[COVER]
Annual Report October 31, 1997
O P P E N H E I M E R
Quest
Opportunity
Value Fund
[Graphic of Rocket]
[OppenheimerFunds Logo]
THE RIGHT WAY TO INVEST
<PAGE>
Report highlights
- -------------------------------------------------------------------------------
Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Managers
10 Statement of
Investments
14 Statement of
Assets & Liabilities
16 Statement of
Operations
17 Statements of
Changes in
Net Assets
18 Financial Highlights
21 Notes to Financial
Statements
26 Report of
Independent
Accountants
27 Federal Income
Tax Information
28 Shareholder Meeting
29 Officers & Trustees
32 Information &
Services
[bullet] 1st Quartile Performance: The Fund's Class A shares continue to rank
in the top quartile of flexible portfolio funds for the one-, three- and
five-year periods ended September 30, 1997, according to Lipper Analytical
Services.(1)
[bullet] We manage the portfolio Avg Annual Total Returns
one stock at a time--our For the 1-year period ended
investment decisions are not 10/31/97 (without sales charges)(2)
dictated by movements of the
stock market or sectors within Class A
the markets. 22.66%
Class B
22.05%
Class C
22.05%
Class Y
(Since inception on 12/16/96)
19.51%
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.
1. Source: Lipper Analytical Services, Inc., 9/30/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 35 of 201 (1-year), 5 of 125
(3-year) and 3 of 59 (5-year) among flexible portfolio funds for the period
ended 9/30/97.
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 Quest Opportunity Value Fund
<PAGE>
Dear shareholder,
- -------------------------------------------------------------------------------
[Photo of Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer
Quest Opportunity
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.
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 21, 1997
3 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Performance update
- -------------------------------------------------------------------------------
Oppenheimer Quest Opportunity Value Fund had an excellent year. Once again,
Lipper Analytical Services ranked the Fund's Class A shares in the 1st quartile
among flexible portfolio funds for the one-year period, as well as the three-
and five-year periods ended September 30, 1997.(2)
Growth of $10,000
Over five years
(without sales charges)(3)
[Mountain chart comparing
the fund's performance with
the S&P 500, with the
following plot points]
Oppenheimer Quest
Opportunity Value Fund
Class A shares S&P 500 Index
10000 10000
10548 10503
10822 10982
11128 11015
11488 11300
11412 11562
11331 11123
11748 11170
12042 11716
11974 11714
13446 12855
15390 14082
16279 15201
17001 16117
18196 16982
18544 17744
19362 18292
20881 19817
20881 20348
23441 23901
25023 25692
Avg Annual Total Returns
For the Period Ended 9/30/97(1)
Class A
Since
1 year 5 year Inception
21.81% 18.72% 18.42%
Class B
Since
1 year 5 year Inception
23.64% N/A 20.26%
Class C
Since
1 year 5 year Inception
27.60% N/A 20.50%
Class Y
Since
1 year 5 year Inception
N/A N/A 22.59%
Cumulative Total Return
For the Period Ended 9/30/97(1)
Class A
5 year
135.84% $23,681(3)
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 1/3/89. The Fund's maximum
sales charge for Class A shares was lower prior to 11/24/95, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 2% (since inception on
9/1/93). Class C returns for the one-year result include the contingent deferred
sales charge of 1%. Class C shares have an inception date of 9/1/93. Class Y
shares were first publicly offered on 12/16/96 and are not available for sale to
individual shareholders. An explanation of the different performance
calculations is in the Fund's prospectus. Class B and C shares are subject to an
annual 0.75% asset-based sales charge and Class A shares are subject to an
annual 0.25% asset-based sales charge. OppenheimerFunds, Inc. became the Fund's
advisor on 11/22/95. The Fund's subadvisor is OpCap Advisors, which was the
Fund's advisor prior to 11/22/95. The portfolio manager is employed by the
Fund's subadvisor.
4 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Portfolio review
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Oppenheimer Quest Opportunity Value Fund is for investors looking for growth of
capital from a flexible portfolio.
[PIE CHART]
Sector Weightings(4)
Financial 34.1%
Technology 21.4
Basic Materials 15.5
Consumer Cyclicals 15.1
Industrial 10.1
Consumer Non-Cyclicals 3.1
Energy 0.7
What We Look For
[bullet] Well-managed, solid businesses.
[bullet] Management motivated to work for shareholders.
[bullet] Securities believed to be undervalued.
[bullet] High return on capital vs. high growth.
Top 10 Stock Holdings(4)
- ----------------------------------------------------------
Wells Fargo & Co. 7.1% McDonald's Corp. 5.1%
- ----------------------------------------------------------
Citicorp 5.9 ACE Ltd. 4.3
- ----------------------------------------------------------
Freddie Mac 5.7 Mattel, Inc. 4.0
- ----------------------------------------------------------
DuPont (E.I.) 5.5 National 4.0
DeNemours & Co. Semiconductor Corp.
- ----------------------------------------------------------
Caterpillar, Inc. 5.1 Boeing Co. 3.9
- ----------------------------------------------------------
2. Source: Lipper Analytical Services, Inc., 9/30/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 35 of 201 (1-year), 5 of 125
(3-year) and 3 of 59 (5-year) among flexible portfolio funds for the periods
ended 9/30/97.
3. Results of a hypothetical $10,000 investment in Class A shares on September
30, 1992. The S&P 500 Index is a broad-based unmanaged stock index including
daily reinvestment of dividends, and cannot be purchased directly by investors.
Past performance does not guarantee future results.
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 Quest Opportunity Value Fund
<PAGE>
An interview with your Fund's managers
- -------------------------------------------------------------------------------
- -------------------
"The Fund's two
major influences
were the stellar
performance of
the U.S. economy
and the abundance
of momentum-
based investing
in the stock
market."
How has the Fund performed during the 12-month period ended October 31, 1997?
Oppenheimer Quest Opportunity Value Fund's Class A shares provided an average
annual total return of 22.66% for the one-year period ended October 31, 1997.(1)
These results reflect changes in share price, plus reinvested income
distributions, but are calculated before sales charges are considered.
What market influences affected the Fund the most over the past year?
The first major influence was the strong performance of the U.S. economy.
Indicators early in the year suggested that the economy might be growing too
quickly, which prompted the Federal Reserve Board to raise short-term interest
rates in a pre-emptive strike against inflation. However, the economy has
expanded fairly steadily and inflation has not been a problem. That has allowed
bond prices to rally and has supported higher corporate earnings in the stock
market.
The second major influence has been the overwhelming presence of
momentum-based investing in the stock market. As its name implies, momentum
investing is when investors latch onto specific securities whose prices are
rising, and bid their prices up to very high levels without much regard for the
company's true underlying value.
The Fund has benefited from both trends. Because we favor high-quality
companies with strong fundamentals, some of our stock positions have been the
subject of momentum investing. As other investors have driven their prices
higher, we have taken profits.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
6 Oppenheimer Quest Opportunity Value Fund
<PAGE>
[Photo] If economic conditions are excellent, why
Portfolio Management has the stock market been so volatile?
Team (l to r) When viewed from a day-to-day or
Richard Glasebrook, II week-to-week perspective, the past year
(Fund Manager) was indeed volatile. The stock market
Pierre Daviron declined sharply between January 1 and
mid-April, producing the largest correction
in several years. The market experienced another sell-off toward the end of
October. The first decline was mainly the result of investors' misplaced fears
that an overheated economy might rekindle inflationary pressures, which can
erode the value of financial assets over time. The more recent sell-off was the
result of problems in Asian stock markets, especially Hong Kong. But when viewed
from a long-term perspective, day-to-day volatility seems to disappear and what
emerges is a less volatile upward trend.
It is important to understand, however, that Oppenheimer Quest
Opportunity Value Fund pays very little attention to the movements of entire
markets or even sectors within those markets. Instead, we manage the portfolio
one stock at a time. That means we focus on finding companies able to produce
superior returns on invested capital over time. Within those parameters, we try
to find those companies with a competitive advantage that will enable them not
only to have high returns today, but in the future as well.
7 Oppenheimer Quest Opportunity Value Fund
<PAGE>
An interview with your Fund's managers
- -------------------------------------------------------------------------------
- -------------------
"We look for
investments
with strong
prospects for
the long term. . ."
Where did you find attractive companies for new investment during the year?
While we have found a few new investments, in large measure we have been
increasing our positions in existing holdings. For example, over the past
several months we've put more money into such holdings as Citicorp, Champion
International and National Semiconductor.
Citicorp's stock was impacted when economic difficulties surfaced in one
of its key markets, Asia. As for Champion International, which is a cyclical
paper company, investors worried at one point about the economy. When Champion's
price dropped despite excellent fundamentals, we bought more at what we regarded
as bargain prices. National Semiconductor bought a company that competes with
Intel, and many investors thought that might not be a wise thing to do, so its
stock went down and we bought more. We think all of these stocks will rise as
they realize their fair values when these situations work themselves out.
Has your "bottom-up" approach led you to invest in companies in any particular
industry or market sector? About a third of our holdings happen to be in the
banking and insurance industries. That's because many of the characteristics we
like have been displayed by companies in the financial sector. These companies
are generally businesses that produce high returns and have free cash flow.
What's more, they tend to create shareholder value through stock buy-backs.
8 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- -------------------
". . . because we
approach these
businesses as
owners, not as
traders."
Have you had any disappointments during the year?
Yes. In hindsight, we would not have had as much cash in the Fund. We kept our
cash levels at about 15% of the portfolio because we were concerned about the
possibility of a market correction, and we wanted to keep cash available to
acquire good companies at attractive values. Other disappointments were mainly
in companies that have excellent businesses, but their stock prices have had a
hard time. For example, we own stock of McDonald's Corp., which is highly
visible but has been neglected by investors because of problems in its domestic
business. Yet, its overseas business is growing, so its stock price represented
an excellent value for an excellent company, in our opinion. The same is true
for Wells Fargo, which has a strong banking franchise but mishandled its merger
with First Interstate.
What do you look for when making new investments?
First, we seek to invest in companies that we believe have solid fundamentals to
support their businesses in good economic times and bad. Second, we pay careful
attention to the price we pay for those companies. We look for situations in
which great companies are selling for less than their fair values.
Perhaps most important, we look for investments with strong prospects for the
long term. That's because we approach these businesses as owners, not as
traders. In our view, being an owner of high-quality businesses represents The
Right Way to Invest.
9 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Statement of Investments October 31, 1997
- -------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------------------------
Common Stocks--81.9%
- -------------------------------------------------------------------------
Basic Materials--12.7%
- -------------------------------------------------------------------------
Chemicals--9.5%
Dow Chemical Co. 700,000 $ 63,525,000
- -------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 3,150,000 179,156,250
- -------------------------------------------------------------------------
Hercules, Inc. 1,000,000 45,875,000
- -------------------------------------------------------------------------
Monsanto Co. 1,910,000 81,652,500
- -------------------------------------------------------------------------
Solutia, Inc. 400,000 8,850,000
------------
379,058,750
- -------------------------------------------------------------------------
Metals--0.2%
Freeport-McMoRan Copper & Gold, Inc., Cl. B 345,000 8,236,875
- -------------------------------------------------------------------------
Paper--3.0%
Champion International Corp. 2,150,000 118,653,125
- -------------------------------------------------------------------------
Consumer Cyclicals--12.3%
- -------------------------------------------------------------------------
Leisure & Entertainment--9.8%
Mattel, Inc. 3,400,000 132,175,000
- -------------------------------------------------------------------------
McDonald's Corp. 3,700,000 165,806,250
- -------------------------------------------------------------------------
Time Warner, Inc. 1,650,000 95,184,375
------------
393,165,625
- -------------------------------------------------------------------------
Media--0.1%
Reed International plc, Sponsored ADR 41,800 1,656,325
- -------------------------------------------------------------------------
Retail: Specialty--2.4%
Nike, Inc., Cl. B 2,100,000 98,700,000
- -------------------------------------------------------------------------
Consumer Non-Cyclicals--2.5%
- -------------------------------------------------------------------------
Food--1.7%
H.J. Heinz Co. 1,500,000 69,656,250
- -------------------------------------------------------------------------
Healthcare/Supplies & Services--0.8%
Becton, Dickinson & Co. 700,000 32,243,750
- -------------------------------------------------------------------------
Energy--0.6%
- -------------------------------------------------------------------------
Oil-Integrated--0.6%
Triton Energy Ltd.(1) 556,000 21,753,500
10 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- ----------------------------------------------------------------------
Market Value
Shares See Note 1
- ----------------------------------------------------------------------
Financial--27.9%
- ----------------------------------------------------------------------
Banks--13.5%
BankBoston Corp. 1,400,000 $113,487,500
- ----------------------------------------------------------------------
Citicorp 1,550,000 193,846,875
- ----------------------------------------------------------------------
Wells Fargo & Co. 800,000 233,100,000
------------
540,434,375
- ----------------------------------------------------------------------
Diversified Financial--8.5%
Countrywide Credit Industries, Inc. 1,525,000 52,326,562
- ----------------------------------------------------------------------
Fannie Mae 1,300,000 62,968,750
- ----------------------------------------------------------------------
Freddie Mac 4,950,000 187,481,250
- ----------------------------------------------------------------------
First Empire State Corp. 90,000 36,810,000
------------
339,586,562
- ----------------------------------------------------------------------
Insurance--5.9%
ACE Ltd. 1,500,000 139,406,250
- ----------------------------------------------------------------------
AFLAC, Inc. 400,000 20,350,000
- ----------------------------------------------------------------------
EXEL Ltd. 771,400 46,621,487
- ----------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 825,000 29,803,125
------------
236,180,862
- ----------------------------------------------------------------------
Industrial--8.3%
- ----------------------------------------------------------------------
Industrial Services--0.7%
Browning-Ferris Industries, Inc. 300,000 9,750,000
- ----------------------------------------------------------------------
Waste Management, Inc. 800,000 18,700,000
------------
28,450,000
- ----------------------------------------------------------------------
Manufacturing--7.6%
Caterpillar, Inc. 3,275,000 167,843,750
- ----------------------------------------------------------------------
Grand Metropolitan plc, Sponsored ADR 1,200,000 44,850,000
- ----------------------------------------------------------------------
Tenneco, Inc. 2,000,000 89,875,000
------------
302,568,750
- ----------------------------------------------------------------------
Technology--17.6%
- ----------------------------------------------------------------------
Aerospace/Defense--5.8%
Boeing Co. 2,665,000 127,586,875
- ----------------------------------------------------------------------
Lockheed Martin Corp. 1,100,000 104,568,750
------------
232,155,625
- ----------------------------------------------------------------------
Computer Software/Services--1.9%
Computer Associates International, Inc. 1,000,000 74,562,500
11 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Electronics--6.9%
Intel Corp. 500,000 $ 38,500,000
- --------------------------------------------------------------------------------
Loral Space & Communications Ltd.(1) 500,000 10,500,000
- --------------------------------------------------------------------------------
National Semiconductor Corp.(1) 3,650,000 131,400,000
- --------------------------------------------------------------------------------
Unitrode Corp.(1) 400,000 10,725,000
- --------------------------------------------------------------------------------
Varian Associates, Inc. 1,450,000 84,825,000
---------------
275,950,000
- --------------------------------------------------------------------------------
Telecommunications-Technology--3.0%
Tele-Communications TCI Ventures Group, Cl. A(1) 5,121,688 118,118,930
---------------
Total Common Stocks (Cost $2,592,791,747) 3,271,131,804
Face
Amount
- --------------------------------------------------------------------------------
U.S. Government Obligations--5.2%
- --------------------------------------------------------------------------------
U.S. Treasury Bonds:
6.25%, 8/15/23 $100,000,000 100,281,300
6.375%, 8/15/27 100,000,000 103,093,800
- --------------------------------------------------------------------------------
U.S. Treasury Nts.:
7.50%, 11/15/01 1,000,000 1,062,188
7.50%, 5/15/02 1,000,000 1,069,063
7.875%, 4/15/98 550,000 555,844
7.875%, 8/15/01 550,000 589,360
--------------
Total U.S. Government Obligations
(Cost $204,570,962) 206,651,555
- --------------------------------------------------------------------------------
Short-Term Notes--14.6%(2)
- --------------------------------------------------------------------------------
Beneficial Corp., 5.50%, 12/4/97 27,266,000 27,128,534
- --------------------------------------------------------------------------------
Deere (John) Capital Corp.:
5.47%, 11/6/97 48,316,000 48,279,157
5.48%, 11/24/97 24,023,000 23,938,893
- -------------------------------------------------------------------------------
Federal Home Loan Bank, 5.50%, 11/3/97 36,705,000 36,693,785
- --------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.57%, 11/20/97 105,440,000 105,134,780
- --------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.51%, 12/1/97 70,159,000 69,836,517
- --------------------------------------------------------------------------------
Household Finance Corp.:
5.48%, 11/20/97 50,000,000 49,855,389
5.49%, 11/13/97 20,000,000 19,963,400
- --------------------------------------------------------------------------------
IBM Credit Corp.:
5.50%, 11/10/97 12,500,000 12,482,812
5.50%, 11/3/97 84,999,000 84,973,125
- --------------------------------------------------------------------------------
International Business Machines Corp.,
5.48%, 11/10/97 17,790,000 17,765,628
12 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Short-Term Notes (continued)
Merrill Lynch & Co., Inc.:
5.50%, 12/8/97 $ 40,932,000 $ 40,700,313
5.58%, 12/15/97 50,000,000 49,663,889
--------------
Total Short-Term Notes (Cost $586,416,222) 586,416,222
- --------------------------------------------------------------------------------
Total Investments, at Value (Cost $3,383,778,931) 101.7% 4,064,199,581
- --------------------------------------------------------------------------------
Liabilities in Excess of Other Assets ( 1.7) (69,333,317)
------------ --------------
Net Assets 100.0% $3,994,866,264
============ ==============
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.
Affiliated company. Represents ownership of at least 5% of the voting securities
of the issuer, and is or was an affiliate, as defined in the Investment Company
Act of 1940, at or during the period ended October 31, 1997. There were no
affiliate securities held as of October 31, 1997. Transactions during the period
in which the issuer was an affiliate are as follows:
Shares Gross Gross Shares
October 31, 1996 Additions Reductions October 31, 1997
- --------------------------------------------------------------------------------
Unitrode Corp. 635,000 249,200 484,200 400,000
See accompanying Notes to Financial Statements.
13 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
Assets
Investments, at value (cost $3,383,778,931)--see
accompanying statement $4,064,199,581
- --------------------------------------------------------------------------------
Cash 293,570
- --------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 25,997,867
Investments sold 16,981,725
Interest and dividends 6,435,239
- --------------------------------------------------------------------------------
Other 17,522
--------------
Total assets 4,113,925,504
- --------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased 105,537,381
Shares of beneficial interest redeemed 11,680,605
Distribution and service plan fees 864,734
Transfer agent and accounting services fees 311,020
Trustees' fees 719
Other 664,781
--------------
Total liabilities 119,059,240
- --------------------------------------------------------------------------------
Net Assets $3,994,866,264
==============
- --------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of beneficial interest $ 1,131,401
- --------------------------------------------------------------------------------
Additional paid-in capital 3,181,733,352
- --------------------------------------------------------------------------------
Undistributed net investment income 12,086,617
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 119,494,244
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 680,420,650
--------------
Net assets $3,994,866,264
==============
14 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based
on net assets of $1,839,481,752 and 51,644,314 shares
of beneficial interest outstanding) $35.62
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $37.79
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $1,706,258,296 and
48,677,678 shares of beneficial interest outstanding) $35.05
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $433,784,754 and
12,389,239 shares of beneficial interest outstanding) $35.01
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price
per share (based on net assets of $15,341,462 and
428,832 shares of beneficial interest outstanding) $35.77
See accompanying Notes to Financial Statements.
15 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Statement of Operations For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
Investment Income
Dividends $ 33,161,302
- --------------------------------------------------------------------------------
Interest 32,136,296
------------
Total income 65,297,598
- --------------------------------------------------------------------------------
Expenses
Management fees--Note 4 25,895,389
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 6,980,790
Class B 12,356,019
Class C 3,154,956
- --------------------------------------------------------------------------------
Transfer agent and accounting services fees--Note 4 3,066,059
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 316,959
Class B 299,868
Class C 77,465
Class Y 2,478
- --------------------------------------------------------------------------------
Shareholder reports 680,533
- --------------------------------------------------------------------------------
Custodian fees and expenses 101,440
- --------------------------------------------------------------------------------
Legal and auditing fees 40,495
- --------------------------------------------------------------------------------
Trustees' fees and expenses 26,495
- --------------------------------------------------------------------------------
Other 192,085
------------
Total expenses 53,191,031
- --------------------------------------------------------------------------------
Net Investment Income 12,106,567
- --------------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain on investments 119,527,334
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 409,132,436
------------
Net realized and unrealized gain 528,659,770
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $540,766,337
============
See accompanying Notes to Financial Statements.
16 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 12,106,567 $ 4,578,345
- ---------------------------------------------------------------------------------------------
Net realized gain 119,527,334 50,530,759
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 409,132,436 171,894,684
------------- --------------
Net increase in net assets resulting from operations 540,766,337 227,003,788
- ----------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (3,619,233) (2,200,923)
Class B (804,150) (693,117)
Class C (155,755) (168,699)
- ---------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (24,749,053) (4,714,005)
Class B (20,565,101) (2,813,903)
Class C (5,201,848) (632,754)
- ----------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 709,459,770 414,067,613
Class B 786,575,074 420,725,129
Class C 201,535,805 111,981,077
Class Y 14,559,098 --
- ----------------------------------------------------------------------------------------------
Net Assets
Total increase 2,197,800,944 1,162,554,206
- ---------------------------------------------------------------------------------------------
Beginning of period 1,797,065,320 634,511,114
-------------- --------------
End of period (including undistributed net investment
income of $12,086,617 and $4,559,188, respectively) $3,994,866,264 $1,797,065,320
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Year Ended October 31,
1997 1996(3) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $29.89 $24.59 $19.69 $18.71 $16.73
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .10 .23(4) .18(4) .35(4)
Net realized and unrealized gain (loss) 6.46 5.62 5.40 1.35 2.02
------ ------ ------ ------ ------
Total income (loss) from investment
operations 6.62 5.72 5.63 1.53 2.37
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income ( .11) ( .13) ( .12) ( .33) ( .07)
Distributions from net realized gain ( .78) ( .29) ( .61) ( .22) ( .32)
------ ------ ------ ------ ------
Total dividends and distributions to
shareholders ( .89) ( .42) ( .73) ( .55) ( .39)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $35.62 $29.89 $24.59 $19.69 $18.71
===============================================================================================================================
Total Return, at Net Asset Value(5) 22.66% 23.56% 29.88% 8.41% 14.34%
===============================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $1,839,482 $897,493 $367,240 $ 163,340 $ 127,225
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $1,399,186 $609,303 $251,626 $ 136,623 $ 87,864
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.67% 0.64% 1.02% 0.96% 2.69%
Expenses 1.54% 1.62% 1.69% 1.78% 1.83%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 30.0% 25.4% 21.0% 42.0% 24.0%
Average brokerage
commission rate(8) $0.0575 $0.0554 -- -- --
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. For the period from September 1, 1993 (inception of offering) to October 31,
1993.
3. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
4. Based on average shares outstanding for the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
18 Oppenheimer Quest Opportunity Value Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- --------------------------------------------------------------------------------------------------------
Year Ended October 31, Year Ended October 31,
1997 1996(3) 1995 1994 1993(2) 1997 1996(3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$29.49 $24.33 $19.59 $18.70 $18.73 $29.45 $24.31
------ ------ ------ ------ ------ ------ ------
.06 .05 .11(4) .08(4) .02(4) .06 .06
6.31 5.47 5.36 1.34 (.05) 6.30 5.44
------ ------ ------ ------ ------ ------ ------
6.37 5.52 5.47 1.42 (.03) 6.36 5.50
- --------------------------------------------------------------------------------------------------------
(.03) (.07) (.12) (.31) -- (.02) (.07)
(.78) (.29) (.61) (.22) -- (.78) (.29)
------ ------ ------ ------ ------ ------ ------
(.81) (.36) (.73) (.53) -- (.80) (.36)
- --------------------------------------------------------------------------------------------------------
$35.05 $29.49 $24.33 $19.59 $18.70 $35.01 $29.45
========================================================================================================
22.05% 22.92% 29.19% 7.84% ( 0.16)% 22.05% 22.89%
========================================================================================================
$1,706,258 $718,506 $217,663 $43,317 $2,115 $433,785 $181,066
- --------------------------------------------------------------------------------------------------------
$1,238,673 $426,358 $116,523 $16,216 $1,175 $316,280 $105,445
- --------------------------------------------------------------------------------------------------------
0.17% 0.12% 0.48% 0.43% 1.32%(6) 0.17% 0.12%
2.03% 2.14% 2.21% 2.34% 2.52%(6) 2.04% 2.14%
- --------------------------------------------------------------------------------------------------------
30.0% 25.4% 21.0% 42.0% 24.0% 30.0% 25.4%
$0.0575 $0.0554 -- -- -- $0.0575 $0.0554
</TABLE>
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $2,201,488,391 and $706,869,013, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
19 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Y
----------------------------------------------------------
Period Ended
Year Ended October 31, October 31,
1995 1994 1993(2) 1997(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $19.58 $18.70 $18.73 $29.93
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08(4) .08(4) .02(4) .17
Net realized and unrealized gain (loss) 5.38 1.33 (.05) 5.67
------ ------ ------ ------
Total income (loss) from investment operations 5.46 1.41 (.03) 5.84
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.12) (.31) -- --
Distributions from net realized gain (.61) (.22) -- --
------ ------ ------ ------
Total dividends and distributions to shareholders (.73) (.53) -- --
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.31 $19.58 $18.70 $35.77
====== ====== ====== ======
================================================================================================================
Total Return, at Net Asset Value(5) 29.16% 7.78% (0.16)% 19.51%
================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $49,608 $7,289 $313 $15,341
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $24,168 $2,709 $172 $6,108
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.37% 0.43% 1.13%(6) 1.30%(6)
Expenses 2.31% 2.35% 2.52%(6) 0.91%(6)
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 21.0% 42.0% 24.0% 30.0%
Average brokerage commission rate(8) -- -- -- $0.0575
</TABLE>
20 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies
Oppenheimer Quest Opportunity Value Fund (the Fund), a series of Oppenheimer
Quest for Value Funds, is a 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 diversified portfolio of common stocks, bonds
and cash equivalents. 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 distribution and/or service plans. No such plan has been
adopted for Class Y shares. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of 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.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal 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.
21 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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.
- --------------------------------------------------------------------------------
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.
22 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
Year Ended October 31, 1997(1) Year Ended October 31, 1996
-----------------------------------------------------------
Shares Amount Shares Amount
-----------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Class A:
Sold 29,187,396 $963,814,139 18,898,662 $520,099,622
Dividends and
distributions reinvested 895,931 27,272,152 261,183 6,621,016
Redeemed (8,466,400) (281,626,521) (4,066,611) (112,653,025)
---------- ------------ ---------- ------------
Net increase 21,616,927 $709,459,770 15,093,234 $414,067,613
========== ============ ========== ============
- --------------------------------------------------------------------------------------
Class B:
Sold 27,082,534 $879,940,989 16,806,769 $458,977,376
Dividends and
distributions reinvested 673,907 20,277,098 132,115 3,318,700
Redeemed (3,442,467) (113,643,013) (1,520,680) (41,570,947)
---------- ------------ ---------- ------------
Net increase 24,313,974 $786,575,074 15,418,204 $420,725,129
========== ============ ========== ============
- --------------------------------------------------------------------------------------
Class C:
Sold 7,353,599 $238,923,162 4,681,623 $127,733,287
Dividends and
distributions reinvested 171,000 5,140,248 30,694 770,104
Redeemed (1,283,150) (42,527,605) (605,328) (16,522,314)
---------- ------------ ---------- ------------
Net increase 6,241,449 $201,535,805 4,106,989 $111,981,077
========== ============ ========== ============
- --------------------------------------------------------------------------------------
Class Y:
Sold 478,353 $16,256,910 -- $ --
Redeemed (49,521) (1,697,812) -- --
---------- ------------ ---------- ------------
Net increase 428,832 $14,559,098 -- $ --
========== ============ ========== ============
</TABLE>
1. 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.
- --------------------------------------------------------------------------------
3. Unrealized Gains and Losses on Investments
At October 31, 1997, net unrealized appreciation on investments of $680,420,650
was composed of gross appreciation of $720,773,612, and gross depreciation of
$40,352,962.
23 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 1.00% of the
first $400 million of average annual net assets, 0.90% of the next $400
million of average annual net assets, and 0.85% of average annual net assets
over $800 million. Effective October 22, 1997, the investment advisory
agreement was amended to include additional breakpoints for average annual
net assets in excess of $800 million. The new investment advisory agreement
provides for a fee of 1.00% of the first $400 million of average annual net
assets, 0.90% of the next $400 million of average annual net assets, 0.85%
of the next $3.2 billion of average annual net assets, 0.80% of the next $4
billion of average annual net assets, and 0.75% of average annual net assets
over $8 billion. The Manager acts as the accounting agent for the Fund at an
annual fee of $55,000, plus out-of-pocket costs and expenses reasonably
incurred.
The Manager pays OpCap Advisors (the Sub-Advisor) monthly an
annual fee based on the fee schedule set forth in the Prospectus. For the year
ended October 31, 1997, the Manager paid $8,439,635 to the Sub-Advisor. 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 year ended October 31, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $16,207,958, of which
$4,243,241 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 $31,965,481 and $2,163,971,
respectively, of which $1,091,203 and $33,822, respectively, was paid to an
affiliated broker/dealer. During the year ended October 31, 1997, OFDI received
contingent deferred sales charges of $1,929,164 and $93,884, respectively, upon
redemption of Class B and Class C shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. 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 year ended October 31, 1997, the Fund paid OFS $2,690,122.
The Fund has adopted a Distribution and Service Plan for Class A
shares to compensate OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of 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.
24 Oppenheimer Quest Opportunity Value Fund
<PAGE>
- --------------------------------------------------------------------------------
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. During the year ended October
31, 1997, OFDI paid $803,131 to an affiliated broker/dealer as compensation for
Class A personal service and maintenance expenses.
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 shares 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 $188,985 and $126,039, respectively, to an
affiliated broker/dealer as compensation for Class B and Class C personal
service and maintenance expenses and retained $10,822,764 and $1,863,764,
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 Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. At October 31, 1997, OFDI had incurred unreimbursed expenses of
$43,396,718 for Class B and $3,606,009 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.
25 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Oppenheimer Quest for Value Funds
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Oppenheimer Quest Opportunity Value
Fund (one of the portfolios constituting Oppenheimer Quest for Value Funds,
hereafter referred to as the Fund), at October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as financial statements) are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997 by correspondence with the
custodian and the application of alternative auditing procedures where
securities purchased had not been received, provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
November 21, 1997
26 Oppenheimer Quest Opportunity 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 $0.8917, $0.8084 and $0.8012 per share were paid
to Class A, Class B and Class C shareholders, respectively, on December 11,
1996, of which $0.4914 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 gain).
Dividends paid by the Fund during the fiscal year ended October
31, 1997 which are not designated as capital gain distributions should be
multiplied by 52.59% 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.
27 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Shareholder Meeting (Unaudited)
On May 23, 1997, a special shareholder meeting was held at which the selection
of Price Waterhouse LLP as the independent accountants and auditors of the Fund
for the fiscal year beginning November 1, 1996 was ratified (Proposal No. 1),
the proposed changes to certain of the Fund's fundamental investment policies,
including changes to the investment objective were approved (Proposal No. 2),
the Investment Advisory Agreement between the Fund and OppenheimerFunds, Inc.
was approved (Proposal No. 3), the Subadvisory Agreement between
OppenheimerFunds, Inc. and OpCap Advisors was approved (Proposal No. 4), the
Fund's Class A 12b-1 Distribution and Service Plan was approved by Class A
shareholders (Proposal No. 5), the Fund's Class B 12b-1 Distribution and Service
Plan was approved by Class B shareholders (Proposal No. 6), and the Fund's Class
C 12b-1 Distribution and Service Plan was approved by Class C shareholders
(Proposal No. 7) as described in the Fund's proxy statement for that meeting.
The following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Proposal For Against Abstain Non-Votes Total
- ---------------- ---------------- --------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Proposal No. 1 42,753,091.558 518,144.361 1,546,312.936 33,321,533 44,817,548.855
Proposal No. 2 39,769,340.621 2,784,314.100 2,268,642.125 33,321,533 44,822,296.846
Proposal No. 3 40,801,075.926 1,708,479.246 2,308,708.534 33,321,533 44,818,263.706
Proposal No. 4 40,338,391.519 1,890,034.216 2,589,833.971 33,321,533 44,818,259.706
Proposal No. 5 19,827,223.196 1,160,119.328 1,233,111.568 33,321,533 22,220,454.092
Proposal No. 6 15,520,063.087 762,311.115 1,166,005.929 33,321,533 17,448,380.131
Proposal No. 7 4,568,475.858 303,466.590 264,739.806 33,321,533 5,136,682.254
</TABLE>
28 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Oppenheimer Quest Opportunity Value Fund
- --------------------------------------------------------------------------------
A Series of Oppenheimer Quest for Value Funds
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Investment Advisor OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
Sub-Advisor OpCap Advisors
- --------------------------------------------------------------------------------
Distributor OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
- --------------------------------------------------------------------------------
Custodian of State Street Bank and Trust Company
Portfolio Securities
- --------------------------------------------------------------------------------
Independent Accountants Price Waterhouse LLP
- --------------------------------------------------------------------------------
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Quest Opportunity Value Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer Quest Opportunity 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.
29 Oppenheimer Quest Opportunity Value Fund
<PAGE>
OppenheimerFunds Family
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------
Real Asset Funds
- --------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
- --------------------------------------------------------------------------------------------
Stock Funds
- --------------------------------------------------------------------------------------------
Developing Markets Fund Capital Appreciation Fund(1) Disciplined Value Fund
Enterprise Fund Quest Capital Value Fund Quest Value Fund
International Growth Fund Growth Fund MidCap Fund
Discovery Fund Global Fund International Small
Quest Small Cap Value Fund Quest Global Value Fund Company Fund
- --------------------------------------------------------------------------------------------
Stock & Bond Funds
- --------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
- --------------------------------------------------------------------------------------------
Bond Funds
- --------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
- --------------------------------------------------------------------------------------------
Municipal Funds
- --------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
- --------------------------------------------------------------------------------------------
Money Market Funds(4)
- --------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
- --------------------------------------------------------------------------------------------
LifeSpan
- --------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by
the U.S. government and there can be no assurance that a money market fund
will be able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997
OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer Quest Opportunity Value Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
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
Account Transactions
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-852-8457
PhoneLink
24-hr automated information
and automated transactions
1-800-533-3310
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
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 OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OppenheimerFunds Logo]
Distributor, Inc.
RA0236.001.1097 December 30, 1997
