[graphic]
picture of snow-capped mountains
Annual Report October 31, 1999
Oppenheimer
Quest Small Cap
Value Fund
[logo]OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
For much of the fiscal year, large cap stocks performed better
than small caps and the growth style of investing produced better results than
the value style of investing.
Because small cap value investing was out of favor for much of the fiscal year,
the Fund was able to buy many excellent companies at attractive prices.
While we can't predict when small cap stocks will begin outperforming the stock
market as a whole, we're optimistic about the Fund as it is currently
structured.
Contents
1 President's Letter
3 An Interview
with Your Fund's
Managers
7 Fund Performance
12 Financial
Statements
27 Report of
Independent
Accountants
28 Federal
Income Tax
Information
29 Officers and Trustees
- ----------------------
Average Annual
Total Returns
For the 1-Year Period
Ended 10/31/99*
Class A
Without With
Sales Chg. Sales Chg.
- ----------------------
0.38% -5.39%
Class B
Without With
Sales Chg. Sales Chg.
- ----------------------
- -0.16% -4.99%
Class C
Without With
Sales Chg. Sales Chg.
- ----------------------
- -0.16% -1.13%
- ----------------------
- ----------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- ---------------------
*See page 10 for further details.
<PAGE>
[Photo of Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer
Quest Small Cap
Value Fund
PRESIDENT'S LETTER
Dear shareholder,
Whenever a new year begins--let alone a new decade or century--it makes sense
to pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year end, it became clearer that while the U.S. economy grew
robustly in 1999, inflation remained at low levels. Indeed, investors appeared
more comfortable with the economy after the Federal Reserve Board demonstrated
its inflation-fighting resolve by raising interest rates three times between
June and November.
As is normal in a rising-interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of large-capitalization growth companies, principally in the technology arena.
Smaller and value-oriented stocks provided particularly lackluster returns, and
overall, foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a
moderate-growth, low-inflation course. As recent revisions of 1999's economic
statistics demonstrated, the economy has defied many analysts' forecasts by
growing at a strong rate, which should be positive for the bond market.
Similarly, positive economic forces could help the stock market's performance
broaden to include value-oriented and smaller stocks.
We see particularly compelling opportunities outside of the U.S. market.
Many foreign stocks also ended 1999 more attractively valued than large-cap
U.S. stocks, and economic trends in overseas markets could lead
to higher stock prices. In Europe, corporate restructuring has just begun,
giving
1 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
PRESIDENT'S LETTER
companies there the same potential for cost-cutting and productivity
improvements that U.S. companies enjoyed 10 years ago. In Japan and Asia,
economic recovery is expected to gain strength, which could allow stocks to
rally from relatively low levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar. Clearly,
while the Internet is here to stay, not all "dot-com" companies will survive,
and many of these high-flying Internet stocks will eventually--and perhaps very
suddenly--return to more reasonable levels. The long-term winners are most
likely to be companies that support the Internet's growth with content or
infrastructure.
What else is in store for investors in 2000? While we do not have an
infallible crystal ball, we believe that in almost any investment
environment, consistent success stems from an unwavering focus on fundamental
investment principles such as maintaining a long-term perspective, using
diversification to manage risk and availing oneself of the services of a
knowledgeable financial advisor. Indeed, these principles serve as the
foundation for every investment we offer, helping to make OppenheimerFunds The
Right Way to Invest in 2000 and beyond.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 19, 1999
These general market views represent opinions of OppenheimerFunds, Inc. and
are not intended to predict or depict performance of any particular fund.
Specific discussion, as it applies to your Fund, is contained in the pages that
follow.
2 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
[photo]
Portfolio Management
Team (l to r)
Tim McCormack
Mark Degenhart
Q How did Oppenheimer Quest Small Cap Value Fund perform during the one-year
period that ended October 31, 1999?
A. In general, the past year has been difficult for small cap value investing,
and the Fund's performance reflects this trying investment environment. For much
of the fiscal year, large cap stocks performed better than small caps and the
growth style of investing produced better results than the value style. The best
part of the entire year for small cap value was the two-month period between
April and May of 1999. That's when it became apparent that the Asian economic
crisis was easing and the U.S. economy was not in danger of going into a
recession. During that time, investors were willing to venture beyond large
household names and into areas that had lagged, such as small cap value stocks.
What changed?
By the summer, investors began to fear inflation, interest rates
began to rise, the U.S. economy was slowing and small cap value gave up much of
the ground it had gained in the spring. This time, investors clamored for an
even narrower group of stocks, primarily large cap technology, boosting those
stock prices to record levels. Within the context of this volatile environment
for small cap value investing, our goal has been to select companies on an
individual basis that represent good businesses trading below their intrinsic
worth.
3 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
Does that mean that you avoided technology?
No, not at all. While it's true that not many Internet stocks fit our valuation
criteria because of a lack of earnings, technology is a broad category. For
instance, we earned a great return from a number of semiconductor manufacturers
that we purchased at bargain prices and then sold when they reached our target
levels. To some extent, these companies benefited from increased orders
resulting from the improving global economy.
What would be an example of a technology stock you bought at a bargain price?
An example is General Semiconductor, Inc., which fell in price when a large
investor group announced its intent to sell its holding in the company. We more
than doubled our position in the stock at that point because we didn't believe
the fundamentals of the company had changed. General Semiconductor, Inc., which
mass produces semiconductor chips that go into virtually every electronic
device, saw the price of these chips deteriorate last year. The reason: its
Asian competitors had nowhere to ship their products, so they flooded the world
market at bargain prices. Now that Asia is recovering, we believe the pricing
should improve, and the company's profitability should also return to healthy
levels.
[callout]
"Our long-term strategy is to select companies on an individual basis that
represent good businesses trading below their intrinsic worth."
[end callout]
4 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
Did you emphasize particular industries or sectors
during the fiscal year?
For the most part, any sector emphasis is merely a residual of our individual
stock selection process. However, patterns can still emerge. The insurance
industry is a fairly large weighting in the portfolio because we believe that
pricing will improve dramatically next year. An unusual number of natural
disasters around the world has forced the industry to raise prices to cover the
costs of these losses. The portfolio's largest holding, RenaissanceRe Holdings
Ltd., is a reinsurance company that stands to gain from improved pricing in
January when most policies are renewed. In the meantime, the company has a
return on equity of 18%, which is very high for an insurance concern.
Although healthcare as a sector has been under pressure due to the
congressional debate over the expansion of Medicare, we recently purchased
Dentsply International, Inc., the largest U.S. manufacturer of dental equipment
and supplies. Unlike the rest of healthcare, dentistry is generally unaffected
by Medicare and managed care controversies because patients pay a large portion
of the bill out of their own pocket. In addition, the dental equipment and
supply industry is highly fragmented, and Dentsply International, Inc. is buying
small "mom-and-pop" competitors, which creates efficiencies of scale that
immediately boost earnings.
[callout]
Average Annual
Total Returns
For the Periods Ended 9/30/99(1)
<TABLE>
<CAPTION>
Class A
1-Year 5-Year 10-Year
- --------------------------
<S> <C> <C>
2.87% 6.97% 9.60%
Class B Since
1-Year 5-Year Inception
- --------------------------
3.64% 7.38% 6.96%
Class C Since
1-Year 5-Year Inception
- --------------------------
7.58% 7.67% 6.95%
</TABLE>
[end callout]
1. See page 10 for further details.
5 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
What is your outlook for the Fund over the coming months?
While we can't predict when small cap stocks will begin outperforming the stock
market as a whole, we can say that we're optimistic about the Fund as it is
currently structured. One statistic--the price-to-earnings ratio--is a commonly
used measure of stock value: Typically, the lower the P/E, the more attractive
the stock's price. The average stock in the Russell 2000 Index sells for 25
times its projected 1999 earnings, while the average stock in the Fund sells for
only 15 times projected 1999 earnings. We believe that we are buying higher
return companies at lower prices, which helps make Oppenheimer Quest Small Cap
Value Fund an important part of The Right Way to Invest.
<TABLE>
<CAPTION>
Top 10 Stock Holdings(2)
- ----------------------------------------------------------
<S> <C>
RenaissanceRe Holdings Ltd. 4.7%
- ----------------------------------------------------------
Cambrex Corp. 4.4
- ----------------------------------------------------------
MSC Industrial Direct Co., Inc., Cl. A 4.4
- ----------------------------------------------------------
Dentsply International, Inc. 4.2
- ----------------------------------------------------------
Wallace Computer Services, Inc. 3.6
- ----------------------------------------------------------
Harman International Industries, Inc. 3.6
- ----------------------------------------------------------
First Health Group Corp. 3.6
- ----------------------------------------------------------
AmeriSource Health Corp., Cl. A 3.4
- ----------------------------------------------------------
General Semiconductor, Inc. 3.3
- ----------------------------------------------------------
Horace Mann Educators Corp. 3.3
Top Five Industries(2)
- ----------------------------------------------------------
Insurance 13.9%
- ----------------------------------------------------------
Industrial Services 12.9
- ----------------------------------------------------------
Healthcare/Supplies & Services 10.8
- ----------------------------------------------------------
Healthcare/Drugs 8.8
- ----------------------------------------------------------
Manufacturing 8.3
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Sector Allocation(2)
[pie chart]
<S> <C>
Capital Goods 26.9%
Healthcare 19.6
Financial 13.9
Consumer
Cyclical 10.0
Consumer
Staples 6.9
Basic Materials 6.7
Energy 5.4
Communication
Services 4.8
Technology 4.0
Transportation 1.8
</TABLE>
2. Portfolio is subject to change. Percentages are as of
October 31, 1999, and are based on total market value of common
stock.
6 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended October 31, 1999, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's discussion of performance. For the Fund's fiscal year that ended
October 31, 1999, Oppenheimer Quest Small Cap Value Fund was negatively impacted
by strong investor preference for large cap stocks. However, the Fund was able
to benefit from its stock selections in technology and cyclical industrials. On
the other hand, many of the Fund's small cap value stocks were hurt in this
difficult investment environment. We have continued to hold many of these
positions because we believe they have the potential to recover well over the
long term. The Fund's portfolio holdings, allocations and strategies are subject
to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of shares of the
Fund held until October 31, 1999. In the case of Class A shares, performance is
measured from the inception of the Class on January 3, 1989; in the case of
Class B and Class C, performance is measured from inception of those classes on
September 1, 1993. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charges on Class B and Class C shares, and reinvestments of all dividends and
capital gains distributions.
The Fund's performance is compared to that of the Russell 2000 Index. The
Russell 2000 Index is an index of the 2,000 smallest securities in the Russell
3000 Index with market values ranging from $25 million to $275 million. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graphs shows the effect of
taxes. The Fund's performance reflects the effects of Fund business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the securities in the index.
7 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Small Cap Value Fund (Class A)
and Russell 2000 Index
<TABLE>
<CAPTION>
Oppenheimer Quest
Small Cap Value Fund Class A Russell 2000 Index
<S> <C> <C>
1.3.89 9425 10000
10.31.89 10283 11505
8398 8367
10.31.91 13018 13273
14528 14532
10.31.93 18917 19243
18925 19175
10.31.95 20593 22693
24128 26462
10.31.97 32022 34224
27203 30171
10.31.99 27307 34656
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 10/31/99(1)
1-Year -5.39% 5-Year 6.34% 10-Year 9.61%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Small Cap Value Fund (Class B)
and Russell 2000 Index
<TABLE>
<CAPTION>
Oppenheimer Quest
Small Cap Value Fund Class B Russell 2000 Index
<S> <C> <C>
9.1.93 10000 10000
10.31.93 10273 10547
10.31.94 10233 10510
10.31.95 11069 12438
10.31.96 12904 14503
10.31.97 17040 18758
10.31.98 14404 16536
10.31.99 14382 18995
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 10/31/99(1)
1-Year -4.99% 5-Year 6.74% Life 6.09%
8 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Small Cap Value Fund (Class C)
and Russell 2000 Index
<TABLE>
<CAPTION>
Oppenheimer Quest
Small Cap Value Fund Class C Russell 2000 Index
<S> <C> <C>
9.1.93 10000 10000
10.31.93 10279 10547
10.31.94 10227 10510
10.31.95 11069 12438
10.31.96 12901 14503
10.31.97 17037 18758
10.31.98 14404 16536
10.31.99 14382 18995
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 10/31/99(1)
1-Year -1.13% 5-Year 7.06% Life 6.07%
The performance information for Russell 2000 Index in the graphs begins on
12/31/88 for Class A, and on 8/31/93 for both Class B and Class C.
1. See page 10 for further details.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
NOTES
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Because of ongoing
market volatility, the Fund's performance may be subject to substantial
short-term changes. For updates on the Fund's performance, please contact your
financial advisor, call us at 1.800.525.7048 or visit our website,
www.oppenheimerfunds.com.
OppenheimerFunds, Inc. became the Fund's advisor on 11/22/95. The Fund's
sub-advisor is OpCap Advisors, which was the Fund's advisor prior to 11/22/95.
The portfolio manager is employed by the Fund's sub-advisor.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
Class A shares of the Fund were first publicly offered on 1/3/89. Class A
returns include the current maximum initial sales charge of 5.75%. Class A
shares are subject to an annual 0.25% asset-based sales charge.
Class B shares of the Fund were first publicly offered on 9/1/93. Class
B returns include the applicable contingent deferred sales charge of 5% (1-year)
and 1% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "life of class" return for Class B uses Class A performance
for the period after conversion. Class B shares are subject to an annual 0.75%
asset-based sales charge.
Class C shares of the Fund were first publicly offered on 9/1/93. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
An explanation of the different performance calculations is in the
Fund's prospectus.
10 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
Financials
11 OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
STATEMENT OF INVESTSTMENTS October 31, 1999
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
====================================================================================
<S> <C> <C>
Common Stocks--90.6%
- ------------------------------------------------------------------------------------
Basic Materials--6.1%
- ------------------------------------------------------------------------------------
Chemicals--6.1%
Cambrex Corp. 333,700 $10,094,425
- ------------------------------------------------------------------------------------
M. A. Hanna Co. 84,000 897,750
- ------------------------------------------------------------------------------------
McWhorter Technologies, Inc.(1) 119,600 1,637,025
- ------------------------------------------------------------------------------------
Spartech Corp. 99,200 2,839,600
----------
15,468,800
- ------------------------------------------------------------------------------------
Capital Goods--24.4%
- ------------------------------------------------------------------------------------
Aerospace/Defense--2.3%
Precision Castparts Corp. 196,600 5,799,700
- ------------------------------------------------------------------------------------
Electrical Equipment--2.9%
Baldor Electric Co. 244,800 4,758,300
- ------------------------------------------------------------------------------------
Technitrol, Inc. 69,500 2,528,062
----------
7,286,362
- ------------------------------------------------------------------------------------
Industrial Services--11.7%
GP Strategies Corp.(1) 136,200 1,600,350
- ------------------------------------------------------------------------------------
MSC Industrial Direct Co., Inc., Cl. A(1) 1,050,500 10,045,406
- ------------------------------------------------------------------------------------
Staff Leasing, Inc.(1) 225,000 1,954,687
- ------------------------------------------------------------------------------------
Tetra Tech, Inc.(1) 440,475 6,992,541
- ------------------------------------------------------------------------------------
Tetra Technologies, Inc.(1) 90,800 754,775
- ------------------------------------------------------------------------------------
Wallace Computer Services, Inc. 380,400 8,416,350
-----------
29,764,109
- ------------------------------------------------------------------------------------
Manufacturing--7.5%
Albany International Corp., Cl. A(1) 225,178 3,419,891
- ------------------------------------------------------------------------------------
Flowserve Corp. 109,800 1,852,875
- ------------------------------------------------------------------------------------
Interpool, Inc. 349,200 2,662,650
- ------------------------------------------------------------------------------------
Lindsay Manufacturing Co. 128,000 2,600,000
- ------------------------------------------------------------------------------------
Paxar Corp.(1) 466,500 4,344,281
- ------------------------------------------------------------------------------------
SPS Technologies, Inc.(1) 141,300 4,380,300
----------
19,259,997
- ------------------------------------------------------------------------------------
Communication Services--4.4%
- ------------------------------------------------------------------------------------
Telecommunications: Long Distance--4.4%
General Semiconductor, Inc.(1) 735,400 7,721,700
- ------------------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(1) 80,500 3,396,094
----------
11,117,794
</TABLE>
12 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclicals--9.0%
- ------------------------------------------------------------------------------------
Autos & Housing--4.2%
Carlisle Cos., Inc. 73,300 $ 2,437,225
- ------------------------------------------------------------------------------------
Harman International Industries, Inc. 205,400 8,395,725
-----------
10,832,950
- ------------------------------------------------------------------------------------
Retail: Specialty--4.8%
G & K Services, Inc., Cl. A 96,100 3,609,756
- ------------------------------------------------------------------------------------
Regis Corp. of Minnesota 166,600 3,092,512
- ------------------------------------------------------------------------------------
Shopko Stores, Inc.(1) 221,900 5,561,369
-----------
12,263,637
- ------------------------------------------------------------------------------------
Consumer Staples--6.2%
- ------------------------------------------------------------------------------------
Food--5.4%
Del Monte Foods Co.(1) 428,000 5,965,250
- ------------------------------------------------------------------------------------
Earthgrains Co. 185,300 4,227,156
- ------------------------------------------------------------------------------------
Performance Food Group Co.(1) 137,100 3,718,837
-----------
13,911,243
- ------------------------------------------------------------------------------------
Household Goods--0.8%
Ruddick Corp. 113,400 1,934,887
- ------------------------------------------------------------------------------------
Energy--4.9%
- ------------------------------------------------------------------------------------
Energy Services--4.9%
Cabot Oil & Gas Corp., Cl. A 280,700 4,526,287
- ------------------------------------------------------------------------------------
Eastern Enterprises 53,900 2,755,638
- ------------------------------------------------------------------------------------
St. Mary Land & Exploration Co. 204,000 5,202,000
-----------
12,483,925
- ------------------------------------------------------------------------------------
Financial--12.6%
- ------------------------------------------------------------------------------------
Insurance--12.6%
Annuity & Life RE Holdings Ltd. 265,800 6,246,300
- ------------------------------------------------------------------------------------
E.W. Blanch Holdings, Inc. 55,600 3,600,100
- ------------------------------------------------------------------------------------
Horace Mann Educators Corp. 268,500 7,568,344
- ------------------------------------------------------------------------------------
RenaissanceRe Holdings Ltd. 297,700 10,847,444
- ------------------------------------------------------------------------------------
Trenwick Group, Inc. 188,677 3,832,502
-----------
32,094,690
- ------------------------------------------------------------------------------------
Healthcare--17.8%
- ------------------------------------------------------------------------------------
Healthcare/Drugs--8.0%
AmeriSource Health Corp., Cl. A(1) 516,000 7,740,000
- ------------------------------------------------------------------------------------
Dentsply International, Inc. 415,600 9,636,725
- ------------------------------------------------------------------------------------
Trigon Healthcare, Inc.(1) 103,900 2,948,163
-----------
20,324,888
</TABLE>
13 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------
<S> <C> <C>
Healthcare/Supplies & Services--9.8%
American Medical Security Group, Inc.(1) 503,200 $ 2,264,400
- ------------------------------------------------------------------------------------
CorVel Corp.(1) 263,600 5,667,400
- ------------------------------------------------------------------------------------
First Health Group Corp.(1) 360,400 8,379,300
- ------------------------------------------------------------------------------------
Shared Medical Systems Corp. 161,800 6,107,950
- ------------------------------------------------------------------------------------
Vital Signs, Inc. 117,300 2,536,613
-----------
24,955,663
- ------------------------------------------------------------------------------------
Technology--3.6%
- ------------------------------------------------------------------------------------
Computer Software--2.1%
Analysts International Corp. 131,200 1,533,400
- ------------------------------------------------------------------------------------
Policy Management Systems Corp.(1) 180,200 3,457,588
- ------------------------------------------------------------------------------------
Systems & Computer Technology Corp.(1) 42,700 459,025
-----------
5,450,013
- ------------------------------------------------------------------------------------
Electronics--1.5%
BMC Industries, Inc. 655,200 3,808,350
- ------------------------------------------------------------------------------------
Transportation--1.6%
- ------------------------------------------------------------------------------------
Air Transportation--1.6%
Air Express International Corp. 153,700 4,092,263
- ------------------------------------------------------------------------------------
Total Common Stocks (Cost $244,527,804) 230,849,271
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
====================================================================================
<S> <C> <C>
Short-Term Notes--8.3%(2)
- ------------------------------------------------------------------------------------
Federal Home Loan Bank, 5.16%, 11/1/99 $ 9,549,000 9,549,000
- ------------------------------------------------------------------------------------
Federal National Mortgage Assn., 5.09%, 11/23/99 11,695,000 11,658,622
- ------------------------------------------------------------------------------------
Total Short-Term Notes (Cost $21,207,622) 21,207,622
- ------------------------------------------------------------------------------------
Total Investments, at Value (Cost $265,735,426) 98.9% 252,056,893
- ------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.1 2,909,833
------------
Net Assets 100.0% $254,966,726
============
</TABLE>
Footnotes TO STATEMENT OF INVESTMENTS
1. Non-income-producing security.
2. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999
<TABLE>
<S> <C>
======================================================================================================
Assets
Investments, at value (cost $265,735,426)--see accompanying statement $ 252,056,893
- ------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 5,137,372
Shares of beneficial interest sold 826,646
Interest and dividends 18,358
Other 42,058
-------------
Total assets 258,081,327
======================================================================================================
Liabilities
Bank overdraft 33,893
- ------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 2,104,625
Shares of beneficial interest redeemed 667,673
Shareholder reports 120,557
Transfer and shareholder servicing agent fees 70,867
Distribution and service plan fees 54,364
Trustees' compensation 23,951
Other 38,671
-------------
Total liabilities 3,114,601
======================================================================================================
Net Assets $254,966,726
=============
======================================================================================================
Composition of Net Assets
- ------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 153,656
- ------------------------------------------------------------------------------------------------------
Additional paid-in capital 276,619,440
- ------------------------------------------------------------------------------------------------------
Overdistributed net investment income (22,637)
- ------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (8,105,200)
- ------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (13,678,533)
- ------------------------------------------------------------------------------------------------------
Net assets $254,966,726
=============
======================================================================================================
Net Asset Value Per Share
- ------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$151,058,537 and 8,981,010 shares of beneficial interest outstanding) $16.82
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $17.85
- ------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $82,948,895
and 5,095,059 shares of beneficial interest outstanding) $16.28
- ------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $20,959,294
and 1,289,503 shares of beneficial interest outstanding) $16.25
</TABLE>
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended October 31, 1999
<TABLE>
<S> <C>
======================================================================================================
Investment Income
Dividends $ 2,446,994
- ------------------------------------------------------------------------------------------------------
Interest 1,486,229
-----------
Total income 3,933,223
======================================================================================================
Expenses
Management fees 2,901,782
- ------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 851,468
Class B 949,036
Class C 249,799
- ------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 822,895
- ------------------------------------------------------------------------------------------------------
Shareholder reports 238,174
- ------------------------------------------------------------------------------------------------------
Trustees' compensation 31,127
- ------------------------------------------------------------------------------------------------------
Custodian fees and expenses 13,308
- ------------------------------------------------------------------------------------------------------
Other 224,081
-----------
Total expenses 6,281,670
Less expenses paid indirectly (5,993)
-----------
Net expenses 6,275,677
======================================================================================================
Net Investment Loss (2,342,454)
======================================================================================================
Realized and Unrealized Gain (Loss)
Net realized loss on investments (7,872,596)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 11,641,212
-----------
Net realized and unrealized gain 3,768,616
======================================================================================================
Net Increase in Net Assets Resulting from Operations $1,426,162
===========
</TABLE>
16 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended October 31, 1999 1998
======================================================================================================
<S> <C> <C>
Operations
- ------------------------------------------------------------------------------------------------------
Net investment loss $ (2,342,454) $ (2,004,739)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) (7,872,596) 9,954,218
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 11,641,212 (64,930,588)
--------------------------
Net increase (decrease) in net assets resulting from operations 1,426,162 (56,981,109)
======================================================================================================
Dividends and/or Distributions to Shareholders
Distributions from net realized gain:
Class A (5,782,692) (15,926,177)
Class B (3,157,168) (7,220,162)
Class C (839,170) (2,252,552)
- ------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain:
Class A (137,547) --
Class B (75,096) --
Class C (19,960) --
======================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A (28,052,430) 51,212,817
Class B (11,675,938) 43,679,239
Class C (5,034,538) 9,563,688
======================================================================================================
Net Assets
Total increase (decrease) (53,348,377) 22,075,744
- ------------------------------------------------------------------------------------------------------
Beginning of period 308,315,103 286,239,359
----------------------------
End of period (including overdistributed net investment
income of $22,637 and $8,314, respectively) $254,966,726 $308,315,103
============================
</TABLE>
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Year Ended October 31, 1999 1998 1997 1996(1) 1995
======================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $17.29 $22.26 $19.03 $17.31 $16.33
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.10) (.09) (.07) .03 .11(2)
Net realized and unrealized gain (loss) .18 (3.02) 5.66 2.79 1.29
-------------------------------------------------------
Total income (loss) from
investment operations .08 (3.11) 5.59 2.82 1.40
- ------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- (.11) --
Distributions from net realized gain (.54) (1.86) (2.36) (.99) (.42)
Distributions in excess of net realized ga (.01) -- -- -- --
-------------------------------------------------------
Total dividends and distributions
to shareholders (.55) (1.86) (2.36) (1.10) (.42)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.82 $17.29 $22.26 $19.03 $17.31
=======================================================
======================================================================================================
Total Return, at Net Asset Value(3) 0.38% (15.05)% 32.72% 17.17% 8.82%
======================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $151,059 $183,567 $181,973 $102,746 $116,307
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $170,205 $201,952 $131,503 $117,765 $119,440
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income (loss) (0.60)% (0.42)% (0.32)% 0.11% 0.67%
Expenses 1.96% 1.80(5) 1.78%(5) 1.90%(5) 1.80%(5)
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 87% 65% 82% 70% 76%
</TABLE>
1. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. Based on average shares outstanding for the period.
3. Assumes a $1,000 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.
4. Annualized for periods of less than one full year.
5. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1999, were $225,134,385 and $271,122,437, respectively.
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
Class B Year Ended October 31, 1999 1998 1997 1996(1) 1995
======================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.84 $21.83 $18.79 $17.11 $16.24
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.22) (.12) (.05) (.06) .022
Net realized and unrealized gain (loss) .21 (3.01) 5.45 2.76 1.27
-------------------------------------------------------
Total income (loss) from
investment operations (.01) (3.13) 5.40 2.70 1.29
- ------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- (.03) --
Distributions from net realized gain (.54) (1.86) (2.36) (.99) (.42)
Distributions in excess of net realized
gain (.01) -- -- -- --
-------------------------------------------------------
Total dividends and distributions
to shareholders (.55) (1.86) (2.36) (1.02) (.42)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.28 $16.84 $21.83 $18.79 $17.11
=======================================================
======================================================================================================
Total Return, at Net Asset Value(3) (0.16)% (15.47)% 32.05% 16.57% 8.17%
======================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $82,949 $98,041 $79,754 $30,766 $23,440
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $94,863 $97,818 $47,462 $26,478 $20,105
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income (loss) (1.10)% (0.92)% (0.80)% (0.37)% 0.09%
Expenses 2.45% 2.31%(5) 2.27%(5) 2.38%(5) 2.37%(5)
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 87% 65% 82% 70% 76%
</TABLE>
1. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. Based on average shares outstanding for the period.
3. Assumes a $1,000 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.
4. Annualized for periods of less than one full year.
5. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1999, were $225,134,385 and $271,122,437, respectively.
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class C Year Ended October 31, 1999 1998 1997 1996(1) 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.81 $21.79 $18.76 $17.11 $16.23
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.25) (.13) (.08) (.05) .01(2)
Net realized and unrealized gain (loss) .24 (2.99) 5.47 2.75 1.29
-------------------------------------------------------
Total income (loss) from
investment operations (.01) (3.12) 5.39 2.70 1.30
- ------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- (.06) --
Distributions from net realized gain (.54) (1.86) (2.36) (.99) (.42)
Distributions in excess of net realized
gain (.01) -- -- -- --
-------------------------------------------------------
Total dividends and distributions
to shareholders (.55) (1.86) (2.36) (1.05) (.42)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.25 $16.81 $21.79 $18.76 $17.11
=======================================================
======================================================================================================
Total Return, at Net Asset Value(3) (0.16)% (15.45)% 32.05% 16.55% 8.24%
======================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $20,959 $26,70 $24,512 $13,181 $9,068
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $24,964 $28,647 $17,401 $11,501 $6,114
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income (loss) (1.10)% (0.92)% (0.81)% (0.40)% 0.08%
Expenses 2.45% 2.31%(5) 2.28%(5) 2.40%(5) 2.38%(5)
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 87% 65% 82% 70% 76%
</TABLE>
1. On November 22, 1995, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. Based on average shares outstanding for the period.
3. Assumes a $1,000 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.
4. Annualized for periods of less than one full year.
5. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1999, were $225,134,385 and $271,122,437, respectively.
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Quest Small Cap 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. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager). The Manager has entered into a
sub-advisory agreement with OpCap Advisors. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge on
investments up to $1 million. Class B and Class C shares may be subject to a
contingent deferred sales charge (CDSC). 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. 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.
- --------------------------------------------------------------------------------
Securities 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 an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
21 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. Therefore, no federal
income or excise tax provision is required. As of October 31, 1999, the Fund had
available for federal income tax purposes an unused capital loss carryover of
approximately $7,549,000, expiring in 2007.
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted a nonfunded retirement plan for the
Fund's independent Trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended October
31, 1999, a provision of $14,323 was made for the Fund's projected benefit
obligations, resulting in an accumulated liability of $22,637 as of October 31,
1999.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual compensation they are entitled to receive from the Fund. Under
the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Trustees in shares of one or more
Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under
the plan will be determined based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
income per share.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
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 distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders
to reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 1999, amounts have been reclassified to reflect a
decrease in additional paid-in capital of $2,328,131. Overdistributed net
investment income was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
22 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Foreign dividend income is often
recorded on the payable date. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Year Ended October 31, 1999 Year Ended October 31, 1998
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
Class A
<S> <C> <C> <C> <C>
Sold 4,182,148 $ 73,860,752 5,051,210 $102,403,615
Dividends and/or
distributions reinvested 333,175 5,733,935 768,695 15,266,280
Redeemed (6,148,237) (107,647,117) (3,380,773) (66,457,078)
------------------------------------------------------
Net increase (decrease) (1,632,914) $ (28,052,430) 2,439,132 $ 51,212,817
======================================================
- -----------------------------------------------------------------------------------
Class B
Sold 1,802,096 $ 30,900,063 3,034,078 $ 60,041,228
Dividends and/or
distributions reinvested 185,249 3,099,205 356,031 6,914,130
Redeemed (2,714,320) (45,675,206) (1,222,121) (23,276,119)
------------------------------------------------------
Net increase (decrease) (726,975) $ (11,675,938) 2,167,988 $ 43,679,239
======================================================
- -----------------------------------------------------------------------------------
Class C
Sold 778,674 $ 13,281,277 941,618 $ 18,583,330
Dividends and/or
distributions reinvested 49,695 829,897 109,265 2,118,649
Redeemed (1,127,488) (19,145,712) (587,036) (11,138,291)
------------------------------------------------------
Net increase (decrease) (299,119) $ (5,034,538) 463,847 $ 9,563,688
======================================================
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of October 31, 1999, net unrealized depreciation on securities of $13,678,533
was composed of gross appreciation of $19,722,348, and gross depreciation of
$33,400,881.
23 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. 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 of the Fund, 0.90% of the
next $400 million and 0.85% of average annual net assets in excess of $800
million. The Fund's management fee for the year ended October 31, 1999, was
1.00% of the average annual net assets for each class of shares.
- --------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager pays OpCap Advisors (the Sub-Advisor) based on the
fee schedule set forth in the Prospectus. For the year ended October 31, 1999,
the Manager paid $1,020,438 to the Sub-Advisor.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. The Fund pays OFS an annual maintenance fee of $18.00 for
each Fund shareholder account and reimburses OFS for its out-of-pocket expenses.
During the year ended October 31, 1999, the Fund paid OFS $792,280.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C
Sales Charges Sales Charges Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
October 31, 1999 $641,725 $152,193 $147,940 $779,449 $67,942
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
October 31 , 1999 $2,502 $424,336 $15,289
</TABLE>
The Fund has adopted Distribution and Service Plans for Class A, Class B
and Class C shares under Rule 12b-1 of the Investment Company Act. Under those
plans the Fund pays the Distributor for all or a portion of its costs incurred
in connection with the distribution and/or servicing of the shares of the
particular class.
24 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
- --------------------------------------------------------------------------------
Class A Distribution and Service Plan Fees. Under the plan the Fund pays an
asset-based sales charge to the Distributor at an auunual rate of 0.25% of
average annual net assets of Class A shares of the Fund. The Fund also pays a
service fee to the Distributor of 0.25% of the average annual net assets of
Class A shares. The Distributor currently uses the fees it receives from the
Fund to pay brokers, dealers and other financial institutions. The Distributor
makes payments to plan recipients quarterly at an annual rate not to exceed
0.25% of the average annual net assets consisting of Class A shares of the Fund.
For the fiscal year ended October 31, 1999, payments under the Class A Plan
totaled $851,468, all of which was paid by the Distributor to recipients. That
included $23,779 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the plan was
terminated. The plans allow for the carry-forward of distribution expenses, to
be recovered from asset-based sales charges in subsequent fiscal periods.
25 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates Continued
Distribution fees paid to the Distributor for the year ended October 31, 1999,
were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $949,036 $785,541 $2,257,229 2.72%
Class C Plan 249,799 116,378 293,629 1.40
</TABLE>
================================================================================
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 0.45%. 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 0.08%
per annum.
The Fund had no borrowings outstanding during the year ended October 31,
1999.
26 | OPPENHEIMER QUEST SMALL CAP 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 Small Cap Value
Fund (one of the portfolios constituting Oppenheimer Quest for Value Funds,
hereafter referred to as the Fund) at October 31, 1999, and 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 presentation. We believe that our audits, which included confirmation
of securities at October 31, 1999, by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
November 19, 1999
27 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $0.5481 per share were paid to Class A, Class B and
Class C shareholders, respectively, on December 15, 1998, all of which was
designated as a "capital gain distribution" for federal income tax purposes.
Whether received in stock or in cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets held for more
than one year (long-term capital gains).
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.
28 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
OPPENHEIMER QUEST SMALL CAP VALUE FUND
<TABLE>
A Series of Oppenheimer Quest for Value Funds
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<S> <C>
Officers and Trustees Bridget A. Macaskill, Chairman of the Board of Trustees and President
Paul Y. Clinton, Trustee
Thomas W. Courtney, Trustee
Robert G. Galli, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
O. Leonard Darling, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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Investment Advisor OppenheimerFunds, Inc.
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Sub-Advisor OpCap Advisors
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Distributor OppenheimerFunds Distributor, Inc.
=================================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
=================================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
=================================================================================================
Independent Accountants PricewaterhouseCoopers LLP
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Legal Counsel Mayer, Brown & Platt
This is a copy of a report to shareholders of Oppenheimer Quest Small
Cap Value Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Quest Small Cap 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, are not insured by the FDIC or
any other agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
29 | OPPENHEIMER QUEST SMALL CAP VALUE FUND
<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to
help.
Internet
24-hr access to account information and transactions
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
Telephone 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
- --------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OppenheimerFunds Information Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
[logo]OppenheimerFunds(R)
RA0251.001.1099 December 30, 1999 Distributor, Inc.
