/A 26.57%
- ---------------------------------------
Class Y
Since
1 year 5 year Inception
- ---------------------------------------
N/A N/A 29.18%
- ---------------------------------------
- ---------------------------------------
Cumulative Total Return
- ---------------------------------------
For the Period Ended 9/30/97(1)
Class A
5 year
- ---------------------------------------
153.55% $25,355(3)
- ---------------------------------------
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Disciplined Value Fund had a strong year. In fact, for the one-year
period ended October 31, 1997 the Fund's Class A shares earned an average annual
total return of 27.60%, without deducting sales charges.(2) In this Fund, we
look for undervalued stocks issued by companies that have reported
better-than-expected earnings. We believe that over time, this consistently
applied value-oriented discipline keeps us very competitive.
Growth of $10,000
Over five years
(without sales charges)(3)
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[The following table was represented as a mountain graph in the printed
materials.]
<TABLE>
<CAPTION>
Oppenheimer Disciplined Value Fund
S&P 500 Index Class A shares
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
92 -- -- $10,000.00 $10,503.49 -- -- $10,000.00 $11,047.49
93 $10,962.18 $11,015.56 $11,300.19 $11,562.18 $11,934.42 $12,345.74 $13,173.00 $13,357.70
94 $11,123.73 $11,170.54 $11,716.76 $11,714.92 $13,048.92 $12,793.45 $13,447.41 $13,270.46
95 $12,855.55 $14,082.83 $15,201.88 $16,117.14 $14,438.63 $15,663.32 $16,995.05 $18,100.70
96 $16,982.24 $17,744.34 $18,292.75 $19,817.63 $18,963.12 $19,201.21 $19,734.85 $21,427.29
97 $20,348.94 $23,901.45 $25,692.41 -- $21,471.42 $24,374.78 $26,902.75 --
</TABLE>
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 9/16/85. The Fund's maximum
sales charge for Class A shares was lower prior to 3/18/96, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 4% (since inception on
10/2/95). Class C returns for the one-year period include the contingent
deferred sales charge of 1%. Class C shares have an inception date of 5/1/96.
Class Y shares were first publicly offered on 12/16/96 and are not available for
sale to individual shareholders. An explanation of the different performance
calculations is contained in the Fund's prospectus. Class B and C shares are
subject to an annual 0.75% asset-based sales charge.
2. 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.
4 Oppenheimer Disciplined Value Fund
<PAGE>
Sector Weightings(4)
[PIE CHART OMITTED]
o Financial 22.4%
o Industrial 15.7
o Technology 14.9
o Energy 13.9
o Consumer Cyclicals 13.1
o Utilities 7.0
o Consumer Non-Cyclicals 6.6
o Basic Materials 6.4
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Disciplined Value Fund is for investors looking for solid growth
opportunities over time.
What We Look For
o Companies that are undervalued, with lower price/earnings ratios than the
market average (S&P 500).
o The potential for better-than-expected earnings.
o Solid, well-established companies that have been overlooked by the market.
Top 10 Stock Holdings(4)
- -----------------------------------------------------------
Columbia Gas System, Inc. 3.2%
- -----------------------------------------------------------
Storage Technology Corp. (New) 2.3
- -----------------------------------------------------------
Chevron Corp. 2.1
- -----------------------------------------------------------
Diamond Offshore Drilling, Inc. 2.1
- -----------------------------------------------------------
IBM Corp. 1.9
- -----------------------------------------------------------
Amoco Corp. 1.9
- -----------------------------------------------------------
Tidewater, Inc. 1.8
- -----------------------------------------------------------
First Union Corp. 1.8
- -----------------------------------------------------------
Travelers Group, Inc. 1.8
- -----------------------------------------------------------
Fort James Corp. 1.7
- -----------------------------------------------------------
3. Results of a hypothetical $10,000 investment in Class A shares on September
30, 1992. The Standard & Poor's 500 Index is a broad-based unmanaged stock index
including daily reinvestment of dividends, and cannot be purchased directly by
investors.
4. Portfolio is subject to change. Percentages are as of October 31, 1997 and
are based on total market value of stock holdings.
5 Oppenheimer Disciplined Value Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed over the past twelve months?
Oppenheimer Disciplined Value Fund had a strong year. For the one-year period
ended October 31, 1997, the average annual total return, without deducting sales
charges, for the Fund's Class A shares was 27.60%.(1) Our discipline is to find
undervalued stocks issued by companies that have reported better-than-expected
earnings. Over long periods of time, we believe this consistently applied
value-oriented discipline keeps us very competitive.
- -----------------------
"History has
shown that
buying a stock
after a positive
earnings surprise
often adds value
to the portfolio."
How do you find undervalued stocks with
better-than-expected earnings?
We screen for companies that have below-average price/earnings (P/E) ratios and
better-than-expected earnings reports (positive earnings surprise). A low P/E
ratio is often an indicator that a stock may be under valued. A positive
earnings surprise happens when a company reports earnings which are better than
the consensus of Wall Street analysts' predictions. History has shown that
buying stocks with better-than-expected earnings usually adds value to a
portfolio. In addition, one positive earnings surprise can often be followed by
another, and another, with an accompanying series of rising estimates by
analysts. This tends to make for good stock price performance.
What industry sectors performed positively for the Fund over the past twelve
months?
The best sectors were technology, finance and energy. In technology, companies
involved in some way with the personal computer industry performed very well.
One example would be Compaq Computer, which has been
1. Includes changes in net asset value without deducting any sales charges.
Such performance would have been lower if sales charges were taken into account.
6 Oppenheimer Disciplined Value Fund
<PAGE>
[PHOTO OMITTED]
Portfolio Management
Team (l to r)
Kenneth White
Peter Antos
(Fund Manager)
Michael Strathearn
quickly increasing market share, as well as expanding the percentage of its
high-end business. Although technology as a group had a very strong year, they
lost some ground in October when some larger companies reported disappointing
earnings. Still, the twelve-month period ending October 31 proved surprisingly
strong for many technology companies.
In financial services, Traveler's, the insurance and stock brokerage
conglomerate, has done extremely well over the past year. The company, which
owns Smith Barney, purchased Salomon Brothers, the Wall Street investment
banking firm, this year. Many Wall Street analysts anticipate that Traveler's
CEO, Sandy Weill, can improve the profitability of the company by combining
Salomon's international presence with Smith Barney's retail distribution
network. Indeed, Mr. Weill has a long track record of buying companies and
making them more efficient. At the same time, the fundamentals for Traveler's
itself have been improving. The bull market for stocks has benefited Smith
Barney, and the strong U.S. economy has strengthened the company's consumer
lending and insurance divisions.
In energy, Chevron, a worldwide oil company, continued to report
better-than-expected earnings. In addition to benefiting from rising energy
prices, the energy giant has increasingly emphasized more profitable activities,
while simultaneously cutting costs.
7 Oppenheimer Disciplined Value Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
The portfolio also holds several oil service companies that provide offshore
services for Chevron and other major oil companies, who are making very large
new discoveries in oil and natural gas. At the same time, the industry's
capacity has been reduced dramatically after 15 years of downsizing and
consolidation within the oil service industry, plus a general decline in prices
that started in 1981. That reduced capacity, in conjunction with the rising
demand, is causing revenues to escalate very rapidly.
- ---------------------------------------
"We are always
seeking out and
finding candidates that meet our
criteria of better-than-expected
earnings at
bargain prices."
Did you experience any major disappointments this year?
The most disappointing sector was utilities, though we didn't have a big
weighting there. In the electric utility industry, earnings growth has been
slower than most other sectors of the stock market, which has made them
unattractive. In addition to sluggish earnings, the specter of deregulation in
the electric utility industry has caused a high level of uncertainty.
What is your outlook on the portfolio?
In almost every market environment, there are undervalued companies with
earnings that are exceeding expectations. We operate our discipline the same
way, day in and day out, no matter what the market does, and we're always
seeking out and finding candidates that meet our criteria of
better-than-expected earnings at bargain prices. We believe this discipline will
continue to produce good investment performance over time.
8 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1997
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--88.0%
- --------------------------------------------------------------------------------
Basic Materials--5.6%
- --------------------------------------------------------------------------------
Chemicals--2.3%
Du Pont (E.I.) De Nemours & Co. 96,600 $5,494,125
- --------------------------------------------------------------------------------
Lubrizol Corp. (The) 43,400 1,670,900
- --------------------------------------------------------------------------------
Nalco Chemical Co. 59,200 2,368,000
- --------------------------------------------------------------------------------
Rohm & Haas Co. 39,000 3,249,187
-----------
12,782,212
- --------------------------------------------------------------------------------
Metals--0.7%
Allegheny Teledyne, Inc. 124,900 3,286,431
- --------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 29,100 612,919
-----------
3,899,350
- --------------------------------------------------------------------------------
Paper--2.6%
Fort James Corp. 209,362 8,309,054
- --------------------------------------------------------------------------------
International Paper Co. 92,600 4,167,000
- --------------------------------------------------------------------------------
Westvaco Corp. 64,500 2,116,406
-----------
14,592,460
- --------------------------------------------------------------------------------
Consumer Cyclicals--10.4%
- --------------------------------------------------------------------------------
Autos & Housing--2.6%
Ford Motor Co. 73,100 3,193,556
- --------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 117,700 7,370,962
- --------------------------------------------------------------------------------
Lear Corp.(1) 77,100 3,705,619
-----------
14,270,137
- --------------------------------------------------------------------------------
Leisure & Entertainment--2.9%
Alaska Air Group, Inc.(1) 100,700 3,360,862
- --------------------------------------------------------------------------------
America West Holdings Corp., Cl. B(1) 181,600 2,689,950
- --------------------------------------------------------------------------------
AMR Corp.(1) 54,900 6,392,419
- --------------------------------------------------------------------------------
UAL Corp.(1) 42,000 3,680,250
-----------
16,123,481
- --------------------------------------------------------------------------------
Media--0.7%
McGraw-Hill, Inc. 57,000 3,726,375
- --------------------------------------------------------------------------------
Retail: General--3.5%
Dayton Hudson Corp. 65,800 4,133,062
- --------------------------------------------------------------------------------
Federated Department Stores, Inc.(1) 41,200 1,812,800
- --------------------------------------------------------------------------------
May Department Stores Cos. 61,500 3,313,312
- --------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 134,200 7,875,862
- --------------------------------------------------------------------------------
VF Corp. 27,500 2,457,812
-----------
19,592,848
9 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Retail: Specialty--0.7%
Brylane, Inc.(1) 19,300 $838,344
- --------------------------------------------------------------------------------
Payless ShoeSource, Inc.(1) 52,700 2,938,025
-----------
3,776,369
-------------------------------------------------------------------------------
Consumer Non-Cyclicals--5.9%
- --------------------------------------------------------------------------------
Food--2.6%
American Stores Co. 271,900 6,984,431
- --------------------------------------------------------------------------------
Kroger Co.(1) 63,500 2,071,687
- --------------------------------------------------------------------------------
Safeway, Inc.(1) 90,800 5,277,750
-----------
14,333,868
- --------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.9%
Tenet Healthcare Corp.(1) 215,470 6,585,302
- --------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(1) 81,700 3,737,775
-----------
10,323,077
- --------------------------------------------------------------------------------
Household Goods--1.4%
Premark International, Inc. 283,500 7,672,219
- --------------------------------------------------------------------------------
Energy--12.3%
- --------------------------------------------------------------------------------
Energy Services & Producers--5.6%
Diamond Offshore Drilling, Inc. 163,100 10,152,975
- --------------------------------------------------------------------------------
Global Marine, Inc.(1) 211,300 6,576,712
- --------------------------------------------------------------------------------
Oryx Energy Co.(1) 193,200 5,325,075
- --------------------------------------------------------------------------------
Tidewater, Inc. 137,100 9,005,756
-----------
31,060,518
- --------------------------------------------------------------------------------
Oil-Integrated--6.7%
Amoco Corp. 99,900 9,159,581
- --------------------------------------------------------------------------------
Chevron Corp. 126,700 10,508,181
- --------------------------------------------------------------------------------
Exxon Corp. 43,600 2,678,675
- --------------------------------------------------------------------------------
Mobil Corp. 98,800 7,193,875
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 273,800 7,632,175
-----------
37,172,487
- --------------------------------------------------------------------------------
Financial--20.9%
- --------------------------------------------------------------------------------
Banks--7.4%
Bank of New York Co., Inc. (The) 95,000 4,470,937
- --------------------------------------------------------------------------------
BankAmerica Corp. 104,400 7,464,600
- --------------------------------------------------------------------------------
BankBoston Corp. 58,600 4,750,262
- --------------------------------------------------------------------------------
Comerica, Inc. 33,500 2,648,594
- --------------------------------------------------------------------------------
First Union Corp. 179,500 8,806,719
- --------------------------------------------------------------------------------
NationsBank Corp. 46,500 2,784,187
10 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Banks (continued)
Norwest Corp. 73,000 $2,340,563
- --------------------------------------------------------------------------------
Wells Fargo & Co. 27,400 7,983,675
-----------
41,249,537
- --------------------------------------------------------------------------------
Diversified Financial--5.6%
American Express Co. 50,000 3,900,000
- --------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 180,600 6,501,600
- --------------------------------------------------------------------------------
Money Store, Inc. (The) 79,000 2,241,625
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 83,100 4,071,900
- --------------------------------------------------------------------------------
Salomon, Inc. 75,900 5,896,481
- --------------------------------------------------------------------------------
Travelers Group, Inc. 123,700 8,659,000
-----------
31,270,606
- --------------------------------------------------------------------------------
Insurance--7.9%
AFLAC, Inc. 59,800 3,042,325
- --------------------------------------------------------------------------------
Allstate Corp. 27,100 2,247,606
- --------------------------------------------------------------------------------
Chubb Corp. 60,300 3,994,875
- --------------------------------------------------------------------------------
Conseco, Inc. 176,800 7,712,900
- --------------------------------------------------------------------------------
Equitable Cos., Inc. 129,800 5,346,138
- --------------------------------------------------------------------------------
Jefferson-Pilot Corp. 32,825 2,537,783
- --------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 70,000 4,970,000
- --------------------------------------------------------------------------------
MBIA, Inc. 67,000 4,003,250
- --------------------------------------------------------------------------------
Torchmark Corp. 176,300 7,029,963
- --------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 83,800 3,027,275
-----------
43,912,115
- --------------------------------------------------------------------------------
Industrial--13.8%
- --------------------------------------------------------------------------------
Electrical Equipment--1.3%
AMP, Inc. 100,300 4,513,500
- --------------------------------------------------------------------------------
Hubbell, Inc., Cl. B 61,994 2,731,611
-----------
7,245,111
- --------------------------------------------------------------------------------
Industrial Services--0.5%
Viad Corp. 152,600 2,784,950
- --------------------------------------------------------------------------------
Manufacturing--10.9%
Aeroquip-Vickers, Inc. 79,000 4,112,938
- --------------------------------------------------------------------------------
AGCO Corp. 190,500 5,524,500
- --------------------------------------------------------------------------------
Case Corp. 124,400 7,440,675
- --------------------------------------------------------------------------------
Deere & Co. 157,300 8,277,913
- --------------------------------------------------------------------------------
Dover Corp. 41,500 2,801,250
- --------------------------------------------------------------------------------
Harsco Corp. 46,000 1,909,000
- --------------------------------------------------------------------------------
Ingersoll-Rand Co. 152,100 5,922,394
11 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Manufacturing (continued)
PACCAR, Inc. 80,600 $3,632,038
- --------------------------------------------------------------------------------
Parker-Hannifin Corp. 151,200 6,322,050
- --------------------------------------------------------------------------------
Textron, Inc. 130,900 7,567,656
- --------------------------------------------------------------------------------
U.S. Industries, Inc. 275,100 7,393,313
-----------
60,903,727
- --------------------------------------------------------------------------------
Transportation--1.1%
Burlington Northern Santa Fe Corp. 63,700 6,051,500
- --------------------------------------------------------------------------------
Technology--13.1%
- --------------------------------------------------------------------------------
Aerospace/Defense--2.3%
General Dynamics Corp. 26,700 2,167,706
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 35,071 3,333,937
- --------------------------------------------------------------------------------
Raytheon Co. 60,000 3,255,000
- --------------------------------------------------------------------------------
TRW, Inc. 70,600 4,041,850
-----------
12,798,493
- --------------------------------------------------------------------------------
Computer Hardware--8.1%
CHS Electronics, Inc.(1) 49,350 1,205,991
- --------------------------------------------------------------------------------
Compaq Computer Corp.(1) 121,650 7,755,188
- --------------------------------------------------------------------------------
International Business Machines Corp. 94,000 9,217,875
- --------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 38,700 1,182,769
- --------------------------------------------------------------------------------
Pitney Bowes, Inc. 54,500 4,322,531
- --------------------------------------------------------------------------------
Quantum Corp.(1) 182,500 5,771,563
- --------------------------------------------------------------------------------
Storage Technology Corp. (New)(1) 187,800 11,021,513
- --------------------------------------------------------------------------------
Xerox Corp. 57,000 4,520,813
-----------
44,998,243
- --------------------------------------------------------------------------------
Computer Software/Services--0.4%
Electronic Data Systems Corp. 58,000 2,243,875
- --------------------------------------------------------------------------------
Electronics--2.2%
National Semiconductor Corp.(1) 121,300 4,366,800
- --------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 57,400 4,498,725
- --------------------------------------------------------------------------------
SCI Systems, Inc.(1) 73,200 3,220,800
-----------
12,086,325
- --------------------------------------------------------------------------------
Telecommunications/Technology--0.1%
AT&T Corp. 16,900 827,044
- --------------------------------------------------------------------------------
Utilities--6.1%
- --------------------------------------------------------------------------------
Electric Utilities--0.6%
FPL Group, Inc. 39,800 2,057,163
- --------------------------------------------------------------------------------
NIPSCO Industries, Inc. 25,500 1,120,406
-----------
3,177,569
12 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Gas Utilities--2.8%
Columbia Gas System, Inc. 215,800 $15,591,550
- --------------------------------------------------------------------------------
Telephone Utilities--2.7%
Ameritech Corp. 28,000 1,820,000
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 67,500 5,391,563
- --------------------------------------------------------------------------------
Frontier Corp. 126,400 2,733,400
- --------------------------------------------------------------------------------
US West Communications Group 133,700 5,322,931
------------
15,267,894
------------
Total Common Stocks (Cost $401,026,732) 489,733,940
Face
Amount
================================================================================
Short-Term Notes--7.2%
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5.50%, 11/10/97(2) $10,000,000 9,986,250
5.46%, 11/14/97(2) 10,000,000 9,980,284
5.47%, 11/7/97(2) 10,000,000 9,990,883
- --------------------------------------------------------------------------------
Federal National Mortgage Assn., 5.46%, 11/4/97(2) 10,000,000 9,995,454
------------
Total U.S. Government Obligations (Cost $39,952,871) 39,952,871
================================================================================
Repurchase Agreements--3.0%
- --------------------------------------------------------------------------------
Repurchase agreement with Zion First
National Bank, 5.68%, dated 10/31/97, to be
repurchased at $16,507,810 on 11/3/97,
collateralized by U.S. Treasury Nts.,
5.125%-6%, 2/28/98-11/15/98,
with a value of $16,863,612 (Cost $16,500,000) 16,500,000 16,500,000
- --------------------------------------------------------------------------------
Total Investments, at Value (Cost $457,479,603) 98.2% 546,186,811
- --------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.8 10,150,181
------------ ------------
Net Assets 100.0% $556,336,992
============ ============
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.
13 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value (cost $457,479,603)--see
accompanying statement $546,186,811
- --------------------------------------------------------------------------------
Cash 97,315
- --------------------------------------------------------------------------------
Receivables:
Investments sold 14,028,734
Shares of capital stock sold 1,578,469
Interest and dividends 697,331
- --------------------------------------------------------------------------------
Other 6,352
------------
Total assets 562,595,012
================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 5,475,009
Shares of capital stock redeemed 358,893
Distribution and service plan fees 99,450
Directors' fees--Note 1 62,264
Transfer and shareholder servicing agent fees 48,636
Other 213,768
------------
Total liabilities 6,258,020
================================================================================
Net Assets $556,336,992
============
================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 23,863
- --------------------------------------------------------------------------------
Additional paid-in capital 397,103,823
- --------------------------------------------------------------------------------
Undistributed net investment income 2,934,887
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 67,567,211
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 88,707,208
------------
Net assets $556,336,992
============
14 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $371,809,526 and 15,948,062
shares of capital stock outstanding) $23.31
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $24.73
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $83,290,683 and 3,572,324
shares of capital stock outstanding) $23.32
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $10,243,102 and
444,018 shares of capital stock outstanding) $23.07
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $90,993,681
and 3,898,705 shares of capital stock outstanding) $23.34
See accompanying Notes to Financial Statements.
15 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $1,499) $4,898,669
- --------------------------------------------------------------------------------
Interest 1,658,497
------------
Total income 6,557,166
================================================================================
Expenses
Management fees--Note 4 1,850,924
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 531,007
Class B 298,040
Class C 44,504
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
Class A 299,864
Class B 34,197
Class C 5,436
Class Y 13,124
- --------------------------------------------------------------------------------
Shareholder reports 160,889
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 34,531
Class B 19,550
Class C 2,315
Class Y 20,407
- --------------------------------------------------------------------------------
Legal and auditing fees 62,274
- --------------------------------------------------------------------------------
Directors' fees and expenses--Note 1 61,101
- --------------------------------------------------------------------------------
Accounting service fees--Note 4 15,000
- --------------------------------------------------------------------------------
Insurance expenses 8,342
- --------------------------------------------------------------------------------
Other 21,355
------------
Total expenses 3,482,860
================================================================================
Net Investment Income 3,074,306
================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on investments 67,704,492
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on investments (16,812,534)
------------
Net realized and unrealized gain 50,891,958
================================================================================
Net Increase in Net Assets Resulting from Operations $53,966,264
============
See accompanying Notes to Financial Statements.
16 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
=====================================================================================
<S> <C> <C>
Operations
Net investment income $ 3,074,306 $ 1,149,629
- -------------------------------------------------------------------------------------
Net realized gain 67,704,492 13,385,207
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (16,812,534) 665,122
------------- -------------
Net increase in net assets resulting from operations 53,966,264 15,199,958
=====================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (641,547) (669,566)
Class B (12,589) (11,039)
Class C (1,655) (1,428)
Class Y (3) --
- -------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (12,873,125) (841,952)
Class B (496,006) (19,962)
Class C (63,782) (1,789)
Class Y (69) --
=====================================================================================
Capital Stock Transactions
Net increase in net assets resulting from
capital stock transactions--Note 2:
Class A 164,714,499 49,316,623
Class B 75,670,149 4,851,609
Class C 8,998,996 696,522
Class Y 79,722,352 --
=====================================================================================
Net Assets
Total increase 368,983,484 68,518,976
- -------------------------------------------------------------------------------------
Beginning of period 187,353,508 118,834,532
------------- -------------
End of period (including undistributed
net investment income of $2,934,887 and
$479,425, respectively) $ 556,336,992 $ 187,353,508
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Year Ended October 31, Year Ended December 31,
1997 1996(4) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $19.65 $17.84 $14.20 $15.14
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23(5) .15 .25 .22
Net realized and unrealized gain (loss) 4.91(5) 1.88 4.88 (.32)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 5.14 2.03 5.13 (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.10) (.25) (.22)
Distributions from net realized gain (1.41) (.12) (1.24) (.62)
------------- ------------- ------------- -------------
Total dividends and distributions to shareholders (1.48) (.22) (1.49) (.84)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.31 $19.65 $17.84 $14.20
============= ============= ============= =============
====================================================================================================================================
Total Return, at Net Asset Value(6) 27.60% 11.41% 36.40% (0.65)%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $371,810 $180,784 $118,118 $78,390
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $234,314 $135,940 $98,063 $71,956
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.05% 1.01%(7) 1.53% 1.50%
Expenses 1.07% 1.13%(7) 1.22% 1.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 103.1% 73.9% 69.7% 98.5%
Average brokerage commission rate(9) $0.0700 $0.0697 -- --
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
3. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
4. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. 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.
18 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C Class Y
- ------------------------- -------------------------------------------- --------------------------- -------------
Period Ended Period Ended
Year Ended October 31, December 31, Year Ended October 31, October 31,
1993 1992 1997 1996(4) 1995(3) 1997 1996(2) 1997(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$14.20 $14.40 $19.77 $18.08 $17.83 $19.57 $18.79 $20.31
- -------------------------------------------------------------------------------------------------------------------------------
.30 .26 .09(5) .05 .02 .10(5) .06 .31(5)
2.64 1.44 4.91(5) 1.83 1.40 4.85(5) .94 4.20(5)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
2.94 1.70 5.00 1.88 1.42 4.95 1.00 4.51
- -------------------------------------------------------------------------------------------------------------------------------
(.30) (.26) (.04) (.07) (.02) (.04) (.10) (.07)
(1.70) (1.64) (1.41) (.12) (1.15) (1.41) (.12) (1.41)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(2.00) (1.90) (1.45) (.19) (1.17) (1.45) (.22) (1.48)
- -------------------------------------------------------------------------------------------------------------------------------
$15.14 $14.20 $23.32 $19.77 $18.08 $23.07 $19.57 $23.34
========== ========== ========== ========== ========== ========== ========== ==========
===============================================================================================================================
20.91% 11.99% 26.61% 10.43% 8.04% 26.64% 5.35% 23.62%
===============================================================================================================================
$64,495 $45,600 $83,291 $5,854 $717 $10,243 $715 $90,994
- -------------------------------------------------------------------------------------------------------------------------------
$54,682 $42,432 $30,019 $2,903 $306 $4,477 $342 $51,775
- -------------------------------------------------------------------------------------------------------------------------------
1.95% 1.74% 0.22% 0.22%(7) 0.21%(7) 0.17% 0.04%(7) 1.21%(7)
1.05% 1.12% 1.84% 1.88%(7) 1.97%(7) 1.86% 1.87%(7) 0.78%(7)
- -------------------------------------------------------------------------------------------------------------------------------
99.7% 141.7% 103.1% 73.9% 69.7% 103.1% 73.9% 103.1%
-- -- $0.0700 $0.0697 -- $0.0700 $0.0697 $0.0700
</TABLE>
7. Annualized.
8. 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, 1997 were $378,742,662 and $293,562,259, respectively.
9. 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 Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Disciplined Value Fund (the Fund), a series of Oppenheimer Series
Fund, Inc. (the Company), 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 by investing
primarily in common stocks with low price-earnings ratios and
better-than-anticipated earnings. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). 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 distri bution 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.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
20 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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, 1997, a provision of $57,489 was made for the Fund's projected
benefit obligations and payments of $3,016 were made to retired directors,
resulting in an accumulated liability of $62,449.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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, 1997, amounts have been reclassified to reflect an
increase in undistributed net investment income of $36,950. Additional paid-in
capital was decreased by the same amount.
- --------------------------------------------------------------------------------
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. 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.
21 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Capital Stock
The Fund has authorized 500 million of $0.001 par value shares of capital stock.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended October 31, 1997(2) Period Ended October 31, 1996(1)
------------------------------ --------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,692,585 $ 80,366,467 3,132,678 $ 59,597,763
Dividends and distributions
reinvested 682,565 13,378,298 79,955 1,491,345
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 7,652,373 178,988,994 -- --
Redeemed (5,280,662) (108,019,260) (630,553) (11,772,485)
-------------- -------------- -------------- --------------
Net increase 6,746,861 $ 164,714,499 2,582,080 $ 49,316,623
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,144,402 $ 25,787,163 261,924 $ 4,955,930
Dividends and distributions
reinvested 25,026 494,015 1,535 28,899
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 2,351,076 55,109,219 -- --
Redeemed (244,280) (5,720,248) (6,999) (133,220)
-------------- -------------- -------------- --------------
Net increase 3,276,224 $ 75,670,149 256,460 $ 4,851,609
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 289,313 $ 6,258,500 36,414 $ 694,306
Dividends and distributions
reinvested 3,239 63,228 172 3,206
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 150,017 3,478,897 -- --
Redeemed (35,084) (801,629) (53) (990)
-------------- -------------- -------------- --------------
Net increase 407,485 $ 8,998,996 36,533 $ 696,522
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class Y:
Sold 4,130,366 $ 85,062,741 -- $ --
Redeemed (231,661) (5,340,389) -- --
-------------- -------------- -------------- --------------
Net increase 3,898,705 $ 79,722,352 -- $ --
============== ============== ============== ==============
</TABLE>
1. For the ten months ended October 31, 1996 for Class A and Class B shares and
for the period from May 1, 1996 (inception of offering) to October 31, 1996 for
Class C shares. The Fund changed its fiscal year end from December 31 to October
31.
2. For the year ended October 31, 1997 for Class A, B and C shares and for the
period from December 16, 1996 (inception of offering) to October 31, 1997 for
Class Y shares.
22 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
3. Unrealized Gains and Losses on Investments
At October 31, 1997, net unrealized appreciation on investments of $88,707,208
was composed of gross appreciation of $92,346,522, and gross depreciation of
$3,639,314.
================================================================================
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 0.625% of the first
$300 million of average annual net assets, 0.50% of the next $100 million and
0.45% of average annual net assets in excess of $400 million. The Manager acts
as the accounting agent for the Fund at an annual fee of $15,000 plus
out-of-pocket costs and expenses reasonably incurred.
For the year ended October 31, 1997, commissions (sales charges paid
by investors) on sales of Class A shares totaled $885,737, of which $558,864 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 $835,875 and $55,818, respectively, of which $259,154 and
$7,702, respectively, was paid to an affiliated broker/dealer. During the year
ended October 31, 1997, OFDI received contingent deferred sales charges of
$31,154 upon redemption of Class B 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 shareholder 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 year ended October 31, 1997, OFDI paid $398,124
to an affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
23 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
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 its
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 and Class C shares, determined as of
the close of each regular business day. During the year ended October 31, 1997,
OFDI paid $10,106 to an affiliated broker/dealer as compensation for Class B
service and maintenance expenses and retained $255,139 and $37,067,
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, 1997, OFDI had incurred unreimbursed expenses of
$1,907,692 for Class B and $111,000 for Class C.
================================================================================
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, 1997.
================================================================================
6. Acquisition of Oppenheimer Value Stock Fund
On July 25, 1997, the Fund acquired all the net assets of Oppenheimer Value
Stock Fund, pursuant to an agreement and plan of reorganization approved by the
Oppenheimer Value Stock Fund shareholders on July 21, 1997. The Fund issued
7,652,373, 2,351,076 and 150,017 shares of beneficial interest for Class A,
Class B and Class C, respectively, valued at $178,988,994, $55,109,219, and
$3,478,897, in exchange for the net assets, resulting in combined Class A net
assets of $356,598,856, Class B net assets of $74,391,341 and Class C net assets
of $8,707,171 on July 25, 1997. The net assets acquired included net unrealized
appreciation of $79,130,574. The exchange qualified as a tax-free reorganization
for federal income tax purposes.
24 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Directors and Shareholders of
Oppenheimer Disciplined Value Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Disciplined Value Fund as of October 31, 1997, and
the related statement of operations for the year then ended, the statements of
changes in net assets for the year then ended and the ten months ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
the ten months ended October 31, 1996. 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. The financial highlights for the four years ended December
31, 1995 were audited by other auditors whose report dated February 9, 1996
expressed an unqualified opinion on this information.
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
October 31, 1997 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 Disciplined Value Fund as of October 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for the year then ended and the ten months ended October 31, 1996, and the
financial highlights for the year ended October 31, 1997 and the ten months
ended October 31, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1997
25 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $1.4834, $1.4487, $1.4495 and $1.4834 per share were
paid to Class A, Class B, Class C and Class Y shareholders, respectively, on
December 31, 1996, of which $1.1578 was designated as a "capital gain
distribution" for federal income tax purposes. Whether received in stock or in
cash, the capital gain distribution should be treated by shareholders as a gain
from the sale of capital assets held for more than one year (long-term capital
gains).
Dividends paid by the Fund during the year ended October 31, 1997
which are not designated as capital gain distributions should be multiplied by
23.91% 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.
26 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Disciplined Value Fund
- --------------------------------------------------------------------------------
A Series of Oppenheimer Series Fund, Inc.
================================================================================
Officers and Directors Leon Levy, Chairman of the Board of Directors
Donald W. Spiro, Vice Chairman of the Board of Directors
Bridget A. Macaskill, Director and President
Robert G. Galli, Director
Benjamin Lipstein, Director
Elizabeth B. Moynihan, Director
Kenneth A. Randall, Director
Edward V. Regan, Director
Russell S. Reynolds, Jr., Director
Pauline Trigere, Director
Clayton K. Yeutter, Director
Peter M. Antos, Vice President
Robert C. Doll, Jr., Vice President
Stephen F. Libera, Vice President
Michael C. Strathearn, Vice President
Kenneth B. White, Vice President
Arthur J. Zimmer, 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.
================================================================================
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 Disciplined Value Fund. This report must be
preceded or accompanied by a Prospectus of Oppenheimer
Disciplined Value 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 Disciplined Value Fund
<PAGE>
Internet
24-hr access to account information
- ---------------------------------------
www.oppenheimerfunds.com
- ---------------------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ---------------------------------------
1-800-525-7048
- ---------------------------------------
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Mon-Fri 8:30am-9pm ET
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- ---------------------------------------
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- ---------------------------------------
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24-hr automated information
and automated transactions
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1-800-533-3310
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Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
- ---------------------------------------
1-800-843-4461
- ---------------------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful messages on the economy and issues that
affect your investments
- ---------------------------------------
1-800-835-3104
- ---------------------------------------
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. 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, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RA0375.001.1097 December 30, 1997
