<PAGE>
------------------------------
Annual Report October 31, 1998
------------------------------
OPPENHEIMER
Quest Balanced
Value Fund
[GRAPHIC]
[LOGO]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An Interview
with Your Fund's
Manager
8 Fund Performance
- -------------------------------
13 Financial
Statements
28 Report of
Independent
Accountants
- -------------------------------
29 Federal
Income Tax
Information
30 Officers and
Trustees
32 Information and Services
Report highlights
- --------------------------------------------------------------------------------
o The Fund had benefited from investments in companies recovering from temporary
weakness in their stock prices.
o High-yield bonds currently represent attractive values after their yields rose
to historically high levels earlier in the period.
Avg Annual Total Returns
For the 1-Year Period
Ended 10/31/98
Class A
Without With
Sales Chg./1/ Sales Chg./2/
- ---------------------------
27.91% 20.55%
- ---------------------------
Class B
Without With
Sales Chg./1/ Sales Chg./2/
- ---------------------------
27.08% 22.08%
- ---------------------------
Class C
Without With
Sales Chg./1/ Sales Chg./2/
- ---------------------------
27.12% 26.12%
- ---------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Because of ongoing
market volatility, the Fund's performance may be subject to substantial
short-term changes. For updates on the Fund's performance, please contact your
financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com. OppenheimerFunds, Inc. became the Fund's advisor on
11/22/95. The Fund's subadvisor is OpCap Advisors, which was the Fund's advisor
prior to 11/22/95. The portfolio manager is employed by the Fund's subadvisor.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2. Class A return includes the current maximum initial sales charge of 5.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the applicable contingent deferred sales charge of 1%.
Class B and C shares are subject to an annual 0.75% asset-based sales charge and
Class A shares are subject to an annual 0.15% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
2 Oppenheimer Quest Balanced Value Fund
<PAGE>
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Quest Balanced
Value Fund
Dear shareholder,
- --------------------------------------------------------------------------------
In retrospect, 1998 has been an unsettling year for the financial markets.
Around the world, stock and bond markets experienced considerable instability,
with particular tumult being felt in Southeast Asia, Russia and Latin America.
The U.S. stock market was not immune from the extreme volatility, as it climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter. In the bond market, yields on
U.S. Treasury securities declined to record lows before rising modestly late in
the year.
Does the swift recovery of the U.S. stock market and the favorable
economic environment for the bond market mean that domestic stocks and bonds
will continue to prosper? We are optimistic over the long term, but we do expect
that concerns about corporate earnings growth in a slow-growth economy will
contribute to more stock market volatility in 1999. In the bond market, the
Federal Reserve Board's decisions to reduce short-term interest rates should
help create a positive climate for fixed income securities. While lower interest
rates are generally good for bond prices, it will become more difficult for bond
funds to maintain their dividends at current levels if yields decline further.
As an Oppenheimer fund shareholder, you may wonder how this potential
volatility will affect you. If you maintain a long-term perspective, as we do,
short-term volatility over the coming months should have little bearing on your
ability to achieve your future financial goals. That's why we continue to
suggest that you adhere to your long-term investment plan. In fact, we are very
encouraged that most of our shareholders stayed the course during last summer's
stock market correction, avoiding the temptation of selling into a temporarily
declining market.
Finally, I would like to thank those shareholders who contacted us about
our revised account statement. Response has been very positive, and we are
pleased that many of you find the new format easier to read and more
informative. If you have any questions about the new statement or any other
matter, please don't hesitate to call us at 1-800-525-7048. In the meantime,
thank you for choosing OppenheimerFunds, The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 20, 1998
3 Oppenheimer Quest Balanced Value Fund
<PAGE>
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"Currently, we
believe that the
bond market's
best values
can be found
among high-yield
corporate bonds."
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How did the Fund perform over the one-year period that ended October 31, 1998?
We were generally pleased with the Fund's returns, particularly relative to
other actively managed, value-oriented, and balanced funds. In our opinion, the
Fund's good performance is primarily a result of our stock selection strategy.
Asset allocation and our bond selection strategy were also important, but did
not influence the Fund's performance over the past year as much as our choice of
individual stocks, which comprised about 60% of the Fund's assets as of October
31, 1998.
In addition, the Fund's Class A shares were ranked 3 out of 395 (1-year),
3 out of 274 (3-year) and 1 out of 146 (5-year) among all balanced funds for the
periods ended September 30, 1998, as measured by Lipper Analytical Services,
Inc.1
Did the Fund benefit from the rally in U.S. Treasury bonds that coincided with
the stock market correction?
Most of the Fund's fixed income portfolio was either in short-term money market
instruments or high yield corporate bonds at the time of the rally. As a result,
the Fund did not benefit from the recovery in U.S. Treasury bonds. In fact, we
avoided long-term U.S. Treasury securities because we did not regard them as
compelling values, even before the recent rally.
Currently, we believe that the bond market's best values can be found
among high yield corporate bonds, which experienced price declines during the
recent "flight to quality" that has characterized this marketplace.
1. Source: Lipper Analytical Services, Inc., 9/30/98. 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. Prior to 5/18/98, the Fund was not in the Lipper Balanced Category,
but has been managed as a balanced fund since inception.
4 Oppenheimer Quest Balanced Value Fund
<PAGE>
[PHOTO]
Portfolio Management
(l to r)
Colin Glinsman
(Portfolio Manager)
Jolene Mirenna
We made some new commitments to the high yield corporate bond area over the last
three months. We did so when yields rose to attractive levels relative to their
historical relationship with U.S. Treasury securities. We also increased our
holdings of convertible bonds issued by companies we regard as financially
sound. Some of these convertible bonds feature yields-to-maturity of 10% or
more, yet their underlying stock prices make it unlikely that investors will
exercise their right to convert them into shares of common stocks. As a result,
these convertible bonds behave more like high yield bonds than like common
stocks.
Has the stock market correction created any new areas of value?
Yes, we have found a number of fundamentally strong companies whose stock prices
had declined to attractive levels, especially among chemical companies and
finance companies. However, we have not yet made any significant purchases. In
fact, we reduced our stock holdings before the correction began to just under
50% of Fund assets, and we are currently focusing on about 15 companies in which
we have a very high level of confidence. Historically, the Fund's equity
portfolio has been composed of about 25 companies representing between 50% and
75% of total assets. We are waiting for market conditions to stabilize before we
substantially increase the Fund's stock allocation.
5 Oppenheimer Quest Balanced Value Fund
<PAGE>
Avg Annual Total Returns
For the Periods Ended 9/30/982
Class A
Since
1 year 5 year Inception
- -------------------------
7.41% 16.13% 14.37%
- -------------------------
Class B
Since
1 year 5 year Inception
- -------------------------
8.30% 16.59% 16.23%
- -------------------------
Class C
Since
1 year 5 year Inception
- -------------------------
12.27% 16.72% 16.25%
- -------------------------
An interview with your Fund's manager
- --------------------------------------------------------------------------------
What individual companies have contributed the most to the Fund's recent
performance?
Phillip Morris Cos., Inc. has done well after languishing for many months.
That's because the company is near a resolution of the legal problems that have
plagued its U.S. tobacco business. The company's international tobacco business
continues to grow, even under recessionary conditions overseas, and we believe
its Kraft Foods Division remains one of the best-run food businesses in the
world.
We purchased shares of software developer Computer Associates
International, Inc. after its stock price fell sharply earlier this year. The
stock declined after the company awarded a large amount of stock to senior
management, followed by an announcement of lower earnings expectations. In our
view, such temporary news does not significantly detract from a fundamentally
strong business. The stock has since rebounded substantially.
US West, Inc., a company that provides local telephone service in the West
and Midwest, is another stock that has done well after a period of lackluster
performance. When we purchased the stock, it was out-of-favor after divesting
the company's fast-growing cable television, cellular telephone and yellow pages
businesses. Since then, a new management team has put a viable business strategy
in place, and the company's stock has rebounded.
How will you use the Fund's cash reserves?
As of October 31, approximately 21% of the Fund's assets were in cash
equivalents. This is an unusual situation for this Fund, because we generally
prefer to remain fully invested in a diversified portfolio of stocks and bonds.
However, we regard our current cash position as prudent in an uncertain market
environment.
6 Oppenheimer Quest Balanced Value Fund
<PAGE>
Asset Allocation/3/
pie chart omitted
[GRAPHIC]
Equities 58.4%
Bonds 20.9
Cash equivalents 20.7
Once we see evidence that the market has stabilized and we have a clearer
picture of the potential risks and rewards this market offers, we expect to
redeploy our cash reserves. In our view, exercising caution is part of The Right
Way to Invest in today's unsettled markets.
Top 10 Stock Holdings/3/
- --------------------------------------------------
Adaptec, Inc. 5.2%
- --------------------------------------------------
Computer Associates International, Inc. 5.0
- --------------------------------------------------
Monsanto Co. 4.3
- --------------------------------------------------
Motorola, Inc. 4.2
- --------------------------------------------------
Citigroup, Inc. 4.0
- --------------------------------------------------
Philip Morris Cos., Inc. 3.9
- --------------------------------------------------
USWest, Inc. 3.5
- --------------------------------------------------
General Instrument Corp. 3.3
- --------------------------------------------------
AMR Corp. 3.1
- --------------------------------------------------
Boeing Co. 2.8
- --------------------------------------------------
2. 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 11/1/91. The Fund's maximum
sales charge for Class A shares was lower prior to 11/24/95, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 1% (since inception on
9/1/93). Class C returns for the one-year result include the contingent deferred
sales charge of 1%. Class C shares have an inception date of 9/1/93. Class B and
C shares are subject to an annual 0.75% asset-based sales charge and Class A
shares are subject to an annual 0.15% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
3. Portfolio is subject to change. Percentages are as of October 31, 1998, and
are based on total market value of investments.
7 Oppenheimer Quest Balanced 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, 1998, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance
During the Fund's fiscal year that ended October 31, 1998, Oppenheimer Quest
Balanced Value Fund's performance was strongly influenced by the management
team's selection of individual stocks, which comprised about 60% of the Fund's
assets. By focusing on businesses with undervalued stock prices, the management
team was able to participate in the stock market's gains during most of the
year. Later in the year, when the stock market experienced a sharp correction,
the Fund's disciplined stock selection strategy and asset allocation helped to
manage risks and cushion volatility. In fact, the Fund benefited from its
relatively large cash position during the recent stock market correction. The
Fund's portfolio holdings, allocations and investment style are subject to
change.
8 Oppenheimer Quest Balanced Value Fund
<PAGE>
o Comparing the Fund's Performance to the Market
The graphs that follow show the performance of a hypothetical $10,000 investment
in Class A, Class B and Class C shares of the Fund held until October 31, 1998.
In the case of Class A shares, performance is measured from the inception of the
class on November 1, 1991, and in the case of Class B and Class C shares,
performance is measured from inception of those classes on September 1, 1993.
The Fund's performance reflects the deduction of the 5.75% maximum initial sales
charge on Class A shares, the 5% (1-year) and 1% (since inception) applicable
contingent deferred sales charge for Class B, and the 1% (1-year) contingent
deferred sales charge for Class C shares. The graphs assume that all dividends
and capital gains distributions were reinvested in additional shares.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effects of
Fund business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the index.
9 Oppenheimer Quest Balanced Value Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Balanced Value Fund (Class A) and S&P 500 Index
The following information was represented by a line graph in the printed
materials.
[GRAPHIC]
Oppenheimer Quest
Balanced Value S&P
Fund Class A 500 Index
----------------- ---------
11/1/91 $ 9,425 $10,000
10/31/92 10,447 10,995
10/31/93 11,484 12,634
10/31/94 12,476 13,122
10/31/95 14,516 16,587
10/31/96 17,686 20,581
10/31/97 22,141 27,188
10/31/98 28,320 33,166
Average Annual Total Return of Class A Shares of the Fund at 10/31/98/(1)/
1 Year 20.55% 5 Year 18.37% Life 16.03%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Balanced Value Fund (Class B) and S&P 500 Index
The following information was represented by a line graph in the printed
materials.
[GRAPHIC]
Oppenheimer Quest
Balanced Value S&P
Fund Class B 500 Index
----------------- ---------
9/1/93 $10,000 $10,000
10/31/93 10,081 10,128
10/31/94 10,884 10,519
10/31/95 12,588 13,297
10/31/96 15,240 16,499
10/31/97 18,981 21,796
10/31/98 24,022 26,589
Average Annual Total Return of Class B Shares of the Fund at 10/31/98/(2)/
1 Year 22.08% 5 Year 18.86% Life 18.49%
10 Oppenheimer Quest Balanced Value Fund
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Balanced Value Fund (Class C) and S&P 500 Index
The following information was represented by a line graph in the printed
materials.
[GRAPHIC]
Oppenheimer Quest
Balanced Value S&P
Fund Class C 500 Index
----------------- ---------
9/1/93 $10,000 $10,000
10/31/93 10,081 10,128
10/31/94 10,879 10,519
10/31/95 12,552 13,297
10/31/96 15,183 16,499
10/31/97 18,904 21,796
10/31/98 24,031 26,589
Average Annual Total Return of Class C Shares of the Fund at 10/31/98/(3)/
1 Year 26.12% 5 Year 18.97% Life 18.49%
The returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information for S&P 500 Index in the graphs begins on 10/31/91
for Class A, and begins on 8/31/93 for both Class B and Class C.
1. The inception date of the Fund (Class A shares) was 11/1/91. The average
annual total returns are shown net of the applicable 5.75% maximum initial sales
charge.
2. Class B shares of the Fund were first publicly offered on 9/1/93. The
average annual total returns are shown net of the applicable 5% and 1%
contingent deferred sales charges, respectively, for the one-year period and the
life of the class. The ending account value in the graph is net of the
applicable 1% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on 9/1/93. The
average annual total returns are shown net of the applicable 1% contingent
deferred sales charge for the one-year period. Past performance is not
predictive of future performance. Graphs are not drawn to the same scale.
11 Oppenheimer Quest Balanced Value Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
12 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1998
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--60.3%
- --------------------------------------------------------------------------------
Basic Materials--10.0%
- --------------------------------------------------------------------------------
Chemicals--10.0%
Dow Chemical Co. 70,000 $ 6,553,750
- --------------------------------------------------------------------------------
Monsanto Co. 250,000 10,156,250
- --------------------------------------------------------------------------------
Morton International, Inc. 200,000 4,975,000
-----------
21,685,000
- --------------------------------------------------------------------------------
Consumer Cyclicals--5.2%
- --------------------------------------------------------------------------------
Leisure & Entertainment--5.2%
AMR Corp./(1)/ 110,000 7,370,000
- --------------------------------------------------------------------------------
McDonald's Corp. 60,000 4,012,500
-----------
11,382,500
- --------------------------------------------------------------------------------
Consumer Non-Cyclicals--6.0%
- --------------------------------------------------------------------------------
Healthcare/Drugs--1.8%
American Home Products Corp. 80,000 3,900,000
- --------------------------------------------------------------------------------
Tobacco--4.2%
Philip Morris Cos., Inc. 180,000 9,202,500
- --------------------------------------------------------------------------------
Financial--8.7%
- --------------------------------------------------------------------------------
Banks--6.9%
Chase Manhattan Corp. (New) 100,000 5,681,250
- --------------------------------------------------------------------------------
Citigroup, Inc. 200,000 9,412,500
-----------
15,093,750
- --------------------------------------------------------------------------------
Insurance--1.8%
AFLAC, Inc. 100,000 3,812,500
- --------------------------------------------------------------------------------
Industrial--2.3%
- --------------------------------------------------------------------------------
Electrical Equipment--0.8%
Rockwell International Corp. 40,000 1,642,500
- --------------------------------------------------------------------------------
Transportation--1.5%
Canadian Pacific Ltd. (New) 140,000 3,167,500
13 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Technology--24.3%
- --------------------------------------------------------------------------------
Aerospace/Defense--3.0%
Boeing Co. 175,000 $ 6,562,500
- --------------------------------------------------------------------------------
Computer Hardware--5.6%
Adaptec, Inc./(1)/ 755,000 12,221,563
- --------------------------------------------------------------------------------
Computer Software/Services--5.4%
Computer Associates International, Inc. 300,000 11,812,500
- --------------------------------------------------------------------------------
Electronics--4.6%
Motorola, Inc. 190,000 9,880,000
- --------------------------------------------------------------------------------
Telecommunications/Technology--5.7%
General Instrument Corp./(1)/ 300,000 7,706,250
- --------------------------------------------------------------------------------
General Semiconductor, Inc./(1)/ 592,300 4,701,381
-----------
12,407,631
- --------------------------------------------------------------------------------
Utilities--3.8%
- --------------------------------------------------------------------------------
Telephone Utilities--3.8%
US West, Inc. 145,000 8,319,375
-----------
Total Common Stocks (Cost $115,460,577) 131,089,819
================================================================================
Preferred Stocks--2.8%
- --------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Depositary Shares
each representing 0.05 Shares of Step-Up Cv. Preferred
Stock (Cost $6,467,399) 406,400 6,045,200
Face
Amount
================================================================================
Non-Convertible Corporate Bonds and Notes--17.5%
- --------------------------------------------------------------------------------
American Standard Cos., Inc., 7.375% Sr. Nts., 2/1/08 $2,000,000 1,975,000
- --------------------------------------------------------------------------------
AmeriServe Food Distribution, Inc., 10.125% Sr. Sub.
Nts., 7/15/07 4,000,000 3,260,000
- --------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 6,000,000 5,280,000
- --------------------------------------------------------------------------------
Conseco, Inc., 6.80% Unsec. Nts., 6/15/05 8,000,000 7,657,872
- --------------------------------------------------------------------------------
HMH Properties, Inc., 7.875% Sr. Nts., Series A,
8/1/05 2,750,000 2,701,875
- --------------------------------------------------------------------------------
PharMerica, Inc., 8.375% Sr. Sub. Nts., 4/1/08 6,000,000 5,190,000
- --------------------------------------------------------------------------------
Playtex Family Products Corp., 9% Sr. Sub. Nts.,
12/15/03 5,500,000 5,651,250
- --------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 2,750,000 2,816,833
- --------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Unsec. Nts.,
12/1/03 2,500,000 2,631,260
- --------------------------------------------------------------------------------
Triton Energy Ltd., 8.75% Sr. Nts., 4/15/02 1,000,000 890,000
-----------
Total Non-Convertible Corporate Bonds and Notes
(Cost $40,013,193) 38,054,090
14 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
===============================================================================
Convertible Corporate Bonds and Notes--5.0%
- -------------------------------------------------------------------------------
Adaptec, Inc., 4.75% Cv. Sub. Nts., 2/1/04 $10,000,000 $ 7,737,500
- -------------------------------------------------------------------------------
Hyperion Solutions Corp., 4.50% Cv. Unsec.
Debs., 3/15/05 4,000,000 3,225,000
-----------
Total Convertible Corporate Bonds and Notes
(Cost $11,619,446) 10,962,500
===============================================================================
Short-Term Notes--22.3%/(2)/
- -------------------------------------------------------------------------------
Associates Corp. of North America, 5%, 12/8/98 8,319,000 8,276,250
- -------------------------------------------------------------------------------
Federal Home Loan Bank, 5.40%, 11/2/98 5,075,000 5,074,239
- -------------------------------------------------------------------------------
Federal National Mortgage Assn., 5.135%, 11/10/98 2,055,000 2,052,362
- -------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.05%, 12/1/98 1,440,000 1,433,940
- -------------------------------------------------------------------------------
Ford Motor Credit Corp., 5.09%, 11/19/98 3,300,000 3,291,601
- -------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.09%, 11/23/98 5,000,000 4,984,447
- -------------------------------------------------------------------------------
Household Finance Corp., 5.09%, 11/19/98 7,000,000 6,982,185
- -------------------------------------------------------------------------------
IBM Credit Corp., 5.20%, 11/2/98 7,357,000 7,355,937
- -------------------------------------------------------------------------------
Norwest Financial, Inc., 5.11%, 12/1/98 9,163,000 9,123,981
-----------
Total Short-Term Notes (Cost $48,574,942) 48,574,942
- -------------------------------------------------------------------------------
Total Investments, at Value (Cost $222,135,557) 107.9% 234,726,551
- -------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (7.9) (17,188,404)
--------- ------------
Net Assets 100.0% $217,538,147
========= ============
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.
15 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1998
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value (cost $222,135,557)--see
accompanying statement $234,726,551
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 3,448,426
Interest and dividends 1,244,790
Investments sold 243,699
Other 1,095
------------
Total assets 239,664,561
================================================================================
Liabilities
Bank overdraft 162,524
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 21,712,791
Shares of beneficial interest redeemed 140,744
Distribution and service plan fees 40,294
Transfer and shareholder servicing agent fees 19,012
Trustees' fees 3,100
Other 47,949
------------
Total liabilities 22,126,414
================================================================================
Net Assets $217,538,147
============
================================================================================
Composition of Net Assets
Par value of shares of beneficial interest $ 140,713
- --------------------------------------------------------------------------------
Additional paid-in capital 172,639,740
- --------------------------------------------------------------------------------
Undistributed net investment income 1,351,480
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 30,815,220
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 12,590,994
------------
Net assets $217,538,147
============
16 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$135,821,125 and 8,765,091 shares of beneficial interest outstanding) $15.50
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $16.45
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $60,807,273 and 3,948,199 shares of beneficial interest
outstanding) $15.40
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $20,909,749 and 1,357,998 shares of beneficial interest
outstanding) $15.40
See accompanying Notes to Financial Statements.
17 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1998
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Interest $ 3,899,951
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $16,081) 1,710,967
-----------
Total income 5,610,918
================================================================================
Expenses
Management fees--Note 4 1,306,652
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 412,380
Class B 390,691
Class C 115,593
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 174,006
- --------------------------------------------------------------------------------
Shareholder reports 97,421
- --------------------------------------------------------------------------------
Registration and filing fees 64,821
- --------------------------------------------------------------------------------
Accounting service fees--Note 4 55,000
- --------------------------------------------------------------------------------
Trustees' fees and expenses 23,784
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 13,272
- --------------------------------------------------------------------------------
Custodian fees and expenses 12,738
- --------------------------------------------------------------------------------
Other 21,144
-----------
Total expenses 2,687,502
================================================================================
Net Investment Income 2,923,416
================================================================================
Realized and Unrealized Gain
Net realized gain on investments 30,835,570
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 3,887,092
-----------
Net realized and unrealized gain 34,722,662
================================================================================
Net Increase in Net Assets Resulting from Operations $37,646,078
===========
See accompanying Notes to Financial Statements.
18 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
1998 1997
==================================================================================
<S> <C> <C>
Operations
Net investment income $ 2,923,416 $ 1,293,749
- ----------------------------------------------------------------------------------
Net realized gain 30,835,570 14,740,001
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 3,887,092 2,797,779
------------ ------------
Net increase in net assets resulting from operations 37,646,078 18,831,529
==================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (1,415,504) (922,387)
Class B (321,556) (181,875)
Class C (96,706) (47,948)
- ----------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (10,300,115) (4,518,417)
Class B (3,423,832) (1,310,410)
Class C (921,807) (319,471)
==================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 42,617,372 22,268,436
Class B 29,355,474 9,713,355
Class C 12,351,024 3,228,726
==================================================================================
Net Assets
Total increase 105,490,428 46,741,538
- ----------------------------------------------------------------------------------
Beginning of period 112,047,719 65,306,181
------------ ------------
End of period (including undistributed net investment
income of $1,351,480 and $261,830, respectively) $217,538,147 $112,047,719
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------
Year Ended October 31,
1998 1997 1996/(1)/ 1995 1994
================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 13.99 $ 12.48 $ 10.92 $ 10.09 $ 11.24
- ------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .26 .20 .23 .27/(2)/ .32/(2)/
Net realized and unrealized gain 3.24 2.65 2.05 1.27 .55
-------- -------- ------- ------- -------
Total income from investment operations 3.50 2.85 2.28 1.54 .87
================================================================================================
Dividends and distributions to shareholders:
Dividends from net investment income (.20) (.19) (.22) (.29) (.32)
Distributions from net realized gain (1.79) (1.15) (.50) (.42) (1.70)
-------- -------- ------- ------- -------
Total dividends and distributions
to shareholders (1.99) (1.34) (.72) (.71) (2.02)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.50 $ 13.99 $ 12.48 $ 10.92 $ 10.09
======== ======== ======= ======= =======
================================================================================================
Total Return, at Net Asset Value/(3)/ 27.91% 25.18% 21.84% 16.35% 8.64%
================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $135,821 $ 79,751 $49,322 $37,082 $30,576
- ------------------------------------------------------------------------------------------------
Average net assets (in thousands) $103,244 $ 61,618 $43,428 $33,397 $29,112
- ------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.07% 1.68% 2.03% 2.60%/(4)/ 3.16%/(4)/
Expenses 1.55% 1.58% 1.90%/(5)/ 1.99%/(4)/ 1.86%/(4)/
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate/(6)/ 165.3% 89.2% 124.2% 130.0% 113.0%
</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 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.
20 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
- ----------- -----------------------------------------------------
Year Ended October 31,
1994 1998 1997 1996/(1)/ 1995 1994
=============================================================
<S> <C> <C> <C> <C> <C>
$ 11.24 $ 13.92 $ 12.42 $ 10.88 $ 10.07 $ 11.23
- -------------------------------------------------------------
.32/(2)/ .19 .15 .17 .19/(2)/ .25/(2)/
.55 3.20 2.62 2.03 1.28 .56
- ------- ------- ------- ------- ------- -------
.87 3.39 2.77 2.20 1.47 .81
=============================================================
(.32) (.12) (.12) (.16) (.24) (.27)
(1.70) (1.79) (1.15) (.50) (.42) (1.70)
- ------- ------- ------- ------- ------- -------
(2.02) (1.91) (1.27) (.66) (.66) (1.97)
- -------------------------------------------------------------
$ 10.09 $ 15.40 $ 13.92 $ 12.42 $ 10.88 $ 10.07
======= ======= ======= ======= ======= =======
=============================================================
8.64% 27.08% 24.55% 21.07% 15.65% 7.96%
=============================================================
$30,576 $60,807 $25,609 $13,175 $7,623 $2,928
- -------------------------------------------------------------
$29,112 $39,165 $19,230 $10,097 $4,856 $1,586
- -------------------------------------------------------------
3.16%/(4)/ 1.53% 1.09% 1.40% 1.71%/(4)/ 2.53%/(4)/
1.86%/(4)/ 2.15% 2.17% 2.53% 2.59%/(4)/ 2.47%/(4)/
- -------------------------------------------------------------
113.0% 165.3% 89.2% 124.2% 130.0% 113.0%
</TABLE>
4. During the periods presented above, the former Advisor voluntarily waived a
portion of its fees. If such waivers had not been in effect, the ratios of net
investment income to average net assets and the ratios of expenses to average
net assets would have been 2.57% and 2.02%, respectively, for Class A, 1.73% and
2.57%, respectively, for Class B and 1.43% and 2.84%, respectively, for Class C,
for the year ended October 31, 1995, and 2.70% and 2.32%, respectively, for
Class A, 2.07% and 2.93%, respectively, for Class B and 1.91% and 3.10%,
respectively, for Class C, for the year ended October 31, 1994.
5. The expense ratio reflects the effect of gross 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, 1998, were $257,150,107 and $215,397,474, respectively.
See accompanying Notes to Financial Statements.
21 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------
Year Ended October 31,
1998 1997 1996/(1)/ 1995 1994
================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $13.92 $12.43 $10.89 $10.07 $11.23
- ------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .18 .15 .17 .15/(2)/ .24/(2)/
Net realized and unrealized gain 3.21 2.62 2.02 1.30 .56
------ ------ ------ ------ ------
Total income from investment operations 3.39 2.77 2.19 1.45 .80
================================================================================================
Dividends and distributions to shareholders:
Dividends from net investment income (.12) (.13) (.15) (.21) (.26)
Distributions from net realized gain (1.79) (1.15) (.50) (.42) (1.70)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.91) (1.28) (.65) (.63) (1.96)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $15.40 $13.92 $12.43 $10.89 $10.07
====== ====== ====== ====== ======
================================================================================================
Total Return, at Net Asset Value/(3)/ 27.12% 24.51% 20.97% 15.38% 7.91%
================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $20,910 $6,687 $2,809 $1,828 $455
- ------------------------------------------------------------------------------------------------
Average net assets (in thousands) $11,598 $4,724 $2,200 $ 968 $298
- ------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.60% 1.09% 1.40% 1.39%/(4)/ 2.39%/(4)/
Expenses 2.15% 2.17% 2.53% 2.88%/(4)/ 2.62%/(4)/
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate/(6)/ 165.3% 89.2% 124.2% 130.0% 113.0%
</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 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. During the periods presented above, the former Advisor voluntarily waived a
portion of its fees. If such waivers had not been in effect, the ratios of net
investment income to average net assets and the ratios of expenses to average
net assets would have been 2.57% and 2.02%, respectively, for Class A, 1.73% and
2.57%, respectively, for Class B and 1.43% and 2.84%, respectively, for Class C,
for the year ended October 31, 1995, and 2.70% and 2.32%, respectively, for
Class A, 2.07% and 2.93%, respectively, for Class B and 1.91% and 3.10%,
respectively, for Class C, for the year ended October 31, 1994.
5. The expense ratio reflects the effect of gross 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, 1998, were $257,150,107 and $215,397,474, respectively.
See accompanying Notes to Financial Statements.
22 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Quest Balanced Value Fund (the Fund) (formerly Oppenheimer Quest
Growth & Income Value 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 operated under the name
Oppenheimer Quest Growth & Income Value Fund through May 17, 1998. The Fund's
investment objective is to seek to achieve a combination of growth of capital
and investment income with growth of capital as the primary objective. The Fund
seeks its investment objective through investments in securities that are
believed to be undervalued in the marketplace and to offer the possibility of
increased value. Ordinarily, the Fund invests its assets in common stocks (with
an emphasis on dividend paying stocks), preferred stocks, securities convertible
into common stock, and debt securities. 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. Class B
and Class C shares may be subject to a contingent deferred sales charge. All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service plan,
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following is
a summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
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 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.
- --------------------------------------------------------------------------------
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.
23 Oppenheimer Quest Balanced 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.
- --------------------------------------------------------------------------------
Trustees' Fees and Expenses. 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, 1998, a provision of $3,072 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $3,072 as of
October 31, 1998.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
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.
24 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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, 1998 Year Ended October 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 4,356,057 $ 61,783,195 2,557,883 $ 33,165,870
Dividends and distributions
reinvested 862,256 11,210,143 445,487 5,194,062
Redeemed (2,153,035) (30,375,966) (1,256,481) (16,091,496)
---------- ------------ ---------- ------------
Net increase 3,065,278 $ 42,617,372 1,746,889 $ 22,268,436
========== ============ ========== ============
- ---------------------------------------------------------------------------------------
Class B:
Sold 2,418,672 $ 34,018,626 904,241 $ 11,537,097
Dividends and distributions
reinvested 276,040 3,565,995 122,631 1,412,244
Redeemed (585,932) (8,229,147) (248,340) (3,235,986)
---------- ------------ ---------- ------------
Net increase 2,108,780 $ 29,355,474 778,532 $ 9,713,355
========== ============ ========== ============
- ---------------------------------------------------------------------------------------
Class C:
Sold 990,115 $ 14,015,246 320,442 $ 4,096,151
Dividends and distributions
reinvested 74,668 964,286 30,289 350,561
Redeemed (187,201) (2,628,508) (96,289) (1,217,986)
---------- ------------ ---------- ------------
Net increase 877,582 $ 12,351,024 254,442 $ 3,228,726
========== ============ ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
As of October 31, 1998, net unrealized appreciation on investments of
$12,590,994 was composed of gross appreciation of $17,681,590, and gross
depreciation of $5,090,596.
25 Oppenheimer Quest Balanced 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 0.85% of average
annual net assets. The Manager acts as the accounting agent for the Fund at an
annual fee of $55,000, plus out-of-pocket costs and expenses reasonably
incurred. The Fund's management fee for the year ended October 31, 1998 was
0.85% of average annual net assets for Class A, Class B and Class C shares.
The Manager pays OpCap Advisors (the Sub-Advisor) a monthly fee
based on the fee schedule set forth in the Prospectus. For the year ended
October 31, 1998, the Manager paid $432,096 to the Sub-Advisor.
For the year ended October 31, 1998, commissions (sales charges paid
by investors) on sales of Class A shares totaled $573,438, of which $164,302 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class A, Class
B and Class C shares totaled $53,578, $912,720 and $103,768, respectively.
Amounts paid to an affiliated broker/dealer for Class B and Class C shares were
$67,628 and $2,821, respectively. During the year ended October 31, 1998, OFDI
received contingent deferred sales charges of $66,320 and $3,405, respectively,
upon redemption of Class B and Class C shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and other Oppenheimer
funds. The Fund pays OFS an annual maintenance fee of $20.00 for each Fund
shareholder account and reimburses OFS for its out-of-pocket expenses. During
the year ended October 31, 1998, the Fund paid OFS $157,889. Effective May 1,
1998, the Board of Trustees approved an increase in the annual maintenance fee
from $16.75 to $20.00 for each shareholder account.
The Fund has adopted a Distribution and Service Plan for Class A
shares to compensate OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of shareholder accounts that hold Class A
shares. Under the Plan, the Fund pays an annual asset-based sales charge to OFDI
of 0.15% per year on Class A shares. The Fund also pays a service fee to OFDI of
0.25% per year. Each fee is computed on the average annual net assets of Class A
shares of the Fund, determined as of the close of each regular business day.
OFDI uses all of the service fee and a portion of the asset-based sales charge
to compensate brokers, dealers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their customers
that hold Class A shares. OFDI retains the balance of the asset-based sales
charge to reimburse itself for its other expenditures under the Plan. During the
year ended October 31, 1998, OFDI paid $10,711 to an affiliated broker/dealer as
compensation for Class A personal service and maintenance expenses and retained
$101,914 as compensation for Class A sales commissions and service fee advances,
as well as financing costs.
26 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is computed
on the average annual net assets of Class B or Class C shares, determined as of
the close of each regular business day. During the year ended October 31, 1998,
OFDI paid $2,205 and $1,120, respectively, to an affiliated broker/dealer as
compensation for Class B and Class C personal service and maintenance expenses
and retained $330,096 and $79,184, 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. As of October 31, 1998, OFDI
had incurred excess distribution and servicing costs of $824,842 for Class B and
$172,161 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, 1998.
================================================================================
6. Other Matters
As of September 24, 1998, the Fund changed its custodian bank from State Street
Bank and Trust Company to Citibank, N.A.
================================================================================
7. Subsequent Event
Effective November 1, 1998, the Manager discontinued the accounting services fee
to the Fund. The Manager will continue to act as accounting agent for the Fund.
27 Oppenheimer Quest Balanced 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 Balanced Value
Fund (formerly Oppenheimer Quest Growth & Income Value Fund, and one of the
portfolios constituting Oppenheimer Quest for Value Funds, hereafter referred to
as the Fund) at October 31, 1998, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the 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, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
November 20, 1998
28 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1999 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1998. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $1.8404, $1.8159 and $1.8168 per share were paid to
Class A, Class B and Class C shareholders, respectively, on December 16, 1997,
of which, for each class of shares, $0.5911 was designated as a capital gain
distribution in the "28% Rate Group" and $0.3852 was designated as a capital
gain distribution in the "20% Rate Group" for federal income tax purposes.
Whether received in stock or cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets.
Dividends paid by the Fund during the fiscal year ended October 31,
1998, which are not designated as capital gain distributions should be
multiplied by 6.53% 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.
29 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Quest Balanced 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
Robert G. Galli, 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 Citibank, N.A.
Portfolio Securities
================================================================================
Independent Accountants PricewaterhouseCoopers LLP
================================================================================
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Quest Balanced Value Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer Quest Balanced 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.
30 Oppenheimer Quest Balanced Value Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
============================================================================================
Real Asset Funds
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Real Asset Fund Gold & Special Minerals Fund
============================================================================================
Global Stock Funds
- --------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
============================================================================================
Stock Funds
- --------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
============================================================================================
Stock & Bond Funds
- --------------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund1 Convertible Securities Fund/2/
Value Fund Equity Income Fund
============================================================================================
Taxable Bond Funds
- --------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
============================================================================================
Municipal Bond Funds
- --------------------------------------------------------------------------------------------
California Municipal Fund/3/ Pennsylvania Municipal Fund/3/ Rochester Division:
Florida Municipal Fund/3/ Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund/3/ Insured Municipal Fund Limited Term New York
New York Municipal Fund/3/ Intermediate Municipal Fund Municipal Fund
============================================================================================
Money Market Funds/4/
- --------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer Quest Balanced Value Fund
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Information and services
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As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at www.oppenheimerfunds.com--
we're here to help.
Internet
24-hr access to account
information. Online
transactions now available
www.oppenheimerfunds.com
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
Account Transactions
Mon-Fri 8:30am-8pm 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
[LOGO] OppenheimerFunds(R)
Distributor, Inc.
RA0257.001.1098 December 30, 1998
