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OPPENHEIMER QUEST OFFICERS VALUE FUND
Semiannual Report April 30, 1997
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OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
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Dear Shareholder,
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Bridget A. Macaskill So far, 1997 has brought the volatility we anticipated in the equity market. April saw a 9%
President decline, but it was followed by an even larger rebound. Despite this volatility, we remain
Oppenheimer optimistic about the rest of the year. On the one hand, the equity market is backed by solid
Quest Officer economic fundamentals that should continue for the near future. On the other hand, the ups and
Value Fund downs of the business cycle are a reality, and at some point, possibly this year, we expect that
the economy will move into a phase of slower growth.
On a positive note, the economy has been expanding slowly but steadily. Interest rates are
still relatively low, despite the Federal Reserve's recent increase in short-term rates. Low
interest rates translate into reduced borrowing rates for companies, which use these savings to
improve productivity through new efficiency-enhancing technologies. Higher productivity
translates into lower production costs, which in turn results in higher profits.
In addition, inflation is at its lowest level in three decades. While it's true that an
increase in interest rates often indicates an accelerating economy, the Federal Reserve has been
quick to acknowledge that inflation and growth are under control. In fact, they've labeled the
recent move as a "pre-emptive" act to keep inflation low and extend the economy's healthy growth
cycle.
Despite this good news, we are realistic about the future of the equity market. During 1996,
most market gains came from a very select group of about 50-100 large-capitalization stocks. The
broader market, including small- and mid-size companies, actually delivered mixed results for the
past year. Many large-company stocks are becoming overvalued, or expensive in price, and market
buyers when they are no longer willing to pay high premiums for them. This may result in a
correction, unless investors turn to the many small- and mid-cap stocks that are relatively
undervalued. There is plenty of room for growth in these areas, and we expect to see these stocks
participating in the market during 1997.
In this uncertain period, selectivity will be our key to maintaining an effective portfolio.
It will be important to base stock choices on the individual merits of companies, such as strong
management, fundamental business policies, long-term future prospects and price. For you, the
investor, maintaining a long-term investment horizon is essential. Short-term swings will
inevitably occur, but the market's long-term trend has been to move higher and higher.
Your portfolio managers discuss the outlook for your Fund in light of these broad issues on
the following pages. Thank you for your confidence in OppenheimerFunds, THE RIGHT WAY TO INVEST.
We look forward to helping you reach your investment goals in the future.
/s/Bridget A. Macaskill
Bridget A. Macaskill
May 21,1997
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2 Oppenheimer Quest Officers Value Fund
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JEFF WHITTINGTON* Q + A
Portfolio Manager
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS?
Oppenheimer Quest Officers Value Fund encountered some difficulty over the period, which affected
its performance. Because this is a "non-diversified fund," a decline in one position can impact
the entire portfolio. This is especially true if the holding is one of the largest positions.
For these reasons, the unexpected performance of LucasVarity, a company that we believe still
maintains good business fundamentals, hindered the Fund's return.
WHAT CHARACTERISTICS DO YOU LOOK FOR WHEN EVALUATING STOCKS?
In this Fund, we look for companies that have three basic traits. First, the businesses we
select must have a competitive advantage versus other companies within their industry, a benefit
that will allow them to sustain a high return on invested capital. Second, we look for companies
with strong management teams who are focused on working hard for the shareholders by implementing
procedures that will improve stock prices, such as paying down debt, buying back stock and paying
dividends. And third, we look for stocks that can be purchased at advantageous prices.
WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
We are pleased to report that our strongest performer was also the Fund's largest holding. UCAR
International, a basic materials firm, was able to generate large amounts of free cash flow due
to overcapacity within the steel-processing industry. In addition, management allocated those
assets wisely by paying back debt and recently announcing a share-repurchase program. Another
strong performer was ACE Ltd., an insurance carrier that writes specialty lines of coverage, such
as excess liability and catastrophic property reinsurance. They were able to keep expenses low by
operating from Bermuda, a country with low overhead that has recently replaced London as the
"hub" of the insurance industry.
We were also pleased with the performance of H&R Block. In the past 20 years, H&R Block
reported gains in all but one, and during the last six months, the company has once again proved
itself a valuable asset to the Fund.(1)
WERE THERE ANY INVESTMENTS THAT DIDN'T PERFORM AS WELL AS EXPECTED?
Our holdings in LucasVarity, a British electrical-equipment conglomerate, underperformed during
the period. This company is currently in the final stages of a merger, which has caused the
stock's price to fall. We remain confident that the combined company will be able to
significantly increase profit margins. Also, two holdings in the oil- and gas-exploration
industry showed disappointing returns as the price of natural gas fell during the period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We believe we have assembled a Fund with many strong companies. We think that choosing stocks of
quality businesses that generate healthy free cash flows and are run by management interested in
maximizing shareholder value is very important. But particularly now, when it appears the market
may see more volatility than it has in the past few years, these characteristics are even more
attractive because they provide the Fund with a relatively stronger defensive position going
forward.
(1) The Fund's portfolio is subject to change.
* The Fund's Sub-adviser is OpCap Advisors (formerly Quest for Value Advisors, the Fund's adviser
until 11/22/95.)
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3 Oppenheimer Quest Officers Value Fund
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<CAPTION>
STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM NOTES - 23.1%
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American Express Credit Corp., 5.42%, 5/7/97 (1) $ 350,000 $ 349,684
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Deere (John) Capital Corp., 5.45%, 5/2/97 (1) 400,000 399,939
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Federal Farm Credit Bank, 5.33%, 5/5/97 (1) 155,000 154,908
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Federal Farm Credit Bank, 5.36%, 5/16/97 (1) 260,000 259,419
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Ford Motor Credit Co., 5.49%, 5/29/97 (1) 346,000 344,523
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General Electric Capital Corp., 5.55%, 5/1/97 (1) 359,000 359,000
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Total Short-Term Notes (Cost $1,867,473) 1,867,473
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SHARES
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COMMON STOCKS - 76.7%
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DIVERSIFIED FINANCIAL - 9.1% Countrywide Credit Industries, Inc. 13,500 366,187
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H & R Block, Inc. 11,400 367,650
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733,837
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INSURANCE - 19.1% ACE Ltd. 13,000 780,000
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EXEL Ltd. 9,600 374,400
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Mid Ocean Ltd. 8,500 389,938
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1,544,338
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MANUFACTURING - 9.3% LucasVarity plc, ADR (2) 25,000 750,000
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METALS - 9.5%
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UCAR International, Inc. (2) 18,300 768,600
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OIL-INTEGRATED - 9.7% Chesapeake Energy Corp. (2) 25,500 385,687
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Triton Energy Ltd. (2) 10,900 400,575
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786,262
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TELECOMMUNICATIONS
- -TECHNOLOGY - 10.2% WorldCom, Inc. 34,500 828,000
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TRANSPORTATION - 9.8% Canadian Pacific Ltd. (New) 32,500 792,188
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Total Common Stocks (Cost $5,883,831) 6,203,225
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TOTAL INVESTMENTS, AT VALUE (COST $7,751,304) 99.8% 8,070,698
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OTHER ASSETS NET OF LIABILITIES 0.2 16,336
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NET ASSETS 100.0% $8,087,034
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(1) 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.
(2) Non-income producing security.
See accompanying Notes to Financial Statements.
4 Oppenheimer Quest Officers Value Fund
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STATEMENT OF ASSETS AND LIABILITIES April 30, 1997 (Unaudited)
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ASSETS Investments, at value (cost $7,751,304) - see accompanying statement $8,070,698
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Cash 26,275
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Receivables:
Investments sold 84,868
Shares of beneficial interest sold 29,223
Dividends 3,200
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Deferred organization costs - Note 1 3,757
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Other 1,084
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Total assets 8,219,105
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LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 92,028
Shareholder reports 22,540
Registration and filing fees 8,095
Legal and auditing fees 5,481
Transfer agent and accounting service fees 571
Other 3,356
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Total liabilities 132,071
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NET ASSETS $8,087,034
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COMPOSITION OF Par value of shares of beneficial interest $6,941
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NET ASSETS Additional paid-in capital 8,822,266
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Accumulated net investment loss (14,073)
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Accumulated net realized loss on investment transactions (1,047,494)
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Net unrealized appreciation on investments - Note 3 319,394
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Net assets - applicable to 694,058 shares of beneficial
interest outstanding $8,087,034
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NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $11.65
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See accompanying Notes to Financial Statements.
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5 Oppenheimer Quest Officers Value Fund
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STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED April 30, 1997 (Unaudited)
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INVESTMENT INCOME Dividends (net of foreign withholding taxes of $996) $46,656
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Interest 26,346
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Total income 73,002
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EXPENSES Management fees - Note 4 32,681
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Shareholder reports 18,844
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Registration and filing fees 18,171
Legal and auditing fees 6,713
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Transfer agent and accounting service fees - Note 4 4,957
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Custodian fees and expenses 3,689
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Other 2,990
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Total expenses 88,045
Less expenses paid indirectly - Note 4 (970)
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Net expenses 87,075
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NET INVESTMENT LOSS (14,073)
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REALIZED AND Net realized loss on investments (984,660)
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UNREALIZED LOSS Net change in unrealized appreciation or depreciation on investments (545,470)
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Net realized and unrealized loss (1,530,130)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($1,544,203)
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STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
(UNAUDITED)
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OPERATIONS Net investment loss ($14,073) ($29,058)
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Net realized gain (loss) (984,660) 1,103,769
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Net change in unrealized appreciation or depreciation (545,470) 570,237
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Net increase (decrease) in net assets resulting
from operations (1,544,203) 1,644,948
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DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income -- (84,879)
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TO SHAREHOLDERS Distributions from net realized gain (1,104,047) (267,637)
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BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2 (694,018) 6,490,302
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NET ASSETS Total increase (decrease) (3,342,268) 7,782,734
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Beginning of period 11,429,302 3,646,568
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End of period (including accumulated net investment
loss of $14,073 for 1997) $8,087,034 $11,429,302
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See accompanying Notes to Financial Statements.
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6 Oppenheimer Quest Officers Value Fund
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FINANCIAL HIGHLIGHTS
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SIX MONTHS
ENDED APRIL 30, YEAR ENDED OCTOBER 31,
1997 (UNAUDITED) 1996(2) 1995(1)
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PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.26 $12.30 $10.00
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Income from investment operations:
Net investment income (.02) (.01) .24
Net realized and unrealized gain (2.11) 4.06 2.10
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Total income from investment operations (2.13) 4.05 2.34
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Dividends and distributions to shareholders:
Dividends from net investment income -- (.26) (.04)
Distributions from net realized gain (1.48) (.83) --
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Total dividends and distributions
to shareholders (1.48) (1.09) (.04)
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Net asset value, end of period $11.65 $15.26 $12.30
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TOTAL RETURN, AT NET ASSET VALUE(3) (14.76)% 35.17% 23.44%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $8,087 $11,429 $3,647
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Average net assets (in thousands) $9,977 $6,973 $2,873
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Ratios to average net assets:
Net investment income (0.30)%(5) (0.42)%(6) 2.44%(4)(5)
Expenses(7) 1.78%(5) 1.92%(6) 0.00%(4)
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Portfolio turnover rate(8) 47.4% 137.4% 108.0%
Average brokerage commission rate(9) $0.0547 $0.0501 --
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(1) For the period from November 8, 1994 (commencement of operations) to
October 31, 1995.
(2) On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser
to the Fund.
(3) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.
(4) During the period noted above, the former Manager voluntarily waived all of
its fees and reimbursed the Fund for all of its operating expenses. If such
waivers and reimbursements had not been in effect, the annualized ratio of net
investment income to average daily net assets and the annualized ratio of net
expenses to average daily net assets would have been 0.47% and 1.97%,
respectively.
(5) Annualized.
(6) The ratio of net investment income to average daily net assets and the
ratio of net expenses to average net assets would have been (0.74)% and 2.24%,
respectively, absent the voluntary reimbursement by both the former Manager and
the current Manager.
(7) Beginning in fiscal 1997, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior
year expense ratios have not been adjusted.
(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 April 30, 1997 were $4,379,835 and $7,477,839, 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.
7 Oppenheimer Quest Officers Value Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
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1. SIGNIFICANT Oppenheimer Quest Officers Value Fund (the Fund), a
ACCOUNTING POLICIES series of Oppenheimer Quest for Value Funds, is a
non-diversified open-end management investment company
registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek
capital appreciation. It is the intention of the
Fund to continue to invest in a non-diversified
portfolio of primarily equity securities believed to be
under valued in the market place. The Fund's
investment adviser is OppenheimerFunds, Inc. (the
Manager). The Fund is authorized to issue Class A,
Class B and Class C shares. Initially, only shares of
Class A will be offered to officers, trustees and
employees of the Fund, the Manager and its affiliates,
their relatives or any trust, pension, profit sharing
or other benefit plan for any of them. 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 distribution and/or
service plan, expenses directly attributable to a
particular class and exclusive voting rights with
respect to matters affecting a single class. Class B
shares will automatically convert to Class A shares six
years after the date of purchase. The following is a
summary of significant accounting policies consistently
followed by the Fund.
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INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which
such information is regularly reported are valued at
the last sale price of the day or, in the absence of
sales, at values based on the closing bid or the last
sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Such securities which cannot be
valued by the approved portfolio pricing service are
valued using dealer-supplied valuations provided the
Manager is satisfied that the firm rendering the quotes
is reliable and that the quotes reflect current market
value, or are valued under consistently applied
procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money
market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to
maturity of any premium or discount.
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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.
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ORGANIZATION COSTS. The former Manager advanced $7,600
for organization and start-up costs of the Fund. Such
expenses are being amortized over a five year period
from the date operations commenced.
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DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
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CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes.
The character of the distributions made during the year
from net investment income or net realized gains may
differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or
realized gain was recorded by the Fund.
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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.
8 Oppenheimer Quest Officers Value Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
2. SHARES OF BENEFICIAL
INTEREST The Fund has authorized an unlimited number of
$.01 par value shares of beneficial interest.
Transactions in shares of beneficial interest
were as follows:
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SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
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SHARES AMOUNT SHARES AMOUNT
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Class A:
Sold 90,320 $ 1,212,145 538,510 $ 7,749,424
Dividends and distributions
reinvested 85,095 1,083,250 27,528 337,769
Redeemed (230,142) (2,989,413) (113,652) (1,596,891)
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Net increase (decrease) (54,727) $ (694,018) 452,386 $ 6,490,302
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3. UNREALIZED GAINS AND At April 30, 1997, net unrealized
LOSSES ON INVESTMENTS appreciation on investments of $319,394 was
composed of gross appreciation of $762,474,
and gross depreciation of $443,080.
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4. MANAGEMENT FEES AND OTHER Management fees paid to the Manager were in
TRANSACTIONS WITH AFFILIATES accordance with the investment advisory
agreement with the Fund. Effective August 1,
1996, the fee was voluntarily reduced from
1.00% of average annual net assets to 0.60%
of the first $4 million of average annual net
assets and 0.70% of net assets in excess of
$4 million. The Manager acts as the
accounting agent for the Fund at an annual
fee of $6,000, plus out-of-pocket costs and
expenses reasonably incurred.
The Manager pays OpCap Advisors (the
Sub-Adviser) based on the fee schedule set
forth in the Prospectus. The Sub-Adviser
waived all fees under the agreement for the
six months ended April 30, 1997. On
February 13, 1997 PIMCO Advisors L.P., signed
a definitive agreement with Oppenheimer
Group, Inc. and its subsidiary Oppenheimer
Financial Corp. for PIMCO Advisors L.P. and
its affiliate, Thomson Advisory Group, Inc.,
to acquire the one-third managing general
partner interest in Oppenheimer Capital (the
parent of OpCap Advisors) and the 1.0%
general interest in Oppenheimer Capital L.P.
For the six months ended April 30, 1997,
commissions (sales charges paid by investors)
on sales of Class A shares totaled $1,671, of
which $1,594 was retained by OppenheimerFunds
Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by
affiliated broker/dealers.
OppenheimerFunds Services (OFS), a
division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and
for other registered investment companies.
The Fund pays OFS an annual maintenance fee
of $14.85 for each Fund shareholder account
and reimburses OFS for its out-of-pocket
expenses. During the six months ended April
30, 1997, the Fund paid OFS $2,120.
Expenses paid indirectly represent a
reduction of custodian fees for earnings on
cash balances maintained by the Fund.
Under a proposed Distribution and
Service Plan for Class A shares (that was
approved by the Board of Trustees at a
meeting held February 4, 1997 and by the
shareholders of the Fund at a meeting held
May 6, 1997) OppenheimerFunds Distributor,
Inc. (OFDI) is compensated for a portion of
its costs incurred in connection with the
personal service and maintenance of 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. Both fees are
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 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. Effective
8/1/96, OFDI has voluntarily waived all fees
under this plan.
9 Oppenheimer Quest Officers Value Fund
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OPPENHEIMER QUEST OFFICERS VALUE FUND
A Series of Oppenheimer Quest for Value Funds
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OFFICERS AND TRUSTEES Bridget A. Macaskill, Chairman of the Board of Trustees
and President
Paul Y. Clinton, Trustee
Thomas W. Courtney, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
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
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INVESTMENT ADVISER OppenheimerFunds, Inc.
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SUB-ADVISER OpCap Advisors
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DISTRIBUTOR OppenheimerFunds Distributor, Inc.
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TRANSFER AND OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
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CUSTODIAN OF PORTFOLIO State Street Bank and Trust Company
SECURITIES
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INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS
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LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken
from the records of the Fund without examination by the
independent accountants.
This is a copy of a report to shareholders of
Oppenheimer Quest Officers Value Fund. This report must
be preceded or accompanied by a Prospectus of
Oppenheimer Quest Officers 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.
10 Oppenheimer Quest Officers Value Fund
