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 811-2944
OPPENHEIMER QUEST VALUE FUND, INC.
(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: October 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Software 12.4%
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Oil & Gas 9.7
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Aerospace & Defense 9.6
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Diversified Financial Services 9.4
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Commercial Banks 9.2
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Media 7.1
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Tobacco 5.0
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Capital Markets 4.8
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Electric Utilities 4.8
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Insurance 4.7
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Wells Fargo & Co. 5.2%
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Altria Group, Inc. 5.0
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Honeywell International, Inc. 4.9
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UBS AG 4.8
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BP plc, ADR 4.6
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Microsoft Corp. 4.4
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Take-Two Interactive Software, Inc. 4.2
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JPMorgan Chase & Co. 4.0
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United Technologies Corp. 4.0
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Exxon Mobil Corp. 3.8
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
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7 | OPPENHEIMER QUEST VALUE FUND, INC.
TOP HOLDINGS AND ALLOCATIONS
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Financials 31.6%
Diversified Financial Services 9.4
Commercial Banks 9.4
Capital Markets 5.0
Insurance 4.8
Thrifts & Mortgage Finance 3.0
Information Technology 15.2
Industrials 13.4
Energy 11.9
Consumer Discretionary 7.2
Utilities 5.9
Consumer Staples 5.1
Health Care 3.6
Materials 3.6
Telecommunication Services 2.5
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on the total market value of common stocks.
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8 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Quest Value Fund, Inc.
withstood a volatile market environment to deliver an attractive 12-month total
return, even as it underwent significant changes. We, the value equity
management team at OppenheimerFunds, Inc., assumed daily management
responsibilities for the Fund on January 1, 2005. Since then, we have
repositioned most of the Fund's assets to bring the portfolio in line with our
disciplined, bottom-up investment management strategy. As a result of that
repositioning, the Fund enjoyed strong absolute and relative total returns in
the financial and consumer discretionary sectors, which helped overcome relative
weakness in its information technology and industrial holdings.
Our investment strategy centers around finding stocks whose prices are, in
our view, inexpensive relative to the underlying companies' long-term earnings
power and potential to generate cash flow. As a byproduct of this sharp focus on
the value characteristics of individual stocks, the Fund's sector weightings may
vary from those of the index. Such over- and underweightings are a reflection of
our conviction about the prospects for individual holdings and their industry
niches rather than enthusiasm for broad sectors.
During this period, we found relatively few financial services or energy
companies that met our investment parameters. In our estimation, many financial
services companies were overly exposed to rising interest rates and a flat yield
curve (i.e., a relatively small gap or difference between short- and long-term
fixed-income yields). In the energy sector, we were concerned about
sustainability of higher oil prices. As a result of these concerns, the
portfolio was underweighted (vs. the index) in these sectors.
Reviewing performance, the financial services and consumer discretionary
sectors were areas of relative strength for the Fund. Among the largest
contributors to performance were Liberty Global, Inc., Sears Roebuck & Co.,
McDonald's Corp., Lehman Brothers Holdings, Inc. and Genworth Financial, Inc.,
Cl. A (formerly GE Financial).
The Fund acquired shares of Liberty Global, Inc. as a result of a merger
between UnitedGlobal Com, a previous holding, and another cable TV operator.
This U.S.-domiciled company operates cable TV systems in Europe and Japan. Our
research showed that it had considerable growth potential, since the company
faced fewer structural competitive issues than U.S. cable operators. The stock
has benefited from that favorable competitive environment and from growing
subscriber bases for its broadband and cable telephony services.
9 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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Shares of major retailer Sears advanced after its merger with discount
retailer Kmart as investors began to appreciate the enhanced value of the
combined entity. McDonald's stock performance improved as a result of higher
margins and better same-store sales in the United States. We have exited these
positions due to valuation.
The stock of brokerage firm Lehman Brothers was inexpensive (compared to
other broker/dealers) when we purchased it, even though its profitability was
among the best in the industry and its franchises and returns were improving.
Since then, the market has awakened to Lehman's strong points. Genworth's
advance can be attributed to a growing awareness among investors that this
former division of General Electric is a solid business in its own right.
As for energy, the Fund's holdings rose along with the escalation in oil
prices and were, overall, a key source of positive return. However, the
underweight in energy contributed negatively to relative performance.
Nonetheless, we were and remain very selective in this sector, primarily because
we cannot identify a significant supply-demand issue that justifies the current
high prices.
In the technology sector, the single largest detractors from results were
Take-Two Interactive Software, Inc. and International Business Machines Corp.
(IBM). Take-Two, which manufactures mature-rated and sports-related game
software and video game accessories, was negatively impacted by a recall of its
leading videogame and, to a lesser extent, by generally weaker consumer demand.
We view the setback as temporary and believe that the company may benefit from
new releases and its excellent competitive position in the mature-rated market.
In the first half of the period, IBM experienced difficulty with execution.
Although the situation has improved, the stock still has not recovered fully. In
industrials, Cendant Corp. and Tyco were the largest detractors from results. As
for Cendant, an owner/operator of several car rental, hotel and other travel
businesses; there were growing concerns about recent acquisitions and the
company's real estate exposure. Recently, Cendant has addressed those concerns,
announcing that it will separate into four discrete businesses. The Fund exited
from Tyco.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow
show the performance of a hypothetical $10,000 investment in each class of
shares of the Fund held until October 31, 2005. In the case of Class A, Class B
and Class C shares, performance is measured for a ten-fiscal-year period. In the
case of Class N shares, performance is measured from inception of the Class on
March 1, 2001. In the case of Class Y shares, performance is measured from
inception of the Class on December 16, 1996. The Fund's performance reflects the
deduction of the maximum initial sales charge on Class A shares, the applicable
contingent deferred sales charge on Class B, Class C, and Class N shares,
10 | OPPENHEIMER QUEST VALUE FUND, INC.
and reinvestments of all dividends and capital gains distributions. Past
performance cannot guarantee future results.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of income but does not consider the
effect of transaction costs, and none of the data in the graphs shows the effect
of taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the investments in the index.
11 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc.(SM) (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Value
Fund, Inc.(SM) (Class A) S&P 500 Index
10/31/1995 9,425 10,000
01/31/1996 10,443 11,001
04/30/1996 10,989 11,376
07/31/1996 10,807 11,196
10/31/1996 12,101 12,408
01/31/1997 12,910 13,898
04/30/1997 12,932 14,233
07/31/1997 15,221 17,030
10/31/1997 15,176 16,391
01/31/1998 15,712 17,636
04/30/1998 17,877 20,078
07/31/1998 17,157 20,318
10/31/1998 16,675 19,999
01/31/1999 16,929 23,370
04/30/1999 18,734 24,461
07/31/1999 17,758 24,422
10/31/1999 17,701 25,131
01/31/2000 16,706 25,786
04/30/2000 17,003 26,937
07/31/2000 16,290 26,612
10/31/2000 17,956 26,659
01/31/2001 19,281 25,554
04/30/2001 19,290 23,444
07/31/2001 19,196 22,801
10/31/2001 17,018 20,024
01/31/2002 17,498 21,431
04/30/2002 17,653 20,486
07/31/2002 15,253 17,416
10/31/2002 14,546 17,001
01/31/2003 14,324 16,500
04/30/2003 15,050 17,761
07/31/2003 16,288 19,629
10/31/2003 17,711 20,535
01/31/2004 18,898 22,201
04/30/2004 18,742 21,822
07/31/2004 18,936 21,805
10/31/2004 19,325 22,467
01/31/2005 20,727 23,852
04/30/2005 20,453 23,204
07/31/2005 21,844 24,867
10/31/2005 21,550 24,425
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 5.10% 5-Year 2.50% 10-Year 7.98%
12 | OPPENHEIMER QUEST VALUE FUND, INC.
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc.(SM) (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Value
Fund, Inc.(SM) (Class B) S&P 500 Index
10/31/1995 10,000 10,000
01/31/1996 11,071 11,001
04/30/1996 11,632 11,376
07/31/1996 11,422 11,196
10/31/1996 12,776 12,408
01/31/1997 13,611 13,898
04/30/1997 13,619 14,233
07/31/1997 16,012 17,030
10/31/1997 15,933 16,391
01/31/1998 16,485 17,636
04/30/1998 18,734 20,078
07/31/1998 17,949 20,318
10/31/1998 17,428 19,999
01/31/1999 17,664 23,370
04/30/1999 19,519 24,461
07/31/1999 18,484 24,422
10/31/1999 18,389 25,131
01/31/2000 17,332 25,786
04/30/2000 17,607 26,937
07/31/2000 16,849 26,612
10/31/2000 18,533 26,659
01/31/2001 19,873 25,554
04/30/2001 19,843 23,444
07/31/2001 19,722 22,801
10/31/2001 17,468 20,024
01/31/2002 17,961 21,431
04/30/2002 18,120 20,486
07/31/2002 15,657 17,416
10/31/2002 14,931 17,001
01/31/2003 14,703 16,500
04/30/2003 15,448 17,761
07/31/2003 16,719 19,629
10/31/2003 18,180 20,535
01/31/2004 19,398 22,201
04/30/2004 19,238 21,822
07/31/2004 19,438 21,805
10/31/2004 19,836 22,467
01/31/2005 21,276 23,852
04/30/2005 20,994 23,204
07/31/2005 22,422 24,867
10/31/2005 22,120 24,425
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 5.65% 5-Year 2.58% 10-Year 8.26%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc.(SM) (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Value
Fund, Inc.(SM) (Class C) S&P 500 Index
10/31/1995 10,000 10,000
01/31/1996 11,067 11,001
04/30/1996 11,629 11,376
07/31/1996 11,427 11,196
10/31/1996 12,773 12,408
01/31/1997 13,608 13,898
04/30/1997 13,616 14,233
07/31/1997 16,011 17,030
10/31/1997 15,940 16,391
01/31/1998 16,483 17,636
04/30/1998 18,740 20,078
07/31/1998 17,946 20,318
10/31/1998 17,425 19,999
01/31/1999 17,667 23,370
04/30/1999 19,522 24,461
07/31/1999 18,487 24,422
10/31/1999 18,392 25,131
01/31/2000 17,334 25,786
04/30/2000 17,609 26,937
07/31/2000 16,851 26,612
10/31/2000 18,545 26,659
01/31/2001 19,886 25,554
04/30/2001 19,855 23,444
07/31/2001 19,745 22,801
10/31/2001 17,466 20,024
01/31/2002 17,936 21,431
04/30/2002 18,070 20,486
07/31/2002 15,585 17,416
10/31/2002 14,832 17,001
01/31/2003 14,574 16,500
04/30/2003 15,286 17,761
07/31/2003 16,513 19,629
10/31/2003 17,916 20,535
01/31/2004 19,071 22,201
04/30/2004 18,885 21,822
07/31/2004 19,040 21,805
10/31/2004 19,380 22,467
01/31/2005 20,754 23,852
04/30/2005 20,433 23,204
07/31/2005 21,777 24,867
10/31/2005 21,446 24,425
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND
AT 10/31/05
1-Year 9.66% 5-Year 2.95% 10-Year 7.93%
14 | OPPENHEIMER QUEST VALUE FUND, INC.
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc.(SM) (Class N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Value
Fund, Inc.(SM) (Class N) S&P 500 Index
03/01/2001 10,000 10,000
04/30/2001 10,175 10,094
07/31/2001 10,125 9,817
10/31/2001 8,976 8,621
01/31/2002 9,229 9,227
04/30/2002 9,301 8,821
07/31/2002 8,034 7,499
10/31/2002 7,656 7,320
01/31/2003 7,533 7,104
04/30/2003 7,911 7,647
07/31/2003 8,555 8,296
10/31/2003 9,290 8,841
01/31/2004 9,907 9,559
04/30/2004 9,815 9,396
07/31/2004 9,907 9,388
10/31/2004 10,101 9,674
01/31/2005 10,832 10,154
04/30/2005 10,677 9,991
07/31/2005 11,392 10,707
10/31/2005 11,233 10,517
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND
AT 10/31/05
1-Year 10.21% 5-Year N/A Since Inception (3/1/01) 2.52%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Value Fund, Inc.(SM) (Class Y)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Value
Fund, Inc.(SM) (Class Y) S&P 500 Index
12/16/1996 10,000 10,000
01/31/1997 10,564 10,624
04/30/1997 10,594 10,881
07/31/1997 12,485 13,019
10/31/1997 12,455 12,531
01/31/1998 12,909 13,482
04/30/1998 14,708 15,349
07/31/1998 14,121 15,532
10/31/1998 13,744 15,289
01/31/1999 13,960 17,866
04/30/1999 15,441 18,700
07/31/1999 14,657 18,670
10/31/1999 14,630 19,212
01/31/2000 13,817 19,713
04/30/2000 14,046 20,593
07/31/2000 13,435 20,344
10/31/2000 14,793 20,380
01/31/2001 15,970 19,536
04/30/2001 15,986 17,923
07/31/2001 15,923 17,431
10/31/2001 14,128 15,308
01/31/2002 14,540 16,383
04/30/2002 14,683 15,661
07/31/2002 12,689 13,314
10/31/2002 12,115 12,997
01/31/2003 11,932 12,614
04/30/2003 12,554 13,578
07/31/2003 13,590 14,730
10/31/2003 14,779 15,698
01/31/2004 15,775 16,972
04/30/2004 15,655 16,683
07/31/2004 15,831 16,669
10/31/2004 16,159 17,176
01/31/2005 17,343 18,028
04/30/2005 17,125 17,739
07/31/2005 18,298 19,010
10/31/2005 18,072 18,673
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/05
1-Year 11.84% 5-Year 4.08% Since Inception (12/16/96) 6.90%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER
INFORMATION.
16 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
OppenheimerFunds, Inc. became the Fund's advisor on 11/22/95, and assumed
responsibility for the Fund's portfolio stock selection on 1/1/05. The Fund's
subadvisor prior to 1/1/05 was OpCap Advisors, which was the Fund's advisor
prior to 11/22/95.
CLASS A shares of the Fund were first publicly offered on 4/30/80. 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 0.25% 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 uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
17 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES
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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 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-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 12/16/96. 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.
18 | OPPENHEIMER QUEST VALUE FUND, INC.
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 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
19 | OPPENHEIMER QUEST VALUE FUND, INC.
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
(5/1/05) (10/31/05) OCTOBER 31, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $ 1,053.70 $ 6.33
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.06 6.23
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,049.00 10.75
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.77 10.57
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,049.60 10.59
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.92 10.41
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,052.10 7.84
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.59 7.71
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,055.30 4.93
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.42 4.85
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended October 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.22%
- ------------------------
Class B 2.07
- ------------------------
Class C 2.04
- ------------------------
Class N 1.51
- ------------------------
Class Y 0.95
- --------------------------------------------------------------------------------
20 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENT OF INVESTMENTS October 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS--98.2%
- ----------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--7.1%
- ----------------------------------------------------------------------------------------------------------------
MEDIA--7.1%
Liberty Global, Inc.,
Series A 904,798 $ 22,411,846
- ----------------------------------------------------------------------------------------------------------------
Liberty Global, Inc.,
Series C 1 1,069,698 25,373,237
- ----------------------------------------------------------------------------------------------------------------
News Corp., Inc.,
Cl. A 1,250,400 17,818,200
--------------
65,603,283
- ----------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--5.0%
- ----------------------------------------------------------------------------------------------------------------
TOBACCO--5.0%
Altria Group, Inc. 620,200 46,546,010
- ----------------------------------------------------------------------------------------------------------------
ENERGY--11.7%
- ----------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--2.0%
Halliburton Co. 317,600 18,770,160
- ----------------------------------------------------------------------------------------------------------------
OIL & GAS--9.7%
BP plc, ADR 638,500 42,396,400
- ----------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 633,900 35,587,146
- ----------------------------------------------------------------------------------------------------------------
TotalFinaElf SA,
Sponsored ADR 2 89,400 11,266,188
--------------
89,249,734
- ----------------------------------------------------------------------------------------------------------------
FINANCIALS--31.0%
- ----------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--4.8%
UBS AG 525,400 45,011,018
- ----------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--9.2%
Bank of America
Corp. 383,400 16,769,916
- ----------------------------------------------------------------------------------------------------------------
Wachovia Corp. 390,800 19,743,216
- ----------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 805,400 48,485,080
--------------
84,998,212
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--9.4%
Capital One
Financial Corp. 331,800 25,332,930
- ----------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 205,000 9,384,900
- ----------------------------------------------------------------------------------------------------------------
JPMorgan Chase
& Co. 1,016,300 37,216,906
- ----------------------------------------------------------------------------------------------------------------
Lehman Brothers
Holdings, Inc. 122,900 14,707,443
--------------
86,642,179
VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
INSURANCE--4.7%
Everest Re
Group Ltd. 100,300 $ 9,974,835
- ----------------------------------------------------------------------------------------------------------------
Genworth Financial,
Inc., Cl. A 907,800 28,768,182
- ----------------------------------------------------------------------------------------------------------------
Platinum
Underwriters
Holdings Ltd. 157,200 4,478,628
--------------
43,221,645
- ----------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--2.9%
Countrywide
Financial Corp. 531,900 16,898,463
- ----------------------------------------------------------------------------------------------------------------
Freddie Mac 165,100 10,128,885
--------------
27,027,348
- ----------------------------------------------------------------------------------------------------------------
HEALTH CARE--3.6%
- ----------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--1.3%
Wyeth 271,000 12,075,760
- ----------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--2.3%
Sanofi-Aventis
SA, ADR 520,900 20,898,508
- ----------------------------------------------------------------------------------------------------------------
INDUSTRIALS--13.1%
- ----------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--9.6%
Honeywell
International, Inc. 1,338,800 45,786,960
- ----------------------------------------------------------------------------------------------------------------
Raytheon Co. 171,700 6,344,315
- ----------------------------------------------------------------------------------------------------------------
United Technologies
Corp. 724,100 37,131,848
--------------
89,263,123
- ----------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--3.5%
Cendant Corp. 1,850,300 32,232,226
- ----------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--15.0%
- ----------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--2.6%
Hutchinson
Technology, Inc. 1 187,300 4,645,040
- ----------------------------------------------------------------------------------------------------------------
International Business
Machines Corp. 235,400 19,274,552
--------------
23,919,592
- ----------------------------------------------------------------------------------------------------------------
SOFTWARE--12.4%
Microsoft Corp. 1,575,500 40,490,350
21 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
SOFTWARE Continued
Novell, Inc. 1 1,427,222 $ 10,875,432
- ----------------------------------------------------------------------------------------------------------------
Synopsys, Inc. 1 1,265,700 23,985,015
- ----------------------------------------------------------------------------------------------------------------
Take-Two Interactive
Software, Inc. 1,2 1,892,200 39,073,930
-------------
114,424,727
- ----------------------------------------------------------------------------------------------------------------
MATERIALS--3.5%
- ----------------------------------------------------------------------------------------------------------------
CHEMICALS--2.4%
Praxair, Inc. 447,200 22,096,152
- ----------------------------------------------------------------------------------------------------------------
METALS & MINING--1.1%
Phelps Dodge Corp. 87,300 10,517,031
- ----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.5%
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.5%
IDT Corp., Cl. B 1 1,146,700 13,691,598
- ----------------------------------------------------------------------------------------------------------------
Sprint Nextel Corp. 401,400 9,356,634
--------------
23,048,232
- ----------------------------------------------------------------------------------------------------------------
UTILITIES--5.7%
- ----------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--4.8%
AES Corp. (The) 1 1,473,500 23,413,915
- ----------------------------------------------------------------------------------------------------------------
CMS Energy Corp. 1 599,100 8,932,581
- ----------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc. 1 967,200 12,283,440
--------------
44,629,936
- ----------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.9%
Sempra Energy 194,000 8,594,200
--------------
Total Common Stocks
(Cost $854,364,994) 908,769,076
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.4%
- ----------------------------------------------------------------------------------------------------------------
Undivided interest of 0.59% in joint repurchase
agreement (Principal Amount/Value $647,082,000,
with a maturity value of $647,153,179) with
UBS Warburg LLC, 3.96%, dated 10/31/05,
to be repurchased at $3,817,420 on 11/1/05,
collateralized by Federal National Mortgage
Assn., 5%, 10/1/35, with a
value of $661,717,556
(Cost $3,817,000) $ 3,817,000 3,817,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
Total Investments, at Value
(excluding Investments Purchased
with Cash Collateral from
Securities Loaned)
(Cost $858,181,994) $ 912,586,076
- ----------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED--1.1%
- ----------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--1.1%
Undivided interest of 0.29% in joint repurchase
agreement (Principal Amount/Value $3,400,000,000,
with a maturity value of $3,400,382,500) with
Nomura Securities, 4.05%, dated 10/31/05,
to be repurchased at $9,985,423 on 11/1/05,
collateralized by U.S. Agency Mortgages,
4.04%--5.50%, 3/15/14--10/1/35,
with a value of $3,468,000,000 3
(Cost $9,984,300) $ 9,984,300 9,984,300
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $868,166,294) 99.7% 922,570,376
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 0.3 2,537,463
-----------------------------
NET ASSETS 100.0% $ 925,107,839
=============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Partial or fully-loaned security. See Note 5 of Notes to Financial
Statements.
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.
22 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES October 31, 2005
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of $10,106,380)
(cost $868,166,294)--see accompanying statement of investments $ 922,570,376
- ----------------------------------------------------------------------------------------------------------------
Cash 386,919
- ----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 14,181,495
Shares of capital stock sold 838,271
Interest and dividends 267,980
Other 42,337
--------------
Total assets 938,287,378
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 9,984,300
- ----------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of capital stock redeemed 1,546,758
Investments purchased 845,233
Shareholder communications 240,562
Transfer and shareholder servicing agent fees 197,547
Distribution and service plan fees 183,838
Directors' compensation 142,853
Other 38,448
--------------
Total liabilities 13,179,539
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS $ 925,107,839
==============
- ----------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 42,639,637
- ----------------------------------------------------------------------------------------------------------------
Additional paid-in capital 648,544,667
- ----------------------------------------------------------------------------------------------------------------
Accumulated net investment income 4,204,288
- ----------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 175,315,165
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 54,404,082
--------------
NET ASSETS $ 925,107,839
==============
23 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $648,207,094 and
29,459,746 shares of capital stock outstanding) $ 22.00
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 23.34
- ----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $133,285,249 and 6,423,536 shares
of capital stock outstanding) $ 20.75
- ----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $88,272,113 and 4,254,772 shares
of capital stock outstanding) $ 20.75
- ----------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $22,417,419 and
1,026,798 shares of capital stock outstanding) $ 21.83
- ----------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$32,925,964 and 1,474,785 shares of capital stock outstanding) $ 22.33
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENT OF OPERATIONS For the Year Ended October 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $113,546) $ 19,837,692
- --------------------------------------------------------------------------------
Interest 410,520
- --------------------------------------------------------------------------------
Other income 37,203
- --------------------------------------------------------------------------------
Portfolio lending fees 28,021
--------------
Total investment income 20,313,436
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 6,955,259
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,625,578
Class B 1,518,536
Class C 893,972
Class N 107,408
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,519,154
Class B 415,058
Class C 246,694
Class N 61,004
Class Y 79,790
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 258,733
Class B 110,934
Class C 43,317
Class N 4,347
- --------------------------------------------------------------------------------
Custodian fees and expenses 33,906
- --------------------------------------------------------------------------------
Directors' compensation 32,661
- --------------------------------------------------------------------------------
Administration Service Fees 1,500
- --------------------------------------------------------------------------------
Other 141,979
--------------
Total expenses 14,049,830
Less reduction to custodian expenses (1,460)
--------------
Net expenses 14,048,370
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 6,265,066
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 205,902,560
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (106,614,838)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 105,552,788
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER QUEST VALUE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2005 2004
- --------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------
Net investment income $ 6,265,066 $ 4,126,783
- --------------------------------------------------------------------------------------
Net realized gain 205,902,560 42,796,329
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (106,614,838) 35,222,302
-------------------------------
Net increase in net assets resulting from operations 105,552,788 82,145,414
- --------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (5,856,566) (1,818,065)
Class B -- --
Class C (104,452) --
Class N (128,052) (4,755)
Class Y (309,331) (83,853)
- --------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (578,230) --
Class B (142,952) --
Class C (75,696) --
Class N (16,939) --
Class Y (24,365) --
- --------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital stock transactions:
Class A (91,673,491) 3,988,765
Class B (47,114,527) (65,573,308)
Class C (2,999,077) (139,229)
Class N 1,659,657 5,137,266
Class Y (598,969) (3,629,908)
- --------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------
Total increase (decrease) (42,410,202) 20,022,327
- --------------------------------------------------------------------------------------
Beginning of period 967,518,041 947,495,714
-------------------------------
End of period (including accumulated net investment
income of $4,204,288 and $4,335,950, respectively) $ 925,107,839 $ 967,518,041
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER QUEST VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.91 $ 18.30 $ 15.03 $ 17.97 $ 19.40
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .18 1 .13 1 .07 .03 .03
Net realized and unrealized gain (loss) 2.10 1.53 3.20 (2.56) (1.01)
-----------------------------------------------------------------------------------
Total from investment operations 2.28 1.66 3.27 (2.53) (.98)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.17) (.05) -- -- --
Distributions from net realized gain (.02) -- -- (.41) (.45)
-----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.19) (.05) -- (.41) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 22.00 $ 19.91 $ 18.30 $ 15.03 $ 17.97
===================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.51% 9.11% 21.76% (14.52)% (5.23)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 648,207 $ 671,678 $ 613,601 $ 487,750 $ 567,124
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 674,531 $ 662,530 $ 518,901 $ 567,625 $ 593,910
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.85% 0.66% 0.48% 0.21% 0.21%
Total expenses 1.24% 4 1.37% 4,5 1.51% 4,5 1.59% 4,5 1.57% 4,6
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 13% 17% 12% 19%
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%.
6. Voluntary waiver of management fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER QUEST VALUE FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.77 $ 17.36 $ 14.37 $ 17.31 $ 18.82
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .01 1 (.03) 1 (.18) (.13) (.08)
Net realized and unrealized gain (loss) 1.99 1.44 3.17 (2.40) (.98)
---------------------------------------------------------------------------------
Total from investment operations 2.00 1.41 2.99 (2.53) (1.06)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain (.02) -- -- (.41) (.45)
---------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.02) -- -- (.41) (.45)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.75 $ 18.77 $ 17.36 $ 14.37 $ 17.31
=================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.65% 8.12% 20.81% (15.09)% (5.83)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 133,285 $ 164,156 $ 213,433 $ 229,555 $ 318,916
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 152,012 $ 192,420 $ 209,546 $ 296,203 $ 346,623
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.05% (0.19)% (0.30)% (0.47)% (0.45)%
Total expenses 2.09% 2.23% 2.35% 2.27% 2.21%
Expenses after payments and waivers and
reduction to custodian expenses 2.08% 2.23% 2.31% 2.27% 2.21%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 13% 17% 12% 19%
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER QUEST VALUE FUND, INC.
CLASS C YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.79 $ 17.37 $ 14.38 $ 17.32 $ 18.83
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) -- 1,2 (.03) 1 (.08) (.08) (.05)
Net realized and unrealized gain (loss) 2.00 1.45 3.07 (2.45) (1.01)
--------------------------------------------------------
Total from investment operations 2.00 1.42 2.99 (2.53) (1.06)
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) -- -- -- --
Distributions from net realized gain (.02) -- -- (.41) (.45)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.04) -- -- (.41) (.45)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.75 $ 18.79 $ 17.37 $ 14.38 $ 17.32
========================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 10.66% 8.18% 20.79% (15.08)% (5.82)%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $88,272 $82,634 $76,529 $68,834 $81,771
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $89,578 $81,073 $68,992 $82,282 $84,956
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) 0.01% (0.18)% (0.32)% (0.46)% (0.42)%
Total expenses 2.06% 2.21% 2.35% 2.26% 2.19%
Expenses after payments and waivers and
reduction to custodian expenses 2.06% 2.21% 2.33% 2.26% 2.19%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 13% 17% 12% 19%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER QUEST VALUE FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 19.77 $ 18.19 $ 14.99 $ 17.96 $ 20.01
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment Operation:
Net investment income (loss) .11 2 .06 2 .02 (.01) -- 3
Net realized and unrealized gain (loss) 2.10 1.53 3.18 (2.55) (2.05)
--------------------------------------------------------
Total from investment operations 2.21 1.59 3.20 (2.56) (2.05)
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) (.01) -- -- --
Distributions from net realized gain (.02) -- -- (.41) --
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.15) (.01) -- (.41) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 21.83 $ 19.77 $ 18.19 $ 14.99 $ 17.96
========================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 11.21% 8.73% 21.35% (14.70)% (10.25)%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $22,418 $18,706 $12,361 $ 8,147 $ 2,696
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,527 $15,716 $ 9,847 $ 6,363 $ 651
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) 0.51% 0.30% 0.17% (0.02)% (0.13)%
Total expenses 1.53% 1.71% 1.87% 1.79% 1.72%
Expenses after payments and waivers and
reduction to custodian expenses 1.53% 1.71% 1.82% 1.79% 1.72%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 13% 17% 12% 19%
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. Less than $0.005 per share.
4. 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.
5. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER QUEST VALUE FUND, INC.
CLASS Y YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.19 $ 18.53 $ 15.19 $ 18.10 $ 19.47
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .18 1 .07 .05 .04
Net realized and unrealized gain (loss) 2.14 1.54 3.27 (2.55) (.96)
--------------------------------------------------------
Total from investment operations 2.38 1.72 3.34 (2.50) (.92)
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.22) (.06) -- -- --
Distributions from net realized gain (.02) -- -- (.41) (.45)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.24) (.06) -- (.41) (.45)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 22.33 $ 20.19 $ 18.53 $ 15.19 $ 18.10
========================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.84% 9.34% 21.99% (14.25)% (4.89)%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $32,926 $30,344 $31,571 $21,842 $20,681
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $32,408 $28,011 $26,426 $23,774 $18,259
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.08% 0.90% 0.69% 0.50% 0.52%
Total expenses 0.98% 1.15% 1.37% 1.38% 1.25%
Expenses after payments and waivers and
reduction to custodian expenses 0.98% 1.15% 1.30% 1.28% 1.22%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 129% 13% 17% 12% 19%
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Value Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund's investment objective is to seek capital appreciation. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager became
the Fund's investment advisor on November 22, 1995, and assumed responsibility
for day-to-day management of the Fund's portfolio on January 1, 2005. From
November 22, 1995 to December 31, 2004, the Manager had engaged OpCap Advisors
as the Fund's Sub-Advisor.
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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Directors. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, in the country that is identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all
32 | OPPENHEIMER QUEST VALUE FUND, INC.
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
ending at, or most recently prior to, the time when the Fund's assets are
valued. 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 Directors. 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 Directors.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
33 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 provisions are
required, however, during the year ended October 31, 2005, the Fund paid federal
excise tax of $1,673.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
---------------------------------------------------------------------
$29,690,271 $151,269,449 $-- $53,102,784
1. During the fiscal year ended October 31, 2005, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended October 31, 2004, the Fund utilized $42,423,928
of capital loss carryforward to offset capital gains realized in that fiscal
year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for October 31, 2005. Net assets of the
Fund were unaffected by the reclassifications.
INCREASE TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL INCOME ON INVESTMENTS 3
---------------------------------------------------------------------
$28,435,763 $1,673 $28,437,436
3. $28,437,436, including $24,356,253 of long-term capital gain, was distributed
in connection with Fund share redemptions.
34 | OPPENHEIMER QUEST VALUE FUND, INC.
The tax character of distributions paid during the years ended October 31, 2005
and October 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2005 OCTOBER 31, 2004
----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 6,398,401 $ 1,906,673
Long-term capital gain 838,182 --
-----------------------------------
Total $ 7,236,583 $ 1,906,673
===================================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 869,467,592
================
Gross unrealized appreciation $ 83,154,673
Gross unrealized depreciation (30,051,889)
----------------
Net unrealized appreciation $ 53,102,784
================
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
October 31, 2005, the Fund's projected benefit obligations were increased by
$1,378 and payments of $3,256 were made to retired directors, resulting in an
accumulated liability of $130,623 as of October 31, 2005.
The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors 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 Director 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 Director. The
Fund purchases shares of the funds selected for deferral by the Director 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 directors' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
35 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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 CAPITAL STOCK
The Fund has authorized 125 million shares of $1.00 par value capital stock in
the aggregate to be apportioned among each class of shares. Transactions in
shares of capital stock were as follows:
YEAR ENDED OCTOBER 31, 2005 YEAR ENDED OCTOBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
CLASS A
Sold 5,570,190 $ 119,489,722 9,121,307 $ 176,840,063
Dividends and/or
distributions reinvested 290,044 6,027,118 93,242 1,710,058
Redeemed (10,143,657) (217,190,331) (9,001,270) (174,561,356)
------------------------------------------------------------------
Net increase (decrease) (4,283,423) $ (91,673,491) 213,279 $ 3,988,765
==================================================================
36 | OPPENHEIMER QUEST VALUE FUND, INC.
YEAR ENDED OCTOBER 31, 2005 YEAR ENDED OCTOBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
CLASS B
Sold 1,231,711 $ 25,040,998 1,820,956 $ 33,402,292
Dividends and/or
distributions reinvested 6,659 131,504 -- --
Redeemed (3,558,851) (72,287,029) (5,373,583) (98,975,600)
-----------------------------------------------------------------
Net decrease (2,320,481) $ (47,114,527) (3,552,627) $ (65,573,308)
=================================================================
- ------------------------------------------------------------------------------------------------------
CLASS C
Sold 828,506 $ 16,869,972 962,461 $ 17,687,805
Dividends and/or
distributions reinvested 8,335 164,529 -- --
Redeemed (980,145) (20,033,578) (970,397) (17,827,034)
-----------------------------------------------------------------
Net decrease (143,304) $ (2,999,077) (7,936) $ (139,229)
=================================================================
- ------------------------------------------------------------------------------------------------------
CLASS N
Sold 488,825 $ 10,470,349 412,806 $ 7,960,801
Dividends and/or
distributions reinvested 6,472 133,847 240 4,396
Redeemed (414,780) (8,944,539) (146,254) (2,827,931)
-----------------------------------------------------------------
Net increase 80,517 $ 1,659,657 266,792 $ 5,137,266
=================================================================
- ------------------------------------------------------------------------------------------------------
CLASS Y
Sold 578,280 $ 12,594,641 696,960 $ 13,737,799
Dividends and/or
distributions reinvested 15,860 333,695 4,517 83,852
Redeemed (622,558) (13,527,305) (902,125) (17,451,559)
-----------------------------------------------------------------
Net decrease (28,418) $ (598,969) (200,648) $ (3,629,908)
=================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2005, were as
follows:
PURCHASES SALES
- -----------------------------------------------------------------
Investment securities $1,226,217,221 $1,364,362,861
- --------------------------------------------------------------------------------
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 Fund
provided for a fee at an rate of 0.75% of the first $200 million of average
annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next
$200 million, 0.66% of the next $200 million, 0.60% of the next $700 million,
0.58% of the next $1 billion and 0.56% of average annual net assets in excess of
$2.5 billion. From January 1, 2004 through December 31, 2004, the annual
advisory fee rate was 0.90% of the first $400 million of average annual net
assets of the Fund, 0.85% of the next $400 million, 0.80% of the next
37 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
$400 million, 0.70% of the next $400 million, 0.65% of the next $400 million and
0.60% of average annual net assets in excess of $2 billion.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
SUB-ADVISOR FEES. For the year ended October 31, 2005, the Manager paid $726,434
to OpCap Advisors for its services to the Fund. The subadvisory 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 year ended October 31, 2005, the Fund paid
$2,339,939 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 Directors has 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 Directors and its independent directors must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of
38 | OPPENHEIMER QUEST VALUE FUND, INC.
such termination. The Distributor's aggregate uncompensated expenses under the
plan at October 31, 2005 for Class B, Class C and Class N shares were
$4,241,971, $2,859,533 and $381,060, respectively. Fees incurred by the Fund
under the plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------
October 31, 2005 $349,126 $15,011 $347,602 $12,730 $16,792
- --------------------------------------------------------------------------------
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 U.S.
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 continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower. As of October 31, 2005,
the Fund had on loan securities valued at $10,106,380. Collateral of $9,984,300
was received for the loans, all of which was received in cash and subsequently
invested in approved instruments.
39 | OPPENHEIMER QUEST VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
40 | OPPENHEIMER QUEST VALUE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER QUEST VALUE FUND, INC.:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Quest Value Fund, Inc., including the statement of investments, as
of October 31, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2005, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Quest Value Fund, Inc. as of October 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with U.S.
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
December 20, 2005
41 | OPPENHEIMER QUEST VALUE FUND, INC.
FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends and distributions of $0.1913, $0.0172, $0.0409, $0.1881 and
$0.2354 per share were paid to Class A, Class B, Class C, Class N and Class Y
shareholders, respectively, on December 8, 2004, of which $0.0172 was designated
as a "capital gain distribution" for federal income tax purposes. Whether
received in stock or in cash, the capital gain distribution should be treated by
shareholders as a gain from the sale of the capital assets held for more than
one year (long-term capital gains).
Dividends, if any, paid by the Fund during the fiscal year ended October
31, 2005 which are not designated as capital gain distributions should be
multiplied by 48.17% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended October 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $19,810,629 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2006, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
42 | OPPENHEIMER QUEST VALUE FUND, INC.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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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 the 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
http://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.
43 | OPPENHEIMER QUEST VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited
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NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER
FUND, LENGTH OF SERVICE, AGE OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH DIRECTOR IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, COLORADO
DIRECTORS 80112-3924. EACH DIRECTOR SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm) (since 1982); General Partner of
Chairman of the Board Trivest Venture Fund (private venture capital fund); President of Investment Counseling
(since 2001), Federated Investors, Inc. (1973-1982); Trustee of the following open-end investment
Director (since 1985) companies: Cash Assets Trust, PIMCO Advisors VIT, Tax Free Trust of Arizona (since 1984) and
Age: 72 four funds for the Hawaiian Tax Free Trust. Oversees 10 portfolios in the OppenheimerFunds
complex.
PAUL Y. CLINTON, Principal of Clinton Management Associates (financial and venture capital consulting firm)
Director (since 1983) (since 1996); Trustee of PIMCO Advisors VIT (open-end investment company); Trustee of Capital
Age: 74 Cash Management Trust (money market fund) (1979-December 2004); Trustee of Narragansett
Insured Tax-Free Income Fund (tax-exempt bond fund) (1996-December 2004); Trustee of Prime
Cash Fund (1996-December 2004); and Director of OCC Cash Reserves, Inc. (open-end investment
company) (1989-December 2002). Oversees 10 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 48 portfolios in the
Director (since 1998) OppenheimerFunds complex.
Age: 72
LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Management Corporation (open-end investment company)
Director (since 1984) (since December 2004); Chairman and Chief Executive Officer of Aquila Management Corporation
Age: 76 (since August 1984); Chairman of the Board and President of Aquila Management Corporation
(August 1984-December 1984); Vice President, Director and Secretary of Aquila Distributors,
Inc. (distributor of Aquila Management Corporation); Treasurer of Aquila Distributors, Inc.;
President and Chairman of the Board of Trustees of Capital Cash Management Trust ("CCMT");
President and Director of STCM Management Company, Inc. (sponsor and adviser to CCMT);
Chairman, President and Director of InCap Management Corporation (nature of business);
Sub-Advisor and Administrator of Prime Cash Fund & Short Term Asset Reserves (nature of
business); Director of OCC Cash Reserves, Inc. (open-end investment company) (until June
2003); Trustee of OCC Accumulation Trust (open-end investment company); Chairman of the Board
of Trustees and President of Hawaiian Tax-Free Trust (open-end investment company) (February
1985-December 2003); Trustee Emeritus of Brown University (since June 1983). Oversees 10
portfolios in the OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995); Director of
Director (since 2001) Special Value Opportunities Fund, LLC (registered investment company) (since September
Age: 62 2004); Director of Zurich Financial Investment Advisory Board (affiliate of the Manager's
parent company) (since October 2004); Board of Governing Trustees of The Jackson Laboratory
(non-profit) (since August 1990); Trustee of the Institute for Advanced Study (non-profit
educational institute) (since May 1992); Special Limited Partner of Odyssey Investment
Partners, LLC (private equity investment) (January 1999-September 2004); Trustee of Research
Foundation of AIMR (2000-2002) (investment research, non-profit); Governor, Jerome Levy
Economics Institute of Bard College (August 1990-September 2001) (economics research);
Director of Ray & Berendtson, Inc.
44 | OPPENHEIMER QUEST VALUE FUND, INC.
BRIAN F. WRUBLE, (May 2000-April 2002) (executive search firm). Oversees 48 portfolios in the
Continued OppenheimerFunds complex.
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OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. LEAVY, MURPHY AND
ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR
MESSRS. VANDEHEY AND WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER
SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CHRIS LEAVY, Senior Vice President of the Manager since September 2000. Formerly a portfolio manager of
Vice President Morgan Stanley Dean Witter Investment Management (1997-September 2000). A officer of 8
(since 2005) portfolios in the OppenheimerFunds complex.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President (since
President (since 2001) September 2000) of the Manager; President and director or trustee of other Oppenheimer funds;
Age: 56 President and Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent holding
company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the
Manager) (since November 2001); Chairman and Director of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since
July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust
program established by the Manager) (since July 2001); Director of the following investment
advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital
Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since November 1, 2001) and Director
(since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company) (since February 1997);
Director of DLB Acquisition Corporation (holding company parent of Babson Capital Management
LLC) (since June 1995); Member of the Investment Company Institute's Board of Governors (since
October 3, 2003); Chief Operating Officer of the Manager (September 2000-June 2001); President
and Trustee of MML Series Investment Fund and MassMutual Select Funds (open-end investment
companies) (November 1999-November 2001); Director of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive Officer and Director of MML Bay State Life
Insurance Company (September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia
Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees
77 portfolios in the OppenheimerFunds complex as a director or trustee and officer and an
additional 10 portfolios as an officer.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Vice
Vice President and President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and
Chief Compliance Officer Shareholder Services, Inc. (since June 1983). Former Vice President and Director of Internal
(since 2004) Audit of the Manager (1997-February 2004). An officer of 87 portfolios in the
Age: 55 OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the
Treasurer (since 1999) following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc.,
Age: 46 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and Oppenheimer
Partnership Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since March
2000),
45 | OPPENHEIMER QUEST VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited / Continued
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BRIAN W. WIXTED, OppenheimerFunds International Ltd. (since May 2000), OppenheimerFunds plc (since May 2000),
Continued OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy
Program (charitable trust program established by the Manager) (since June 2003); Treasurer
and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial
Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust Company-Mutual
Fund Services Division (March 1995-March 1999). An officer of 87 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002) of the
Secretary (since 2001) Manager; General Counsel and Director of the Distributor (since December 2001); General
Age: 57 Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice
President and General Counsel of HarbourView Asset Management Corporation (since December
2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since
September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc.
(since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November
2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services,
Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General
Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November
2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc. (since November
2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice
President (May 1985-December 2003), Acting General Counsel (November 2001-February 2002) and
Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001), and OppenheimerFunds International Ltd.
(September 1997-November 2001). An officer of 87 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S DIRECTORS AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
46 | OPPENHEIMER QUEST VALUE FUND, INC.
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee financial expert," whether
through the type of specialized education or experience described in that
Instruction. The Board has concluded that while the members of the Audit
Committee collectively have the necessary attributes and experience required to
serve effectively as an Audit Committee, no single member possesses all of the
required technical attributes through the particular methods of education or
experience set forth in the Instructions to be designated as an audit committee
financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $15,000 in fiscal 2005 and $15,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $156,805 in fiscal 2005 and $39,500 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and $6,000 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: Computations of capital gain tax liability, preparation of tax
returns, preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2005 and $114 in fiscal 2004.
Such services: the cost to the principal accountant of attending audit committee
meetings.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $161,805 in fiscal 2005 and $45,614 in fiscal
2004 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES 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 FUND'S AUDIT COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Audit Committee (the "Committee") will evaluate potential Board
candidates to assess their qualifications. The Committee shall have the
authority, upon approval of the Board, to retain an executive search firm
to assist in this effort. The Committee may consider recommendations by
business and personal contacts of current Board members and by executive
search firms which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider the
advice and recommendation of the Funds' investment manager and its
affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee
evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the 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 October 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
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 Value Fund, Inc.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: December 20, 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: December 20, 2005
By: /s/ Brian W. Wixted
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Brian W. Wixted
Principal Financial Officer
Date: December 20, 2005