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 Small Cap 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, 2003 - October 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK HOLDINGS
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Take Two Interactive Software, Inc. 3.2%
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UnitedGlobalCom, Inc., Cl. A 2.5
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AFC Enterprises, Inc. 2.1
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Scientific Games Corp., Cl. A 2.1
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IDT Corp., Cl. B 2.0
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Oregon Steel Mills, Inc. 1.8
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Affiliated Managers Group, Inc. 1.6
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NorthStar Realty Finance Corp. 1.6
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Platinum Underwriters Holdings Ltd. 1.6
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Pantry, Inc. (The) 1.6
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
TOP TEN COMMON STOCK INDUSTRIES
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Hotels, Restaurants & Leisure 6.6%
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Machinery 6.3
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Diversified Financial Services 5.7
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Real Estate 5.6
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Software 5.6
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Electric Utilities 4.0
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IT Services 3.9
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Commercial Banks 3.7
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Thrifts & Mortgage Finance 3.4
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Metals & Mining 3.3
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on net assets.
8 | OPPENHEIMER SMALL CAP VALUE FUND
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Financials 22.7%
Industrials 17.2
Information Technology 14.4
Consumer Discretionary 14.0
Materials 8.3
Utilities 7.2
Health Care 5.0
Energy 4.6
Consumer Staples 3.7
Telecommunication Services 2.9
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on common stocks.
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9 | OPPENHEIMER SMALL CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2004, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. During its fiscal year ended
October 31, 2004, Oppenheimer Small Cap Value Fund provided higher returns than
its benchmark, the Russell 2000 Index, and its peer group, the Lipper Small-Cap
Core Fund category. The Fund benefited throughout the reporting period from its
"bottom-up" approach of identifying attractive values among companies that may
have been mispriced or otherwise overlooked by investors, or that have
experienced temporary problems that caused unwarranted erosion of their stock
prices.
During the reporting period, the Fund's industrial stocks fared
particularly well as the U.S. economy strengthened and the war in Iraq
progressed. For example, defense electronics maker DRS Technologies, Inc.
achieved better than expected results, causing its stock valuation to expand. We
sold the Fund's position in DRS Technologies, Inc. when it reached a price we
considered fully valued. Engineering firm URS Corp. benefited from higher
spending by local governments on infrastructure improvements and the federal
government on defense. Finally, a bankruptcy and security consulting company was
acquired by an insurance services firm during the period at a substantial
premium to its prevailing stock price, benefiting the Fund.
Strong returns in the health care sector were driven by the Fund's
investment in Province Healthcare Co., which also was acquired by another
company during the reporting period. A west coast based managed care insurance
provider saw its stock price rise as investors' concerns over Medicare
reimbursement rates waned. A laboratory services company achieved higher sales
and earnings after the successful launch of a new blood testing product.
Among producers of basic materials, a specialty chemicals maker benefited
from rising global demand for substances used in the manufacture of plastic. As
steel prices rose during the reporting period, Fund holdings in Steel Dynamics,
Inc. and GrafTech International Ltd. benefited. In the utilities area, the Fund
scored successes with an independent power producer and marketer, which
recovered from previously depressed levels as its balance sheet and business
prospects improved. Although the Fund received strong contributions from some
energy holdings that benefited from higher oil and gas prices, weakness in other
positions produced returns that were roughly in line with that of the Index's
energy component.
10 | OPPENHEIMER SMALL CAP VALUE FUND
However, the Fund's returns were constrained by several disappointments,
chiefly in the financial and information technology sectors. The Fund's light
exposure to real estate investment trusts ("REITs") hindered relative
performance when inflation concerns ebbed and these companies gained value.
Among technology companies, a telecommunication equipment maker was hurt by
deteriorating business fundamentals. In the telecommunications services area,
IDT Corp. saw its profit margin decline in an increasingly competitive
marketplace.
As of the end of the reporting period, we have continued to find what we
believe to be attractive values in companies across the full range of market
sectors. However, we have been finding those values among larger companies more
than we did at the start of the reporting period. Accordingly, the average
market capitalization of the Fund's holdings has increased toward the higher end
of the small-cap range.
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, 2004. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. 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. Past performance cannot guarantee future results.
The Fund's performance is compared to that of the Russell 2000 Index. The
Russell 2000 Index measures the performance of the 2,000 smallest securities in
the Russell 3000 Index. Index performance reflects the reinvestment of income
but does not consider the effect of transaction costs, and none of the data in
the graphs shows the effect of taxes. The Fund's performance reflects the
effects of the Fund's 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 investments in the
index.
11 | OPPENHEIMER SMALL CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small Cap Value Fund (Class A)
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Small
Cap Value Fund Russell
Date (Class A) 2000 Index
10/31/1994 9,425 10,000
01/31/1995 9,261 9,730
04/30/1995 9,586 10,538
07/31/1995 10,297 11,925
10/31/1995 10,256 11,835
01/31/1996 10,798 12,644
04/30/1996 11,663 14,015
07/31/1996 10,981 12,749
10/31/1996 12,016 13,800
01/31/1997 13,140 15,040
04/30/1997 12,875 14,022
07/31/1997 15,547 17,006
10/31/1997 15,948 17,848
01/31/1998 15,797 17,758
04/30/1998 17,349 19,967
07/31/1998 14,833 17,399
10/31/1998 13,548 15,734
01/31/1999 13,874 17,817
04/30/1999 14,432 18,120
07/31/1999 15,176 18,689
10/31/1999 13,600 18,074
01/31/2000 13,859 20,979
04/30/2000 14,797 21,458
07/31/2000 16,058 21,262
10/31/2000 17,190 21,220
01/31/2001 17,670 21,753
04/30/2001 17,362 20,844
07/31/2001 17,994 20,898
10/31/2001 16,671 18,525
01/31/2002 18,930 20,971
04/30/2002 20,635 22,236
07/31/2002 16,798 17,145
10/31/2002 16,429 16,382
01/31/2003 16,052 16,384
04/30/2003 17,106 17,619
07/31/2003 19,684 21,106
10/31/2003 22,365 23,486
01/31/2004 25,072 25,891
04/30/2004 25,045 25,022
07/31/2004 24,928 24,707
10/31/2004 27,041 26,241
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 13.95% 5-Year 13.38% 10-Year 10.46%
12 | OPPENHEIMER SMALL CAP VALUE FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small Cap Value Fund (Class B)
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Small
Cap Value Fund Russell
Date (Class B) 2000 Index
10/31/1994 10,000 10,000
01/31/1995 9,806 9,730
04/30/1995 10,135 10,538
07/31/1995 10,874 11,925
10/31/1995 10,817 11,835
01/31/1996 11,368 12,644
04/30/1996 12,267 14,015
07/31/1996 11,536 12,749
10/31/1996 12,610 13,800
01/31/1997 13,768 15,040
04/30/1997 13,471 14,022
07/31/1997 16,247 17,006
10/31/1997 16,651 17,848
01/31/1998 16,467 17,758
04/30/1998 18,063 19,967
07/31/1998 15,422 17,399
10/31/1998 14,076 15,734
01/31/1999 14,390 17,817
04/30/1999 14,951 18,120
07/31/1999 15,703 18,689
10/31/1999 14,054 18,074
01/31/2000 14,296 20,979
04/30/2000 15,246 21,458
07/31/2000 16,523 21,262
10/31/2000 17,683 21,220
01/31/2001 18,177 21,753
04/30/2001 17,861 20,844
07/31/2001 18,510 20,898
10/31/2001 17,149 18,525
01/31/2002 19,473 20,971
04/30/2002 21,227 22,236
07/31/2002 17,279 17,145
10/31/2002 16,901 16,382
01/31/2003 16,513 16,384
04/30/2003 17,597 17,619
07/31/2003 20,249 21,106
10/31/2003 23,007 23,486
01/31/2004 25,791 25,891
04/30/2004 25,763 25,022
07/31/2004 25,643 24,707
10/31/2004 27,816 26,241
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 14.91% 5-Year 13.74% 10-Year 10.77%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. SEE PAGE 16 FOR FURTHER INFORMATION.
13 | OPPENHEIMER SMALL CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small Cap Value Fund (Class C)
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Small
Cap Value Fund Russell
Date (Class C) 2000 Index
10/31/1994 10,000 10,000
01/31/1995 9,812 9,730
04/30/1995 10,141 10,538
07/31/1995 10,881 11,925
10/31/1995 10,824 11,835
01/31/1996 11,371 12,644
04/30/1996 12,273 14,015
07/31/1996 11,540 12,749
10/31/1996 12,616 13,800
01/31/1997 13,777 15,040
04/30/1997 13,479 14,022
07/31/1997 16,261 17,006
10/31/1997 16,659 17,848
01/31/1998 16,481 17,758
04/30/1998 18,082 19,967
07/31/1998 15,434 17,399
10/31/1998 14,085 15,734
01/31/1999 14,409 17,817
04/30/1999 14,963 18,120
07/31/1999 15,716 18,689
10/31/1999 14,063 18,074
01/31/2000 14,314 20,979
04/30/2000 15,266 21,458
07/31/2000 16,547 21,262
10/31/2000 17,689 21,220
01/31/2001 18,159 21,753
04/30/2001 17,811 20,844
07/31/2001 18,434 20,898
10/31/2001 17,051 18,525
01/31/2002 19,337 20,971
04/30/2002 21,047 22,236
07/31/2002 17,095 17,145
10/31/2002 16,699 16,382
01/31/2003 16,286 16,384
04/30/2003 17,324 17,619
07/31/2003 19,898 21,106
10/31/2003 22,563 23,486
01/31/2004 25,245 25,891
04/30/2004 25,168 25,022
07/31/2004 24,993 24,707
10/31/2004 27,064 26,241
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 18.95% 5-Year 13.99% 10-Year 10.47%
14 | OPPENHEIMER SMALL CAP VALUE FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small Cap Value Fund (Class N)
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Small
Cap Value Fund Russell
Date (Class N) 2000 Index
03/01/2001 10,000 10,000
04/30/2001 10,383 10,255
07/31/2001 10,761 10,281
10/31/2001 9,964 9,114
01/31/2002 11,311 10,317
04/30/2002 12,326 10,940
07/31/2002 10,030 8,435
10/31/2002 9,804 8,060
01/31/2003 9,574 8,061
04/30/2003 10,199 8,668
07/31/2003 11,726 10,384
10/31/2003 13,315 11,555
01/31/2004 14,918 12,738
04/30/2004 14,854 12,310
07/31/2004 14,773 12,155
10/31/2004 16,016 12,910
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 19.29% 5-Year N/A Since Inception (3/1/01) 13.71%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE
PAGE 16 FOR FURTHER INFORMATION.
15 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES
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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.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
Prior to 4/28/00, the Fund's sub-advisor was OpCap Advisors, Inc., its advisor
until 11/22/95.
CLASS A shares of the Fund were first publicly offered on 1/3/89. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. Class A shares are subject to a maximum annual 0.25%
asset-based sales charge. The asset-based sales charge is subject to a voluntary
waiver of a portion or all of the charge as described in the Prospectus, and the
Board of Trustees has set the rate at zero.
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 charges on redemption 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.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER SMALL CAP VALUE FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to
17 | OPPENHEIMER SMALL CAP VALUE FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
exceptions described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(5/1/04) (10/31/04) OCTOBER 31, 2004
- ---------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,079.70 $ 6.98
- ---------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.45 6.77
- ---------------------------------------------------------------------
Class B Actual 1,000.00 1,075.30 11.38
- ---------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.23 11.05
- ---------------------------------------------------------------------
Class C Actual 1,000.00 1,075.40 11.27
- ---------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.33 10.94
- ---------------------------------------------------------------------
Class N Actual 1,000.00 1,078.20 8.71
- ---------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.79 8.45
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended October 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.33%
- ------------------------
Class B 2.17
- ------------------------
Class C 2.15
- ------------------------
Class N 1.66
The expense ratios reflect voluntary reimbursements of expenses by the Fund's
Transfer Agent that can be terminated at any time, without advance notice. The
"Financial Highlights" tables in the Fund's financial statements, included in
this report, also show the gross expense ratios, without such reimbursements.
18 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF INVESTMENTS October 31, 2004
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--96.2%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.5%
- --------------------------------------------------------------------------------
DISTRIBUTORS--1.0%
Source Information
Management Co.
(The) 1 900,000 $ 9,072,000
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--6.6%
AFC Enterprises, Inc. 1 876,000 18,991,680
- --------------------------------------------------------------------------------
Dave & Buster's, Inc. 1 391,200 6,943,800
- --------------------------------------------------------------------------------
Intrawest Corp. 299,600 5,827,220
- --------------------------------------------------------------------------------
Lodgian, Inc. 1 900,000 9,270,000
- --------------------------------------------------------------------------------
Scientific Games
Corp., Cl. A 1 875,000 18,532,500
-------------
59,565,200
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.8%
Celebrate
Express, Inc. 1 50,000 849,500
- --------------------------------------------------------------------------------
ValueVision Media,
Inc., Cl. A 1 600,000 6,264,000
-------------
7,113,500
- --------------------------------------------------------------------------------
MEDIA--2.7%
Carmike Cinemas,
Inc. 25,000 895,000
- --------------------------------------------------------------------------------
DreamWorks
Animation SKG, Inc. 1 23,800 929,390
- --------------------------------------------------------------------------------
UnitedGlobalCom,
Inc., Cl. A 1 3,000,000 22,440,000
-------------
24,264,390
- --------------------------------------------------------------------------------
MULTILINE RETAIL--0.7%
Dollar Tree
Stores, Inc. 1 200,000 5,780,000
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--1.5%
Advance Auto
Parts, Inc. 1 150,000 5,868,000
- --------------------------------------------------------------------------------
Build-A-Bear-
Workshop, Inc. 1 37,100 905,611
- --------------------------------------------------------------------------------
Pacific Sunwear of
California, Inc. 1 300,000 7,032,000
-------------
13,805,611
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.2%
Oxford Industries,
Inc. 50,000 1,854,500
- --------------------------------------------------------------------------------
CONSUMER STAPLES--3.5%
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.1%
Pantry, Inc. (The) 1 611,400 14,056,086
- --------------------------------------------------------------------------------
Performance Food
Group Co. 1 200,000 4,652,000
-------------
18,708,086
- --------------------------------------------------------------------------------
FOOD PRODUCTS--1.4%
Gold Kist
Holdings, Inc. 1 600,000 6,600,000
- --------------------------------------------------------------------------------
J.M. Smucker Co.
(The) 150,000 6,675,000
-------------
13,275,000
- --------------------------------------------------------------------------------
ENERGY--4.4%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.4%
Pride International,
Inc. 1 700,000 12,936,000
- --------------------------------------------------------------------------------
OIL & GAS--3.0%
Energy Partners Ltd. 1 800,000 14,048,000
- --------------------------------------------------------------------------------
Frontier Oil Corp. 300,000 7,374,000
- --------------------------------------------------------------------------------
KCS Energy, Inc. 1 400,000 5,444,000
-------------
26,866,000
- --------------------------------------------------------------------------------
FINANCIALS--21.9%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--0.5%
National Financial
Partners Corp. 145,900 4,484,966
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--3.7%
BankAtlantic
Bancorp, Inc. 485,000 8,482,650
- --------------------------------------------------------------------------------
Cullen/Frost
Bankers, Inc. 180,000 8,820,000
- --------------------------------------------------------------------------------
Independence
Community
Bank Corp. 127,622 4,802,416
- --------------------------------------------------------------------------------
Sterling Financial
Corp., Western US 300,000 11,271,000
-------------
33,376,066
19 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--5.7%
Affiliated Managers
Group, Inc. 1 265,600 $ 14,831,104
- --------------------------------------------------------------------------------
Apollo Investment
Corp. 700,000 9,520,000
- --------------------------------------------------------------------------------
Assured Guaranty
Ltd. 547,000 8,981,740
- --------------------------------------------------------------------------------
Gabelli Asset
Management, Inc. 200,000 9,220,000
- --------------------------------------------------------------------------------
Knight Trading
Group, Inc. 1 833,500 8,660,065
-------------
51,212,909
- --------------------------------------------------------------------------------
INSURANCE--3.0%
Platinum
Underwriters
Holdings Ltd. 500,000 14,625,000
- --------------------------------------------------------------------------------
Protective Life Corp. 312,700 12,289,110
-------------
26,914,110
- --------------------------------------------------------------------------------
REAL ESTATE--5.6%
BioMed Realty
Trust, Inc. 250,000 4,545,000
- --------------------------------------------------------------------------------
Kite Realty
Group Trust 140,000 1,848,000
- --------------------------------------------------------------------------------
New Century
Financial Corp. 225,000 12,408,750
- --------------------------------------------------------------------------------
Newcastle
Investment Corp. 375,000 11,478,750
- --------------------------------------------------------------------------------
NorthStar Realty
Finance Corp. 1,2 1,689,000 14,829,420
- --------------------------------------------------------------------------------
U-Store-It Trust 1 325,000 5,430,750
-------------
50,540,670
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--3.4%
Bank Mutual Corp. 700,000 8,596,000
- --------------------------------------------------------------------------------
Franklin Bank Corp. 1 550,000 9,075,000
- --------------------------------------------------------------------------------
NewAlliance
Bancshares, Inc. 925,000 12,839,000
-------------
30,510,000
- --------------------------------------------------------------------------------
HEALTH CARE--4.8%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--0.6%
MedImmune, Inc. 1 175,000 4,973,500
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.5%
Bio-Rad Laboratories,
Inc., Cl. A 1 80,000 4,161,600
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--2.8%
Capital Senior
Living Corp. 1 800,000 4,240,000
- --------------------------------------------------------------------------------
Manor Care, Inc. 375,000 12,277,500
- --------------------------------------------------------------------------------
PacifiCare Health
Systems, Inc. 1 250,000 8,905,000
-------------
25,422,500
- --------------------------------------------------------------------------------
PHARMACEUTICALS--0.9%
Watson
Pharmaceuticals,
Inc. 1 300,000 8,409,000
- --------------------------------------------------------------------------------
INDUSTRIALS--16.5%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.4%
BE Aerospace, Inc. 1 183,900 1,577,862
- --------------------------------------------------------------------------------
Orbital Sciences
Corp. 1 1,066,200 11,035,170
-------------
12,613,032
- --------------------------------------------------------------------------------
BUILDING PRODUCTS--1.1%
Jacuzzi Brands, Inc. 1 1,100,000 9,515,000
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.2%
Huron Consulting
Group, Inc. 1 80,200 1,563,900
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--2.5%
Perini Corp. 1 375,000 5,925,000
- --------------------------------------------------------------------------------
Quanta Services,
Inc. 1 1,200,000 8,064,000
- --------------------------------------------------------------------------------
URS Corp. 1 325,000 8,970,000
-------------
22,959,000
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.6%
AMETEK, Inc. 425,000 13,991,000
- --------------------------------------------------------------------------------
MACHINERY--6.3%
Actuant Corp., Cl. A 1 110,000 4,363,700
- --------------------------------------------------------------------------------
Albany International
Corp., Cl. A 225,000 6,754,500
- --------------------------------------------------------------------------------
Chicago Bridge
& Iron Co. NV 300,000 9,285,000
- --------------------------------------------------------------------------------
Harsco Corp. 185,000 8,963,250
- --------------------------------------------------------------------------------
Idex Corp. 223,200 8,236,080
20 | OPPENHEIMER SMALL CAP VALUE FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MACHINERY Continued
Kennametal, Inc. 200,000 $ 9,306,000
- --------------------------------------------------------------------------------
Oshkosh Truck Corp. 175,000 10,307,500
-------------
57,216,030
- --------------------------------------------------------------------------------
ROAD & RAIL--2.0%
Old Dominion
Freight Line, Inc. 1 300,000 8,407,500
- --------------------------------------------------------------------------------
Pacer International,
Inc. 1 550,000 9,762,500
-------------
18,170,000
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--1.4%
Hughes Supply, Inc. 450,000 12,784,500
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--13.9%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.3%
Carrier Access Corp. 1 700,000 6,188,000
- --------------------------------------------------------------------------------
Packeteer, Inc. 1 450,000 5,553,000
-------------
11,741,000
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.1%
Amphenol Corp.,
Cl. A 1 270,000 9,269,100
- --------------------------------------------------------------------------------
Lipman Electronic
Engineering Ltd. 250,000 5,955,000
- --------------------------------------------------------------------------------
Richardson
Electronics Ltd. 390,000 3,237,000
-------------
18,461,100
- --------------------------------------------------------------------------------
IT SERVICES--3.9%
Ceridian Corp. 1 375,000 6,468,750
- --------------------------------------------------------------------------------
CSG Systems
International, Inc. 1 800,000 13,448,000
- --------------------------------------------------------------------------------
Ness Technologies,
Inc. 1 501,000 6,623,220
- --------------------------------------------------------------------------------
Titan Corp. (The) 1 600,000 8,904,000
-------------
35,443,970
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.0%
National
Semiconductor
Corp. 1 550,000 9,185,000
- --------------------------------------------------------------------------------
SOFTWARE--5.6%
Activision, Inc. 1 850,000 12,308,000
- --------------------------------------------------------------------------------
Compuware Corp. 1 800,000 4,632,000
- --------------------------------------------------------------------------------
Novell, Inc. 1 600,000 4,314,000
- --------------------------------------------------------------------------------
Take-Two Interactive
Software, Inc. 1 878,600 28,958,656
-------------
50,212,656
- --------------------------------------------------------------------------------
MATERIALS--8.0%
- --------------------------------------------------------------------------------
CHEMICALS--2.7%
Airgas, Inc. 400,000 9,840,000
- --------------------------------------------------------------------------------
FMC Corp. 1 150,000 6,577,500
- --------------------------------------------------------------------------------
Millennium
Chemicals, Inc. 1 300,000 6,444,000
- --------------------------------------------------------------------------------
Westlake Chemical
Corp. 1 50,000 1,153,500
-------------
24,015,000
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING--0.7%
Smurfit-Stone
Container Corp. 1 375,000 6,510,000
- --------------------------------------------------------------------------------
METALS & MINING--3.3%
Century
Aluminum Co. 1 492,000 11,384,880
- --------------------------------------------------------------------------------
International Steel
Group, Inc. 1 59,600 2,201,028
- --------------------------------------------------------------------------------
Oregon Steel
Mills, Inc. 1 1,120,300 16,266,756
-------------
29,852,664
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--1.3%
Bowater, Inc. 325,000 11,973,000
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.8%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.5%
IDT Corp., Cl. B 1 1,300,000 17,966,000
- --------------------------------------------------------------------------------
PTEK Holdings, Inc. 1 500,000 4,980,000
-------------
22,946,000
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.3%
SBA Communications
Corp. 1 300,000 2,511,000
21 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
UTILITIES--6.9%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--4.0%
AES Corp. (The) 1 800,000 $ 8,720,000
- --------------------------------------------------------------------------------
CMS Energy Corp. 1 1,000,000 9,360,000
- --------------------------------------------------------------------------------
NRG Energy, Inc. 1 320,000 8,876,800
- --------------------------------------------------------------------------------
Reliant Energy, Inc. 1 850,000 8,738,000
-------------
35,694,800
- --------------------------------------------------------------------------------
GAS UTILITIES--1.0%
Southern Union Co. 1 420,000 9,227,400
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--1.9%
Equitable
Resources, Inc. 160,000 8,848,000
- --------------------------------------------------------------------------------
Questar Corp. 175,200 8,409,600
-------------
17,257,600
-------------
Total Common Stocks
(Cost $763,240,111) 867,089,260
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.0%
- --------------------------------------------------------------------------------
Undivided interest of 63.18% in joint
repurchase agreement (Principal Amount/
Value $57,987,000, with a maturity value
of $57,995,553) with Zions Bank/Capital
Markets Group, 1.77%, dated 10/29/04,
to be repurchased at $36,641,404 on
11/1/04, collateralized by U.S. Treasury
Nts., 2.375%, 8/15/06, with a
value of $59,191,443
(Cost $36,636,000) $ 36,636,000 $ 36,636,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $799,876,111) 100.2% 903,725,260
- --------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.2) (2,103,924)
-----------------------------
NET ASSETS 100.0% $ 901,621,336
=============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended October 31, 2004.
The aggregate fair value of securities of affiliated companies held by the Fund
as of October 31, 2004 amounts to $14,829,420. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
OCTOBER 31, GROSS GROSS OCTOBER 31, UNREALIZED DIVIDEND
2003 ADDITIONS REDUCTIONS 2004 DEPRECIATION INCOME
- -------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
NorthStar Realty Finance Corp. -- 1,689,000 -- 1,689,000 $ 371,580 $ --
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2004
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $784,675,111) $ 888,895,840
Affiliated companies (cost $15,201,000) 14,829,420
--------------
903,725,260
- -------------------------------------------------------------------------------------------------
Cash 269,077
- -------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 6,609,722
Shares of beneficial interest sold 3,437,614
Interest and dividends 121,309
Other 51,365
--------------
Total assets 914,214,347
- -------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 10,998,972
Shares of beneficial interest redeemed 994,590
Transfer and shareholder servicing agent fees 209,643
Distribution and service plan fees 184,122
Shareholder communications 115,594
Trustees' compensation 49,984
Other 40,106
--------------
Total liabilities 12,593,011
- -------------------------------------------------------------------------------------------------
NET ASSETS $ 901,621,336
==============
- -------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 307,809
- -------------------------------------------------------------------------------------------------
Additional paid-in capital 695,192,607
- -------------------------------------------------------------------------------------------------
Accumulated net investment loss (48,262)
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 102,320,033
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 103,849,149
--------------
NET ASSETS $ 901,621,336
==============
23 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $543,999,330
and 18,083,646 shares of beneficial interest outstanding) $ 30.08
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $ 31.92
- -------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $198,971,123
and 7,103,289 shares of beneficial interest outstanding) $ 28.01
- -------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $122,329,169
and 4,373,831 shares of beneficial interest outstanding) $ 27.97
- -------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $36,321,714
and 1,220,089 shares of beneficial interest outstanding) $ 29.77
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $24,509) $ 5,216,533
- --------------------------------------------------------------------------------
Interest 312,149
-------------
Total investment income 5,528,682
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 5,805,595
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,072,829
Class B 1,901,118
Class C 963,669
Class N 109,390
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,187,370
Class B 612,972
Class C 308,881
Class N 85,156
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 100,696
Class B 90,652
Class C 31,278
Class N 2,579
- --------------------------------------------------------------------------------
Trustees' compensation 46,313
- --------------------------------------------------------------------------------
Custodian fees and expenses 21,207
- --------------------------------------------------------------------------------
Other 147,436
--------------
Total expenses 12,487,141
Less reduction to custodian expenses (7,478)
Less payments and waivers of expenses (8,455)
--------------
Net expenses 12,471,208
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (6,942,526)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments 124,451,145
Foreign currency transactions (43,653)
Net increase from payment by affiliate 21,870
--------------
Net realized gain 124,429,362
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 14,520,760
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 132,007,596
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER SMALL CAP VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2004 2003
- ----------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment loss $ (6,942,526) $ (1,946,080)
- ----------------------------------------------------------------------------------------------
Net realized gain 124,429,362 56,185,756
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 14,520,760 90,036,665
--------------------------------
Net increase in net assets resulting from operations 132,007,596 144,276,341
- ----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (16,996,526) --
Class B (9,005,226) --
Class C (3,905,268) --
Class N (673,503) --
- ----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 152,733,067 27,564,749
Class B 2,246,042 (1,650,967)
Class C 38,042,967 7,875,626
Class N 22,066,171 4,208,196
- ----------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------
Total increase 316,515,320 182,273,945
- ----------------------------------------------------------------------------------------------
Beginning of period 585,106,016 402,832,071
--------------------------------
End of period (including accumulated net investment loss of
$48,262 and $32,137, respectively) $ 901,621,336 $ 585,106,016
============== ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.11 $ 19.18 $ 19.53 $ 21.26 $ 16.82
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.17) 1 (.04) (.19) (.23) (.16)
Net realized and unrealized gain (loss) 5.42 6.97 (.09) (.47) 4.60
------------------------------------------------------------------------------
Total from investment operations 5.25 6.93 (.28) (.70) 4.44
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.28) -- (.07) (1.03) -- 2
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.08 $ 26.11 $ 19.18 $ 19.53 $ 21.26
==============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 20.90% 36.13% (1.45)% (3.02)% 26.40%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 543,999 $ 330,215 $ 222,029 $ 172,395 $ 157,759
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 436,617 $ 245,319 $ 231,657 $ 163,007 $ 147,952
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.61)% (0.12)% (0.69)% (1.06)% (0.95)%
Total expenses 1.35% 1.59% 1.68% 1.86% 1.90%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 1.56% 1.66% N/A 5,6 N/A 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 163% 163% 151% 162% 166%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.59 $ 18.20 $ 18.65 $ 20.47 $ 16.28
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.37) 1 (.17) (.18) (.23) (.33)
Net realized and unrealized gain (loss) 5.07 6.56 (.20) (.56) 4.52
------------------------------------------------------------------------------
Total from investment operations 4.70 6.39 (.38) (.79) 4.19
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.28) -- (.07) (1.03) -- 2
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.01 $ 24.59 $ 18.20 $ 18.65 $ 20.47
==============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 19.91% 35.11% (2.06)% (3.60)% 25.74%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 198,971 $ 171,896 $ 129,885 $ 95,418 $ 83,859
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 190,251 $ 137,734 $ 134,304 $ 88,235 $ 79,526
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.43)% (0.85)% (1.34)% (1.65)% (1.48)%
Total expenses 2.18% 2.42% 2.34% 2.45% 2.44%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 2.29% 2.32% N/A 5,6 N/A 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 163% 163% 151% 162% 166%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER SMALL CAP VALUE FUND
CLASS C YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.55 $ 18.17 $ 18.62 $ 20.44 $ 16.25
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.37) 1 (.13) (.10) (.19) (.33)
Net realized and unrealized gain (loss) 5.07 6.51 (.28) (.60) 4.52
------------------------------------------------------------------------------
Total from investment operations 4.70 6.38 (.38) (.79) 4.19
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.28) -- (.07) (1.03) -- 2
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.97 $ 24.55 $ 18.17 $ 18.62 $ 20.44
==============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 19.95% 35.11% (2.06)% (3.61)% 25.79%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 122,329 $ 71,779 $ 46,360 $ 26,604 $ 22,173
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 96,555 $ 53,649 $ 45,455 $ 24,134 $ 20,521
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.42)% (0.85)% (1.33)% (1.64)% (1.49)%
Total expenses 2.16% 2.40% 2.33% 2.45% 2.44%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 2.30% 2.31% N/A 5,6 N/A 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 163% 163% 151% 162% 166%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 1
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.98 $ 19.13 $ 19.51 $ 19.58
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.26) 2 (.11) (.27) (.04)
Net realized and unrealized gain (loss) 5.33 6.96 (.04) (.03)
-----------------------------------------------------------
Total from investment operations 5.07 6.85 (.31) (.07)
- -------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.28) -- (.07) --
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 29.77 $ 25.98 $ 19.13 $ 19.51
===========================================================
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 20.29% 35.81% (1.61)% (0.36)%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 36,322 $ 11,216 $ 4,558 $ 409
- -------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 21,951 $ 6,722 $ 2,882 $ 106
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.93)% (0.36)% (0.78)% (1.14)%
Total expenses 1.70% 2.01% 1.82% 2.01%
Expenses after payments and waivers and
reduction to custodian expenses 1.66% 1.80% 1.80% N/A 5,6
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 163% 163% 151% 162%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Small Cap 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 capital appreciation. The Fund's investment advisor is OppenheimerFunds,
Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class N 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. All classes of
shares have identical rights and voting privileges with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. 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.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities may be valued primarily
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. 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
31 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for
business. 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. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
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.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
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
32 | OPPENHEIMER SMALL CAP VALUE FUND
not offset by capital loss carry forwards, 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
------------------------------------------------------------------------
$ 66,322,978 $ 36,175,708 $ -- $ 103,670,496
1. During the fiscal year ended October 31, 2004, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended October 31, 2003, the Fund utilized $18,203,203
of capital loss carryforward to offset capital gains realized in that fiscal
year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for October 31, 2004. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO
REDUCTION TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS 3
------------------------------------------------------
$ 14,197,981 $ 6,926,401 $ 21,124,382
3. $14,197,981, including $5,011,011 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended October 31, 2004
and October 31, 2003 was as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2004 OCTOBER 31, 2003
----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 8,874,298 $ --
Long-term capital gain 21,706,225 --
------------------------------------
Total $ 30,580,523 $ --
====================================
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, 2004 are noted below. The primary
difference between
33 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 $ 800,054,764
===============
Gross unrealized appreciation $ 118,737,789
Gross unrealized depreciation (15,067,293)
---------------
Net unrealized appreciation $ 103,670,496
===============
- --------------------------------------------------------------------------------
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, 2004, the Fund's projected benefit obligations were increased by $11,181 and
payments of $745 were made to retired trustees, resulting in an accumulated
liability of $42,574 as of October 31, 2004.
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.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
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 and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. The Fund pays interest to its custodian on
such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The
Reduction to Custodian Expenses line item, if applicable, represents earnings on
cash balances maintained by the
34 | OPPENHEIMER SMALL CAP VALUE FUND
Fund during the period. Such interest expense and other custodian fees may be
paid with these earnings.
- --------------------------------------------------------------------------------
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED OCTOBER 31, 2004 YEAR ENDED OCTOBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------
CLASS A
Sold 8,776,725 $ 247,299,487 5,916,521 $ 125,928,724
Dividends and/or
distributions reinvested 633,321 16,346,018 -- --
Redeemed (3,975,589) (110,912,438) 1 (4,844,173) (98,363,975)
--------------------------------------------------------------
Net increase 5,434,457 $ 152,733,067 1,072,348 $ 27,564,749
==============================================================
- ------------------------------------------------------------------------------------------
CLASS B
Sold 2,234,686 $ 58,583,041 2,100,067 $ 42,422,540
Dividends and/or
distributions reinvested 344,832 8,348,406 -- --
Redeemed (2,467,247) (64,682,405) 1 (2,247,539) (44,073,507)
--------------------------------------------------------------
Net increase (decrease) 112,271 $ 2,246,042 (147,472) $ (1,650,967)
==============================================================
- ------------------------------------------------------------------------------------------
CLASS C
Sold 2,120,967 $ 55,844,893 1,493,876 $ 29,360,313
Dividends and/or
distributions reinvested 146,833 3,549,968 -- --
Redeemed (817,988) (21,351,894) 1 (1,121,795) (21,484,687)
--------------------------------------------------------------
Net increase 1,449,812 $ 38,042,967 372,081 $ 7,875,626
==============================================================
- ------------------------------------------------------------------------------------------
CLASS N
Sold 942,361 $ 26,412,337 288,753 $ 6,214,235
Dividends and/or
distributions reinvested 24,717 634,506 -- --
Redeemed (178,716) (4,980,672) 1 (95,267) (2,006,039)
--------------------------------------------------------------
Net increase 788,362 $ 22,066,171 193,486 $ 4,208,196
==============================================================
1. Net of redemption fees of $7,733, $3,369, $1,710 and $389 for Class A, Class
B, Class C and Class N, respectively.
35 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2004, were
$1,333,539,394 and $1,185,208,883, 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 January 1, 2004, the
agreement provides for a fee at an annual rate of 0.80% of the first $400
million of average annual net assets of the Fund, 0.75% of the next $400 million
and 0.60% of average annual net assets in excess of $800 million. Prior to
January 1, 2004 the annual advisory fee was: 0.85% of the first $400 million of
average annual net assets of the Fund, 0.75% of the next $400 million and 0.60%
of average annual net assets in excess of $800 million.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
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, 2004, the Fund paid
$2,118,544 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. Under the Plan, the Fund pays a service fee to the Distributor of up to
0.25% of the average annual net assets of Class A shares. The Distributor
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions quarterly for providing personal services and maintenance
of accounts of their customers that hold Class A shares. Under the Plan, the
Fund may also pay an asset-based sales charge to the Distributor. Beginning
January 1, 2003, the Board of Trustees set the annual asset-based sales charge
rate at zero. Fees incurred by the Fund under the Plan are detailed in the
Statement of Operations.
- --------------------------------------------------------------------------------
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 to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of up to 0.25% per year under each plan. If either
the Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
36 | OPPENHEIMER SMALL CAP VALUE FUND
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at October 31,
2004 for Class B, Class C and Class N shares were $2,005,361, $1,355,190 and
$344,483, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------
October 31, 2004 $ 609,190 $ 2,832 $ 304,373 $ 16,341 $ 10,762
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage
commissions for sales that is permitted under its investment advisory agreement,
the Fund's Manager terminated that practice in July 2003. Subsequently, the
Manager paid the Fund $21,870, an amount equivalent to certain of such
commissions incurred in prior years.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the year ended October 31, 2004, OFS waived $8,455 for Class N shares.
This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
37 | OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of October 31, 2004, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well
as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund,
and nine Directors/Trustees of certain of the Funds other than this Fund
(collectively, the "Directors/Trustees"). The complaints allege that the Manager
charged excessive fees for distribution and other costs, improperly used assets
of the Funds in the form of directed brokerage commissions and 12b-1 fees to pay
brokers to promote sales of the Funds, and failed to properly disclose the use
of Fund assets to make those payments in violation of the Investment Company Act
of 1940 and the Investment Advisers Act of 1940. The complaints further allege
that by permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the Investment
Company Act of 1940 and at common law. By order dated October 27, 2004, these
six actions, and future related actions, were consolidated by the U.S. District
Court for the Southern District of New York into a single consolidated
proceeding in contemplation of the filing of a superseding consolidated and
amended complaint.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
38 | OPPENHEIMER SMALL CAP VALUE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER QUEST FOR VALUE FUNDS:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Small Cap Value Fund, (one of the portfolios constituting the
Oppenheimer Quest For Value Funds) including the statement of investments, as of
October 31, 2004, 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 five 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.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, 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 Small Cap Value Fund as of October 31, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
KPMG LLP
Denver, Colorado
December 16, 2004
39 | OPPENHEIMER SMALL CAP VALUE FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Distributions of $1.2766 per share were paid to Class A, Class B, Class C
and Class N shareholders, on December 10, 2003, of which $0.9062 was designated
as a "capital gain distribution" for federal income tax purposes. Whether
received in stock or in cash, the capital gain distribution should be treated by
shareholders as a gain from the sale of the capital assets held for more than
one year (long-term capital gains).
Dividends, if any, paid by the Fund during the fiscal year ended October
31, 2004 which are not designated as capital gain distributions should be
multiplied by 4.56% 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, 2004 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. $3,829,926 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2005, 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.
40 | OPPENHEIMER SMALL CAP VALUE FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS 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
1.800.525.7048, (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 is 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 Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those
forms may be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
41 | OPPENHEIMER SMALL CAP 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 TRUSTEES THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Board Partner of Trivest Venture Fund (private venture capital fund); former President
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: 71 Trust of Arizona and 4 funds for the 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: 73 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Formerly a director of OCC Cash
Reserves, Inc. (open-end investment company) (1989-December 2002). 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: 71
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: 75 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, 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. Formerly Chairman of
the Board of Trustees and President of Hawaiian Tax-Free Trust. Oversees 11
portfolios in the OppenheimerFunds complex.
BRIAN WRUBLE, General Partner (since September 1995) of Odyssey Partners, L.P. (hedge funds in
Trustee (since 2001) distribution since 1/1/97); Director (since September 2004) of Special Value
Age: 61 Opportunities Fund, LLC; Investment Advisory Board (since October 2004) of
Zurich Financial Services; Board of Governing Trustees (since August 1990) of
The Jackson Laboratory (genetics laboratory, non profit); Trustee (since May
1992) of Institute for Advanced Study (educational institute); Formerly Special
Limited Partner (1999-2004) and Managing Principal (through December 1998) of
Odyssey Investment Partners, LLC (private equity investment); Trustee
(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.
42 | OPPENHEIMER SMALL CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS.
DAMIAN, LEAVY, MURPHY AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
11TH FLOOR, NEW YORK, NY 10281-1008, AND FOR MR. WIXTED AND MR. VANDEHEY, 6803
S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE
TERM OR UNTIL HIS 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: 55 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 following investment advisory subsidiaries of
the Manager: OFI Institutional Asset Management, Inc., Centennial Asset
Management Corporation, Trinity Investment Management Corporation and Tremont
Capital Management, Inc. (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.; 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 Babson Capital Management LLC); a member of the
Investment Company Institute's Board of Governors (elected to serve from October
3, 2003 through September 30, 2006). 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 63 portfolios as
Trustee/Director and 21 additional portfolios as Officer in the OppenheimerFunds
complex.
CHRISTOPHER LEAVY, Senior Vice President of the Manager since September 2000; an officer of 7
Vice President and Portfolio portfolios in the OppenheimerFunds complex. Formerly a portfolio manager of
Manager (since 2001) Morgan Stanley Dean Witter Investment Management (1997 - September 2000).
Age: 33
JOHN DAMIAN Vice President of the Manager since September 2001; an officer of 2 portfolios
Vice President and Portfolio in the OppenheimerFunds complex; formerly Senior Analyst/Director for Citigroup
Manager (since 2001) Asset Management (November 1999 - September 2001); Senior Research Analyst for
Age: 36 Pzena Investment Management (October 1997 - November 1999).
43 | OPPENHEIMER SMALL CAP 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) of HarbourView Asset Management Corporation, Shareholder Financial Services,
Age: 45 Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation,
and Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management,
Inc. (since November 2000), and of OppenheimerFunds Legacy Program (a Colorado
non-profit corporation) (since June 2003); Treasurer and Chief Financial Officer
(since May 2000) of OFI Trust Company (a trust company subsidiary of the
Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition
Corp. Formerly Assistant Treasurer of Centennial Asset Management Corporation
(March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer (March 1995-March 1999) at Bankers
Trust Company-Mutual Fund Services Division. An officer of 84 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2001) February 2002) of the Manager; General Counsel and a director (since November
Age: 56 2001) of the Distributor; General Counsel (since November 2001) of Centennial
Asset Management Corporation; Senior Vice President and General Counsel (since
November 2001) of HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer Acquisition Corp.;
Assistant Secretary and a director (since October 1997) of OppenheimerFunds
International Ltd. and OppenheimerFunds plc; Vice President and a director
(since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director
(since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice
President, General Counsel and a director (since November 2001) of Shareholder
Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments,
Inc. and OFI Trust Company; Vice President (since November 2001) of
OppenheimerFunds Legacy Program; Senior Vice President and General Counsel
(since November 2001) of OFI Institutional Asset Management, Inc.; a director
(since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice
President (May 1985-December 2003), 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); and
OppenheimerFunds International Ltd. (October 1997-November 2001). An officer of
84 portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the
Vice President and Manager; Vice President (since June 1983) of OppenheimerFunds Distributor, Inc.,
Chief Compliance Officer Centennial Asset Management Corporation and Shareholder Services, Inc. Formerly
(since 2004) (until February 2004) Vice President and Director of Internal Audit of the
Age: 54 Manager. An officer of 84 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, BY
CALLING 1.800.525.7048.
44 | OPPENHEIMER SMALL CAP VALUE FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that the registrant
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
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $10,000 in fiscal 2004 and $10,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual
financial statements billed $39,500 in fiscal year 2004 and no such
fees in fiscal year 2003 to the registrant's investment adviser or
any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees include, among others: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $6,000 in fiscal 2004 and $5,000 in
fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include, among others: tax compliance, tax planning and
tax advice. Tax compliance generally involves preparation of
original and amended tax returns, claims for a refund and tax
payment-planning services. Tax planning and tax advice includes
assistance with tax audits and appeals, tax advice related to
mergers and acquisitions and requests for rulings or technical
advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $86 in fiscal 2004 and $69 in fiscal
2003.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include the cost to the principal accountant of attending
audit committee meetings.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the registrant
to it principal accountant during the fiscal year in which services
are provided 2) such services were not recognized by the registrant
at the time of engagement as non-audit services and 3) such services
are promptly brought to the attention of the audit committee of the
registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $45,586 in fiscal 2004 and $5,069 in
fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not include
any prohibited non-audit services as defined by the Securities
Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board is responsible for approving nominees for election as trustees.
To assist in this task, the Board has designated the Audit Committee as the
nominating committee for the Board. It reviews and recommends nominees to the
Board. The Committee is comprised entirely of disinterested trustees as defined
in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the
Committee in nominating candidates for election as independent Trustees of the
Registrant. The Registrant's Board has adopted a written charter for the
Committee. A current copy of the Audit Committee charter is available to
shareholders on the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM.
Under the current policy, if the Board determines that a vacancy exists or
is likely to exist on the Board, the Audit Committee of the Board will consider
candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission
to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO
80112, to the attention of the Board of Trustees of the named Registrant, c/o
the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for
trustees includes a number of factors. In screening candidates for board
membership, whether the candidate is suggested by Board members, shareholders or
others, the Committee considers the candidate's professional experience,
soundness of judgment, integrity, ability to make independent, analytical
inquiries, collegiality, willingness and ability to devote the time required to
perform Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
ITEM 10. 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, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances 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 over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)