UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5225
Oppenheimer Quest Balanced Value Fund
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: October 31
Date of reporting period: November 1, 2002 - October 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of
the Fund's performance during its fiscal year ended October 31, 2003, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index. The Fund's portfolio manager is employed by its
sub-advisor, OpCap Advisors.
Management's Discussion of Fund Performance. The Fund's strong performance was
due to a constructive outlook for corporate America throughout the period. The
Fund consistently emphasized undervalued or out-of-favor stocks that, in our
view, had been oversold and stood to appreciate greatly once investor sentiment
factored in the improving economic and corporate environment. The Fund also
maintained a relatively high allocation to equities (roughly 70%) and stressed
corporate bonds at a time when others were skeptical.
The Fund continued to benefit from strong individual stock selection during
the period; prime examples include: EMC Corp., GM Hughes and Sears Roebuck & Co.
Each became undervalued in the flight-to-quality that occurred early in the
period. For instance, EMC is a provider of information storage systems, software
and networks that had been part of the late 1990s technology "bubble." Plus, the
company was losing market share. For both reasons, the stock price dropped well
below what we believed was fair value for a company of EMC's size. However, once
EMC entered a new product cycle and revenues steadied, investor sentiment
improved and the stock price rebounded. GM Hughes is the company behind the
satellite TV service DirecTV. Its stock price bounced back after a planned
merger with competitor EchoStar fell through. Hughes's price rose again after
Newscorp agreed in April to acquire a controlling 34% interest in the company.
The market viewed this alliance as a plus, since Newscorp has considerable
marketing and strategic acumen.
In the case of Sears, the market was concerned that the company's credit
operations would fail. The Fund's portfolio managers disagreed and made a
moderately sized investment that paid off handsomely after Sears sold its credit
card operations and refocused on its core retail business.
The gains for these and other stocks were partially offset by losses for
mortgage lender Freddie Mac and Tenet Healthcare Corp. Freddie Mac's stock has
suffered from news of accounting restatements and the dismissal of its senior
management team. Yet, the operations are intact and the financial risk remains
small, so after some consideration, the Fund actually increased its investment
in the company. In contrast, Tenet Healthcare showed signs of long-term problems
and Fund's investment was sold.
6 | OPPENHEIMER QUEST BALANCED VALUE FUND
On the bond portion of the portfolio, timing was a benefit to performance.
When the period began, the Fund had already sold a sizable portion of its
Treasury securities and bought higher-yielding, but still investment-grade
corporate bonds at large discounts. These corporate securities hindered
performance during the mid-winter flight to quality, but became a boon in the
spring as the market sorted out its concerns. The Fund's portfolio managers then
sold many of them at premium prices, redirecting the money into shorter-term and
somewhat higher-quality securities at that time. The well-timed shift lowered
the Fund's duration and raised the overall quality slightly. It also protected
the Fund to some extent when bond yields rose in the latter half of the period.
The Fund's holdings, strategies and management 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, 2003. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-year period. In the case of Class N
shares, performance is measured from inception of the Class on March 1, 2001. In
the case of Class Y shares performance is measured from the inception of the
Class on May 1, 2000. The Fund's performance reflects the deduction of the
maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C and Class N shares, and reinvestments
of all dividends and capital gains distributions.
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.
7 | OPPENHEIMER QUEST BALANCED VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer Quest Balanced Value Fund (Class A) S&P 500 Index
10/31/1993 $ 9,425 $10,000
01/31/1994 10,164 10,365
04/30/1994 9,716 9,769
07/31/1994 9,986 10,003
10/31/1994 10,239 10,386
01/31/1995 9,970 10,419
04/30/1995 11,173 11,472
07/31/1995 12,462 12,611
10/31/1995 11,914 13,128
01/31/1996 12,974 14,443
04/30/1996 13,543 14,934
07/31/1996 13,241 14,698
10/31/1996 14,516 16,290
01/31/1997 15,701 18,245
04/30/1997 15,354 18,686
07/31/1997 17,860 22,358
10/31/1997 18,172 21,519
01/31/1998 19,707 23,153
04/30/1998 21,966 26,360
07/31/1998 21,334 26,674
10/31/1998 23,243 26,256
01/31/1999 26,601 30,681
04/30/1999 27,935 32,114
07/31/1999 28,028 32,063
10/31/1999 28,236 32,993
01/31/2000 27,645 33,853
04/30/2000 28,006 35,364
07/31/2000 27,290 34,937
10/31/2000 29,868 34,999
01/31/2001 31,908 33,549
04/30/2001 32,584 30,779
07/31/2001 32,374 29,934
10/31/2001 30,359 26,288
01/31/2002 30,528 28,135
04/30/2002 28,940 26,896
07/31/2002 24,013 22,865
10/31/2002 23,716 22,319
01/31/2003 25,006 21,663
04/30/2003 26,898 23,317
07/31/2003 29,150 25,297
10/31/2003 31,275 26,959
Average Annual Total Returns of Class A Shares of the Fund at 10/31/03*
1-Year 24.29% 5-Year 4.87% 10-Year 12.08%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer Quest Balanced Value Fund (Class B) S&P 500 Index
10/31/1993 $10,000 $10,000
01/31/1994 10,754 10,365
04/30/1994 10,280 9,769
07/31/1994 10,541 10,003
10/31/1994 10,796 10,386
01/31/1995 10,498 10,419
04/30/1995 11,745 11,472
07/31/1995 13,079 12,611
10/31/1995 12,486 13,128
01/31/1996 13,582 14,443
04/30/1996 14,149 14,934
07/31/1996 13,814 14,698
10/31/1996 15,117 16,290
01/31/1997 16,330 18,245
04/30/1997 15,949 18,686
07/31/1997 18,529 22,358
10/31/1997 18,828 21,519
01/31/1998 20,391 23,153
04/30/1998 22,682 26,360
07/31/1998 21,994 26,674
10/31/1998 23,927 26,256
01/31/1999 27,350 30,681
04/30/1999 28,685 32,114
07/31/1999 28,733 32,063
10/31/1999 28,923 32,993
01/31/2000 28,318 33,853
04/30/2000 28,688 35,364
07/31/2000 27,955 34,937
10/31/2000 30,595 34,999
01/31/2001 32,684 33,549
04/30/2001 33,377 30,779
07/31/2001 33,162 29,934
10/31/2001 31,098 26,288
01/31/2002 31,271 28,135
04/30/2002 29,645 26,896
07/31/2002 24,598 22,865
10/31/2002 24,293 22,319
01/31/2003 25,614 21,663
04/30/2003 27,553 23,317
07/31/2003 29,859 25,297
10/31/2003 32,036 26,959
Average Annual Total Returns of Class B Shares of the Fund at 10/31/03*
1-Year 25.89% 5-Year 5.12% 10-Year 12.35%
*See Notes on page 11 for further details.
8 | OPPENHEIMER QUEST BALANCED VALUE FUND
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer Quest Balanced Value Fund (Class C) S&P 500 Index
10/31/1993 $10,000 $10,000
01/31/1994 10,769 10,365
04/30/1994 10,288 9,769
07/31/1994 10,548 10,003
10/31/1994 10,791 10,386
01/31/1995 10,486 10,419
04/30/1995 11,726 11,472
07/31/1995 13,047 12,611
10/31/1995 12,450 13,128
01/31/1996 13,532 14,443
04/30/1996 14,097 14,934
07/31/1996 13,763 14,698
10/31/1996 15,061 16,290
01/31/1997 16,261 18,245
04/30/1997 15,882 18,686
07/31/1997 18,451 22,358
10/31/1997 18,752 21,519
01/31/1998 20,312 23,153
04/30/1998 22,594 26,360
07/31/1998 21,912 26,674
10/31/1998 23,837 26,256
01/31/1999 27,236 30,681
04/30/1999 28,569 32,114
07/31/1999 28,633 32,063
10/31/1999 28,795 32,993
01/31/2000 28,140 33,853
04/30/2000 28,479 35,364
07/31/2000 27,705 34,937
10/31/2000 30,264 34,999
01/31/2001 32,292 33,549
04/30/2001 32,938 30,779
07/31/2001 32,666 29,934
10/31/2001 30,583 26,288
01/31/2002 30,721 28,135
04/30/2002 29,089 26,896
07/31/2002 24,098 22,865
10/31/2002 23,734 22,319
01/31/2003 24,999 21,663
04/30/2003 26,864 23,317
07/31/2003 29,036 25,297
10/31/2003 31,089 26,959
Average Annual Total Returns of Class C Shares of the Fund at 10/31/03*
1-Year 29.99% 5-Year 5.46% 10-Year 12.01%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer Quest Balanced Value Fund (Class N) S&P 500 Index
03/01/2001 $10,000 $10,000
04/30/2001 10,345 10,094
07/31/2001 10,271 9,817
10/31/2001 9,630 8,621
01/31/2002 9,690 9,227
04/30/2002 9,183 8,821
07/31/2002 7,616 7,499
10/31/2002 7,512 7,320
01/31/2003 7,920 7,104
04/30/2003 8,514 7,647
07/31/2003 9,219 8,296
10/31/2003 9,879 8,841
Average Annual Total Returns of Class N Shares of the Fund at 10/31/03*
1-Year 30.50% Since Inception -0.46%
The performance information for the S&P 500 Index in the graphs begins on
10/31/93 for Class A, Class B and Class C, 2/28/01 for Class N and 4/30/00 for
Class Y.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
9 | OPPENHEIMER QUEST BALANCED VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer Quest Balanced Value Fund (Class Y) S&P 500 Index
05/01/2000 $10,000 $10,000
07/31/2000 9,795 9,879
10/31/2000 10,732 9,897
01/31/2001 11,482 9,487
04/30/2001 11,740 8,703
07/31/2001 11,677 8,464
10/31/2001 10,962 7,434
01/31/2002 11,046 7,956
04/30/2002 10,484 7,605
07/31/2002 8,712 6,466
10/31/2002 8,607 6,311
01/31/2003 9,089 6,126
04/30/2003 9,787 6,594
07/31/2003 10,611 7,153
10/31/2003 11,396 7,623
Average Annual Total Returns of Class Y Shares of the Fund at 10/31/03*
1-Year 32.40% Since Inception 3.80%
*See Notes on page 11 for further details.
The performance information for the S&P 500 Index in the graphs begins on
10/31/93 for Class A, Class B and Class C, 2/28/01 for Class N and 4/30/00 for
Class Y.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
10 | OPPENHEIMER QUEST BALANCED VALUE FUND
NOTES
- --------------------------------------------------------------------------------
In reviewing performance and rankings, please remember that past performance
cannot 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
fluctuations, and current performance may be more or less than the results
shown. For updates on the Fund's performance, visit our website at
www.oppenheimerfunds.com.
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. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.
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.
Class A shares of the Fund were first publicly offered on 11/1/91. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. 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 A shares
are subject to a maximum annual 0.15% asset-based sales charge. There is a
voluntary waiver of a portion of the Class A asset-based sales charge as
described in the Prospectus.
Class B shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charges of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B does not include any contingent deferred sales charge on redemptions and 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. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the one-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
Class N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the one-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
Class Y shares of the Fund were first publicly offered on 5/1/00. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
11 | OPPENHEIMER QUEST BALANCED VALUE FUND
STATEMENT OF INVESTMENTS October 31, 2003
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------
Common Stocks--69.4%
- ----------------------------------------------------------------------------------
Consumer Discretionary--17.4%
- ----------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--1.8%
Royal Caribbean Cruises Ltd. 3,500,000 $ 103,985,000
- ----------------------------------------------------------------------------------
Media--9.6%
Clear Channel Communications, Inc. 2,000,000 81,640,000
- ----------------------------------------------------------------------------------
General Motors Corp., Cl. H 1 19,000,000 312,170,000
- ----------------------------------------------------------------------------------
Omnicom Group, Inc. 1,000,000 79,800,000
- ----------------------------------------------------------------------------------
Walt Disney Co. (The) 4,000,000 90,560,000
--------------
564,170,000
- ----------------------------------------------------------------------------------
Multiline Retail--4.2%
Dollar General Corp. 6,500,000 146,055,000
- ----------------------------------------------------------------------------------
Sears Roebuck & Co. 2,000,000 105,260,000
--------------
251,315,000
- ----------------------------------------------------------------------------------
Specialty Retail--1.8%
Office Depot, Inc. 1 7,245,800 108,179,794
- ----------------------------------------------------------------------------------
Consumer Staples--3.6%
- ----------------------------------------------------------------------------------
Household Products--2.2%
Procter & Gamble Corp. (The) 1,300,000 127,777,000
- ----------------------------------------------------------------------------------
Tobacco--1.4%
Altria Group, Inc. 1,800,000 83,700,000
- ----------------------------------------------------------------------------------
Energy--0.8%
- ----------------------------------------------------------------------------------
Energy Equipment & Services--0.8%
Nabors Industries Ltd. 1 1,202,100 45,439,380
- ----------------------------------------------------------------------------------
Financials--19.7%
- ----------------------------------------------------------------------------------
Capital Markets--2.4%
Bank of New York Co., Inc. (The) 4,500,000 140,355,000
- ----------------------------------------------------------------------------------
Commercial Banks--5.3%
Commerce Bancorp, Inc. 2,000,000 96,680,000
- ----------------------------------------------------------------------------------
Washington Mutual, Inc. 5,000,000 218,750,000
--------------
315,430,000
- ----------------------------------------------------------------------------------
Insurance--4.3%
American International Group, Inc. 2,000,000 121,660,000
- ----------------------------------------------------------------------------------
UnumProvident Corp. 8,000,000 130,960,000
--------------
252,620,000
- ----------------------------------------------------------------------------------
Thrifts & Mortgage Finance--7.7%
Fannie Mae 1,500,000 107,535,000
- ----------------------------------------------------------------------------------
Freddie Mac 6,200,000 348,006,000
--------------
455,541,000
12 | OPPENHEIMER QUEST BALANCED VALUE FUND
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------
Health Care--9.3%
- ----------------------------------------------------------------------------------
Health Care Providers & Services--6.9%
Aetna, Inc. 2,000,000 $ 114,820,000
- ----------------------------------------------------------------------------------
Anthem, Inc. 1 1,200,000 82,116,000
- ----------------------------------------------------------------------------------
McKesson Corp. 3,533,600 106,962,072
- ----------------------------------------------------------------------------------
Quest Diagnostics, Inc. 1 1,500,000 101,475,000
--------------
405,373,072
- ----------------------------------------------------------------------------------
Pharmaceuticals--2.4%
Pfizer, Inc. 2,500,000 79,000,000
- ----------------------------------------------------------------------------------
Sanofi-Synthelabo SA, ADR 2,000,000 61,800,000
--------------
140,800,000
- ----------------------------------------------------------------------------------
Industrials--1.9%
- ----------------------------------------------------------------------------------
Commercial Services & Supplies--0.2%
ChoicePoint, Inc. 1 148,173 5,191,982
- ----------------------------------------------------------------------------------
Waste Management, Inc. 195,500 5,067,360
--------------
10,259,342
- ----------------------------------------------------------------------------------
Industrial Conglomerates--1.7%
Tyco International Ltd. 5,000,000 104,400,000
- ----------------------------------------------------------------------------------
Information Technology--7.8%
- ----------------------------------------------------------------------------------
Communications Equipment--2.8%
Cisco Systems, Inc. 1 3,000,000 62,940,000
- ----------------------------------------------------------------------------------
JDS Uniphase Corp. 1 10,000,000 35,500,000
- ----------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares 4,000,000 67,960,000
--------------
166,400,000
- ----------------------------------------------------------------------------------
Computers & Peripherals--1.9%
Dell, Inc. 1 3,000,000 108,360,000
- ----------------------------------------------------------------------------------
Electronic Equipment & Instruments--1.3%
Flextronics International Ltd. 1 5,500,000 77,000,000
- ----------------------------------------------------------------------------------
IT Services--1.8%
Electronic Data Systems Corp. 5,000,000 107,250,000
- ----------------------------------------------------------------------------------
Materials--8.9%
- ----------------------------------------------------------------------------------
Metals & Mining--6.6%
Alcan, Inc. 3,000,000 119,790,000
- ----------------------------------------------------------------------------------
Inco Ltd. 1 4,000,000 132,800,000
- ----------------------------------------------------------------------------------
Nucor Corp. 2,500,000 137,075,000
--------------
389,665,000
- ----------------------------------------------------------------------------------
Paper & Forest Products--2.3%
International Paper Co. 3,500,000 137,725,000
--------------
Total Common Stocks (Cost $3,534,191,850) 4,095,744,588
13 | OPPENHEIMER QUEST BALANCED VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
Market Value
Units See Note 1
- ------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
- ------------------------------------------------------------------------------------
Conseco, Inc. Wts., Exp. 9/10/08 1 (Cost $1,463,255) 292,651 $ 2,238,780
Principal
Amount
- ------------------------------------------------------------------------------------
U.S. Government Obligations--12.7%
- ------------------------------------------------------------------------------------
U.S. Treasury Inflationary Index Bonds:
3.375%, 1/15/12-4/15/32 2 $148,875,000 182,316,756
3.875%, 4/15/29 2 150,000,000 213,370,184
- ------------------------------------------------------------------------------------
U.S. Treasury Nts., 3%, 11/30/03 354,245,000 354,867,763
------------
Total U.S. Government Obligations (Cost $669,873,917) 750,554,703
- ------------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes--13.7%
- ------------------------------------------------------------------------------------
American Express Co., 5.50% Nts., 9/12/06 14,600,000 15,713,484
- ------------------------------------------------------------------------------------
AT&T Corp.:
7% Sr. Nts., 11/15/06 15,000,000 16,624,830
7.80% Sr. Nts., 11/15/11 3 3,000,000 3,405,978
- ------------------------------------------------------------------------------------
AT&T Wireless Services, Inc., 7.35% Sr. Unsec.
Nts., 3/1/06 15,000,000 16,468,545
- ------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The), 6.25% Sr. Unsec.
Nts., 7/15/05 24,860,000 26,668,664
- ------------------------------------------------------------------------------------
Boeing Capital Corp., 6.50% Nts., 2/15/12 10,000,000 10,967,110
- ------------------------------------------------------------------------------------
Cendant Corp., 6.875% Sr. Unsec. Nts., 8/15/06 15,100,000 16,605,863
- ------------------------------------------------------------------------------------
CIT Group, Inc.:
7.125% Sr. Nts., 10/15/04 12,175,000 12,796,363
7.75% Sr. Unsec. Unsub. Nts., 4/2/12 15,000,000 17,533,710
- ------------------------------------------------------------------------------------
Citigroup, Inc., 6% Nts., 2/21/12 15,000,000 16,344,675
- ------------------------------------------------------------------------------------
Conseco Financing Trust II, Escrow Shares,
11/15/26 1,4,5 51,155,000 --
- ------------------------------------------------------------------------------------
Conseco Financing Trust III, Escrow Shares, 4/1/27 1,4,5 41,990,000 --
- ------------------------------------------------------------------------------------
Conseco, Inc., Escrow Shares, 6/15/07 1,4,5 8,000,000 --
- ------------------------------------------------------------------------------------
DaimlerChrysler NA Holding Corp., 3.40% Nts.,
Series D, 12/15/04 19,480,000 19,605,003
- ------------------------------------------------------------------------------------
Ford Motor Co., 7.45% Bonds, 7/16/31 7,610,000 6,854,730
- ------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.125% Unsec. Nts., 1/9/06 20,060,000 20,757,245
- ------------------------------------------------------------------------------------
General Dynamics Corp., 2.125% Nts., 5/15/06 6,815,000 6,754,762
- ------------------------------------------------------------------------------------
General Electric Capital Corp.:
5.35% Nts., Series A, 3/30/06 24,340,000 25,983,364
6% Nts., 6/15/12 19,700,000 21,235,221
- ------------------------------------------------------------------------------------
General Mills, Inc., 2.625% Unsec. Unsub. Nts., 10/24/06 38,940,000 38,664,655
- ------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.75% Nts., 1/15/06 33,775,000 36,029,414
- ------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec.
Nts., 9/1/12 25,000,000 26,178,425
- ------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co., 7.857% Nts., 8/15/11 15,000,000 12,900,000
- ------------------------------------------------------------------------------------
Household Finance Corp., 7% Nts., 5/15/12 20,000,000 22,750,600
- ------------------------------------------------------------------------------------
International Lease Finance Corp., 5.54% Nts.,
Series M, 3/21/05 9,725,000 10,153,873
- ------------------------------------------------------------------------------------
J.P. Morgan Chase & Co., 5.25% Nts., 5/30/07 24,340,000 26,014,203
- ------------------------------------------------------------------------------------
John Deere Capital Corp., 3.125% Sr. Nts.,
Series D, 12/15/05 19,480,000 19,908,404
- ------------------------------------------------------------------------------------
Kraft Foods, Inc., 4.625% Nts., 11/1/06 17,515,000 18,268,443
- ------------------------------------------------------------------------------------
News America Holdings, Inc., 9.25% Sr. Debs., 2/1/13 8,500,000 10,964,065
14 | OPPENHEIMER QUEST BALANCED VALUE FUND
Principal Market Value
Amount See Note 1
- ------------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes Continued
- ------------------------------------------------------------------------------------
Raytheon Co., 8.20% Sr. Unsec. Nts., 3/1/06 $24,330,000 $ 27,214,930
- ------------------------------------------------------------------------------------
Safeway, Inc., 7.25% Nts., 9/15/04 15,842,000 16,570,938
- ------------------------------------------------------------------------------------
SBC Communications, Inc., 5.75% Sr. Nts., 5/2/06 10,480,000 11,285,147
- ------------------------------------------------------------------------------------
Sprint Capital Corp., 8.375% Nts., 3/15/12 42,100,000 48,144,255
- ------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
5% Sr. Nts., 7/1/07 32,275,000 30,177,125
6.50% Sr. Nts., 6/1/12 36,070,000 33,635,275
6.875% Sr. Nts., 11/15/31 18,090,000 16,009,650
- ------------------------------------------------------------------------------------
Time Warner, Inc., 5.625% Sr. Unsec. Nts., 5/1/05 29,270,000 30,731,334
- ------------------------------------------------------------------------------------
Verizon Global Funding Corp.:
6.75% Sr. Unsec. Unsub. Nts., 12/1/05 24,350,000 26,525,794
7.375% Sr. Nts., 9/1/12 15,000,000 17,236,500
- ------------------------------------------------------------------------------------
Walt Disney Co. (The), 7.30% Nts., 2/8/05 24,340,000 25,958,707
- ------------------------------------------------------------------------------------
Waste Management, Inc., 6.50% Sr. Unsub. Nts., 11/15/08 8,740,000 9,677,767
- ------------------------------------------------------------------------------------
Weyerhaeuser Co., 5.50% Unsec. Unsub. Nts., 3/15/05 37,500,000 39,084,787
--------------
Total Non-Convertible Corporate Bonds and Notes (Cost $774,597,037) 808,403,838
- ------------------------------------------------------------------------------------
Short-Term Notes--2.6%
- ------------------------------------------------------------------------------------
American Express Credit Corp.:
1.02%, 11/12/03 47,000,000 46,985,352
1.03%, 11/5/03 20,000,000 19,997,711
- ------------------------------------------------------------------------------------
Canadian Imperial Holdings, Inc., 1.04%, 11/6/03 18,195,000 18,192,372
- ------------------------------------------------------------------------------------
Federal Home Loan Bank, 0.96%, 11/20/03 30,000,000 29,984,800
- ------------------------------------------------------------------------------------
Student Loan Marketing Assn., 0.94%, 11/3/03 35,650,000 35,648,138
--------------
Total Short-Term Notes (Cost $150,808,373) 150,808,373
- ------------------------------------------------------------------------------------
Total Investments, at Value (Cost $5,130,934,432) 98.4% 5,807,750,282
- ------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.6 93,885,290
----------------------------
Net Assets 100.0% $5,901,635,572
============================
<FN>
Footnotes to Statement of Investments
1. Non-income producing security.
2. Denotes an inflation-indexed security: coupon and principal are indexed to
the consumer price index.
3. Represents the current interest rate for a variable or increasing rate
security.
4. Received as the result of issuer reorganization. Currently has minimal market
value.
5. Identifies issues considered to be illiquid. See Note 5 of Notes to Financial
Statements.
</FN>
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER QUEST BALANCED VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2003
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Assets
- -----------------------------------------------------------------------------------
Investments, at value (cost $5,130,934,432)--see
accompanying statement $5,807,750,282
- -----------------------------------------------------------------------------------
Cash 1,307,949
- -----------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 90,238,657
Interest and dividends 23,358,400
Shares of beneficial interest sold 14,261,854
Other 104,336
---------------
Total assets 5,937,021,478
- -----------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 24,621,062
Shares of beneficial interest redeemed 6,903,966
Transfer and shareholder servicing agent fees 1,225,764
Distribution and service plan fees 1,188,293
Shareholder reports 728,037
Trustees' compensation 407,969
Other 310,815
---------------
Total liabilities 35,385,906
- -----------------------------------------------------------------------------------
Net Assets $5,901,635,572
===============
- -----------------------------------------------------------------------------------
Composition of Net Assets
- -----------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 3,774,324
- -----------------------------------------------------------------------------------
Additional paid-in capital 6,277,851,105
- -----------------------------------------------------------------------------------
Undistributed net investment income 1,979,679
- -----------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,058,785,386)
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments 676,815,850
---------------
Net Assets $5,901,635,572
===============
16 | OPPENHEIMER QUEST BALANCED VALUE FUND
- --------------------------------------------------------------------------------
Net Asset Value Per Share
- --------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $2,287,707,247 and 145,847,037 shares of beneficial interest
outstanding) $15.69
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $16.65
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $2,306,365,999 and 147,778,425 shares of beneficial interest
outstanding) $15.61
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $982,287,767 and 62,956,546 shares of beneficial interest
outstanding) $15.60
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $142,865,647 and 9,169,870 shares of beneficial interest
outstanding) $15.58
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $182,408,912 and 11,680,560 shares of beneficial
interest outstanding) $15.62
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER QUEST BALANCED VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2003
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Investment Income
- -----------------------------------------------------------------------------------
Interest $ 70,475,132
- -----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $538,961) 56,809,656
---------------
Total investment income 127,284,788
- -----------------------------------------------------------------------------------
Expenses
- -----------------------------------------------------------------------------------
Management fees 40,756,593
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 4,999,025
Class B 19,837,175
Class C 8,346,004
Class N 561,294
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 5,189,642
Class B 6,010,482
Class C 1,948,344
Class N 434,495
Class Y 285,521
- -----------------------------------------------------------------------------------
Shareholder reports 1,155,446
- -----------------------------------------------------------------------------------
Trustees' compensation 159,875
- -----------------------------------------------------------------------------------
Custodian fees and expenses 61,257
- -----------------------------------------------------------------------------------
Other 254,826
---------------
Total expenses 89,999,979
Less reduction to custodian expenses (3,503)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class A (22,011)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class B (31,324)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class C (6,073)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class N (44,353)
---------------
Net expenses 89,892,715
- -----------------------------------------------------------------------------------
Net Investment Income 37,392,073
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain
- -----------------------------------------------------------------------------------
Net realized gain on investments 76,105,001
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 1,233,709,607
- -----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $1,347,206,681
===============
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER QUEST BALANCED VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended October 31, 2003 2002
- --------------------------------------------------------------------------------------
Operations
- --------------------------------------------------------------------------------------
Net investment income $ 37,392,073 $ 43,478,870
- --------------------------------------------------------------------------------------
Net realized gain (loss) 76,105,001 (1,100,608,969)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,233,709,607 (320,675,076)
--------------------------------
Net increase (decrease) in net assets resulting
from operations 1,347,206,681 (1,377,805,175)
- --------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
- --------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (18,094,923) (35,137,431)
Class B (8,058,436) (19,021,719)
Class C (3,846,362) (8,785,498)
Class N (766,994) (1,253,866)
Class Y (1,843,901) (3,511,298)
- --------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (51,374,614)
Class B -- (54,075,958)
Class C -- (22,607,352)
Class N -- (1,111,533)
Class Y -- (3,693,332)
- --------------------------------------------------------------------------------------
Beneficial Interest Transactions
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 116,535,156 504,567,658
Class B 24,803,540 554,626,572
Class C (900,239) 292,955,277
Class N 27,405,091 90,711,420
Class Y 25,736,832 23,910,940
- --------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------
Total increase (decrease) 1,508,176,445 (111,605,909)
- --------------------------------------------------------------------------------------
Beginning of period 4,393,459,127 4,505,065,036
--------------------------------
End of period [including undistributed
(overdistributed) net investment income of
$1,979,679 and $(2,801,778), respectively] $5,901,635,572 $4,393,459,127
================================
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER QUEST BALANCED VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Class A Year Ended October 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.02 $16.09 $16.66 $16.41 $15.50
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .17 .46 .36 .21
Net realized and unrealized gain (loss) 3.64 (3.53) (.20) .55 2.88
---------------------------------------------------------------------
Total from investment operations 3.80 (3.36) .26 .91 3.09
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) (.27) (.53) (.28) (.26)
Distributions from net realized gain -- (.44) (.30) (.38) (1.92)
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.13) (.71) (.83) (.66) (2.18)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.69 $12.02 $16.09 $16.66 $16.41
=====================================================================
- -------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 31.87% (21.88)% 1.64% 5.78% 21.48%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,287,707 $1,667,143 $1,763,404 $1,027,560 $899,084
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,902,499 $1,960,568 $1,353,860 $1,020,483 $454,409
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.60% 1.20% 2.61% 2.24% 1.81%
Total expenses 1.38% 3,4 1.51% 3,4 1.47% 3 1.45% 3 1.51% 3
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 108% 88% 105% 58%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER QUEST BALANCED VALUE FUND
Class B Year Ended October 31, 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
Per Share Operating Data
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.98 $16.00 $16.52 $16.28 $15.40
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06 .07 .35 .25 .14
Net realized and unrealized gain (loss) 3.63 (3.52) (.19) .55 2.84
-------------------------------------------------------------------
Total from investment operations 3.69 (3.45) .16 .80 2.98
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06) (.13) (.38) (.18) (.18)
Distributions from net realized gain -- (.44) (.30) (.38) (1.92)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.06) (.57) (.68) (.56) (2.10)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.61 $11.98 $16.00 $16.52 $16.28
===================================================================
- -----------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 30.89% (22.38)% 1.03% 5.10% 20.84%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,306,366 $1,759,167 $1,836,130 $925,476 $801,485
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,985,215 $2,068,300 $1,307,367 $873,470 $355,797
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.84% 0.56% 2.00% 1.64% 1.21%
Total expenses 2.15% 3,4 2.15% 3,4 2.07% 3 2.06% 3 2.10% 3
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 108% 88% 105% 58%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER QUEST BALANCED VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Class C Year Ended October 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Per Share Operating Data
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.97 $16.00 $16.51 $16.27 $15.40
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .07 .34 .25 .15
Net realized and unrealized gain (loss) 3.62 (3.52) (.18) .55 2.83
-----------------------------------------------------------------
Total from investment operations 3.69 (3.45) .16 .80 2.98
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06) (.14) (.37) (.18) (.19)
Distributions from net realized gain -- (.44) (.30) (.38) (1.92)
-----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.06) (.58) (.67) (.56) (2.11)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.60 $11.97 $16.00 $16.51 $16.27
=================================================================
- ---------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 30.99% (22.40)% 1.05% 5.10% 20.80%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $982,288 $763,338 $751,229 $341,824 $313,506
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $835,198 $903,426 $502,037 $336,336 $139,356
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.92% 0.58% 2.00% 1.64% 1.21%
Total expenses 2.08% 3,4 2.13% 3,4 2.07% 3 2.06% 3 2.10% 3
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 108% 88% 105% 58%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER QUEST BALANCED VALUE FUND
Class N Year Ended October 31, 2003 2002 2001 1
- -----------------------------------------------------------------------------------------
Per Share Operating Data
- -----------------------------------------------------------------------------------------
Net asset value, beginning of period $11.94 $16.05 $ 16.84
- -----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 .20 .22
Net realized and unrealized gain (loss) 3.63 (3.56) (.83)
-------------------------------
Total from investment operations 3.74 (3.36) (.61)
- -----------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.10) (.31) (.18)
Distributions from net realized gain -- (.44) --
-------------------------------
Total dividends and/or distributions to shareholders (.10) (.75) (.18)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $15.58 $11.94 $16.05
===============================
- -----------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 31.50% (21.99)% (3.71)%
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $142,866 $85,744 $19,649
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $112,416 $70,477 $ 4,977
- -----------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.23% 1.07% 2.75%
Total expenses 1.74% 1.67% 1.58%
Expenses after expense reimbursement or fee waiver
and reduction to custodian expenses 1.70% N/A 4,5 N/A 4
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 92% 108% 88%
<FN>
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Assumes an 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
23 | OPPENHEIMER QUEST BALANCED VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- ----------------------------------------------------------------------
Class Y Year Ended October 31, 2003 2002 2001 2000 1
- ----------------------------------------------------------------------------------------------------------
Per Share Operating Data
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.96 $16.05 $16.67 $15.65
- ----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .20 .25 .74 .15
Net realized and unrealized gain (loss) 3.64 (3.52) (.40) .99
------------------------------------------------
Total from investment operations 3.84 (3.27) .34 1.14
- ----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.18) (.38) (.66) (.12)
Distributions from net realized gain -- (.44) (.30) --
------------------------------------------------
Total dividends and/or distributions to shareholders (.18) (.82) (.96) (.12)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.62 $11.96 $16.05 $16.67
================================================
- ----------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 32.40% (21.48)% 2.14% 7.32%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $182,409 $118,068 $134,654 $144
- ----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $145,793 $137,322 $ 77,394 $ 32
- ----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.89% 1.75% 2.97% 2.46%
Total expenses 1.05% 4 0.96% 4,5 1.00% 4 0.98% 4
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 92% 108% 88% 105%
<FN>
1. For the period from May 1, 2000 (inception of offering) to October 31, 2000.
2. Assumes an 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
24 | OPPENHEIMER QUEST BALANCED VALUE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Quest Balanced Value Fund (the Fund), a series of Oppenheimer Quest
For Value Funds, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is to seek a combination of growth of capital and investment income. 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, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class N shares are sold only through retirement plans.
Retirement plans that offer Class N shares may impose charges on those accounts.
Class Y shares are sold to certain institutional investors without either a
front-end sales charge or a CDSC. All classes of shares have identical rights
and voting privileges. Earnings, net assets and net asset value per share may
differ by minor amounts due to each class having its own expenses directly
attributable to that class. Classes A, B, C and N have separate distribution
and/or service plans. No such plan has been adopted for Class Y shares. Class B
shares will automatically convert to Class A shares six years after the date of
purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. Securities traded on NASDAQ are valued based on the closing price
provided by NASDAQ prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the last sale price on the prior
trading day, if it is within the spread of the closing bid and asked prices, and
if not, at the closing bid price. Securities (including restricted securities)
for which quotations are not readily available are valued primarily using
dealer-supplied valuations, a portfolio pricing service authorized by the Board
of Trustees, or at their fair value. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Foreign Currency Translation. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
25 | OPPENHEIMER QUEST BALANCED VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
Net Unrealized
Appreciation
Based on Cost of
Securities and
Undistributed Undistributed Accumulated Other Investments
Net Investment Long-Term Loss for Federal Income
Income Gain Carryforward 1,2 Tax Purposes
--------------------------------------------------------------------
$2,376,279 $-- $1,058,785,382 $676,815,850
1. As of October 31, 2003, the Fund had $1,058,785,382 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of October 31, 2003,
details of the capital loss carryforward were as follows:
Expiring
----------------------
2010 $1,058,785,382
2. During the fiscal year October 31, 2003, the Fund utilized $28,726,716 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year October 31, 2002, the Fund did not utilize any capital
loss carryforwards.
The tax character of distributions paid during the years ended October 31, 2003
and October 31, 2002 was as follows:
Year Ended Year Ended
October 31, 2003 October 31, 2002
------------------------------------------------------
Distributions paid from:
Ordinary income $32,610,616 $ 91,935,261
Long-term capital gain -- 108,637,340
-----------------------------
Total $32,610,616 $200,572,601
=============================
26 | OPPENHEIMER QUEST BALANCED VALUE FUND
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 2003 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities
and other investments $5,130,934,432
===============
Gross unrealized appreciation $ 728,635,255
Gross unrealized depreciation (51,819,405)
---------------
Net unrealized appreciation $ 676,815,850
===============
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded 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, 2003, the Fund's projected benefit obligations were increased by $49,320 and
payments of $8,643 were made to retired trustees, resulting in an accumulated
liability of $396,593 as of October 31, 2003.
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 the annual compensation they are entitled to receive from the Fund.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of the Fund or are invested in other Oppenheimer funds
selected by the Trustee. 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 investment income per share. Amounts will be deferred
until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
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. Income distributions, if any, are declared
and paid quarterly. Capital gain distributions, if any, are declared and paid
annually.
27 | OPPENHEIMER QUEST BALANCED VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Security Transactions. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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:
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
Class A
Sold 44,599,273 $625,350,191 76,270,446 $1,136,914,035
Dividends and/or
distributions reinvested 1,211,270 15,682,192 4,844,872 74,947,527
Redeemed (38,714,556) (524,497,227) (51,991,218) (707,293,904)
----------------------------------------------------------
Net increase 7,095,987 $116,535,156 29,124,100 $ 504,567,658
==========================================================
- -------------------------------------------------------------------------------------
Class B
Sold 26,928,476 $374,945,073 69,354,980 $1,043,042,694
Dividends and/or
distributions reinvested 526,821 6,544,923 3,838,605 59,980,758
Redeemed (26,540,590) (356,686,456) (41,078,794) (548,396,880)
----------------------------------------------------------
Net increase 914,707 $ 24,803,540 32,114,791 $ 554,626,572
==========================================================
- -------------------------------------------------------------------------------------
Class C
Sold 13,717,232 $193,481,707 35,498,231 $ 536,176,064
Dividends and/or
distributions reinvested 237,055 2,946,014 1,571,290 24,519,188
Redeemed (14,751,471) (197,327,960) (20,268,479) (267,739,975)
----------------------------------------------------------
Net increase (decrease) (797,184) $ (900,239) 16,801,042 $ 292,955,277
==========================================================
28 | OPPENHEIMER QUEST BALANCED VALUE FUND
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
Class N
Sold 4,959,184 $ 68,509,566 8,276,594 $ 121,525,612
Dividends and/or
distributions reinvested 59,656 756,892 156,819 2,362,733
Redeemed (3,028,836) (41,861,367) (2,477,684) (33,176,925)
----------------------------------------------------------
Net increase 1,990,004 $ 27,405,091 5,955,729 $ 90,711,420
==========================================================
- -------------------------------------------------------------------------------------
Class Y
Sold 3,864,165 $ 53,749,796 4,615,777 $ 65,893,788
Dividends and/or
distributions reinvested 141,014 1,843,889 470,717 7,204,577
Redeemed (2,193,394) (29,856,853) (3,607,330) (49,187,425)
----------------------------------------------------------
Net increase 1,811,785 $ 25,736,832 1,479,164 $ 23,910,940
==========================================================
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other tha
short-term obligations, for the year ended October 31, 2003, were $4,296,111,903
and $4,603,305,590, respectively.
- --------------------------------------------------------------------------------
4. 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. Effective June 15, 2003, the
agreement provides for a fee at an annual rate of 0.85% of the first $1 billion
of average annual net assets of the Fund, 0.81% of the next $2 billion, 0.76% of
the next $1 billion, 0.71% of the next $1 billion, 0.65% of the next $1 billion
and 0.60% of the average annual net assets in excess of $6 billion. Prior to
June 15, 2003, the management fee was 0.85% of the first $5 billion of average
annual net assets of the Fund, 0.75% of the next $1 billion, 0.65% of the next
$1 billion and 0.60% of average annual net assets in excess of $7 billion.
- --------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager retains OpCap Advisors (the Sub-Advisor) to
provide the day-to-day portfolio management of the Fund. For the year ended
October 31, 2003, the Manager paid $11,559,829 to the Sub-Advisor for its
services to the Fund.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2003, the Fund paid
$13,609,246 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $5,000 for assets
of less than $10 million and $10,000 for assets of $10 million or more. The
Class Y shares are subject to the minimum fees in the event that the per account
fee does not equal or exceed the applicable minimum fees. OFS may voluntarily
waive the minimum fees.
29 | OPPENHEIMER QUEST BALANCED VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- ----------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% of average annual net assets for all classes.
This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (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.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- ----------------------------------------------------------------------------------------------------------
October 31, 2003 $6,082,038 $1,693,081 $611,237 $8,142,875 $1,397,803 $475,836
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its own
resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- -------------------------------------------------------------------------------
October 31, 2003 $38,817 $6,310,225 $216,014 $354,859
- --------------------------------------------------------------------------------
Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the plan the Fund paid
an asset-based sales charge to the Distributor at an annual rate equal to 0.15%
of average annual net assets representing Class A shares purchased before
September 1, 1993 and 0.10% of average annual net assets representing Class A
shares purchased on or before December 31, 2002. Beginning January 1, 2003, the
Board of Trustees set the annual rate at zero. The Fund also pays a service fee
to the Distributor of 0.25% of the average annual net assets of Class A shares.
For the year ended October 31, 2003, expense under the Class A plan totaled
$4,999,025, all of which were paid by the Distributor to recipients, which
included $98,089 retained by the Distributor and $297,518 which was paid to an
affiliate of the Manager.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan.
30 | OPPENHEIMER QUEST BALANCED VALUE FUND
Distribution fees paid to the Distributor for the year ended October 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Uncompensated
Uncompensated Expenses as %
Total Expenses Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------------
Class B Plan $19,837,175 $14,359,076 $71,404,659 3.10%
Class C Plan 8,346,004 1,904,797 17,350,050 1.77
Class N Plan 561,294 451,270 2,694,186 1.89
- --------------------------------------------------------------------------------
5. Illiquid Securities
As of October 31, 2003, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of October
31, 2003 was zero.
- --------------------------------------------------------------------------------
6. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at October 31, 2003.
31 | OPPENHEIMER QUEST BALANCED VALUE FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Quest For Value Funds:
We have audited the accompanying statement of assets and liabilities including
the statement of investments of Oppenheimer Quest Balanced Value Fund (one of
the portfolios constituting the Oppenheimer Quest For Value Funds) including the
statement of investments, as of October 31, 2003, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the four years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended October 31, 1999, were audited by other auditors whose report dated
November 19, 1999, expressed an unqualified opinion on this information.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Quest Balanced Value Fund as of October 31, 2003, 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 four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2003
32 | OPPENHEIMER QUEST BALANCED VALUE FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended October 31,
2003 which are not designated as capital gain distributions should be multiplied
by 100% to arrive at the amount eligible for the corporate dividend-received
deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended October 31, 2003 which are not designated as capital gain distributions
are eligible for lower individual income tax rates to the extent that the Fund
has received qualified dividend income as stipulated by recent tax legislation.
$43,878,881 of the Fund's fiscal year taxable income may be eligible for the
lower individual income tax rates. In early 2004, shareholders of record will
receive information regarding the percentage of distributions that are eligible
for lower individual income tax rates.
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.
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.225.5677, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund will be
required to file new Form N-PX, with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. The first such
filing is due no later than August 31, 2004, for the twelve months ended June
30, 2004. Once filed, the Fund's Form N-PX filing will be available (i) without
charge, upon request, by calling the Fund toll-free at 1.800.225.5677, and (ii)
on the SEC's website at www.sec.gov.
33 | OPPENHEIMER QUEST BALANCED VALUE FUND
TRUSTEES AND OFFICERS Unaudited
- ----------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held
Fund, Length of Service, Age by Trustee; Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way,
TRUSTEES Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.
Thomas W. Courtney, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Partner of Trivest Venture Fund (private venture capital fund); former President
Board of Trustees, of Investment Counseling Federated Investors, Inc.; Trustee of the following
Trustee (since 1987) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free
Age: 70 Trust of Arizona and Hawaiian Tax Free Trust. Oversees 11 portfolios in the
OppenheimerFunds complex.
Paul Y. Clinton, Principal of Clinton Management Associates, a financial and venture capital
Trustee (since 1987) consulting firm; Trustee of the following open-end investment companies: Trustee
Age: 71 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Formerly: Director, External Affairs,
Kravco Corporation, a national real estate owner and property management
corporation; President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture capital
partnership; a general partner of Essex Limited Partnership, an investment
partnership; President of Geneve Corp., a venture capital fund; Chairman of
Woodland Capital Corp., a small business investment company; and Vice President
of W.R. Grace & Co. Oversees 11 portfolios in the OppenheimerFunds complex.
Robert G. Galli, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 70
Lacy B. Herrmann, Chairman and Chief Executive Officer of Aquila Management Corporation, the
Trustee (since 1987) sponsoring organization and manager, administrator and/or sub-adviser to the
Age: 74 following open-end investment companies, and Chairman of the Board of Trustees
and President of each: Churchill Cash Reserves Trust, Aquila-Cascadia Equity
Fund, Cash Assets Trust, Prime Cash Fund, Narragansett Insured Tax-Free Income
Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund
of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian
Tax-Free Trust, and Aquila Rocky Mountain Equity Fund and PIMCO ADVISORS VIT;
Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc., distributor of the above funds; President and Chairman of
the Board of Trustees of Capital Cash Management Trust ("CCMT"), and an Officer
and Trustee/Director of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President and a
Director of InCap Management Corporation, formerly sub-adviser and administrator
of Prime Cash Fund and Short Term Asset Reserves; Trustee Emeritus of Brown
University. Oversees 11 portfolios in the OppenheimerFunds complex.
34 | OPPENHEIMER QUEST BALANCED VALUE FUND
Brian Wruble, Special Limited Partner (since January 1999) of Odyssey Investment Partners, LLC
Trustee (since 2001) (private equity investment); General Partner (since September 1996) of Odyssey
Age: 60 Partners, L.P. (hedge fund in distribution since 1/1/97); Board of Governing
Trustees (since August 1990) of The Jackson Laboratory (non-profit); Trustee
(since May 1992) of Institute for Advanced Study (educational institute);
formerly Trustee (May 2000 - 2002) of Research Foundation of AIMR (investment
research, non-profit); Governor, Jerome Levy Economics Institute of Bard College
(economics research) (August 1990-September 2001); Director of Ray & Berendtson,
Inc. (executive search firm) (May 2000-April 2002). Oversees 10 portfolios in
the OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Murphy
and Zack Two World Financial Center, 225 Liberty St., New York, NY 10281-1008,
for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer
serves for an annual term or until his or her earlier resignation, death or
removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President (since 2001) (since September 2000) of the Manager; President and a director or trustee of
Age: 54 other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc.
(a subsidiary of the Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and Centennial Asset Management
Corporation (since November 2001), HarbourView Asset Management Corporation and
OFI Private Investments, Inc. (since July 2001); President (since November 1,
2001) and a director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; a director (since November 2001) of Trinity Investment Management Corp.
and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a director (since June 1995)
of DLB Acquisition Corporation (a holding company that owns the shares of David
L. Babson & Company, Inc.); formerly, Chief Operating Officer (September
2000-June 2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 72 portfolios as
Trustee/Officer and 10 portfolios as Officer in the OppenheimerFunds complex.
35 | OPPENHEIMER QUEST BALANCED VALUE FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- ----------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 44 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management,
Inc. (since November 2000) (offshore fund management subsidiaries of the
Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 82 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Secretary (since 2001) of the Manager; General Counsel and a director (since November 2001) of
Age: 55 OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001); OppenheimerFunds International Ltd. and OppenheimerFunds
plc (October 1997-November 2001). An officer of 82 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
36 | OPPENHEIMER QUEST BALANCED VALUE FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that the Fund does not have an
audit committee financial expert serving on its Audit Committee. In this regard,
no member of the Audit Committee was identified as having all of the technical
attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to qualify as
an "audit committee financial expert," whether through the type of specialized
education or experience described in that Instruction. The Board has concluded
that while the members of the Audit Committee collectively have the necessary
attributes and experience required to serve effectively as an Audit Committee,
no single member possesses all of the required technical attributes through the
particular methods of education or experience set forth in the Instructions to
be designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of October 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)