UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5225
OPPENHEIMER QUEST BALANCED VALUE FUND
-------------------------------------
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: OCTOBER 31
----------
Date of reporting period: NOVEMBER 1, 2004 - APRIL 30, 2005
---------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN COMMON STOCK INDUSTRIES
- --------------------------------------------------------------------------------
Insurance 11.7%
- --------------------------------------------------------------------------------
Oil & Gas 10.1
- --------------------------------------------------------------------------------
Pharmaceuticals 5.5
- --------------------------------------------------------------------------------
Communications Equipment 4.4
- --------------------------------------------------------------------------------
Food & Staples Retailing 3.9
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure 3.7
- --------------------------------------------------------------------------------
Commercial Services & Supplies 3.5
- --------------------------------------------------------------------------------
Metals & Mining 2.9
- --------------------------------------------------------------------------------
Machinery 2.4
- --------------------------------------------------------------------------------
Biotechnology 2.4
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
ConocoPhillips 6.5%
- --------------------------------------------------------------------------------
American International Group, Inc. 4.9
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 3.9
- --------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 3.7
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 3.1
- --------------------------------------------------------------------------------
Pfizer, Inc. 3.0
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 3.0
- --------------------------------------------------------------------------------
Inco Ltd. 2.9
- --------------------------------------------------------------------------------
Sanofi-Aventis SA, ADR 2.5
- --------------------------------------------------------------------------------
Eaton Corp. 2.4
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2005, and are based on net assets.
For up-to-date Top 10 Fund Holdings, please visit www.oppenheimerfunds.com.
- --------------------------------------------------------------------------------
9 | OPPENHEIMER QUEST BALANCED FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Stocks 70.4%
Bonds and Notes 26.6
Cash Equivalents 3.0
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2005, and are based on total value of investments.
- --------------------------------------------------------------------------------
10 | OPPENHEIMER QUEST BALANCED FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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.
CLASS A shares of the Fund were first publicly offered on 11/1/91. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. The Fund's maximum sales charge for Class A shares was lower
prior to 11/24/95, so actual performance may have been higher. Class A shares
are subject to a maximum annual 0.15% asset-based sales charge. There is a
voluntary waiver of a portion of the Class A asset-based sales charge as
described in the Prospectus.
CLASS B shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charges of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B does not
include any contingent deferred sales charge on redemptions and uses Class A
performance for the period after conversion. Class B shares are subject to an
annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the one-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
11 | OPPENHEIMER QUEST BALANCED FUND
NOTES
- --------------------------------------------------------------------------------
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the one-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 5/1/00. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
12 | OPPENHEIMER QUEST BALANCED 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 April 30, 2005.
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), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
13 | OPPENHEIMER QUEST BALANCED FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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
(11/1/04) (4/30/05) APRIL 30, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $ 996.50 $5.76
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.04 5.82
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 992.90 9.68
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.12 9.79
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 992.90 9.38
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.42 9.49
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 995.30 7.40
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.41 7.48
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 998.20 4.22
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.58 4.27
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 181/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended April 30, 2005 are as follows:
CLASS EXPENSE RATIOS
- ----------------------------------
Class A 1.16%
- ----------------------------------
Class B 1.95
- ----------------------------------
Class C 1.89
- ----------------------------------
Class N 1.49
- ----------------------------------
Class Y 0.85
- --------------------------------------------------------------------------------
14 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS April 30, 2005 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--70.2%
- ------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--8.8%
- ------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--1.3%
Harley-Davidson, Inc. 2,000,000 $ 94,040,000
- ------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--3.7%
Royal Caribbean Cruises Ltd. 1 6,300,000 264,726,000
- ------------------------------------------------------------------------------------------------------------------
MEDIA--0.8%
DirecTV Group, Inc. (The) 2 4,095,700 57,831,284
- ------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--2.0%
Kohl's Corp. 2 3,000,000 142,800,000
- ------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--1.0%
Tiffany & Co. 2,500,000 75,375,000
- ------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--5.2%
- ------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--3.9%
Wal-Mart Stores, Inc. 6,000,000 282,840,000
- ------------------------------------------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.3%
Avon Products, Inc. 2,300,000 92,184,000
- ------------------------------------------------------------------------------------------------------------------
ENERGY--10.1%
- ------------------------------------------------------------------------------------------------------------------
OIL & GAS--10.1%
BP plc, ADR 114,700 6,985,230
- ------------------------------------------------------------------------------------------------------------------
ChevronTexaco Corp. 2,500,000 130,000,000
- ------------------------------------------------------------------------------------------------------------------
ConocoPhillips 4,500,000 471,825,000
- ------------------------------------------------------------------------------------------------------------------
XTO Energy, Inc. 4,000,000 120,680,000
----------------
729,490,230
- ------------------------------------------------------------------------------------------------------------------
FINANCIALS--13.7%
- ------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.0%
Citigroup, Inc. 3,000,000 140,880,000
- ------------------------------------------------------------------------------------------------------------------
INSURANCE--11.7%
AMBAC Financial Group, Inc. 2,540,000 169,799,000
- ------------------------------------------------------------------------------------------------------------------
American International Group, Inc. 7,000,000 355,950,000
- ------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 3,000,000 217,110,000
- ------------------------------------------------------------------------------------------------------------------
UnumProvident Corp. 6,250,000 104,500,000
----------------
847,359,000
- ------------------------------------------------------------------------------------------------------------------
HEALTH CARE--10.9%
- ------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--2.4%
Amgen, Inc. 2 3,000,000 174,630,000
- ------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.6%
Boston Scientific Corp. 2 4,000,000 118,320,000
- ------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.4%
WellPoint, Inc. 2 800,000 102,200,000
15 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--5.5%
Pfizer, Inc. 8,000,000 $ 217,360,000
- ------------------------------------------------------------------------------------------------------------------
Sanofi-Aventis SA, ADR 4,000,000 177,480,000
----------------
394,840,000
- ------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--7.6%
- ------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.7%
Boeing Co. 2,000,000 119,040,000
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--3.5%
ChoicePoint, Inc. 2 2,700,000 106,569,000
- ------------------------------------------------------------------------------------------------------------------
H&R Block, Inc. 3,000,000 149,430,000
----------------
255,999,000
- ------------------------------------------------------------------------------------------------------------------
MACHINERY--2.4%
Eaton Corp. 3,000,000 175,950,000
- ------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--9.8%
- ------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--4.4%
Cisco Systems, Inc. 2 13,000,000 224,640,000
- ------------------------------------------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR 6,000,000 95,880,000
----------------
320,520,000
- ------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.9%
Flextronics International Ltd. 2 12,400,000 138,260,000
- ------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.3%
Texas Instruments, Inc. 6,500,000 162,240,000
- ------------------------------------------------------------------------------------------------------------------
SOFTWARE--1.2%
Cadence Design Systems, Inc. 2 6,000,000 84,000,000
- ------------------------------------------------------------------------------------------------------------------
MATERIALS--4.1%
- ------------------------------------------------------------------------------------------------------------------
METALS & MINING--2.9%
Inco Ltd. 2 5,900,000 210,866,000
- ------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--1.2%
International Paper Co. 2,500,000 85,725,000
----------------
Total Common Stocks (Cost $4,923,678,328) 5,070,115,514
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--1.2%
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 2.625%, 3/15/09 1 (Cost $88,532,981) $ 90,155,000 86,351,631
- ------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--25.4%
- ------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--2.8%
- ------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--1.3%
DaimlerChrysler NA Holdings Corp., 6.40% Nts., 5/15/06 34,100,000 34,675,744
- ------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.125% Unsec. Nts., 1/9/06 20,060,000 20,155,486
16 | OPPENHEIMER QUEST BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
AUTOMOBILES Continued
General Motors Acceptance Corp., 6.75% Nts., 1/15/06 $ 38,505,000 $ 38,796,521
----------------
93,627,751
- ------------------------------------------------------------------------------------------------------------------
MEDIA--1.5%
News America Holdings, Inc., 9.25% Sr. Debs., 2/1/13 8,500,000 10,745,386
- ------------------------------------------------------------------------------------------------------------------
Time Warner Cos., Inc., 8.11% Nts., 8/15/06 28,200,000 29,535,185
- ------------------------------------------------------------------------------------------------------------------
Viacom, Inc., 6.40% Sr. Nts., 1/30/06 38,950,000 39,686,389
- ------------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 5.375% Sr. Unsec. Nts., 6/1/07 24,350,000 24,896,438
----------------
104,863,398
- ------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--4.3%
- ------------------------------------------------------------------------------------------------------------------
BEVERAGES--0.6%
Coca-Cola Enterprises, Inc., 5.25% Unsec. Unsub. Nts., 5/15/07 41,139,000 42,086,061
- ------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.9%
CVS Corp., 3.875% Unsec. Nts., 11/1/07 24,360,000 24,115,109
- ------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 6.15% Sr. Unsec. Nts., 3/1/06 40,125,000 40,718,007
----------------
64,833,116
- ------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--2.2%
General Mills, Inc., 2.625% Unsec. Unsub. Nts., 10/24/06 43,810,000 42,950,886
- ------------------------------------------------------------------------------------------------------------------
Kellogg Co., 2.875% Nts., 6/1/08 43,500,000 41,781,446
- ------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 4.625% Nts., 11/1/06 46,350,000 46,700,221
- ------------------------------------------------------------------------------------------------------------------
Tyson Foods, Inc., 7.25% Sr. Unsec. Nts., 10/1/06 28,240,000 29,479,821
----------------
160,912,374
- ------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.6%
Proctor & Gamble Co. (The), 3.50% Nts., 12/15/08 43,230,000 42,377,677
- ------------------------------------------------------------------------------------------------------------------
ENERGY--1.5%
- ------------------------------------------------------------------------------------------------------------------
OIL & GAS--1.5%
ChevronTexaco Capital Co., 3.50% Nts., 9/17/07 43,790,000 43,326,351
- ------------------------------------------------------------------------------------------------------------------
Marathon Oil Corp., 5.375% Unsec. Nts., 6/1/07 38,950,000 39,826,648
- ------------------------------------------------------------------------------------------------------------------
Valero Energy Corp., 6.125% Unsec. Nts., 4/15/07 24,350,000 25,048,553
----------------
108,201,552
- ------------------------------------------------------------------------------------------------------------------
FINANCIALS--7.8%
- ------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.5%
Credit Suisse First Boston, Inc. (USA), 5.75% Unsec. Nts., 4/15/07 37,650,000 38,769,335
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--2.4%
Household Finance Corp., 7% Nts., 5/15/12 20,000,000 22,593,460
- ------------------------------------------------------------------------------------------------------------------
KeyCorp, 2.75% Sr. Nts., Series G, 2/27/07 43,615,000 42,551,317
- ------------------------------------------------------------------------------------------------------------------
US Bank NA, 2.85% Nts., 11/15/06 40,300,000 39,677,970
- ------------------------------------------------------------------------------------------------------------------
Wachovia Corp., 4.95% Nts., 11/1/06 40,680,000 41,247,811
17 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
World Savings Bank FSB, 4.125% Sr. Nts., 3/10/08 $ 24,200,000 $ 24,147,413
----------------
170,217,971
- ------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--0.3%
American Express Credit Corp., 3% Nts., 5/16/08 19,460,000 18,810,873
- ------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.5%
American Express Co., 5.50% Nts., 9/12/06 41,100,000 41,945,756
- ------------------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The), 6.50% Nts., 5/1/06 38,970,000 39,978,349
- ------------------------------------------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 15,000,000 17,514,915
- ------------------------------------------------------------------------------------------------------------------
Citigroup, Inc.:
5% Nts., 3/6/07 26,426,000 26,874,846
6% Nts., 2/21/12 15,000,000 16,199,100
- ------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 25,000,000 26,249,075
- ------------------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co., 5.25% Nts., 5/30/07 46,725,000 47,763,510
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.15% Nts., Series B, 1/26/06 38,390,000 39,058,869
----------------
255,584,420
- ------------------------------------------------------------------------------------------------------------------
INSURANCE--1.1%
Berkshire Hathaway Finance Corp., 3.375% Nts., 10/15/08 39,050,000 37,894,081
- ------------------------------------------------------------------------------------------------------------------
International Lease Finance Corp., 4% Nts., Series O, 1/17/06 41,660,000 41,713,533
----------------
79,607,614
- ------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--4.3%
- ------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.0%
Boeing Capital Corp., 6.50% Nts., 2/15/12 10,000,000 11,027,470
- ------------------------------------------------------------------------------------------------------------------
General Dynamics Corp., 2.125% Nts., 5/15/06 40,930,000 40,287,686
- ------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 4.079% Nts., 11/16/06 43,840,000 43,839,825
- ------------------------------------------------------------------------------------------------------------------
Raytheon Co., 6.75% Nts., 8/15/07 43,810,000 46,088,164
----------------
141,243,145
- ------------------------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.6%
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 43,830,000 42,616,610
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.3%
Cendant Corp., 6.875% Sr. Unsec. Nts., 8/15/06 15,100,000 15,617,311
- ------------------------------------------------------------------------------------------------------------------
Waste Management, Inc., 6.50% Sr. Unsub. Nts., 11/15/08 8,740,000 9,311,745
----------------
24,929,056
- ------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--1.0%
General Electric Capital Corp.:
5.35% Nts., Series A, 3/30/06 24,340,000 24,690,131
6% Nts., 6/15/12 19,700,000 21,208,981
- ------------------------------------------------------------------------------------------------------------------
Tyco International Group SA, 5.80% Nts., 8/1/06 29,200,000 29,900,625
----------------
75,799,737
18 | OPPENHEIMER QUEST BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
MACHINERY--0.4%
John Deere Capital Corp., 3.125% Sr. Nts., Series D, 12/15/05 $ 29,200,000 $ 29,115,320
- ------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.6%
- ------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.6%
Motorola, Inc., 4.608% Nts., 11/16/07 38,960,000 39,257,499
- ------------------------------------------------------------------------------------------------------------------
MATERIALS--1.5%
- ------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING--0.3%
Temple-Inland, Inc., 5.003% Nts., 5/17/07 24,500,000 24,738,189
- ------------------------------------------------------------------------------------------------------------------
METALS & MINING--0.6%
Alcoa, Inc., 4.25% Sr. Unsec. Nts., 8/15/07 44,705,000 44,792,398
- ------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.6%
Weyerhaeuser Co., 6% Unsec. Unsub. Nts., 8/1/06 38,950,000 39,976,216
- ------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.5%
- ------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.1%
SBC Communications, Inc., 5.75% Sr. Nts., 5/2/06 39,450,000 40,165,465
- ------------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp.:
6.75% Sr. Unsec. Unsub. Nts., 12/1/05 24,350,000 24,786,766
7.375% Sr. Nts., 9/1/12 15,000,000 17,322,300
----------------
82,274,531
- ------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.4%
AT&T Wireless Services, Inc., 7.35% Sr. Unsec. Nts., 3/1/06 24,740,000 25,460,528
- ------------------------------------------------------------------------------------------------------------------
UTILITIES--1.1%
- ------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.6%
Dominion Resources, Inc.:
3.66% Sr. Nts., Series A, 11/15/06 43,845,000 43,598,065
7.625% Sr. Unsec. Unsub. Nts., Series B, 7/15/05 40,000 40,327
----------------
43,638,392
- ------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.5%
Duke Capital LLC, 4.302% Sr. Unsec. Nts., 5/18/06 37,870,000 37,895,104
----------------
Total Non-Convertible Corporate Bonds and Notes (Cost $1,840,169,168) 1,831,628,867
- ------------------------------------------------------------------------------------------------------------------
SHORT-TERM NOTES--1.0%
- ------------------------------------------------------------------------------------------------------------------
American Express Credit Corp., 2.80%, 5/16/05 45,000,000 44,948,000
- ------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 2.65%, 5/2/05 26,857,000 26,855,023
----------------
Total Short-Term Notes (Cost $71,803,023) 71,803,023
- ------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with
Cash Collateral from Securities Loaned) (Cost $6,924,183,500) 7,059,899,035
19 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--2.0%
- ------------------------------------------------------------------------------------------------------------------
ASSET BACKED FLOATING NOTE--0.3%
Money Market Trust, Series A, 3.029%, 5/16/05 3 $ 10,000,000 $ 10,000,000
- ------------------------------------------------------------------------------------------------------------------
Whitehawk CDO Funding Corp., 3.08%, 6/15/05 3 12,000,000 12,000,000
----------------
22,000,000
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--0.2%
Lexington Parker Capital, 2.828%, 5/17/05 3 11,922,257 11,922,257
- ------------------------------------------------------------------------------------------------------------------
FUNDING AGREEMENT/GIC--0.0%
Protective Life Insurance Co., 3.31%, 7/29/05 3 2,000,000 2,000,000
- ------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--1.2%
Undivided interest of 0.13% in joint repurchase agreement (Principal Amount/
Value $3,500,000,000, with a maturity value of $3,501,158,889) with Nomura
Securities, 2.98%, dated 4/29/05, to be repurchased at $4,636,223 on 5/2/05,
collateralized by U.S. Agency Mortgages, 0%-7%, 1/15/08-3/15/46, with a
value of $3,633,391,066 3 4,634,688 4,634,688
- ------------------------------------------------------------------------------------------------------------------
Undivided interest of 10.67% in joint repurchase agreement (Principal Amount/
Value $750,000,000, with a maturity value of $750,250,833) with WAMU
Capital Corp., 3.01%, dated 4/29/05, to be repurchased at $80,026,756 on
5/2/05, collateralized by U.S. Agency Mortgages, 0%-7%, 5/1/19-7/1/44,
with a value of $765,000,000 3 80,000,000 80,000,000
----------------
84,634,688
- ------------------------------------------------------------------------------------------------------------------
MASTER FLOATING NOTES--0.1%
Goldman Sachs Group, L.P., 3.12%, 5/2/05 3 7,000,000 7,000,000
- ------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FLOATING NOTE--0.1%
American Express Credit Corp., 2.995%, 5/16/05 3 4,945,652 4,945,652
- ------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 2.935%, 5/20/05 3 4,499,923 4,499,923
----------------
9,445,575
- ------------------------------------------------------------------------------------------------------------------
YANKEE FLOATING CERTIFICATE OF DEPOSIT--0.1%
Natexis Banques Populaires, N.Y., 2.981%, 5/16/05 3 8,995,942 8,995,942
----------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $145,998,462) 145,998,462
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $7,070,181,962) 99.8% 7,205,897,497
- ------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.2 17,527,008
----------------------------------
NET ASSETS 100.0% $ 7,223,424,505
==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Partial or fully-loaned security--See Note 5 of Notes to Financial
Statements.
2. Non-income producing security.
3. The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 5 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
April 30, 2005
- ------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $204,783,556)
(cost $7,070,181,962)--see accompanying statement of investments $ 7,205,897,497
- ------------------------------------------------------------------------------------------------
Cash 1,408,857
- ------------------------------------------------------------------------------------------------
Collateral for securities loaned 60,480,003
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 166,405,274
Interest and dividends 26,605,977
Shares of beneficial interest sold 7,967,797
Other 159,687
----------------
Total assets 7,468,925,092
- ------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 206,478,465
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 21,432,459
Shares of beneficial interest redeemed 13,646,289
Distribution and service plan fees 1,448,581
Transfer and shareholder servicing agent fees 1,260,618
Shareholder communications 609,092
Trustees' compensation 577,080
Other 48,003
----------------
Total liabilities 245,500,587
- ------------------------------------------------------------------------------------------------
NET ASSETS $ 7,223,424,505
================
- ------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 4,247,750
- ------------------------------------------------------------------------------------------------
Additional paid-in capital 7,064,050,923
- ------------------------------------------------------------------------------------------------
Accumulated net investment income 4,307,582
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 15,102,715
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 135,715,535
----------------
NET ASSETS $ 7,223,424,505
================
21 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $3,167,860,329 and
184,877,823 shares of beneficial interest outstanding) $ 17.13
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 18.18
- ------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $2,409,462,243 and 142,691,754 shares
of beneficial interest outstanding) $ 16.89
- ------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $1,206,908,745 and 71,430,167 shares
of beneficial interest outstanding) $ 16.90
- ------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $209,534,260 and 12,350,583 shares
of beneficial interest outstanding) $ 16.97
- ------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$229,658,928 and 13,424,640 shares of beneficial interest outstanding) $ 17.11
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended April 30, 2005
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 34,277,241
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $737,754) 27,867,281
- --------------------------------------------------------------------------------
Portfolio lending fees 293,385
----------------
Total investment income 62,437,907
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 25,830,424
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 3,948,531
Class B 12,684,172
Class C 6,195,192
Class N 537,456
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 3,103,883
Class B 2,741,575
Class C 1,020,798
Class N 294,769
Class Y 178,332
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 236,171
Class B 309,709
Class C 106,854
Class N 7,168
- --------------------------------------------------------------------------------
Trustees' compensation 166,439
- --------------------------------------------------------------------------------
Custodian fees and expenses 53,010
- --------------------------------------------------------------------------------
Other 215,008
----------------
Total expenses 57,629,491
Less reduction to custodian expenses (17,970)
----------------
Net expenses 57,611,521
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,826,386
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 198,442,434
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (243,038,762)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (39,769,942)
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER QUEST BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2005 OCTOBER 31,
(UNAUDITED) 2004
- --------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 4,826,386 $ (1,822,325)
- --------------------------------------------------------------------------------------------------------
Net realized gain 198,442,434 878,073,926
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (243,038,762) (298,061,553)
----------------------------------
Net increase (decrease) in net assets resulting from operations (39,769,942) 578,190,048
- --------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A -- (5,329,694)
Class B -- --
Class C -- --
Class N -- (50,738)
Class Y -- (811,934)
- --------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 128,621,934 531,512,099
Class B (125,474,978) 33,158,209
Class C 8,033,913 132,642,652
Class N 3,123,796 49,356,993
Class Y (8,893,508) 37,480,083
- --------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Total increase (decrease) (34,358,785) 1,356,147,718
- --------------------------------------------------------------------------------------------------------
Beginning of period 7,257,783,290 5,901,635,572
----------------------------------
End of period (including accumulated net investment income
(loss) of $4,307,582 and $(518,804), respectively) $ 7,223,424,505 $ 7,257,783,290
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2005 OCT.31,
CLASS A (UNAUDITED) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning
of period $ 17.19 $ 15.69 $ 12.02 $ 16.09 $ 16.66 $ 16.41
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .05 1 .07 .16 .17 .46 .36
Net realized and unrealized
gain (loss) (.11) 1.46 3.64 (3.53) (.20) .55
-----------------------------------------------------------------------------------------------
Total from investment operations (.06) 1.53 3.80 (3.36) .26 .91
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- (.03) (.13) (.27) (.53) (.28)
Distributions from net realized gain -- -- -- (.44) (.30) (.38)
-----------------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders -- (.03) (.13) (.71) (.83) (.66)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.13 $ 17.19 $ 15.69 $ 12.02 $ 16.09 $ 16.66
===============================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 (0.35)% 9.79% 31.87% (21.88)% 1.64% 5.78%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,167,860 $3,054,761 $2,287,707 $1,667,143 $1,763,404 $1,027,560
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,219,428 $2,759,594 $1,902,499 $1,960,568 $1,353,860 $1,020,483
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.52% 0.38% 1.60% 1.20% 2.61% 2.24%
Total expenses 1.16% 4 1.21% 4,5 1.38% 4,5 1.51% 4,5 1.47% 4 1.45% 4
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 106% 92% 108% 88% 105%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2005 OCT.31,
CLASS B (UNAUDITED) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.01 $ 15.61 $ 11.98 $ 16.00 $ 16.52 $ 16.28
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) (.02) 1 (.07) .06 .07 .35 .25
Net realized and unrealized
gain (loss) (.10) 1.47 3.63 (3.52) (.19) .55
----------------------------------------------------------------------------------------------
Total from investment operations (.12) 1.40 3.69 (3.45) .16 .80
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- (.06) (.13) (.38) (.18)
Distributions from net realized gain -- -- -- (.44) (.30) (.38)
----------------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders -- -- (.06) (.57) (.68) (.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.89 $ 17.01 $ 15.61 $ 11.98 $ 16.00 $ 16.52
==============================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 (0.71)% 8.97% 30.89% (22.38)% 1.03% 5.10%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,409,462 $2,549,069 $2,306,366 $1,759,167 $1,836,130 $ 925,476
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,560,775 $2,495,872 $1,985,215 $2,068,300 $1,307,367 $ 873,470
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.27)% (0.40)% 0.84% 0.56% 2.00% 1.64%
Total expenses 1.95% 4 2.00% 4,5 2.15% 4,5 2.15% 4,5 2.07% 4 2.06% 4
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 106% 92% 108% 88% 105%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER QUEST BALANCED FUND
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2005 OCT.31,
CLASS C UNAUDITED) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.02 $ 15.60 $ 11.97 $ 16.00 $ 16.51 $ 16.27
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) (.02) 1 (.06) .07 .07 .34 .25
Net realized and unrealized
gain (loss) (.10) 1.48 3.62 (3.52) (.18) .55
----------------------------------------------------------------------------------------------
Total from investment operations (.12) 1.42 3.69 (3.45) .16 .80
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment
income -- -- (.06) (.14) (.37) (.18)
Distributions from net realized gain -- -- -- (.44) (.30) (.38)
----------------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders -- -- (.06) (.58) (.67) (.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.90 $ 17.02 $ 15.60 $ 11.97 $ 16.00 $ 16.51
==============================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 (0.71)% 9.10% 30.99% (22.40)% 1.05% 5.10%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,206,909 $1,207,729 $ 982,288 $ 763,338 $ 751,229 $ 341,824
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,251,084 $1,129,522 $ 835,198 $ 903,426 $ 502,037 $ 336,336
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.21)% (0.34)% 0.92% 0.58% 2.00% 1.64%
Total expenses 1.89% 4 1.94% 4,5 2.08% 4,5 2.13% 4,5 2.07% 4 2.06% 4
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 106% 92% 108% 88% 105%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2005 OCT.31,
CLASS N (UNAUDITED) 2004 2003 2002 2001 1
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.05 $ 15.58 $ 11.94 $ 16.05 $ 16.84
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .02 2 .03 .11 .20 .22
Net realized and unrealized gain (loss) (.10) 1.45 3.63 (3.56) (.83)
--------------------------------------------------------------------------
Total from investment operations (.08) 1.48 3.74 (3.36) (.61)
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- (.01) (.10) (.31) (.18)
Distributions from net realized gain -- -- -- (.44) --
--------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (.01) (.10) (.75) (.18)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.97 $ 17.05 $ 15.58 $ 11.94 $ 16.05
==========================================================================
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.47)% 9.47% 31.50% (21.99)% (3.71)%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 209,534 $ 207,450 $ 142,866 $ 85,744 $ 19,649
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 217,101 $ 180,201 $ 112,416 $ 70,477 $ 4,977
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.20% 0.04% 1.23% 1.07% 2.75%
Total expenses 1.49% 1.55% 1.74% 1.67% 1.58%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 N/A 5 1.70% N/A 5,6 N/A 5
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 106% 92% 108% 88%
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.
28 | OPPENHEIMER QUEST BALANCED FUND
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2005 OCT.31,
CLASS Y (UNAUDITED) 2004 2003 2002 2001 2000 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.14 $ 15.62 $ 11.96 $ 16.05 $ 16.67 $ 15.65
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06 2 .12 .20 .25 .74 .15
Net realized and unrealized gain (loss) (.09) 1.46 3.64 (3.52) (.40) .99
-----------------------------------------------------------------------------------------
Total from investment operations (.03) 1.58 3.84 (3.27) .34 1.14
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- (.06) (.18) (.38) (.66) (.12)
Distributions from net realized gain -- -- -- (.44) (.30) --
-----------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (.06) (.18) (.82) (.96) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.11 $ 17.14 $ 15.62 $ 11.96 $ 16.05 $ 16.67
=========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (0.18)% 10.17% 32.40% (21.48)% 2.14% 7.32%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 229,659 $ 238,775 $ 182,409 $118,068 $ 134,654 $ 144
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 246,058 $ 216,973 $ 145,793 $137,322 $ 77,394 $ 32
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.83% 0.70% 1.89% 1.75% 2.97% 2.46%
Total expenses 0.85% 5 0.90% 5 1.05% 5 0.96% 5,6 1.00% 5 0.98% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 106% 92% 108% 88% 105%
1. For the period from May 1, 2000 (inception of offering) to October 31, 2000.
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.
29 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Balanced Fund (the Fund), a series of Oppenheimer Quest For
Value Funds, is an open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek a combination of growth of capital and investment income. The Fund's
primary objective is growth of capital. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). Effective January 1, 2005, Oppenheimer
Capital LLC (the Sub-Advisor) replaced OpCap Advisors as the Fund's sub-advisor,
and assumed its responsibility for providing day-to-day portfolio management for
the Fund. Oppenheimer Capital LLC is the parent company of OpCap Advisors.
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
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. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. 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 sixty days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Futures contracts traded on a
commodities or futures exchange will be valued at the final settlement price or
official closing price on the principal exchange as reported by such principal
exchange at its trading session
30 | OPPENHEIMER QUEST BALANCED FUND
ending at, or most recently prior to, the time when the Fund's assets are
valued. 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 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. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income 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. 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.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
31 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
As of April 30, 2005, the Fund had available for federal income tax
purposes an estimated capital loss carryforward of zero. This estimated capital
loss carryforward represents carryforward as of the end of the last fiscal year,
increased for losses deferred under tax accounting rules to the current fiscal
year and is increased or decreased by capital losses or gains realized in the
first six months of the current fiscal year. As of April 30, 2005, it is
estimated that the Fund will utilize $181,820,457 of capital loss carryforward
to offset realized capital gains. During the year ended October 31, 2004, the
Fund utilized $876,964,925 of capital loss carryforward to offset capital gains
realized in that fiscal year.
As of October 31, 2004, the Fund had available for federal income tax purposes a
capital loss carryforward as follows:
EXPIRING
--------------------------
2010 $181,820,457
- --------------------------------------------------------------------------------
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 six months
ended April 30, 2005, the Fund's projected benefit obligations were increased
by $80,316 and payments of $9,272 were made to retired trustees, resulting in
an accumulated liability of $564,801 as of April 30, 2005.
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 distributions, if any, are
declared and paid quarterly. Capital gain distributions, if any, are declared
and paid annually.
32 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------
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. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. 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 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 $.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
SIX MONTHS ENDED APRIL 30, 2005 YEAR ENDED OCTOBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 26,866,221 $ 475,870,743 63,546,703 $1,061,970,225
Dividends and/or
distributions reinvested -- -- 289,741 4,693,898
Redeemed (19,645,021) (347,248,809) (32,026,858) (535,152,024)
------------------------------------------------------------------
Net increase 7,221,200 $ 128,621,934 31,809,586 $ 531,512,099
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 9,154,985 $ 159,936,033 25,825,685 $ 427,597,730
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (16,314,739) (285,411,011) (23,752,602) (394,439,521)
------------------------------------------------------------------
Net increase (decrease) (7,159,754) $(125,474,978) 2,073,083 $ 33,158,209
==================================================================
33 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
SIX MONTHS ENDED APRIL 30, 2005 YEAR ENDED OCTOBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 7,407,930 $ 129,572,456 18,943,131 $ 313,720,431
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (6,952,457) (121,538,543) (10,924,983) (181,077,779)
------------------------------------------------------------------
Net increase 455,473 $ 8,033,913 8,018,148 $ 132,642,652
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 3,011,399 $ 52,772,980 6,779,800 $ 112,445,795
Dividends and/or
distributions reinvested -- -- 3,094 49,396
Redeemed (2,826,472) (49,649,184) (3,787,108) (63,138,198)
------------------------------------------------------------------
Net increase 184,927 $ 3,123,796 2,995,786 $ 49,356,993
==================================================================
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 2,639,765 $ 46,646,846 5,092,722 $ 84,840,588
Dividends and/or
distributions reinvested -- -- 50,227 811,929
Redeemed (3,145,475) (55,540,354) (2,893,159) (48,172,434)
------------------------------------------------------------------
Net increase (decrease) (505,710) $ (8,893,508) 2,249,790 $ 37,480,083
==================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the six months
ended April 30, 2005, were $3,493,766,378 and $3,188,314,547, respectively.
There were purchases of $53,845,313 and sales of $250,849,320 of U.S.
government and government agency obligations for the six months ended April 30,
2005.
- --------------------------------------------------------------------------------
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, 2005, the
agreement provides for a fee at annual rate of 0.80% of the first $1 billion of
average annual net assets of the Fund, 0.76% of the next $2 billion, 0.71% of
the next $1 billion, 0.66% of the next $1 billion, 0.60% of the next $1
billion, 0.55% of the next $1 billion, 0.50% of average annual net assets in
excess of $7 billion. Prior to January 1, 2005, the agreement provided for a
fee at an annual rate of 0.85% of the first $1 billion of average annual net
assets of the Fund, 0.81% of the next $2 billion, 0.76% of the next $1 billion,
0.71% of the next $1 billion, 0.65% of the next $1 billion, 0.60% of the next
$1 billion, 0.55% of the next $1 billion and 0.50% of average annual net assets
in excess of $8 billion.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
34 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Manager retains Oppenheimer Capital LLC (the
"Sub-Advisor") to provide the day-to-day portfolio management of the Fund.
Under the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual
fee in monthly installments, based on the average daily net assets of the Fund.
The fee paid to the Sub-Advisor under the Sub-Advisory agreement is paid by the
Manager, not by the Fund. The fee is calculated as a percentage of the fee the
Fund pays the Manager. The rate is 40% of the advisory fee collected by the
Manager based on the net assets of the Fund as of November 22, 1995, and 30% of
the fee collected by the Manager on assets in excess of that amount. For the
six months ended April 30, 2005, the Manager paid $9,108,884 and $4,096,168 to
the Sub-Advisor and OpCap Advisors, respectively, for their services to the
Fund. The sub-advisory agreement between the Manager and OpCap Advisors was
terminated on December 31, 2004.
- --------------------------------------------------------------------------------
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 six months ended April 30, 2005, the
Fund paid $7,341,122 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the Plan, the Fund pays
a service fee to the Distributor of 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% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 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 determine whether the
35 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 April 30, 2005 for Class B, Class C
and Class N shares were $52,935,584, $21,235,668 and $4,147,462, 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
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------------------
April 30, 2005 $1,687,059 $14,161 $2,394,460 $79,953 $148,538
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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. This undertaking may be amended or
withdrawn at any time.
- --------------------------------------------------------------------------------
5. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the
collateral. Cash collateral is invested in cash equivalents. The Fund retains a
portion of the interest earned from the collateral. The Fund also continues to
receive interest or dividends paid on the securities loaned. As of April 30,
2005, the Fund had on loan securities valued at $204,783,556. Collateral of
$206,478,465 was received for the loans, of which $145,998,462 was received in
cash and subsequently invested in approved instruments.
36 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint has been filed as putative derivative and
class actions against the Manager, OFS and the Distributor, as well as 51 of
the Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present
and former Directors or Trustees and 8 present and former officers of the
funds. This complaint, initially filed in the U.S. District Court for the
Southern District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges 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 assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary
duties to shareholders of the funds under the Investment Company Act of 1940
and at common law. The complaint seeks unspecified compensatory and punitive
damages, rescission of the funds' investment advisory agreements, an accounting
of all fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
37 | OPPENHEIMER QUEST BALANCED 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 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 voting record is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in Form N-PX
filing 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.
38 | OPPENHEIMER QUEST BALANCED FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the advisory
and sub-advisory agreements. The Investment Company Act of 1940, as amended,
requires that the Board request and evaluate, and that the Manager and
sub-adviser provide, such information as may be reasonably necessary to
evaluate the terms of the advisory and sub-advisory agreements. The Board
employs an independent consultant to prepare a report that provides
information, including comparative information, that the Board requests for
this purpose. In addition, the Board receives information throughout the year
regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement and sub-advisory agreement for the current year, the Board
evaluated the nature and extent of the services provided by the Manager, OpCap
Advisors the Fund's former sub-adviser ("OpCap"), a subsidiary of Oppenheimer
Capital LLC ("Oppenheimer Capital"), and each of their affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers. Until January 1, 2005,
OpCap provided the Fund with the services of the portfolio manager and OpCap's
investment team, who provided research, analysis and other advisory services in
regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's and OpCap's resources that are
available to the Fund. The Board noted that the Manager has had over forty years
of experience as an investment adviser and that its assets under management rank
it among the top mutual fund managers in the United States. The Board evaluated
the Manager's administrative, accounting, legal and compliance services and
information the Board received regarding the experience and professional
qualifications of the Manager's personnel and the size and functions of its
staff. The Board members also considered their experiences as directors or
trustees of the Fund and other funds advised by the Manager. The Board received
and reviewed information regarding the quality of services provided by
affiliates of the Manager, which it also reviews at other times during the year
in connection with the renewal of the Fund's service agreements. The Board noted
that the relatively low redemption rate for funds advised by the Manager
provided an indication of shareholder satisfaction with the overall level of
services provided by the Manager.
The Board also considered the quality of the services provided by OpCap.
OpCap had served as the Fund's investment adviser from the Fund's inception in
April 1980 until February 1997, when the Manager became the Fund's investment
adviser and OpCap was retained as the Fund's sub-adviser. Oppenheimer Capital,
the parent company of OpCap,
39 | OPPENHEIMER QUEST BALANCED FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
has been an equity investment manager since its inception in 1969 and as of
September 2004 had over $24 billion in assets under management.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of Colin Glinsman and the Large Cap investment team and analysts. Mr.
Glinsman has had over 25 years of experience managing equity and fixed income
investments and has been primarily responsible for the day-to-day management of
the Fund's portfolio since December 1992. He is Managing Director and Chief
Investment Officer of Oppenheimer Capital.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other balanced funds (including both
funds advised by the Manager and funds advised by other investment advisers).
The Board also receives and reviews comparative performance information
regarding the Fund and other funds at each Board meeting. The Board noted that
the Fund's one-, five- and ten-year performance was better than its peer group
average. However its three-year performance was below its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Fund. The independent
consultant provided comparative data in regard to the fees and expenses of the
Fund, other balanced funds and other funds with comparable assets levels and
distribution features. The Board noted that the Fund's contractual and actual
management fees and its total expenses were higher than its peer group average.
In addition, the Board evaluated the comparability of the fees charged and the
services provided to the Fund to the fees charged and services provided to other
types of entities advised by the Manager. The Board noted that the Manager, not
the Fund, pays the sub-advisory fee under the terms of the sub-advisory
agreement.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager, OpCap and Oppenheimer Capital have received
and may receive as a result of their relationship with the Fund, including
compensation paid to affiliates and research provided in connection with
permissible brokerage arrangements (soft dollar arrangements).
40 | OPPENHEIMER QUEST BALANCED FUND
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board noted that the fund has recently experienced
significant asset growth and that, based on current asset levels, however the
Fund is not yet approaching its last management fee breakpoint.
CHANGES TO MANAGEMENT ARRANGEMENTS. Following discussion of the roles of
OpCap and its parent company Oppenheimer Capital in the management of the Fund's
portfolio investments, the Board and the Manager concluded that it was in the
best interests of the Fund and its shareholders for Oppenheimer Capital to
advise the Fund directly, rather than through its OpCap subsidiary. In addition,
the Board requested and the Manager agreed to a revised breakpoint schedule that
provides for a lower management fee, at an annual rate of 0.80% of the first $1
billion of average annual net assets of the Fund, 0.76% of the next $2 billion,
0.71% of the next $1 billion, 0.66% of the next $1 billion, 0.60% of the next $1
billion, 0.55% of the next $1 billion, 0.50% of average annual net assets in
excess of $7 billion.
CONCLUSIONS. The above factors, and the changes to the management
arrangements, were also considered by the independent Trustees meeting
separately from the full Board, assisted by experienced counsel to the Fund.
Fund counsel is independent of the Manager and Oppenheimer Capital within the
meaning and intent of the Securities and Exchange Commission Rules. The Board
was aware that there are alternatives to retaining the Manager.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager, and to be provided by Oppenheimer Capital, are a benefit to
the Fund and in the best interest of the Fund's shareholders and that the amount
and structure of the compensation received by the Manager and its affiliates,
and the revised fee structure adopted by the Board and the Manager are
reasonable in relation to the services provided. Accordingly, the Board elected
to continue the investment advisory agreement for another year and to approve
the sub-advisory agreement between the Manager and Oppenheimer Capital, which
became effective on January 1, 2005. In arriving at this decision, the Board did
not single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
OpCap and Oppenheimer Capital are not affiliated with the Manager.
41 | OPPENHEIMER QUEST BALANCED FUND
ITEM 2. CODE OF ETHICS
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semiannual reports.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. DISCLOSURE OF PROXY POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT
INVESTMENT COMPANIES
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES
Not applicable
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable
ITEM 10. 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 11. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(c)) as of April 30, 2005,
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 changes in registrant's internal controls over
financial reporting that occurred during the registrant's last
fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)
(C) EXHIBITS ATTACHED HERETO. (ATTACH PORTFOLIO PROXY VOTING POLICIES AND
PROCEDURES AS REQUIRED BY ITEM 7)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Quest Balanced Value Fund
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: June 15, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: June 15, 2005
By: /S/ BRIAN W. WIXTED
----------------------------
Brian W. Wixted
Chief Financial Officer
Date: June 15, 2005