UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5225
OPPENHEIMER QUEST FOR VALUE FUNDS
(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, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
OPPENHEIMER QUEST BALANCED FUND(SM)
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Pharmaceuticals 9.9%
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Computers & Peripherals 8.3
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Hotels, Restaurants & Leisure 8.0
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Health Care Providers & Services 6.3
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Thrifts & Mortgage Finance 5.3
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Oil & Gas 5.2
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Insurance 4.6
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Multiline Retail 3.7
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Household Durables 3.5
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Diversified Telecommunication Services 3.2
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Countrywide Financial Corp. 5.3%
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ConocoPhillips 5.2
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Pfizer, Inc. 5.0
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Royal Caribbean Cruises Ltd. 4.6
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Roche Holding Ltd., Sponsored ADR 4.4
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Apple Computer, Inc. 3.8
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Federated Department Stores, Inc. 3.7
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Centex Corp. 3.5
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AMBAC Financial Group, Inc. 3.3
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Aetna, Inc. 3.2
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
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7 | OPPENHEIMER QUEST BALANCED FUND
TOP HOLDINGS AND ALLOCATIONS
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PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Stocks 72.7%
Bonds and Notes 25.9
Cash Equivalents 1.4
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on the total market value of investments.
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8 | OPPENHEIMER QUEST BALANCED FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2006, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. In the one-year period ended
October 31, 2006, Oppenheimer Quest Balanced Fund underperformed the broad U.S.
stock market, as measured by the S&P 500 Index, but outpaced the domestic bond
market, as measured by the Lehman Brothers Aggregate Bond Index. The Fund's
performance received a boost from a strong tilt toward equities, which
significantly outperformed bonds, good stock selection in the healthcare sector
and a defensive interest-rate positioning for the bond portfolio. The relative
gains from these positions were partially offset by weakness in several consumer
discretionary and information technology stocks.
As always, we positioned the Fund's equity portfolio in undervalued stocks
that, in our view, stood to appreciate once investors factored in a changing
environment or the company's underappreciated strengths. For example, the Fund's
largest contributor was Pfizer, Inc., which also is one of the Fund's largest
holdings as of period close. We began purchasing shares of this pharmaceuticals
company more than one year ago, after investor anxiety about its patent
protections (for LIPITOR), plus problems that forced it to withdraw a major
pain-relieving drug (BETREX) from the market, led to a large decline in the
stock price. During the past year, Pfizer won several lawsuits upholding its
Lipitor patent position. Additionally, management, realizing the loss of BETREX
would impact growth rates, took steps to rein in costs and maintain
profitability. As a result, the stock rebounded, and the benefit was enhanced by
our large allocation.
Other strong contributors included managed care provider Aetna, Inc., Inco
Ltd., a Canadian nickel producer, Eaton Corp., a diversified manufacturing
enterprise, Federated Department Stores, Inc., owners of Macy's and other retail
chains; and Apple Computer, Inc. With the exception of Aetna, each benefited
from company-specific developments during the period. For example, Inco's stock
(which has now been sold) bucked the recent downward trend in materials prices
because the company is being bought out at a premium. Apple, a more recent
purchase, is growing along with sales of the IPod. More importantly, recent
laptop and computer introductions have been well received, leading us to believe
that Apple can capture market share in the future from Windows-based personal
computer manufacturers. Another new holding was NII Holdings, Inc., a U.S.
company that markets cell-phone services in Latin America. The stock was a
strong contributor late in the period and, we believe, will be so again. The
markets it serves--most notably, Brazil and Mexico--are vast and poorly
penetrated.
Partially offsetting the gains from these and others stocks were Apollo
Group, Inc., Royal Caribbean Cruises Ltd., and McAfee, Inc. We exited McAfee, a
provider of internet security software, after concluding that, in the future,
its largest competition will be Microsoft. We feel that, in this situation, the
underdog will not win.
9 | OPPENHEIMER QUEST BALANCED FUND
FUND PERFORMANCE DISCUSSION
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We also sold our investment in Apollo Group, Inc., one of the nation's
largest providers of post-secondary adult education. Enrollment within its
traditional market, working adults, is declining, and the company is pursuing a
new market: high-school graduates who want a more flexible, lower-cost
alternative to traditional colleges. We underestimated the difficulty of this
transition and will re-evaluate the stock in the future.
In contrast, we added to our investment in the troubled cruise line
industry, even though Royal Caribbean Cruises, which has been a major
contributor to performance in prior years, was a major detractor from results
this year. Investors continue to punish the stock, due to concerns about high
fuel costs and lower demand for berths if consumers curb their spending. More
focused on the long-term dynamics of the industry than these near-term concerns,
we bought additional shares as the price declined. Royal Caribbean and one other
competitor dominate the Caribbean cruise market, giving them ample room to
enhance profitability. We believe that, in the long run, that will prove to be
the more significant factor.
Believing that bonds, especially longer-term bonds, were too expensive, we
limited the Fund's exposure to fixed-income. In addition, we invested the bond
portfolio defensively, keeping a below-index duration (i.e., a relatively low
sensitivity to interest-rate movements). We emphasized short-term, high-quality
bonds, which, for some of the period, provided higher yields than
comparable-maturity Treasuries for little incremental risk.
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, 2006. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. In the case of Class Y shares, performance is measured from the inception
of the Class on May 1, 2000. The Fund's performance reflects the deduction of
the maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C and Class N shares, and reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
The Fund's performance is compared to the performance of the 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.
10 | OPPENHEIMER QUEST BALANCED FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Balanced Fund(SM) (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Balanced
Fund(SM)
(Class A) S&P 500 Index
-------------- -------------
10/31/1996 $ 9,425 $10,000
01/31/1997 $10,194 $11,200
04/30/1997 $ 9,969 $11,471
07/31/1997 $11,596 $13,725
10/31/1997 $11,799 $13,210
01/31/1998 $12,795 $14,213
04/30/1998 $14,262 $16,182
07/31/1998 $13,852 $16,375
10/31/1998 $15,091 $16,118
01/31/1999 $17,272 $18,834
04/30/1999 $18,138 $19,714
07/31/1999 $18,198 $19,683
10/31/1999 $18,333 $20,254
01/31/2000 $17,949 $20,782
04/30/2000 $18,184 $21,709
07/31/2000 $17,719 $21,447
10/31/2000 $19,393 $21,485
01/31/2001 $20,717 $20,595
04/30/2001 $21,156 $18,894
07/31/2001 $21,020 $18,376
10/31/2001 $19,711 $16,138
01/31/2002 $19,821 $17,272
04/30/2002 $18,790 $16,511
07/31/2002 $15,591 $14,036
10/31/2002 $15,398 $13,701
01/31/2003 $16,236 $13,298
04/30/2003 $17,464 $14,314
07/31/2003 $18,926 $15,529
10/31/2003 $20,306 $16,549
01/31/2004 $21,978 $17,892
04/30/2004 $21,460 $17,587
07/31/2004 $21,762 $17,573
10/31/2004 $22,294 $18,107
01/31/2005 $22,813 $19,005
04/30/2005 $22,216 $18,701
07/31/2005 $24,019 $20,041
10/31/2005 $23,072 $19,685
01/31/2006 $24,150 $20,977
04/30/2006 $24,900 $21,581
07/31/2006 $23,920 $21,118
10/31/2006 $25,557 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 4.40% 5-Year 4.09% 10-Year 9.84%
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 16 FOR FURTHER
INFORMATION.
11 | OPPENHEIMER QUEST BALANCED FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Balanced Fund(SM) (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Balanced
Fund(SM) (Class B) S&P 500 Index
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10/31/1996 $10,000 $10,000
01/31/1997 $10,803 $11,200
04/30/1997 $10,551 $11,471
07/31/1997 $12,257 $13,725
10/31/1997 $12,455 $13,210
01/31/1998 $13,489 $14,213
04/30/1998 $15,004 $16,182
07/31/1998 $14,549 $16,375
10/31/1998 $15,828 $16,118
01/31/1999 $18,092 $18,834
04/30/1999 $18,975 $19,714
07/31/1999 $19,007 $19,683
10/31/1999 $19,126 $20,254
01/31/2000 $18,691 $20,782
04/30/2000 $18,916 $21,709
07/31/2000 $18,391 $21,447
10/31/2000 $20,102 $21,485
01/31/2001 $21,445 $20,595
04/30/2001 $21,873 $18,894
07/31/2001 $21,691 $18,376
10/31/2001 $20,308 $16,138
01/31/2002 $20,401 $17,272
04/30/2002 $19,317 $16,511
07/31/2002 $16,005 $14,036
10/31/2002 $15,776 $13,701
01/31/2003 $16,634 $13,298
04/30/2003 $17,892 $14,314
07/31/2003 $19,390 $15,529
10/31/2003 $20,804 $16,549
01/31/2004 $22,517 $17,892
04/30/2004 $21,986 $17,587
07/31/2004 $22,295 $17,573
10/31/2004 $22,840 $18,107
01/31/2005 $23,372 $19,005
04/30/2005 $22,760 $18,701
07/31/2005 $24,607 $20,041
10/31/2005 $23,637 $19,685
01/31/2006 $24,742 $20,977
04/30/2006 $25,510 $21,581
07/31/2006 $24,506 $21,118
10/31/2006 $26,184 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 4.90% 5-Year 4.21% 10-Year 10.10%
12 | OPPENHEIMER QUEST BALANCED FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Balanced Fund(SM) (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Balanced
Fund(SM) (Class C) S&P 500 Index
------------------ -------------
10/31/1996 $10,000 $10,000
01/31/1997 $10,797 $11,200
04/30/1997 $10,546 $11,471
07/31/1997 $12,251 $13,725
10/31/1997 $12,451 $13,210
01/31/1998 $13,486 $14,213
04/30/1998 $15,002 $16,182
07/31/1998 $14,549 $16,375
10/31/1998 $15,827 $16,118
01/31/1999 $18,084 $18,834
04/30/1999 $18,969 $19,714
07/31/1999 $19,012 $19,683
10/31/1999 $19,119 $20,254
01/31/2000 $18,684 $20,782
04/30/2000 $18,910 $21,709
07/31/2000 $18,395 $21,447
10/31/2000 $20,094 $21,485
01/31/2001 $21,441 $20,595
04/30/2001 $21,870 $18,894
07/31/2001 $21,689 $18,376
10/31/2001 $20,306 $16,138
01/31/2002 $20,398 $17,272
04/30/2002 $19,314 $16,511
07/31/2002 $16,000 $14,036
10/31/2002 $15,759 $13,701
01/31/2003 $16,599 $13,298
04/30/2003 $17,837 $14,314
07/31/2003 $19,279 $15,529
10/31/2003 $20,642 $16,549
01/31/2004 $22,309 $17,892
04/30/2004 $21,741 $17,587
07/31/2004 $22,018 $17,573
10/31/2004 $22,521 $18,107
01/31/2005 $22,984 $19,005
04/30/2005 $22,362 $18,701
07/31/2005 $24,122 $20,041
10/31/2005 $23,130 $19,685
01/31/2006 $24,161 $20,977
04/30/2006 $24,862 $21,581
07/31/2006 $23,848 $21,118
10/31/2006 $25,436 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 8.97% 5-Year 4.61% 10-Year 9.79%
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 16 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER QUEST BALANCED FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Balanced Fund(SM) (Class N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Balanced
Fund(SM) (Class N) S&P 500 Index
------------------ -------------
03/01/2001 $10,000 $10,000
04/30/2001 $10,345 $10,094
07/31/2001 $10,271 $ 9,817
10/31/2001 $ 9,630 $ 8,621
01/31/2002 $ 9,690 $ 9,227
04/30/2002 $ 9,183 $ 8,821
07/31/2002 $ 7,616 $ 7,499
10/31/2002 $ 7,512 $ 7,320
01/31/2003 $ 7,920 $ 7,104
04/30/2003 $ 8,514 $ 7,647
07/31/2003 $ 9,219 $ 8,296
10/31/2003 $ 9,879 $ 8,841
01/31/2004 $10,686 $ 9,559
04/30/2004 $10,420 $ 9,396
07/31/2004 $10,567 $ 9,388
10/31/2004 $10,814 $ 9,674
01/31/2005 $11,055 $10,154
04/30/2005 $10,763 $ 9,991
07/31/2005 $11,620 $10,707
10/31/2005 $11,150 $10,517
01/31/2006 $11,667 $11,207
04/30/2006 $12,020 $11,530
07/31/2006 $11,539 $11,282
10/31/2006 $12,316 $12,234
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 9.45% 5-Year 5.04% Since Inception (3/1/01) 3.74%
14 | OPPENHEIMER QUEST BALANCED FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Balanced Fund(SM) (Class Y)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Balanced
Fund(SM) (Class Y) S&P 500 Index
------------------ -------------
05/01/2000 $10,000 $10,000
07/31/2000 $ 9,795 $ 9,879
10/31/2000 $10,732 $ 9,897
01/31/2001 $11,482 $ 9,487
04/30/2001 $11,740 $ 8,703
07/31/2001 $11,677 $ 8,464
10/31/2001 $10,962 $ 7,434
01/31/2002 $11,046 $ 7,956
04/30/2002 $10,484 $ 7,605
07/31/2002 $ 8,712 $ 6,466
10/31/2002 $ 8,607 $ 6,311
01/31/2003 $ 9,089 $ 6,126
04/30/2003 $ 9,787 $ 6,594
07/31/2003 $10,611 $ 7,153
10/31/2003 $11,396 $ 7,623
01/31/2004 $12,344 $ 8,242
04/30/2004 $12,058 $ 8,101
07/31/2004 $12,247 $ 8,095
10/31/2004 $12,555 $ 8,341
01/31/2005 $12,848 $ 8,755
04/30/2005 $12,533 $ 8,614
07/31/2005 $13,551 $ 9,232
10/31/2005 $13,031 $ 9,068
01/31/2006 $13,646 $ 9,663
04/30/2006 $14,085 $ 9,941
07/31/2006 $13,541 $ 9,728
10/31/2006 $14,480 $10,548
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/06
1-Year 11.11% 5-Year 5.72% Since Inception (5/1/00) 5.86%
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 16 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER QUEST BALANCED FUND
NOTES
- --------------------------------------------------------------------------------
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. The Fund's
subadvisor during the period was Oppenheimer Capital LLP, which was the Fund's
advisor prior to 11/22/95. The portfolio manager during the period was employed
by the Fund's subadvisor.
CLASS A shares of the Fund were first publicly offered on 11/1/91. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. The Fund's maximum sales charge for Class A shares was lower
prior to 11/24/95, so actual performance may have been higher. Class A shares
are subject to a maximum annual 0.15% asset-based sales charge. There is a
voluntary waiver of a portion of the Class A asset-based sales charge as
described in the Prospectus.
CLASS B shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charges of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B does not
include any contingent deferred sales charge on redemptions and uses Class A
performance for the period after conversion. Class B shares are subject to an
annual 0.75% asset-based sales charge.
16 | OPPENHEIMER QUEST BALANCED FUND
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 5/1/00. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
17 | OPPENHEIMER QUEST BALANCED FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2006.
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
18 | OPPENHEIMER QUEST BALANCED FUND
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
(5/1/06) (10/31/06) OCTOBER 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,026.40 $5.99
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.31 5.97
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,022.30 9.94
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.43 9.90
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,023.10 9.68
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.68 9.65
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,024.60 7.58
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.74 7.55
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,028.00 4.46
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.82 4.44
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, 2006 are as follows:
CLASS EXPENSE RATIOS
- ----------------------------
Class A 1.17%
- ----------------------------
Class B 1.94
- ----------------------------
Class C 1.89
- ----------------------------
Class N 1.48
- ----------------------------
Class Y 0.87
- --------------------------------------------------------------------------------
19 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS October 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
COMMON STOCKS--72.7%
- ---------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--15.2%
- ---------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--8.0%
Carnival Corp. 1,500,000 $ 73,230,000
- ---------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 1 7,300,000 295,650,000
- ---------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc. 2,400,000 142,704,000
---------------
511,584,000
- ---------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--3.5%
Centex Corp. 4,250,000 222,275,000
- ---------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--3.7%
Federated Department Stores, Inc. 5,400,000 237,114,000
- ---------------------------------------------------------------------------------------------------------------
ENERGY--6.4%
- ---------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.2%
GlobalSantaFe Corp. 1,500,000 77,850,000
- ---------------------------------------------------------------------------------------------------------------
OIL & GAS--5.2%
ConocoPhillips 5,500,000 331,320,000
- ---------------------------------------------------------------------------------------------------------------
FINANCIALS--12.9%
- ---------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--3.0%
Merrill Lynch & Co., Inc. 2,200,000 192,324,000
- ---------------------------------------------------------------------------------------------------------------
INSURANCE--4.6%
AMBAC Financial Group, Inc. 2,540,000 212,064,600
- ---------------------------------------------------------------------------------------------------------------
American International Group, Inc. 1,200,000 80,604,000
---------------
292,668,600
- ---------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--5.3%
Countrywide Financial Corp. 9,000,000 343,080,000
- ---------------------------------------------------------------------------------------------------------------
HEALTH CARE--16.2%
- ---------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--6.3%
Aetna, Inc. 5,000,000 206,100,000
- ---------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc. 4,000,000 195,120,000
---------------
401,220,000
- ---------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--9.9%
Kos Pharmaceuticals, Inc. 2 750,000 37,312,500
- ---------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 12,000,000 319,800,000
- ---------------------------------------------------------------------------------------------------------------
Roche Holding Ltd., Sponsored ADR 3,187,000 279,977,950
---------------
637,090,450
20 | OPPENHEIMER QUEST BALANCED FUND
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
INDUSTRIALS--3.6%
- ---------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.4%
ChoicePoint, Inc. 2 2,430,000 $ 88,427,700
- ---------------------------------------------------------------------------------------------------------------
MACHINERY--2.2%
Eaton Corp. 2,000,000 144,860,000
- ---------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--12.7%
- ---------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--2.9%
Motorola, Inc. 8,000,000 184,480,000
- ---------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--8.3%
Apple Computer, Inc. 2 3,000,000 243,240,000
- ---------------------------------------------------------------------------------------------------------------
Dell, Inc. 2 5,000,000 121,650,000
- ---------------------------------------------------------------------------------------------------------------
EMC Corp. 2 10,000,000 122,500,000
- ---------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 1,200,000 46,488,000
---------------
533,878,000
- ---------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.5%
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 10,000,007 97,000,068
- ---------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--5.7%
- ---------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.2%
AT&T, Inc. 6,000,000 205,500,000
- ---------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--2.5%
NII Holdings, Inc. 2 2,500,000 162,575,001
---------------
Total Common Stocks (Cost $4,163,040,809) 4,663,246,819
UNITS
- ---------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ---------------------------------------------------------------------------------------------------------------
Raytheon Co. Wts., Exp. 6/16/11 2 (Cost $0) 97,453 1,531,961
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--25.9%
- ---------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--2.0%
- ---------------------------------------------------------------------------------------------------------------
AUTOMOBILES--0.5%
DaimlerChrysler North America Holding Corp., 4.75% Unsec. Nts., 1/15/08 $ 34,360,000 34,044,300
- ---------------------------------------------------------------------------------------------------------------
MEDIA--1.5%
CBS Corp., 5.625% Sr. Unsec. Nts., 5/1/07 19,560,000 19,576,841
- ---------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 9.25% Sr. Debs., 2/1/13 8,500,000 10,073,784
- ---------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 7.25% Sr. Unsec. Debs., 9/1/08 19,640,000 20,278,830
- ---------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 5.70% Nts., 7/15/11 41,285,000 42,175,683
---------------
92,105,138
21 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.3%
- ---------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.2%
CVS Corp., 3.875% Unsec. Nts., 11/1/07 $ 42,080,000 $ 41,378,106
- ---------------------------------------------------------------------------------------------------------------
Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 39,130,000 38,941,785
---------------
80,319,891
- ---------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--1.4%
General Mills, Inc., 6% Unsec. Nts., 2/15/12 44,190,000 45,514,772
- ---------------------------------------------------------------------------------------------------------------
Kellogg Co., 2.875% Nts., 6/1/08 43,500,000 41,943,614
- ---------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 4.625% Nts., 11/1/06 3,750,000 3,750,000
---------------
91,208,386
- ---------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.7%
Proctor & Gamble Co. (The), 3.50% Nts., 12/15/08 43,230,000 41,907,378
- ---------------------------------------------------------------------------------------------------------------
ENERGY--1.8%
- ---------------------------------------------------------------------------------------------------------------
OIL & GAS--1.8%
ChevronTexaco Capital Co., 3.50% Nts., 9/17/07 43,790,000 43,159,424
- ---------------------------------------------------------------------------------------------------------------
Marathon Oil Corp., 5.375% Unsec. Nts., 6/1/07 40,515,000 40,538,175
- ---------------------------------------------------------------------------------------------------------------
Valero Energy Corp., 6.125% Unsec. Nts., 4/15/07 28,750,000 28,816,901
---------------
112,514,500
- ---------------------------------------------------------------------------------------------------------------
FINANCIALS--10.3%
- ---------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--3.1%
Ameriprise Financial, Inc., 5.35% Sr. Unsec. Nts., 11/15/10 39,120,000 39,345,018
- ---------------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The), 7.80% Nts., 8/15/07 39,130,000 39,870,653
- ---------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, Inc., (USA), 5.75% Unsec. Nts., 4/15/07 47,410,000 47,475,568
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 29,880,000 30,479,990
- ---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 3.70% Nts., Series B, 4/21/08 43,990,000 43,078,923
---------------
200,250,152
- ---------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--2.6%
Household Finance Corp., 7% Sr. Unsec. Unsub. Nts., 5/15/12 20,000,000 21,674,840
- ---------------------------------------------------------------------------------------------------------------
KeyCorp, 2.75% Sr. Nts., Series G, 2/27/07 43,615,000 43,182,121
- ---------------------------------------------------------------------------------------------------------------
U.S. Bancorp:
4.50% Sr. Nts., Series P, 7/29/10 15,610,000 15,310,663
5.30% Nts., 4/28/09 14,800,000 14,873,837
- ---------------------------------------------------------------------------------------------------------------
Wachovia Corp., 4.375% Nts., 6/1/10 39,280,000 38,426,838
- ---------------------------------------------------------------------------------------------------------------
World Savings Bank FSB, 4.125% Sr. Nts., 3/10/08 30,080,000 29,572,400
---------------
163,040,699
22 | OPPENHEIMER QUEST BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--1.4%
American Express Credit Corp.:
3% Nts., 5/16/08 $ 19,460,000 $ 18,849,559
5% Nts., Series B, 12/2/10 34,230,000 34,209,633
- ---------------------------------------------------------------------------------------------------------------
SLM Corp., 4.50% Nts., Series A, 7/26/10 39,250,000 38,315,340
---------------
91,374,532
- ---------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.9%
CIT Group, Inc.:
4.75% Sr. Nts., 12/15/10 24,575,000 24,140,907
7.75% Sr. Unsec. Unsub. Nts., 4/2/12 15,000,000 16,647,795
- ---------------------------------------------------------------------------------------------------------------
Citigroup, Inc.:
5% Nts., 3/6/07 20,776,000 20,748,804
6% Nts., 2/21/12 15,000,000 15,589,185
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co., 5.25% Nts., 5/30/07 46,725,000 46,705,796
---------------
123,832,487
- ---------------------------------------------------------------------------------------------------------------
INSURANCE--1.3%
Berkshire Hathaway Finance Corp., 3.375% Nts., 10/15/08 43,940,000 42,526,494
- ---------------------------------------------------------------------------------------------------------------
International Lease Finance Corp., 5.625% Sr. Unsec. Unsub. Nts., 6/1/07 41,960,000 42,007,373
---------------
84,533,867
- ---------------------------------------------------------------------------------------------------------------
INDUSTRIALS--4.4%
- ---------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.3%
Boeing Capital Corp., 6.50% Nts., 2/15/12 27,625,000 29,357,143
- ---------------------------------------------------------------------------------------------------------------
General Dynamics Corp., 4.50% Sr. Unsec. Nts., 8/15/10 31,940,000 31,292,959
- ---------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 4.079% Nts., 11/16/06 43,840,000 43,817,817
- ---------------------------------------------------------------------------------------------------------------
Raytheon Co., 6.75% Nts., 8/15/07 43,810,000 44,225,976
---------------
148,693,895
- ---------------------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.7%
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 43,830,000 43,331,653
- ---------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.1%
Waste Management, Inc., 6.50% Sr. Unsub. Nts., 11/15/08 8,740,000 8,948,047
- ---------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.7%
General Electric Capital Corp.:
4.875% Nts., Series A, 10/21/10 24,450,000 24,286,967
6% Nts., 6/15/12 19,700,000 20,516,230
---------------
44,803,197
23 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
MACHINERY--0.6%
John Deere Capital Corp., 3.875% Nts., Series D, 3/7/07 $ 39,120,000 $ 38,914,151
- ---------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.7%
- ---------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.7%
Motorola, Inc., 4.608% Nts., 11/16/07 43,850,000 43,566,641
- ---------------------------------------------------------------------------------------------------------------
MATERIALS--1.2%
- ---------------------------------------------------------------------------------------------------------------
CHEMICALS--0.5%
E.I. du Pont de Nemours & Co., 4.125% Nts., 4/30/10 34,225,000 33,185,895
- ---------------------------------------------------------------------------------------------------------------
METALS & MINING--0.7%
Alcoa, Inc., 4.25% Sr. Unsec. Nts., 8/15/07 44,705,000 44,188,344
- ---------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.1%
- ---------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.1%
AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 29,370,000 29,672,129
- ---------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp.:
7.25% Sr. Unsec. Unsub. Nts., 12/1/10 24,450,000 26,266,293
7.375% Sr. Nts., 9/1/12 15,000,000 16,499,730
---------------
72,438,152
- ---------------------------------------------------------------------------------------------------------------
UTILITIES--1.1%
- ---------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--1.1%
Dominion Resources, Inc., 3.66% Sr. Nts., Series A, 11/15/06 36,545,000 36,522,452
- ---------------------------------------------------------------------------------------------------------------
Duke Capital Corp., 7.50% Bonds, 10/1/09 30,455,000 32,141,567
---------------
68,664,019
---------------
Total Non-Convertible Corporate Bonds and Notes (Cost $1,664,507,921) 1,661,865,324
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM NOTES--1.3%
- ---------------------------------------------------------------------------------------------------------------
American Express Credit Corp., 5.23%, 11/22/06 25,000,000 24,923,729
- ---------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 4.98%, 11/1/06 54,919,000 54,919,000
---------------
Total Short-Term Notes (Cost $79,842,729) 79,842,729
- ---------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with
Cash Collateral from Securities Loaned) (Cost $5,907,391,459) 6,406,486,833
24 | OPPENHEIMER QUEST BALANCED FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--0.2% 3
- ---------------------------------------------------------------------------------------------------------------
ASSET BACKED FLOATING NOTE--0.2%
Whitehawk CDO Funding Corp. $ 10,000,000 $ 10,000,000
- ---------------------------------------------------------------------------------------------------------------
FUNDING AGREEMENT/GUARANTEED INVESTMENT CONTRACT--0.0%
Protective Life Insurance Co. 500,000 500,000
- ---------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.0%
Undivided interest of 0.03% in joint repurchase agreement (Principal Amount/
Value $3,450,000,000, with a maturity value of $3,450,510,792) with Nomura
Securities, 5.33%, dated 10/31/06, to be repurchased at $1,124,416 on 11/1/06,
collateralized by U.S. Agency Mortgages, 0.00%-7.439%, 3/15/14-6/25/43,
with a value of $3,519,000,000 1,124,250 1,124,250
---------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $11,624,250) 11,624,250
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $5,919,015,709) 100.1% 6,418,111,083
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (5,995,990)
------------------------------
NET ASSETS 100.0% $6,412,115,093
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Partial or fully-loaned security. See Note 5 of accompanying Notes.
2. Non-income producing security.
3. The security/securities have 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
accompanying Notes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------
Investments, at value (cost $5,919,015,709)--see accompanying statement of investments $6,418,111,083
- --------------------------------------------------------------------------------------------------------------
Cash 2,034,729
- --------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 80,355,561
Interest and dividends 25,492,974
Shares of beneficial interest sold 1,744,526
Other 105,050
--------------
Total assets 6,527,843,923
- --------------------------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 11,624,250
- --------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 83,419,675
Shares of beneficial interest redeemed 16,719,953
Distribution and service plan fees 1,304,665
Transfer and shareholder servicing agent fees 1,181,248
Trustees' compensation 871,879
Shareholder communications 513,944
Other 93,216
--------------
Total liabilities 115,728,830
- --------------------------------------------------------------------------------------------------------------
NET ASSETS $6,412,115,093
==============
- --------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 3,437,534
- --------------------------------------------------------------------------------------------------------------
Additional paid-in capital 5,692,739,546
- --------------------------------------------------------------------------------------------------------------
Accumulated net investment income 10,660,967
- --------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 206,181,672
- --------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 499,095,374
--------------
NET ASSETS $6,412,115,093
==============
26 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$3,058,131,254 and 162,498,412 shares of beneficial interest outstanding) $18.82
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $19.97
- --------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,847,651,161
and 100,073,017 shares of beneficial interest outstanding) $18.46
- --------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,022,881,298
and 55,356,859 shares of beneficial interest outstanding) $18.48
- --------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $207,129,539
and 11,140,689 shares of beneficial interest outstanding) $18.59
- --------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $276,321,841 and 14,684,387 shares of beneficial interest outstanding) $18.82
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER QUEST BALANCED FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 78,583,813
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $2,721,370) 78,340,970
- --------------------------------------------------------------------------------
Portfolio lending fees 467,162
- --------------------------------------------------------------------------------
Other income 124,216
----------------
Total investment income 157,516,161
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 47,511,106
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 7,961,750
Class B 20,145,494
Class C 11,219,336
Class N 1,077,365
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 6,430,938
Class B 4,464,645
Class C 1,922,282
Class N 576,634
Class Y 473,341
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 519,942
Class B 399,666
Class C 184,682
Class N 13,303
- --------------------------------------------------------------------------------
Trustees' compensation 338,000
- --------------------------------------------------------------------------------
Custodian fees and expenses 75,663
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 319,458
----------------
Total expenses 103,635,105
Less reduction to custodian expenses (42,705)
----------------
Net expenses 103,592,400
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 53,923,761
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 251,310,872
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 371,082,120
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 676,316,753
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER QUEST BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2006 2005
- -----------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income $ 53,923,761 $ 17,470,480
- -----------------------------------------------------------------------------------------------
Net realized gain 251,310,872 455,092,227
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 371,082,120 (246,170,891)
--------------------------------
Net increase in net assets resulting from operations 676,316,753 226,391,816
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (40,353,835) --
Class B (9,442,976) --
Class C (6,062,238) --
Class N (2,103,130) --
Class Y (4,313,806) --
- -----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (112,335,599) --
Class B (74,130,785) --
Class C (40,907,900) --
Class N (7,470,626) --
Class Y (9,186,316) --
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A (393,883,632) 116,753,759
Class B (467,003,506) (416,333,424)
Class C (227,815,940) (49,767,516)
Class N (21,452,884) 2,797,923
Class Y (9,256,183) 23,891,848
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Total decrease (749,402,603) (96,265,594)
- -----------------------------------------------------------------------------------------------
Beginning of period 7,161,517,696 7,257,783,290
--------------------------------
End of period (including accumulated net investment income
of $10,660,967 and $19,013,191, respectively) $6,412,115,093 $7,161,517,696
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.79 $ 17.19 $ 15.69 $ 12.02 $ 16.09
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .21 1 .11 1 .07 .16 .17
Net realized and unrealized gain (loss) 1.66 .49 1.46 3.64 (3.53)
-------------------------------------------------------------------------------
Total from investment operations 1.87 .60 1.53 3.80 (3.36)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.23) -- (.03) (.13) (.27)
Distributions from net realized gain (.61) -- -- -- (.44)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.84) -- (.03) (.13) (.71)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.82 $ 17.79 $ 17.19 $ 15.69 $ 12.02
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.77% 3.49% 9.79% 31.87% (21.88)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $3,058,131 $3,277,261 $3,054,761 $2,287,707 $1,667,143
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,215,973 $3,285,181 $2,759,594 $1,902,499 $1,960,568
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.13% 0.61% 0.38% 1.60% 1.20%
Total expenses 1.17% 4 1.17% 4 1.21% 4,5 1.38% 4,5 1.51% 4,5
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 89% 106% 92% 108%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER QUEST BALANCED FUND
CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.46 $ 17.01 $ 15.61 $ 11.98 $ 16.00
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .06 1 (.03) 1 (.07) .06 .07
Net realized and unrealized gain (loss) 1.63 .48 1.47 3.63 (3.52)
-------------------------------------------------------------------------------
Total from investment operations 1.69 .45 1.40 3.69 (3.45)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.08) -- -- (.06) (.13)
Distributions from net realized gain (.61) -- -- -- (.44)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.69) -- -- (.06) (.57)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.46 $ 17.46 $ 17.01 $ 15.61 $ 11.98
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.90% 2.65% 8.97% 30.89% (22.38)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,847,651 $2,205,679 $2,549,069 $2,306,366 $1,759,167
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,014,712 $2,470,464 $2,495,872 $1,985,215 $2,068,300
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.35% (0.17)% (0.40)% 0.84% 0.56%
Total expenses 1.95% 4 1.96% 4 2.00% 4,5 2.15% 4,5 2.15% 4,5
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 89% 106% 92% 108%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.48 $ 17.02 $ 15.60 $ 11.97 $ 16.00
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .07 1 (.02) 1 (.06) .07 .07
Net realized and unrealized gain (loss) 1.64 .48 1.48 3.62 (3.52)
-------------------------------------------------------------------------------
Total from investment operations 1.71 .46 1.42 3.69 (3.45)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.10) -- -- (.06) (.14)
Distributions from net realized gain (.61) -- -- -- (.44)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.71) -- -- (.06) (.58)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.48 $ 17.48 $ 17.02 $ 15.60 $ 11.97
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.97% 2.70% 9.10% 30.99% (22.40)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,022,881 $1,191,400 $1,207,729 $ 982,288 $763,338
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,122,088 $1,248,447 $1,129,522 $ 835,198 $903,426
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.41% (0.11)% (0.34)% 0.92% 0.58%
Total expenses 1.89% 4 1.89% 4 1.94% 4,5 2.08% 4,5 2.13% 4,5
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 89% 106% 92% 108%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER QUEST BALANCED FUND
CLASS N YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.58 $ 17.05 $ 15.58 $ 11.94 $ 16.05
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .15 1 .05 1 .03 .11 .20
Net realized and unrealized gain (loss) 1.64 .48 1.45 3.63 (3.56)
----------------------------------------------------------------------------
Total from investment operations 1.79 .53 1.48 3.74 (3.36)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.17) -- (.01) (.10) (.31)
Distributions from net realized gain (.61) -- -- -- (.44)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.78) -- (.01) (.10) (.75)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.59 $ 17.58 $ 17.05 $ 15.58 $ 11.94
============================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.45% 3.11% 9.47% 31.50% (21.99)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 207,130 $ 216,843 $ 207,450 $ 142,866 $ 85,744
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 215,652 $ 219,040 $ 180,201 $ 112,416 $ 70,477
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.83% 0.30% 0.04% 1.23% 1.07%
Total expenses 1.48% 1.49% 1.55% 1.74% 1.67%
Expenses after payments and waivers and
reduction to custodian expenses 1.48% 1.49% 1.55% 1.70% 1.67%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 89% 106% 92% 108%
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.
33 | OPPENHEIMER QUEST BALANCED FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.79 $ 17.14 $ 15.62 $ 11.96 $ 16.05
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 1 .17 1 .12 .20 .25
Net realized and unrealized gain (loss) 1.66 .48 1.46 3.64 (3.52)
-------------------------------------------------------------------------------
Total from investment operations 1.92 .65 1.58 3.84 (3.27)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.28) -- (.06) (.18) (.38)
Distributions from net realized gain (.61) -- -- -- (.44)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.89) -- (.06) (.18) (.82)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.82 $ 17.79 $ 17.14 $ 15.62 $ 11.96
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.11% 3.79% 10.17% 32.40% (21.48)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 276,322 $ 270,335 $ 238,775 $ 182,409 $ 118,068
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 276,812 $ 253,220 $ 216,973 $ 145,793 $ 137,322
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.43% 0.93% 0.70% 1.89% 1.75%
Total expenses 0.87% 4 0.85% 4 0.90% 4 1.05% 4 0.96% 4,5
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 89% 106% 92% 108%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Balanced Fund (the Fund), a series of Oppenheimer Quest For
Value Funds, is an open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek a combination of growth of capital and investment income. The Fund's
primary objective is growth of capital. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Manager has entered into a subadvisory
agreement with Oppenheimer Capital LLC.
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 Trustees. 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(R) 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, as 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 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
35 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 Trustees. Investments in open-end registered
investment companies are valued at that fund's net asset value. Short-term
"money market type" debt securities with remaining maturities of sixty days or
less are valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
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.
36 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent
distribution requirements the Fund must satisfy under the income tax
regulations, losses the Fund may be able to offset against income and gains
realized in future years and unrealized appreciation or depreciation of
securities and other investments for federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
-----------------------------------------------------------------------------
$11,564,181 $228,739,812 $-- $476,537,238
1. During the fiscal year ended October 31, 2006, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended October 31, 2005, the Fund utilized $181,820,457
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, 2006. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO
ACCUMULATED NET
INCREASE TO REALIZED GAIN
PAID-IN CAPITAL ON INVESTMENTS 3
--------------------------------------
$40,884,919 $40,884,919
3. $40,884,919, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.
37 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The tax character of distributions paid during the years ended October 31, 2006
and October 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
-------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 62,275,985 $--
Long-term capital gain 244,031,226 --
----------------------------------
Total $ 306,307,211 $--
==================================
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, 2006 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 $ 5,941,573,845
================
Gross unrealized appreciation $ 519,896,415
Gross unrealized depreciation (43,359,177)
----------------
Net unrealized appreciation $ 476,537,238
================
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended October
31, 2006, the Fund's projected benefit obligations were increased by $179,802
and payments of $25,409 were made to retired trustees, resulting in an
accumulated liability of $869,842 as of October 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
and paid quarterly. Capital gain distributions, if any, are declared and paid
annually.
38 | OPPENHEIMER QUEST BALANCED FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------
CLASS A
Sold 31,500,972 $ 570,267,687 52,209,952 $ 933,780,734
Dividends and/or
distributions reinvested 7,682,670 137,709,558 -- --
Redeemed (60,923,880) (1,101,860,877) (45,627,925) (817,026,975)
--------------------------------------------------------------
Net increase (decrease) (21,740,238) $ (393,883,632) 6,582,027 $ 116,753,759
==============================================================
39 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------
CLASS B
Sold 8,581,552 $ 152,390,833 14,527,626 $ 255,243,732
Dividends and/or
distributions reinvested 3,911,374 68,946,474 -- --
Redeemed (38,752,535) (688,340,813) (38,046,508) (671,577,156)
--------------------------------------------------------------
Net decrease (26,259,609) $ (467,003,506) (23,518,882) $ (416,333,424)
==============================================================
- -----------------------------------------------------------------------------------------
CLASS C
Sold 6,246,846 $ 111,066,770 11,673,588 $ 205,356,257
Dividends and/or
distributions reinvested 2,171,851 38,302,739 -- --
Redeemed (21,234,631) (377,185,449) (14,475,489) (255,123,773)
--------------------------------------------------------------
Net decrease (12,815,934) $ (227,815,940) (2,801,901) $ (49,767,516)
==============================================================
- -----------------------------------------------------------------------------------------
CLASS N
Sold 3,181,896 $ 56,868,554 4,902,473 $ 86,592,098
Dividends and/or
distributions reinvested 516,842 9,162,505 -- --
Redeemed (4,889,445) (87,483,943) (4,736,733) (83,794,175)
--------------------------------------------------------------
Net increase (decrease) (1,190,707) $ (21,452,884) 165,740 $ 2,797,923
==============================================================
- -----------------------------------------------------------------------------------------
CLASS Y
Sold 3,658,168 $ 66,104,385 6,145,175 $ 110,749,121
Dividends and/or
distributions reinvested 628,190 11,251,180 -- --
Redeemed (4,798,899) (86,611,748) (4,878,597) (86,857,273)
--------------------------------------------------------------
Net increase (decrease) (512,541) $ (9,256,183) 1,266,578 $ 23,891,848
==============================================================
- --------------------------------------------------------------------------------
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, 2006, were as
follows:
PURCHASES SALES
- ------------------------------------------------------------------------------
Investment securities $4,231,637,096 $5,570,102,847
U.S. government and
government agency obligations -- 14,191,086
- --------------------------------------------------------------------------------
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 which provides for a fee at an
annual rate of average net assets as shown in the following table:
40 | OPPENHEIMER QUEST BALANCED FUND
FEE SCHEDULE EFFECTIVE APRIL 4, 2006 FEE SCHEDULE NOVEMBER 1, 2005 TO APRIL 3, 2006
- ---------------------------------------------------------------------------------------
Up to $1.0 billion 0.80% Up to $1.0 billion 0.80%
Next $2.0 billion 0.76 Next $2.0 billion 0.76
Next $1.0 billion 0.71 Next $1.0 billion 0.71
Next $1.0 billion 0.66 Next $1.0 billion 0.66
Next $1.0 billion 0.60 Next $1.0 billion 0.60
Next $1.0 billion 0.55 Next $1.0 billion 0.55
Next $2.0 billion 0.50 Over $7.0 billion 0.50
Over $9.0 billion 0.48
- --------------------------------------------------------------------------------
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. The Manager retains Oppenheimer Capital LLC (the
"Sub-Advisor") to provide the day-to-day portfolio management of the Fund. Under
the Sub-Advisory Agreement, the Manager, not the Fund, pays the Sub-Advisor an
annual fee in monthly installments, based on the average daily net assets of the
Fund. The fee is calculated as a percentage of the fee the Fund pays the
Manager. The rate is 40% of the advisory fee collected by the Manager based on
the net assets of the Fund as of November 22, 1995, and 30% of the fee collected
by the Manager on assets in excess of that amount. For the year ended October
31, 2006, the Manager paid $14,352,743 to the Sub-Advisor for its services to
the Fund.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2006, the Fund paid
$14,003,793 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 up to 0.25% of the average annual net assets
of Class A shares. The Distributor currently uses all of those fees to pay
dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Under the plan, the Fund may also pay an asset-based sales
charge to the Distributor. Beginning January 1, 2003, the Board of Trustees set
the annual asset-based sales charge rate at zero. Fees incurred by the Fund
under the plan are detailed in the Statement of Operations.
41 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 up to 0.25% per year under each plan. If either the Class B,
Class C or Class N plan is terminated by the Fund or by the shareholders of a
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2006 for Class B, Class C and Class N shares were $41,536,235, $24,579,996 and
$4,966,026, 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 following table 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, 2006 $1,563,338 $23,321 $4,345,241 $97,932 $84,485
- --------------------------------------------------------------------------------
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
securities, letters of credit 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 each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is
42 | OPPENHEIMER QUEST BALANCED FUND
delivered to the Fund on the next business day. Cash collateral may be invested
in approved investments and the Fund bears the risk of any loss in value of
these investments. The Fund retains a portion of the interest earned from the
collateral. 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. 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, 2006, the Fund had on loan
securities valued at $11,412,900, which are included in the Statement of Assets
and Liabilities as "Investments, at value" and, when applicable, as "Receivable
for Investments sold." Collateral of $11,624,250 was received for the loans, all
of which was received in cash and subsequently invested in approved investments
or held as cash.
- --------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
October 31, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of October
31, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
- --------------------------------------------------------------------------------
7. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York
43 | OPPENHEIMER QUEST BALANCED FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LITIGATION Continued
on January 10, 2005 and was amended on March 4, 2005. The complaint alleged,
among other things, that the Manager charged excessive fees for distribution and
other costs, and that by permitting and/or participating in those actions, the
Directors/Trustees and the Officers of the funds breached their fiduciary duties
to fund shareholders under the Investment Company Act of 1940 and at common law.
The plaintiffs sought unspecified damages, an accounting of all fees paid, and
an award of attorneys' fees and litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
44 | OPPENHEIMER QUEST BALANCED FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER QUEST FOR VALUE FUNDS:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Quest Balanced Fund (one of the portfolios constituting the
Oppenheimer Quest For Value Funds), including the statement of investments, as
of October 31, 2006, 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, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Quest Balanced Fund as of October 31, 2006, 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 12, 2006
45 | OPPENHEIMER QUEST BALANCED FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $0.6099 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December
12, 2005. 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, 2006 which are not designated as capital gain distributions should be
multiplied by 100% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended October 31, 2006 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. $76,470,132 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2007, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended October 31, 2006, $28,779,703 or 46.21% of the ordinary distributions
paid by the Fund qualifies as an interest related dividend.
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.
46 | OPPENHEIMER QUEST BALANCED FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in 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.
47 | OPPENHEIMER QUEST BALANCED FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S.TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNA-
TION, RETIREMENT, DEATH OR REMOVAL.
THOMAS W.COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm) (since 1982); General
Chairman of the Board of Partner of Trivest Venture Fund (private venture capital fund); President of
Trustees (since 2001), Investment Counseling Federated Investors, Inc. (1973-1982); Trustee of the fol-
Trustee (since 1987) lowing open-end investment companies: Cash Assets Trust (1984), Premier VIT
Age: 73 (formerly PIMCO Advisors VIT), Tax Free Trust of Arizona (since 1984) and four
funds for the Hawaiian Tax Free Trust. Oversees 11 portfolios in the
OppenheimerFunds complex.
DAVID K.DOWNES, President, Chief Executive Officer and Board Member of CRAFund Advisors, Inc.
Trustee (since 2005) (investment management company) (since January 2004); President of The Community
Age: 66 Reinvestment Act Qualified Investment Fund (investment management company) (since
January 2004); Independent Chairman of the Board of Trustees of Quaker Investment
Trust (registered investment company) (since January 2004); Director of Internet
Capital Group (information technology company) (since October 2003); Chief
Operating Officer and Chief Financial Officer of Lincoln National Investment
Companies, Inc. (subsidiary of Lincoln National Corporation, a publicly traded
company) and Delaware Investments U.S., Inc. (investment management subsidiary of
Lincoln National Corporation) (1995-2003); President, Chief Executive Officer and
Trustee of Delaware Investment Family of Funds (1995-2003); President and Board
Member of Lincoln National Convertible Securities Funds, Inc. and the Lincoln
National Income Funds, TDC (1995-2003); Chairman and Chief Executive Officer of
Retirement Financial Services, Inc. (registered transfer agent and investment
adviser and subsidiary of Delaware Investments U.S., Inc.) (1995-2003); President
and Chief Executive Officer of Delaware Service Company, Inc. (1995-2003); Chief
Administrative Officer, Chief Financial Officer, Vice Chairman and Director of
Equitable Capital Management Corporation (investment subsidiary of Equitable Life
Assurance Society) (1985-1992); Corporate Controller of Merrill Lynch & Company
(financial services holding company) (1977-1985); held the following positions at
the Colonial Penn Group, Inc. (insurance company): Corporate Budget Director
(1974-1977), Assistant Treasurer (1972-1974) and Director of Corporate Taxes
(1969-1972); held the following positions at Price Waterhouse & Company (financial
services firm): Tax Manager (1967-1969), Tax Senior (1965-1967) and Staff
Accountant (1963-1965); United States Marine Corps (1957-1959). Oversees 10
portfolios in the OppenheimerFunds complex.
ROBERT G.GALLI, A director or trustee of other Oppenheimer funds.Oversees 55 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 73
LACY B.HERRMANN, Founder and Chairman Emeritus of Aquila Group of Funds (open-end investment
Trustee (since 1987) company) (since December 2004); Chairman of Aquila Management Corporation and
Age: 77 Aquila Investment Management LLC (since August 1984); Chief Executive Officer and
President of Aquila Management Corporation (August 1984-December 1994); 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,
48 | OPPENHEIMER QUEST BALANCED FUND
LACY B.HERRMANN President and Director of InCap Management Corporation; Sub-Advisor and
Continued Administrator of Prime Cash Fund & Short Term Asset Reserves; Director of OCC Cash
Reserves, Inc. (open-end investment company) (June 2003-December 2004); Trustee of
Premier VIT (formerly PIMCO Advisors VIT) (investment company) (since 1994);
Trustee of OCC Accumulation Trust (open-end investment company) (until December
2004); Trustee Emeritus of Brown University (since June 1983). Oversees 11
portfolios in the OppenheimerFunds complex.
BRIAN F.WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Trustee (since 2001) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 63 (since September 2004); Member, Zurich Financial Investment Advisory Board
(insurance (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. (May 2000-April 2002) (executive
search firm); President and Chief Executive Officer of the Delaware Group of Mutual
Funds (1992-1995); Chairman,President and Chief Executive Officer of Equitable
Capital Management Corporation (1985-1992); Vice President, Senior Vice President,
Executive Vice President and Chief Investment Officer at The Equitable Life
Assurance Society of the U.S. (1979-1992); Vice President and Co-manager of
Fundamental Equities Research at Smith Barney, Harris Upham and Company
(1970-1979); Engineer, Sperry Gyroscope Company (1966-1970); former governor of the
Association for Investment Management and Research; former chairman of the
Institute of Chartered Financial Analysts; Chartered Financial Analyst. Oversees 55
portfolios in the OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE MR. MURPHY IS AN "INTERESTED TRUSTEE" BECAUSE HE IS AFFILIATED WITH THE MANAGER BY
AND OFFICER VIRTUE OF HIS POSITIONS AS AN OFFICER AND DIRECTOR OF THE MANAGER, AND AS A SHARE-
HOLDER OF ITS PARENT COMPANY. THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL
CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY
SERVES AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT,
DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
JOHN V.MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President
Trustee (since 2005) (since September 2000) of the Manager; President and director or trustee of other
and President and Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC")
Principal Executive (the Manager's Partnership Holdings, Inc. (holding company subsidiary of the
Officer (since 2001) Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc.
Age: 57 (subsidiary of the Manager) (since November 2001); Chairman and Director of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent sub-sidiaries 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
49 | OPPENHEIMER QUEST BALANCED FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JOHN V.MURPHY Massachusetts Mutual Life Insurance Company (OAC's parent company) (since
Continued 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 92 portfolios in the OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. ZACK,
OF THE FUND GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW
YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS.
IVES, 6803 S.TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR
AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
MARK S.VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March
Vice President and 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset
Chief Compliance Officer Management Corporation and Shareholder Services, Inc. (since June 1983). Former
(since 2004) Vice President and Director of Internal Audit of the Manager (1997-February 2004).
Age: 56 An officer of 92 portfolios in the OppenheimerFunds complex.
BRIAN W.WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer
Treasurer and Principal of the following: HarbourViewAsset Management Corporation, Shareholder Financial
Financial and Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Officer (since 1999) Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Age: 47 Private Investments, Inc. (since March 2000), OppenheimerFunds International
Ltd. (since May 2000), OppenheimerFunds plc (since May 2000), 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 92 portfolios in the OppenheimerFunds
complex.
BRIAN S.PETERSEN, Assistant Vice President of the Manager (since August 2002); Manager/Financial
Assistant Treasurer Product Accounting of the Manager (November 1998-July 2002). An officer of 92
(since 2004) portfolios in the OppenheimerFunds complex.
Age: 36
BRIAN C.SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004);
(since 2005) Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003);
Age: 36 Director of Mutual Fund Operations at American Data Services, Inc. (September
2000-May 2001). An officer of 92 portfolios in the OppenheimerFunds complex.
50 | OPPENHEIMER QUEST BALANCED FUND
ROBERT G.ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002)
Secretary (since 2001) of the Manager; General Counsel and Director of the Distributor (since December
Age: 58 2001); General Counsel of Centennial Asset Management Corporation (since December
2001); Senior Vice President and General Counsel of HarbourViewAsset 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
92 portfolios in the OppenheimerFunds complex.
KATHLEEN T.IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
(since 2001) (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
Age: 41 Management Corporation (since October 2003); Vice President and Assistant Secretary
of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since December 2001);
Assistant Counsel of the Manager (August 1994-October 2003). An officer of 92
portfolios in the OppenheimerFunds complex.
LISA I.BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First
Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December
(since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant
Age: 38 General Counsel (May 1999-December 2000) of UBS Financial Services Inc.
(formerly, PaineWebber Incorporated). An officer of 92 portfolios in the
OppenheimerFunds complex.
PHILLIP S.GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); First Vice President (2001-September 2004); Director (2000-
(since 2004) September 2004) and Vice President (1998-2000) of Merrill Lynch Investment
Age: 42 Management. An officer of 92 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
51 | OPPENHEIMER QUEST BALANCED FUND
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND(SM)
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN COMMON STOCK INDUSTRIES
- --------------------------------------------------------------------------------
Software 11.7%
- --------------------------------------------------------------------------------
Media 6.6
- --------------------------------------------------------------------------------
Tobacco 5.2
- --------------------------------------------------------------------------------
Oil & Gas 3.5
- --------------------------------------------------------------------------------
Diversified Financial Services 3.4
- --------------------------------------------------------------------------------
Insurance 3.3
- --------------------------------------------------------------------------------
Aerospace & Defense 3.3
- --------------------------------------------------------------------------------
Capital Markets 3.3
- --------------------------------------------------------------------------------
Biotechnology 2.9
- --------------------------------------------------------------------------------
Pharmaceuticals 2.8
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
Take-Two Interactive Software, Inc. 4.4%
- --------------------------------------------------------------------------------
Microsoft Corp. 4.3
- --------------------------------------------------------------------------------
Altria Group, Inc. 3.9
- --------------------------------------------------------------------------------
UBS AG 2.6
- --------------------------------------------------------------------------------
Liberty Global, Inc., Series A 2.5
- --------------------------------------------------------------------------------
Liberty Global, Inc., Series C 2.5
- --------------------------------------------------------------------------------
AES Corp. (The) 2.2
- --------------------------------------------------------------------------------
Siemens AG, Sponsored ADR 2.2
- --------------------------------------------------------------------------------
Bank of America Corp. 1.9
- --------------------------------------------------------------------------------
Capital One Financial Corp. 1.8
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
- --------------------------------------------------------------------------------
7 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Stocks 69.6%
Cash Equivalents 29.4
Bonds and Notes 1.0
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on the total market value of investments.
- --------------------------------------------------------------------------------
8 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2006, 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 Opportunity Value
Fund's Class A shares (without sales charge) generated a total return of 7.00%
for the 12 months ended October 31, 2006. At the beginning of the period, we had
invested approximately 64% of assets in stocks and complemented this position
with fixed-income investments and alternative investment strategies. At the end
of the period, approximately 70% of assets were invested in stocks. The stock
portfolio generated double-digit total returns but underperformed the S&P 500
Index which generated a one-year total return of 16.33%. The underperformance
was partially offset by the bond portfolio, which added value by outperforming
the Lehman Brothers Aggregate Bond Index, and by short positions that were net
contributors to performance. The broad bond market was very volatile but,
largely due to a rally in the final weeks, posted a 12-month total return of
5.19%, as measured by the Lehman Brothers Aggregate Bond Index. As this is a
blended portfolio, we also measure performance using a 60% stocks/40% bonds
blend of these indexes, which returned 11.80% during the period.
Entering the reporting period, we had a cautiously optimistic outlook for
stocks and a bearish outlook for bonds. In keeping with the latter viewpoint, we
positioned the Fund's fixed-income allocation defensively. Investing exclusively
in money market instruments, we limited the portfolio's sensitivity to rising
interest rates. We also added continually to current income, since individual
securities matured more frequently and the proceeds could be reinvested in
newer, higher-yielding securities.
As for the stock portfolio, our investment approach seeks to add value
primarily from selection of individual stocks with potential for multiyear
earnings growth. Generally speaking, we over- or underweight market sectors or
capitalization segments only when we have strong convictions about their
potential to over- or underperform. Even then, such shifts are limited. During
this period, we reduced the Fund's exposure to energy stocks, which appeared
overvalued, and increased the overall exposure to large-company stocks, which
tend to fare better than small-company stocks in a slowing economic environment.
Adding more large-caps increased the Fund's exposure to the risks of that
particular market segment. To balance that additional exposure, we shorted the
Fidelity NASDAQ(R) Composite Index, a "market basket" replicating the overall
NASDAQ large-cap stocks. Shorting, which creates the risk of unlimited loss and
is considered speculative, involves selling securities that the Fund does not
own and borrowing the same securities from a third party for delivery to the
buyer. If the price of the securities later declines, we may be
9 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
able to buy back shares for less than the buyer paid us originally. Those shares
are then given to the third party, to replace the shares we borrowed, and the
Fund keeps the profit. By timing our shorts carefully, we were able to generate
gains that helped to offset downturns in two of the Fund's largest holdings:
Cendant Corp. and Take-Two Interactive Software, Inc.
We purchased Cendant, a conglomerate of real estate, travel, hospitality
and vehicle rental companies, in the belief that the breakup of the company into
separate entities, slated to occur in mid-2006, would benefit shareholders. The
spinoffs, however, were not beneficial. The four smaller companies were not as
attractive to investors, analyst interest waned, and the stock prices declined.
We have since exited our position.
Take-Two was highly volatile this year and, ultimately, a detractor from
results. Nevertheless, we consider this designer and manufacturer of video game
software (e.g., the Grand Theft Auto series) the portfolio's most outstanding
growth opportunity. During the reporting period, the stock suffered from a lull
in the video-game industry cycle, a common occurrence while the designers of
game hardware (e.g., Sony's PlayStation) finish development of their
next-generation products. We view Take-Two's products, development talent and
studios as very impressive and think it is uniquely positioned to capture market
share from its competitors once its industry moves to the next phase. We used
the stock's weakness this year as an opportunity to buy at very attractive
prices.
These losses were more than offset by strongly positive results for a
variety of other holdings. Chief among them were UBS AG and Orbital Sciences
Corp. As the world's leading wealth manager, UBS has a steady, growing stream of
recurring fee-based income that is not highly sensitive to interest rate
movements. That, in turn, fosters consistency in earnings. We find such
predictability, plus a stock price that is more reasonable than those of other
asset and wealth managers, an attractive combination.
Predictability is a key reason we invested in Orbital Sciences as well.
Orbital designs, builds and launches commercial satellites, and operates in the
missile defense industry. It manages both businesses efficiently. Furthermore,
each business involves long lead times on product development and order
fulfillment, so the company's future income is easily foreseeable.
Other strong contributors included AES Corp., an unregulated utilities
company; pharmaceuticals maker Pfizer, Inc.; software giant Microsoft Corp.; and
Cisco Systems, Inc., a leading provider of routing and switching equipment and
Internet-based networking technologies.
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, 2006. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from
10 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
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, 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 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 OPPORTUNITY VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Opportunity Value Fund(SM) (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Opportunity
Value Fund(SM)
(Class A) S&P 500 Index
----------------- -------------
10/31/1996 $ 9,425 $10,000
01/31/1997 $10,324 $11,200
04/30/1997 $10,220 $11,471
07/31/1997 $11,837 $13,725
10/31/1997 $11,561 $13,210
01/31/1998 $11,936 $14,213
04/30/1998 $13,158 $16,182
07/31/1998 $12,631 $16,375
10/31/1998 $12,235 $16,118
01/31/1999 $12,714 $18,834
04/30/1999 $14,145 $19,714
07/31/1999 $13,771 $19,683
10/31/1999 $14,231 $20,254
01/31/2000 $13,754 $20,782
04/30/2000 $13,791 $21,709
07/31/2000 $13,364 $21,447
10/31/2000 $14,631 $21,485
01/31/2001 $15,336 $20,595
04/30/2001 $15,559 $18,894
07/31/2001 $15,486 $18,376
10/31/2001 $14,223 $16,138
01/31/2002 $14,469 $17,272
04/30/2002 $14,216 $16,511
07/31/2002 $12,693 $14,036
10/31/2002 $12,146 $13,701
01/31/2003 $11,879 $13,298
04/30/2003 $12,310 $14,314
07/31/2003 $13,151 $15,529
10/31/2003 $13,931 $16,549
01/31/2004 $14,980 $17,892
04/30/2004 $14,505 $17,587
07/31/2004 $14,771 $17,573
10/31/2004 $15,087 $18,107
01/31/2005 $15,918 $19,005
04/30/2005 $15,778 $18,701
07/31/2005 $16,462 $20,041
10/31/2005 $16,263 $19,685
01/31/2006 $16,708 $20,977
04/30/2006 $16,840 $21,581
07/31/2006 $16,379 $21,118
10/31/2006 $17,400 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-YEAR 0.84% 5-YEAR 2.89% 10-YEAR 5.69%
12 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Opportunity Value Fund(SM) (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Opportunity
Value Fund(SM)
(Class B) S&P 500 Index
----------------- -------------
10/31/1996 $10,000 $10,000
01/31/1997 $10,941 $11,200
04/30/1997 $10,819 $11,471
07/31/1997 $12,511 $13,725
10/31/1997 $12,205 $13,210
01/31/1998 $12,589 $14,213
04/30/1998 $13,860 $16,182
07/31/1998 $13,285 $16,375
10/31/1998 $12,851 $16,118
01/31/1999 $13,341 $18,834
04/30/1999 $14,825 $19,714
07/31/1999 $14,411 $19,683
10/31/1999 $14,870 $20,254
01/31/2000 $14,352 $20,782
04/30/2000 $14,369 $21,709
07/31/2000 $13,904 $21,447
10/31/2000 $15,202 $21,485
01/31/2001 $15,905 $20,595
04/30/2001 $16,116 $18,894
07/31/2001 $16,015 $18,376
10/31/2001 $14,684 $16,138
01/31/2002 $14,916 $17,272
04/30/2002 $14,627 $16,511
07/31/2002 $13,042 $14,036
10/31/2002 $12,464 $13,701
01/31/2003 $12,189 $13,298
04/30/2003 $12,633 $14,314
07/31/2003 $13,495 $15,529
10/31/2003 $14,296 $16,549
01/31/2004 $15,372 $17,892
04/30/2004 $14,885 $17,587
07/31/2004 $15,157 $17,573
10/31/2004 $15,482 $18,107
01/31/2005 $16,335 $19,005
04/30/2005 $16,191 $18,701
07/31/2005 $16,893 $20,041
10/31/2005 $16,688 $19,685
01/31/2006 $17,145 $20,977
04/30/2006 $17,281 $21,581
07/31/2006 $16,807 $21,118
10/31/2006 $17,856 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-YEAR 1.61% 5-YEAR 3.01% 10-YEAR 5.97%
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 OPPORTUNITY VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Opportunity Value Fund(SM) (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Opportunity
Value Fund(SM)
(Class C) S&P 500 Index
----------------- -------------
10/31/1996 $10,000 $10,000
01/31/1997 $10,943 $11,200
04/30/1997 $10,817 $11,471
07/31/1997 $12,512 $13,725
10/31/1997 $12,205 $13,210
01/31/1998 $12,588 $14,213
04/30/1998 $13,860 $16,182
07/31/1998 $13,285 $16,375
10/31/1998 $12,850 $16,118
01/31/1999 $13,339 $18,834
04/30/1999 $14,824 $19,714
07/31/1999 $14,414 $19,683
10/31/1999 $14,873 $20,254
01/31/2000 $14,354 $20,782
04/30/2000 $14,376 $21,709
07/31/2000 $13,914 $21,447
10/31/2000 $15,209 $21,485
01/31/2001 $15,918 $20,595
04/30/2001 $16,125 $18,894
07/31/2001 $16,024 $18,376
10/31/2001 $14,696 $16,138
01/31/2002 $14,927 $17,272
04/30/2002 $14,642 $16,511
07/31/2002 $13,054 $14,036
10/31/2002 $12,469 $13,701
01/31/2003 $12,173 $13,298
04/30/2003 $12,595 $14,314
07/31/2003 $13,429 $15,529
10/31/2003 $14,199 $16,549
01/31/2004 $15,242 $17,892
04/30/2004 $14,733 $17,587
07/31/2004 $14,970 $17,573
10/31/2004 $15,261 $18,107
01/31/2005 $16,079 $19,005
04/30/2005 $15,907 $18,701
07/31/2005 $16,557 $20,041
10/31/2005 $16,328 $19,685
01/31/2006 $16,745 $20,977
04/30/2006 $16,847 $21,581
07/31/2006 $16,355 $21,118
10/31/2006 $17,345 $22,899
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-YEAR 5.31% 5-YEAR 3.37% 10-YEAR 5.66%
14 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Opportunity Value Fund(SM) (Class N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Opportunity
Value Fund(SM)
(Class N) S&P 500 Index
----------------- -------------
03/01/2001 $10,000 $10,000
04/30/2001 $10,221 $10,094
07/31/2001 $10,170 $ 9,817
10/31/2001 $ 9,337 $ 8,621
01/31/2002 $ 9,496 $ 9,227
04/30/2002 $ 9,326 $ 8,821
07/31/2002 $ 8,327 $ 7,499
10/31/2002 $ 7,957 $ 7,320
01/31/2003 $ 7,772 $ 7,104
04/30/2003 $ 8,054 $ 7,647
07/31/2003 $ 8,599 $ 8,296
10/31/2003 $ 9,102 $ 8,841
01/31/2004 $ 9,779 $ 9,559
04/30/2004 $ 9,461 $ 9,396
07/31/2004 $ 9,623 $ 9,388
10/31/2004 $ 9,819 $ 9,674
01/31/2005 $10,351 $10,154
04/30/2005 $10,250 $ 9,991
07/31/2005 $10,683 $10,707
10/31/2005 $10,545 $10,517
01/31/2006 $10,825 $11,207
04/30/2006 $10,901 $11,530
07/31/2006 $10,594 $11,282
10/31/2006 $11,246 $12,234
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-YEAR 5.72% 5-YEAR 3.79% SINCE INCEPTION (3/1/01) 2.09%
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 OPPORTUNITY VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Opportunity Value Fund(SM) (Class Y)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Quest Opportunity
Value Fund(SM)
(Class Y) S&P 500 Index
----------------- -------------
12/16/1996 $10,000 $10,000
01/31/1997 $10,635 $10,624
04/30/1997 $10,531 $10,881
07/31/1997 $12,215 $13,019
10/31/1997 $11,951 $12,531
01/31/1998 $12,353 $13,482
04/30/1998 $13,636 $15,349
07/31/1998 $13,109 $15,532
10/31/1998 $12,713 $15,289
01/31/1999 $13,216 $17,866
04/30/1999 $14,712 $18,700
07/31/1999 $14,343 $18,670
10/31/1999 $14,841 $19,212
01/31/2000 $14,361 $19,713
04/30/2000 $14,408 $20,593
07/31/2000 $13,985 $20,344
10/31/2000 $15,331 $20,380
01/31/2001 $16,080 $19,536
04/30/2001 $16,332 $17,923
07/31/2001 $16,261 $17,431
10/31/2001 $14,951 $15,308
01/31/2002 $15,225 $16,383
04/30/2002 $14,965 $15,661
07/31/2002 $13,377 $13,314
10/31/2002 $12,807 $12,997
01/31/2003 $12,538 $12,614
04/30/2003 $12,997 $13,578
07/31/2003 $13,892 $14,730
10/31/2003 $14,724 $15,698
01/31/2004 $15,835 $16,972
04/30/2004 $15,340 $16,683
07/31/2004 $15,624 $16,669
10/31/2004 $15,963 $17,176
01/31/2005 $16,852 $18,028
04/30/2005 $16,710 $17,739
07/31/2005 $17,438 $19,010
10/31/2005 $17,237 $18,673
01/31/2006 $17,717 $19,898
04/30/2006 $17,863 $20,472
07/31/2006 $17,387 $20,032
10/31/2006 $18,479 $21,721
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/06
1-YEAR 7.21% 5-YEAR 4.33% SINCE INCEPTION (12/16/96) 6.42%
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 OPPORTUNITY VALUE FUND
NOTES
- --------------------------------------------------------------------------------
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 1/3/89. 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 OPPORTUNITY VALUE FUND
NOTES
- --------------------------------------------------------------------------------
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 OPPORTUNITY VALUE FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2006.
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 OPPORTUNITY VALUE FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(5/1/06) (10/31/06) OCTOBER 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,033.20 $ 7.35
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.00 7.30
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,029.90 11.01
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.42 10.92
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,029.60 11.21
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.22 11.13
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,031.60 9.21
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.18 9.14
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,034.50 6.53
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,018.80 6.48
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,
excluding affiliated fund indirect expenses, based on the 6-month period ended
October 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.43%
- ------------------------
Class B 2.14
- ------------------------
Class C 2.18
- ------------------------
Class N 1.79
- ------------------------
Class Y 1.27
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
20 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENT OF INVESTMENTS October 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--72.3%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--10.2%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.9%
Hilton Hotels Corp. 187,700 $ 5,428,284
- --------------------------------------------------------------------------------
Starwood Hotels &
Resorts Worldwide,
Inc. 153,200 9,152,168
- --------------------------------------------------------------------------------
Wyndham Worldwide
Corp. 1 447,240 13,193,580
---------------
27,774,032
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.7%
Liberty Media Holding
Corp.-Interactive,
Series A 1 1,153,750 25,463,263
- --------------------------------------------------------------------------------
MEDIA--6.6%
Liberty Global, Inc.,
Series A 1 1,435,422 37,665,473
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series C 1 1,473,428 37,469,274
- --------------------------------------------------------------------------------
Liberty Media
Holding Corp.-Capital,
Series A 1 255,610 22,764,627
---------------
97,899,374
- --------------------------------------------------------------------------------
CONSUMER STAPLES--8.5%
- --------------------------------------------------------------------------------
BEVERAGES--1.4%
Constellation Brands,
Inc., Cl. A 1 322,500 8,865,525
- --------------------------------------------------------------------------------
Diageo plc, Sponsored
ADR 163,600 12,183,292
---------------
21,048,817
- --------------------------------------------------------------------------------
FOOD PRODUCTS--1.9%
ConAgra Foods, Inc. 259,400 6,783,310
- --------------------------------------------------------------------------------
Nestle SA 64,931 22,182,127
---------------
28,965,437
- --------------------------------------------------------------------------------
TOBACCO--5.2%
Altria Group, Inc. 714,000 58,069,620
- --------------------------------------------------------------------------------
Loews Corp./Carolina
Group 326,400 18,872,448
---------------
76,942,068
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ENERGY--3.9%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.4%
Halliburton Co. 198,000 $ 6,405,300
- --------------------------------------------------------------------------------
OIL & GAS--3.5%
BP plc, ADR 340,400 22,840,840
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 263,800 18,840,596
- --------------------------------------------------------------------------------
Kinder Morgan, Inc. 56,500 5,938,150
- --------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR 51,100 4,535,636
---------------
52,155,222
- --------------------------------------------------------------------------------
FINANCIALS--14.2%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--3.3%
E*TRADE Financial
Corp. 1 401,200 9,339,936
- --------------------------------------------------------------------------------
UBS AG 658,112 39,305,270
---------------
48,645,206
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--1.8%
Wachovia Corp. 477,400 26,495,700
- --------------------------------------------------------------------------------
CONSUMER FINANCE--1.8%
Capital One Financial
Corp. 337,900 26,805,607
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.4%
Bank of America Corp. 521,400 28,087,818
- --------------------------------------------------------------------------------
Groupe Bruxelles
Lambert SA 200,000 22,016,311
---------------
50,104,129
- --------------------------------------------------------------------------------
INSURANCE--3.3%
Everest Re Group Ltd. 159,200 15,789,456
- --------------------------------------------------------------------------------
Fidelity National
Financial, Inc. 563,000 12,554,900
- --------------------------------------------------------------------------------
Fidelity National
Title Group, Inc., Cl. A 126,373 2,781,470
- --------------------------------------------------------------------------------
Genworth Financial,
Inc., Cl. A 247,000 8,259,680
- --------------------------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 337,300 10,071,778
---------------
49,457,284
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.6%
Freddie Mac 127,500 8,796,225
21 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE--7.3%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--2.9%
Amgen, Inc. 1,2 146,300 $ 11,105,633
- --------------------------------------------------------------------------------
Human Genome
Sciences, Inc. 1 483,600 6,456,060
- --------------------------------------------------------------------------------
MedImmune, Inc. 1 476,000 15,251,040
- --------------------------------------------------------------------------------
Vanda
Pharmaceuticals, Inc. 1 749,440 9,772,698
---------------
42,585,431
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.5%
Boston Scientific
Corp. 1 471,800 7,506,338
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.1%
WellPoint, Inc. 1 216,000 16,485,120
- --------------------------------------------------------------------------------
PHARMACEUTICALS--2.8%
Medicines Co. (The) 1 261,600 6,791,136
- --------------------------------------------------------------------------------
Pfizer, Inc. 541,700 14,436,305
- --------------------------------------------------------------------------------
Sanofi-Aventis SA,
ADR 477,500 20,384,475
---------------
41,611,916
- --------------------------------------------------------------------------------
INDUSTRIALS--5.5%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.3%
Empresa Brasileira de
Aeronautica SA, ADR 3 180,500 7,514,215
- --------------------------------------------------------------------------------
Orbital Sciences Corp. 1 945,200 17,164,832
- --------------------------------------------------------------------------------
United Technologies
Corp. 372,600 24,487,272
---------------
49,166,319
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.2%
Siemens AG,
Sponsored ADR 356,800 32,044,208
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--17.3%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--2.1%
Cisco Systems, Inc. 1 738,800 17,827,244
- --------------------------------------------------------------------------------
Juniper Networks, Inc. 1 577,500 9,944,550
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 111,500 4,057,485
---------------
31,829,279
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--1.4%
Hutchinson
Technology, Inc. 1 334,500 $ 7,743,675
- --------------------------------------------------------------------------------
International Business
Machines Corp. 142,800 13,184,724
---------------
20,928,399
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.2%
eBay, Inc. 1 419,900 13,491,387
- --------------------------------------------------------------------------------
Yahoo!, Inc. 1 146,400 3,856,176
---------------
17,347,563
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.9%
Texas Instruments, Inc. 444,500 13,415,010
- --------------------------------------------------------------------------------
SOFTWARE--11.7%
Compuware Corp. 1 1,200,300 9,650,412
- --------------------------------------------------------------------------------
Microsoft Corp. 2,223,200 63,828,072
- --------------------------------------------------------------------------------
Novell, Inc. 1 2,036,300 12,217,800
- --------------------------------------------------------------------------------
Synopsys, Inc. 1 982,300 22,111,573
- --------------------------------------------------------------------------------
Take-Two Interactive
Software, Inc. 1,3,4 4,722,550 66,068,475
---------------
173,876,332
- --------------------------------------------------------------------------------
MATERIALS--0.6%
- --------------------------------------------------------------------------------
METALS & MINING--0.6%
Companhia Vale do
Rio Doce, Sponsored
ADR 423,400 9,196,248
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.7%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.1%
IDT Corp., Cl. B 1 1,312,055 17,043,594
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.6%
Sprint Nextel Corp. 461,100 8,617,959
- --------------------------------------------------------------------------------
UTILITIES--3.1%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.9%
Reliant Energy, Inc. 1 1,106,800 14,034,224
- --------------------------------------------------------------------------------
ENERGY TRADERS--2.2%
AES Corp. (The) 1 1,479,000 32,523,210
---------------
Total Common Stocks
(Cost $987,250,002) 1,075,168,814
22 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MONEY MARKET FUND--27.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Oppenheimer
Institutional
Money Market
Fund, Cl. E, 5.23% 4,5,9
(Cost $411,573,319) 411,573,319 $ 411,573,319
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
STRUCTURED NOTES--1.0%
- --------------------------------------------------------------------------------
Fhu-Jin Ltd.
Catastrophe Linked
Nts., Cl. B, 9.368%,
8/10/11 6,7 $ 3,000,000 3,024,900
- --------------------------------------------------------------------------------
Successor Cal Quake
Parametric Ltd.
Catastrophe Linked Nts.:
Cl. A-I, 10.64%,
6/6/08 6,7 3,000,000 2,968,800
Cl. A-I, 12.64%,
6/6/08 6,7 3,000,000 3,019,350
- --------------------------------------------------------------------------------
Successor Hurricane
Modeled Ltd.
Catastrophe Linked
Nts., Cl. B-I, 16.04%,
12/6/07 6,7 3,000,000 3,088,800
- --------------------------------------------------------------------------------
Successor Japan
Quake Ltd.,
Catastrophe Linked
Nts., Series A-I, 9.64%,
6/6/08 6,7 3,000,000 3,018,750
---------------
Total Structured Notes
(Cost $15,000,000) 15,120,600
VALUE
SEE NOTE 1
- --------------------------------------------------------------------------------
Total Investments,
at Value (excluding
Investments Purchased
with Cash Collateral
from Securities Loaned)
(Cost $1,413,823,321) $1,501,862,733
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED 8
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.7%
Undivided interest of 1.16% in joint repurchase
agreement (Principal Amount/Value $3,450,000,000,
with a maturity value of $3,450,510,792) with
Nomura Securities, 5.33%, dated 10/31/06,
to be repurchased at $40,080,461 on
11/1/06, collateralized by U.S. Agency
Mortgages, 0.00%-7.439%,
3/15/14-6/25/43, with
a value of
$3,519,000,000 $ 40,074,528 40,074,528
- --------------------------------------------------------------------------------
YANKEE FLOATING CERTIFICATE OF DEPOSIT--0.1%
Natexis Banques
Populaires NY, 5.34%,
11/1/06 2,000,000 2,000,000
---------------
Total Investments Purchased with
Cash Collateral from Securities
Loaned (Cost $42,074,528) 42,074,528
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $1,455,897,849) 103.8% 1,543,937,261
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS
OF OTHER ASSETS (3.8) (57,069,717)
--------------------------------
NET ASSETS 100.0% $1,486,867,544
================================
23 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 5
- --------------------------------------------------------------------------------------------------------
Amgen, Inc. 265 4/23/07 $75 $139,253 $148,400
3. Partial or fully-loaned security. See Note 9 of accompanying Notes.
4. Represents ownership of at least 5% of the voting securities of the issuer,
and is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended October 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
OCTOBER 31, GROSS GROSS OCTOBER 31,
2005 ADDITIONS REDUCTIONS 2006
- --------------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.23%* -- 489,723,396 78,150,077 411,573,319
Take-Two Interactive Software, Inc. 3,996,250 726,300 -- 4,722,550
VALUE DIVIDEND
SEE NOTE 1 INCOME
- --------------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.23%* $ 411,573,319 $ 1,574,622
Take-Two Interactive Software, Inc. 66,068,475 --
--------------------------------
$ 477,641,794 $ 1,574,622
================================
* The money market fund and the Fund are affiliated by having the same
investment advisor.
5. The Fund may have elements of risk due to concentrated investments. Such
concentrations may subject the Fund to additional risks.
6. Illiquid security. The aggregate value of illiquid securities as of October
31, 2006 was $15,120,600, which represents 1.02% of the Fund's net assets. See
Note 8 of accompanying Notes.
7. Represents the current interest rate for a variable or increasing rate
security.
8. The security/securities have 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 9 of
accompanying Notes.
9. Rate shown is the 7-day yield as of October 31, 2006.
24 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
SHARES VALUE
SOLD SHORT SEE NOTE 1
- --------------------------------------------------------------------------------------------------
COMMON STOCK SECURITIES SOLD SHORT--(14.2)% 1
- --------------------------------------------------------------------------------------------------
Alcon, Inc. (37,660) $ (3,994,973)
- --------------------------------------------------------------------------------------------------
Arkema 2 (3,190) (155,732)
- --------------------------------------------------------------------------------------------------
Fidelity NASDAQ Composite Index-Tracking (1,403,600) (130,492,692)
- --------------------------------------------------------------------------------------------------
Fidelity National Information Services, Inc. (316,500) (13,156,905)
- --------------------------------------------------------------------------------------------------
Imerys SA (22,760) (1,966,602)
- --------------------------------------------------------------------------------------------------
Lafarge SA (19,460) (2,615,331)
- --------------------------------------------------------------------------------------------------
Nasdaq-100 Unit Investment Trust (1,043,100) (44,415,198)
- --------------------------------------------------------------------------------------------------
Suez SA (124,960) (5,591,629)
- --------------------------------------------------------------------------------------------------
Total SA (127,600) (8,683,378)
--------------
TOTAL COMMON STOCK SECURITIES SOLD SHORT (PROCEEDS $197,269,073) $(211,072,440)
==============
1. Collateral on short sales was segregated by the Fund in the amount of
$368,633,358, which represented 174.64% of the market value of securities sold
short. See Note 1 of accompanying Notes.
2. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2006
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $942,360,042) $1,066,295,467
Affiliated companies (cost $513,537,807) 477,641,794
--------------
1,543,937,261
- -----------------------------------------------------------------------------------------------------------------
Cash 1,403,932
- -----------------------------------------------------------------------------------------------------------------
Deposits with broker for securities sold short 207,864,259
- -----------------------------------------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 1,593,022
- -----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 5,852,027
Interest and dividends 2,968,896
Other 81,522
--------------
Total assets 1,763,700,919
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------
Short positions, at value (proceeds of $197,269,073)--see accompanying statement
of investments 211,072,440
- -----------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $139,253)--see accompanying statement
of investments 148,400
- -----------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 42,074,528
- -----------------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 14,880,301
- -----------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 4,688,348
Shares of beneficial interest redeemed 2,950,108
Distribution and service plan fees 310,348
Transfer and shareholder servicing agent fees 297,962
Trustees' compensation 226,508
Shareholder communications 137,758
Other 46,674
--------------
Total liabilities 276,833,375
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS $1,486,867,544
==============
- -----------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 497,422
- -----------------------------------------------------------------------------------------------------------------
Additional paid-in capital 1,355,033,037
- -----------------------------------------------------------------------------------------------------------------
Accumulated net investment income 13,431,756
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 56,957,754
- -----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 60,947,575
--------------
NET ASSETS $1,486,867,544
==============
26 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -----------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $1,146,502,587 and
38,026,444 shares of beneficial interest outstanding) $ 30.15
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 31.99
- -----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $159,147,320
and 5,493,605 shares of beneficial interest outstanding) $ 28.97
- -----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $141,980,764 and 4,911,865 shares of
beneficial interest outstanding) $ 28.91
- -----------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,431,052
and 722,149 shares of beneficial interest outstanding) $ 29.68
- -----------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $17,805,821 and 588,088 shares of beneficial interest outstanding) $ 30.28
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 21,984,426
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding
taxes of $423,808) 14,946,917
Affiliated companies 1,574,622
- --------------------------------------------------------------------------------
Portfolio lending fees 4,325,080
- --------------------------------------------------------------------------------
Other income 52,881
---------------
Total investment income 42,883,926
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 13,406,190
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 3,053,502
Class B 1,786,369
Class C 1,542,766
Class N 123,526
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,765,281
Class B 369,638
Class C 340,613
Class N 80,299
Class Y 73,363
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 264,974
Class B 57,469
Class C 30,859
Class N 2,420
- --------------------------------------------------------------------------------
Dividends on short sales 1,696,616
- --------------------------------------------------------------------------------
Custodian fees and expenses 20,624
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 104,272
---------------
Total expenses 25,720,281
Less reduction to custodian expenses (940)
Less waivers and reimbursements of expenses (32,704)
---------------
Net expenses 25,686,637
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 17,197,289
28 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments (including premiums on options exercised) $ 55,077,868
Closing and expiration of option contracts written 158,062
Foreign currency transactions 249,788
Short positions 16,142,453
Swap contracts 29,979
---------------
Net realized gain 71,658,150
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 39,226,340
Translation of assets and liabilities denominated in
foreign currencies 2,666,329
Option contracts (9,147)
Short positions (13,557,238)
Swap contracts (13,287,279)
---------------
Net change in unrealized appreciation 15,039,005
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 103,894,444
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2006 2005
- ------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 17,197,289 $ 6,952,511
- ------------------------------------------------------------------------------------------------------------------
Net realized gain 71,658,150 261,305,597
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 15,039,005 (119,390,292)
----------------------------------
Net increase in net assets resulting from operations 103,894,444 148,867,816
- ------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (10,046,614) (1,598,737)
Class B -- --
Class C -- --
Class N (100,954) --
Class Y (250,160) (86,357)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (175,983,423) (99,583,789)
Class B (27,064,716) (18,611,376)
Class C (22,974,652) (13,238,663)
Class N (3,378,288) (1,849,874)
Class Y (3,563,267) (2,105,804)
- ------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from beneficial interest transactions:
Class A (127,453,722) (92,065,432)
Class B (35,046,955) (67,412,741)
Class C (18,827,596) (15,626,986)
Class N (2,203,146) (967,139)
Class Y (7,837,997) (2,922,726)
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Total decrease (330,837,046) (167,201,808)
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 1,817,704,590 1,984,906,398
----------------------------------
End of period (including accumulated net investment income
of $13,431,756 and $6,574,734, respectively) $ 1,486,867,544 $ 1,817,704,590
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.58 $ 32.41 $ 30.00 $ 26.41 $ 31.30
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 1 .17 1 .07 1 .14 .24
Net realized and unrealized gain (loss) 1.67 2.27 2.41 3.71 (4.74)
------------------------------------------------------------------------
Total from investment operations 2.03 2.44 2.48 3.85 (4.50)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.24) (.04) (.07) (.26) (.39)
Distributions from net realized gain (4.22) (2.23) -- -- --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (4.46) (2.27) (.07) (.26) (.39)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.15 $ 32.58 $ 32.41 $ 30.00 $ 26.41
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.00% 7.79% 8.30% 14.70% (14.60)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,146,503 $1,378,475 $1,459,053 $1,429,157 $1,181,014
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,238,504 $1,465,797 $1,497,594 $1,292,117 $1,300,422
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.22% 0.53% 0.23% 0.53% 0.82%
Total expenses 1.43% 4 1.33% 1.32% 1.44% 1.52%
Expenses after payments and waivers and
reduction to custodian expenses 1.43% 1.28% 1.32% 1.44% 1.52%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 66% 100% 64% 63% 73%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.43%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.44 $ 31.55 $ 29.36 $ 25.79 $ 30.56
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .13 1 (.08) 1 (.17) 1 (.11) .03
Net realized and unrealized gain (loss) 1.62 2.20 2.36 3.68 (4.63)
------------------------------------------------------------------------
Total from investment operations 1.75 2.12 2.19 3.57 (4.60)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- (.17)
Distributions from net realized gain (4.22) (2.23) -- -- --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (4.22) (2.23) -- -- (.17)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.97 $ 31.44 $ 31.55 $ 29.36 $ 25.79
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.22% 6.94% 7.46% 13.84% (15.16)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 159,147 $ 210,856 $ 278,215 $ 424,121 $ 693,380
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 178,815 $ 247,951 $ 342,847 $ 527,653 $ 981,593
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.47% (0.27)% (0.54)% (0.19)% 0.17%
Total expenses 2.18% 4 2.12% 2.11% 2.20% 2.17%
Expenses after payments and waivers
and reduction to custodian expenses 2.18% 2.07% 2.11% 2.20% 2.17%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 66% 100% 64% 63% 73%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 2.18%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
CLASS C YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.38 $ 31.48 $ 29.29 $ 25.77 $ 30.55
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .13 1 (.07) 1 (.16) 1 (.06) .05
Net realized and unrealized gain (loss) 1.62 2.20 2.35 3.63 (4.65)
------------------------------------------------------------------------
Total from investment operations 1.75 2.13 2.19 3.57 (4.60)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- (.05) (.18)
Distributions from net realized gain (4.22) (2.23) -- -- --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (4.22) (2.23) -- (.05) (.18)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.91 $ 31.38 $ 31.48 $ 29.29 $ 25.77
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.23% 6.99% 7.48% 13.88% (15.16)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 141,981 $ 174,735 $ 190,426 $ 205,336 $ 203,490
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 154,404 $ 187,520 $ 203,073 $ 198,226 $ 245,055
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.47% (0.22)% (0.51)% (0.19)% 0.18%
Total expenses 2.18% 4 2.08% 2.06% 2.17% 2.16%
Expenses after payments and waiver and
reduction to custodian expenses 2.18% 2.02% 2.06% 2.17% 2.16%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 66% 100% 64% 63% 73%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 2.18%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.12 $ 32.06 $ 29.72 $ 26.21 $ 31.26
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .25 1 .05 1 (.05) 1 .09 .49
Net realized and unrealized gain (loss) 1.66 2.24 2.39 3.65 (5.02)
------------------------------------------------------------------------
Total from investment operations 1.91 2.29 2.34 3.74 (4.53)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) -- -- 2 (.23) (.52)
Distributions from net realized gain (4.22) (2.23) -- -- --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (4.35) (2.23) -- (.23) (.52)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 29.68 $ 32.12 $ 32.06 $ 29.72 $ 26.21
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 6.64% 7.39% 7.89% 14.39% (14.78)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 21,431 $ 25,539 $ 26,382 $ 19,538 $ 14,843
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 24,755 $ 27,162 $ 23,702 $ 17,677 $ 10,295
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) 0.87% 0.17% (0.15)% 0.23% 0.55%
Total expenses 1.77% 5 1.69% 1.73% 2.14% 1.76%
Expenses after payments and waivers
and reduction to custodian expenses 1.77% 1.64% 1.69% 1.73% 1.76%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 66% 100% 64% 63% 73%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods of less than one full year.
5. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.77%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
CLASS Y YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.70 $ 32.52 $ 30.11 $ 26.53 $ 31.40
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .41 1 .22 1 .12 1 .20 .56
Net realized and unrealized gain (loss) 1.69 2.28 2.41 3.72 (4.99)
------------------------------------------------------------------------
Total from investment operations 2.10 2.50 2.53 3.92 (4.43)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.09) (.12) (.34) (.44)
Distributions from net realized gain (4.22) (2.23) -- -- --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (4.52) (2.32) (.12) (.34) (.44)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.28 $ 32.70 $ 32.52 $ 30.11 $ 26.53
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.21% 7.98% 8.42% 14.97% (14.34)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 17,806 $ 28,100 $ 30,831 $ 30,124 $ 24,458
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 23,687 $ 29,815 $ 30,649 $ 27,078 $ 28,726
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.39% 0.69% 0.38% 0.74% 1.17%
Total expenses 1.24% 4 1.17% 1.16% 1.33% 1.34%
Expenses after payments and waivers and
reduction to custodian expenses 1.23% 1.12% 1.16% 1.23% 1.23%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 66% 100% 64% 63% 73%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.24%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Opportunity Value Fund (the Fund), a series of Oppenheimer
Quest For Value Funds, is an open-end management investment company registered
under the Investment Company Act of 1940, as amended. The Fund's investment
objective is to seek growth of capital. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
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 Trustees. 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(R) 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, as 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 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
36 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
available are valued at their fair value. Foreign and domestic securities whose
values have been materially affected by what the Manager identifies as a
significant event occurring before the Fund's assets are valued but after the
close of their respective exchanges will be fair valued. Fair value is
determined in good faith using consistently applied procedures under the
supervision of the Board of Trustees. Investments in open-end registered
investment companies are valued at that fund's net asset value. Short-term
"money market type" debt securities with remaining maturities of sixty days or
less are valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying Statement of Operations. The Fund records a realized gain or loss
when a structured note is sold or matures.
- --------------------------------------------------------------------------------
SECURITIES SOLD SHORT. The Fund sells securities that it does not own, and it
will therefore be obligated to purchase such securities at a future date. Upon
entering into a short position, the Fund records the proceeds as a deposit with
the broker in its Statement of Assets and Liabilities. The value of the open
short position is recorded as a liability, and the Fund records an unrealized
gain or loss to the extent of the difference between the proceeds received and
the value of the open short position. The Fund records a realized gain or loss
when the short position is closed out. By entering into short sales, the Fund
bears the market risk of increases in value of the security sold short in excess
of the proceeds received. Until the security is replaced, the Fund is required
to pay the lender any dividend or interest earned. Dividend expense on short
sales is treated as an expense in the Statement of Operations.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually
37 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
- --------------------------------------------------------------------------------
AFFILIATED FUNDS. The Fund is permitted to invest daily available cash balances
in affiliated money market funds. Each day, the Fund invests the available cash
in Oppenheimer Institutional Money Market Fund ("IMMF") which seeks current
income and stability of principal. The Manager is also the investment advisor of
IMMF. The Fund's investment in IMMF is included in the Statement of Investments.
Included in the net earnings received from IMMF is a 0.10% management fee paid
to the Manager by IMMF. The Manager will waive fees and/or reimburse Fund
expenses in an amount equal to the indirect management fees incurred through the
Fund's investment in IMMF.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential loss on a particular financial instrument is
greater than the value of such financial instrument, as reflected in the Fund's
Statement of Assets and Liabilities in the annual and semiannual reports.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
38 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
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 1,2,3 TAX PURPOSES
----------------------------------------------------------------------
$ 35,079,381 $ 38,351,049 $ 169,405 $ 58,309,818
1. The Fund had $169,405 of straddle losses which were deferred.
2. During the fiscal year ended October 31, 2006, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended October 31, 2005, the Fund did not utilize any
capital loss carryforward.
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, 2006. 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 4
-----------------------------------------------------------------
$ 10,247,991 $ 57,461 $ 10,305,452
4. $10,247,991, including $6,585,161 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended October 31, 2006
and October 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
-----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 73,736,564 $ 1,685,094
Long-term capital gain 169,625,510 135,389,506
------------------------------------
Total $ 243,362,074 $ 137,074,600
====================================
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, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments,
39 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 $1,458,535,400
Federal tax cost of other investments (197,408,120)
---------------
Total federal tax cost $1,261,127,280
===============
Gross unrealized appreciation $ 145,742,863
Gross unrealized depreciation (87,433,045)
---------------
Net unrealized appreciation $ 58,309,818
===============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended October
31, 2006, the Fund's projected benefit obligations were decreased by $89,482 and
payments of $13,908 were made to retired trustees, resulting in an accumulated
liability of $216,630 as of October 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed
40 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
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, to the extent they are not offset by positive
cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------
CLASS A
Sold 3,156,644 $ 92,608,542 4,917,724 $ 159,915,739
Dividends and/or
distributions reinvested 6,108,760 174,466,185 3,053,572 95,576,808
Redeemed (13,548,536) (394,528,449) (10,683,874) (347,557,979)
--------------------------------------------------------------
Net decrease (4,283,132) $ (127,453,722) (2,712,578) $ (92,065,432)
==============================================================
- ------------------------------------------------------------------------------------------
CLASS B
Sold 623,703 $ 17,563,977 773,625 $ 24,343,742
Dividends and/or
distributions reinvested 939,523 25,949,614 576,702 17,549,037
Redeemed (2,775,477) (78,560,546) (3,462,406) (109,305,520)
--------------------------------------------------------------
Net decrease (1,212,251) $ (35,046,955) (2,112,079) $ (67,412,741)
==============================================================
41 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------
CLASS C
Sold 397,470 $ 11,161,293 523,791 $ 16,441,896
Dividends and/or
distributions reinvested 760,831 20,976,105 396,787 12,046,450
Redeemed (1,813,917) (50,964,994) (1,401,470) (44,115,332)
--------------------------------------------------------------
Net decrease (655,616) $ (18,827,596) (480,892) $ (15,626,986)
==============================================================
- ------------------------------------------------------------------------------------------
CLASS N
Sold 187,209 $ 5,389,710 221,277 $ 7,121,994
Dividends and/or
distributions reinvested 122,955 3,467,323 59,403 1,839,109
Redeemed (383,112) (11,060,179) (308,571) (9,928,242)
--------------------------------------------------------------
Net decrease (72,948) $ (2,203,146) (27,891) $ (967,139)
==============================================================
- ------------------------------------------------------------------------------------------
CLASS Y
Sold 181,884 $ 5,332,127 225,432 $ 7,354,369
Dividends and/or
distributions reinvested 133,197 3,813,427 69,881 2,192,161
Redeemed (586,333) (16,983,551) (383,956) (12,469,256)
--------------------------------------------------------------
Net decrease (271,252) $ (7,837,997) (88,643) $ (2,922,726)
==============================================================
- --------------------------------------------------------------------------------
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, 2006, were as
follows:
PURCHASES SALES
- ------------------------------------------------------------------
Investment securities $ 1,192,352,823 $ 794,643,076
U.S. government and government
agency obligations -- 57,000,000
- --------------------------------------------------------------------------------
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 which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
----------------------------------------
Up to $1.0 billion 0.85%
Next $500 million 0.80
Next $500 million 0.75
Next $500 million 0.70
Next $500 million 0.65
Next $500 million 0.60
Next $500 million 0.55
Over $4.0 billion 0.50
42 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2006, the Fund paid
$3,697,690 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 up to 0.25% of the average annual net assets
of Class A shares. The Distributor currently uses all of those fees to pay
dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Under the plan, the Fund may also pay an asset-based sales
charge to the Distributor. Beginning January 1, 2003, the Board of Trustees set
the annual asset-based sales charge rate at zero. Fees incurred by the Fund
under the plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of up to 0.25% per year under each plan. If either the Class B,
Class C or Class N plan is terminated by the Fund or by the shareholders of a
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2006 for Class C and Class N shares were $7,558,248 and $613,289, 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
43 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CDSC retained by the Distributor on the redemption of shares is shown in the
following table 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, 2006 $ 226,263 $ 20,287 $ 388,997 $ 7,769 $ 4,258
- --------------------------------------------------------------------------------
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. During the year ended October 31, 2006, OFS
waived $1,578 for Class Y shares. This undertaking may be amended or withdrawn
at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the year ended October 31, 2006, the Manager waived $31,126 for
IMMF management fees.
- --------------------------------------------------------------------------------
5. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call or put options are noted
in the State-ment of Investments where applicable. Contracts subject to call or
put, expiration date, exercise price, premium received and market value are
detailed in a note to the Statement of Investments. Options written are reported
as a liability in the Statement of Assets and Liabilities. Realized gains and
losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium
44 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
whether or not the option is exercised. The Fund also has the additional risk of
not being able to enter into a closing transaction if a liquid secondary market
does not exist.
Written option activity for the year ended October 31, 2006 was as follows:
CALL OPTIONS
-------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- -------------------------------------------------------
Options outstanding as of
October 31, 2005 -- $ --
Options written 4,852 1,607,401
Options closed or expired (1,587) (149,269)
Options exercised (3,000) (1,318,879)
-------------------------
Options outstanding as of
October 31, 2006 265 $ 139,253
=========================
- --------------------------------------------------------------------------------
6. CREDIT DEFAULT SWAP CONTRACTS
Credit default swaps are designed to transfer the credit exposure of fixed
income products between counterparties. The Fund may enter into credit default
swaps, both directly ("unfunded swaps") and indirectly in the form of a swap
embedded within a structured note ("funded swaps"), to protect against the risk
that a security will default. Unfunded and funded credit default swaps may be on
a single security, or a basket of securities. The Fund may take a short position
(purchaser of credit protection) or a long position (seller of credit
protection) in the credit default swap. Risks of credit default swaps include,
but are not limited to, the cost of paying for credit protection if there are no
credit events, pricing transparency when assessing the cost of a credit default
swap, counterparty risk, and the need to fund the delivery obligation (either
cash or defaulted bonds depending on whether the Fund is long or short the swap,
respectively).
The Fund would take a short position in a credit default swap (the
"unfunded swap") against a long portfolio position to decrease exposure to
specific high yield issuers. As a purchaser of credit protection under a swap
contract, the Fund pays a periodic interest fee on the notional amount to the
counterparty. This interest fee is accrued daily as a component of unrealized
appreciation (depreciation) and is recorded as realized loss upon payment. Upon
occurrence of a specific credit event with respect to the underlying referenced
debt obligation, the Fund is obligated to deliver that security to the
counterparty in exchange for receipt of the notional amount from the
counterparty. The difference between the value of the security delivered and the
notional amount received is recorded as realized gain and is included on the
Statement of Operations. Credit default swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is included on the Statement of Operations.
45 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. CREDIT DEFAULT SWAP CONTRACTS Continued
Information regarding such credit default swaps as of October 31, 2006 is as
follows:
NOTIONAL ANNUAL
AMOUNT INTEREST
REFERENCE RECEIVED BY RATE PAID UNREALIZED
DEBT THE FUND UPON BY THE TERMINATION APPRECIATION
COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Custom basket of
Asset-Backed Securities $ 60,000,000 3.244% 11/25/39 $ 108,691
Custom basket of
Asset-Backed Securities 125,000,000 3.150 7/25/45 (1,199,996)
---------------
$ (1,091,305)
===============
The Fund would take a long position in the credit default swap note (the "funded
swap") to increase the exposure to specific high yield corporate issuers. As a
seller of credit protection under a swap contract, the Fund receives a periodic
interest fee on the notional amount from the counterparty. This interest fee is
accrued daily as a component of unrealized appreciation (depreciation) and is
recorded as realized gain upon receipt. Upon occurrence of a specific credit
event with respect to the underlying referenced debt obligation, the Fund
receives that security from the counterparty in exchange for payment of the
notional amount to the counterparty. The difference between the value of the
security received and the notional amount paid is recorded as realized loss and
is included on the Statement of Operations. Credit default swaps are marked to
market daily using different sources, including quotations from counterparties,
pricing services, brokers or market makers. The unrealized appreciation
(depreciation) related to the change in the valuation of the notional amount of
the swap is combined with the amount due to (owed by) the Fund at termination or
settlement and disclosed separately on the Statement of Assets and Liabilities.
The net change in this amount is included on the Statement of Operations.
Information regarding such credit default swaps as of October 31, 2006 is as
follows:
NOTIONAL ANNUAL
AMOUNT INTEREST RATE
REFERENCE PAID BY RECEIVED UNREALIZED
DEBT THE FUND UPON BY THE TERMINATION APPRECIATION
COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Custom basket of
Asset-Backed Securities $ 10,000,000 19.50% 11/25/39 $ (1,088)
Custom basket of
Asset-Backed Securities 20,500,000 19.25 7/25/45 1,484,331
--------------
$ 1,483,243
==============
46 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
- --------------------------------------------------------------------------------
7. TOTAL RETURN SWAP CONTRACTS
A total return swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. One cash flow stream will typically be
based on a reference interest rate or index and the other on the total return of
a reference asset such as a security, a basket of securities, or an index. The
total return includes appreciation or depreciation on the reference asset, plus
any interest or dividend payments. Payments under the swap are based on an
agreed upon principal amount but since this principal amount is not exchanged,
it represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Total return swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations. The primary risks associated with total return swaps are credit
risks (if the counterparty fails to meet its obligations) and market risk (if
there is no liquid market for the agreement or unfavorable changes occur in the
reference asset).
As of October 31, 2006, the Fund had entered into the following total return
swap agreements:
SWAP NOTIONAL PAID BY RECEIVED TERMINATION UNREALIZED
COUNTERPARTY AMOUNT THE FUND BY THE FUND DATES DEPRECIATION
- ------------------------------------------------------------------------------------------------------------------
Goldman Sachs
International:
If positive, the total If positive, the total
return of a custom return of Groupe
basket of securities Bruxelles Lambert
and One-Month SA (equity) and
90,000EUR EURIBOR plus spread One-Month 6/22/07 $ 563,001
310,000EUR based on the value of EURIBOR minus 6/21/07 1,961,680
5,996EUR Bruxelles Lambert spread based on 6/28/07 38,879
226,000EUR SA (equity). If a custom equity 6/21/07 1,619,612
60,000EUR negative, the total basket. If negative, 6/27/07 377,784
20,000EUR return on Groupe the total return 6/28/07 129,973
513,000EUR Bruxelles Lambert on the custom 6/28/07 5,170,861
400,000EUR SA. basket of securities. 6/29/07 3,817,427
-------------
$ 13,679,217
=============
Notional amount is reported in U.S. Dollars, except for those denoted in the
following currency:
EUR Euro
Abbreviation is as follows:
EURIBOR Euro Interbank Offered Rate
47 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. ILLIQUID SECURITIES
As of October 31, 2006, investments in securities included issues that are
illiquid. A security may also be considered illiquid if it lacks a readily
available market or if its valuation has not changed for a certain period of
time. The Fund will not invest more than 15% of its net assets (determined at
the time of purchase and reviewed periodically) in illiquid securities.
Securities that are illiquid are marked with the applicable footnote on the
Statement of Investments.
- --------------------------------------------------------------------------------
9. 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
securities, letters of credit 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 each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. 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. 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, 2006, the Fund
had on loan securities valued at $39,471,338, which are included in the
Statement of Assets and Liabilities as "Investments, at value" and, when
applicable, as "Receivable for Investments sold." Collateral of $42,074,528 was
received for the loans, all of which was received in cash and subsequently
invested in approved investments or held as cash.
- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
October 31, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.
48 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of October
31, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
- --------------------------------------------------------------------------------
11. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
49 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER QUEST FOR VALUE FUNDS:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Quest Opportunity Value Fund (one of the portfolios constituting the
Oppenheimer Quest For Value Funds), including the statement of investments, as
of October 31, 2006, 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, 2006, 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 Opportunity Value Fund as of October 31, 2006, 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 12, 2006
50 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $3.0725 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December 8,
2005. 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, 2006 which are not designated as capital gain distributions should be
multiplied by 23.88% 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, 2006, 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. $15,411,006 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2007, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended October 31, 2006, $8,915,251 or 85.74% of the ordinary distributions
paid by the Fund qualifies as an interest related dividend and $25,094,603 or
39.62% of the short-term capital gain distribution paid by the Fund qualifies as
a short-term capital gain dividend.
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.
51 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
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.
52 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX
CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, COLORADO 80112-3924. EACH TRUSTEE 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
Chairman of the Board 1982); General Partner of Trivest Venture Fund (private venture capital
of Trustees (since 2001), fund); President of Investment Counseling Federated Investors, Inc.
Trustee (since 1987) (1973-1982); Trustee of the following open-end investment companies: Cash
Age: 73 Assets Trust (1984), Premier VIT (formerly PIMCO Advisors VIT), Tax Free
Trust of Arizona (since 1984) and four funds for the Hawaiian Tax Free
Trust. Oversees 10 portfolios in the OppenheimerFunds complex.
DAVID K. DOWNES, President, Chief Executive Officer and Board Member of CRAFund Advisors,
Trustee (since 2005) Inc. (investment management company) (since January 2004); President of
Age: 66 The Community Reinvestment Act Qualified Investment Fund (investment
management company) (since January 2004); Independent Chairman of the
Board of Trustees of Quaker Investment Trust (registered investment
company) (since January 2004); Director of Internet Capital Group
(information technology company) (since October 2003); Chief Operating
Officer and Chief Financial Officer of Lincoln National Investment
Companies, Inc. (subsidiary of Lincoln National Corporation, a publicly
traded company) and Delaware Investments U.S., Inc. (investment management
subsidiary of Lincoln National Corporation) (1995-2003); President, Chief
Executive Officer and Trustee of Delaware Investment Family of Funds
(1995-2003); President and Board Member of Lincoln National Convertible
Securities Funds, Inc. and the Lincoln National Income Funds, TDC
(1995-2003); Chairman and Chief Executive Officer of Retirement Financial
Services, Inc. (registered transfer agent and investment adviser and
subsidiary of Delaware Investments U.S., Inc.) (1995-2003); President and
Chief Executive Officer of Delaware Service Company, Inc. (1995-2003);
Chief Administrative Officer, Chief Financial Officer, Vice Chairman and
Director of Equitable Capital Management Corporation (investment
subsidiary of Equitable Life Assurance Society) (1985-1992); Corporate
Controller of Merrill Lynch & Company (financial services holding
company) (1977-1985); held the following positions at the Colonial Penn
Group, Inc. (insurance company): Corporate Budget Director (1974-1977),
Assistant Treasurer (1972-1974) and Director of Corporate Taxes
(1969-1972); held the following positions at Price Waterhouse & Company
(financial services firm): Tax Manager (1967-1969), Tax Senior (1965-1967)
and Staff Accountant (1963-1965); United States Marine Corps (1957-1959).
Oversees 10 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 55 portfolios
Trustee (since 1998) in the OppenheimerFunds complex.
Age: 73
LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Group of Funds (open-end
Trustee (since 1987) investment company) (since December 2004); Chairman of Aquila Management
Age: 77 Corporation and Aquila Investment Management LLC (since August 1984);
Chief Executive Officer and President of Aquila Management Corporation
(August 1984-December 1994); 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
53 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
LACY B. HERRMANN, Corporation; Sub-Advisor and Administrator of Prime Cash Fund & Short Term
Continued Asset Reserves; Director of OCC Cash Reserves, Inc. (open-end investment
company) (June 2003-December 2004); Trustee of Premier VIT (formerly
PIMCO Advisors VIT) (investment company) (since 1994); Trustee of OCC
Accumulation Trust (open-end investment company) (until December 2004);
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
Trustee (since 2001) 1995); Director of Special Value Opportunities Fund, LLC (registered
Age: 63 investment company) (since September 2004); Member, Zurich Financial
Investment Advisory Board (insurance) (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. (May 2000-April
2002) (executive search firm); President and Chief Executive Officer of the
Delaware Group of Mutual Funds (1992-1995); Chairman, President and Chief
Executive Officer of Equitable Capital Management Corporation
(1985-1992); Vice President, Senior Vice President, Executive Vice
President and Chief Investment Officer at The Equitable Life Assurance
Society of the U.S. (1979-1992); Vice President and Co-manager of
Fundamental Equities Research at Smith Barney, Harris Upham and Company
(1970-1979); Engineer, Sperry Gyroscope Company (1966-1970); former
governor of the Association for Investment Management and Research; former
chairman of the Institute of Chartered Financial Analysts; Chartered
Financial Analyst. Oversees 55 portfolios in the OppenheimerFunds complex.
- ----------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE MR. MURPHY IS AN "INTERESTED TRUSTEE" BECAUSE HE IS AFFILIATED WITH THE
AND OFFICER MANAGER BY VIRTUE OF HIS POSITIONS AS AN OFFICER AND DIRECTOR OF THE
MANAGER, AND AS A SHAREHOLDER OF ITS PARENT COMPANY. THE ADDRESS OF MR.
MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW
YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE
TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN
OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT,
DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
Trustee (since 2005) and President (since September 2000) of the Manager; President and director or
President and Principal trustee of other Oppenheimer funds; President and Director of Oppenheimer
Executive Officer Acquisition Corp. ("OAC") (the Manager's parent holding company) and of
(since 2001) Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
Age: 57 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
54 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
JOHN V. MURPHY, (OAC's parent company) (since February 1997); Director of DLB Acquisition
Continued 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 92 portfolios in the
OppenheimerFunds complex.
- ----------------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR
OF THE FUND MESSRS. FERREIRA, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL
CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS.
VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY,
CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE TERM
OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
EMMANUEL FERREIRA, Vice President of the Manager (since January 2003); Portfolio Manager at
Vice President and Portfolio Lashire Investments (July 1999-December 2002). An officer of 3 portfolios
Manager (since 2003) in the OppenheimerFunds complex.
Age: 39
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and Chief March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Compliance Officer Centennial Asset Management Corporation and Shareholder Services, Inc.
(since 2004) (since June 1983). Former Vice President and Director of Internal Audit of
Age: 56 the Manager (1997-February 2004). An officer of 92 portfolios in the
OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership
Age: 47 Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since
March 2000), OppenheimerFunds International Ltd. (since May 2000),
OppenheimerFunds plc (since May 2000), 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 92 portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002);
Assistant Treasurer Manager/Financial Product Accounting of the Manager (November 1998-July
(since 2004) 2002). An officer of 92 portfolios in the OppenheimerFunds complex.
Age: 36
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of
Assistant Treasurer Financial Reporting and Compliance of First Data Corporation (April
(since 2005) 2003-July 2004); Manager of Compliance of Berger Financial Group LLC (May
Age: 36 2001-March 2003); Director of Mutual Fund Operations at American Data
Services, Inc. (September 2000-May 2001). An officer of 92 portfolios in
the OppenheimerFunds complex.
55 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2001) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 58 December 2001); General Counsel of Centennial Asset Management Corporation
(since December 2001); Senior Vice President and General Counsel of Harbour-
View 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 92 portfolios
in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary
Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant
(since 2001) Secretary (since October 2003) of the Distributor; Assistant Secretary of
Age: 41 Centennial Asset Management Corporation (since October 2003); Vice President
and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant
Secretary of OppenheimerFunds Legacy Program and Shareholder Financial
Services, Inc. (since December 2001); Assistant Counsel of the Manager (August
1994-October 2003). An officer of 92 portfolios in the OppenheimerFunds
complex.
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First
Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December
(since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant
Age: 38 General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (for-
merly, PaineWebber Incorporated). An officer of 92 portfolios in the
OppenheimerFunds complex.
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); Mr. Gillespie held the following positions at Merrill Lynch
(since 2004) Investment Management: First Vice President (2001-September 2004); Director
Age: 42 (2000-September 2004) and Vice President (1998-2000). An officer of 92
portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
56 | OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
OPPENHEIMER SMALL- & MID- CAP VALUE FUND
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Insurance 7.3%
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Health Care Providers & Services 5.0
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Hotels, Restaurants & Leisure 4.9
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Software 4.5
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Media 4.2
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Energy Traders 3.7
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Capital Markets 3.6
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Electronic Equipment & Instruments 3.0
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Life Sciences Tools & Services 3.0
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Machinery 2.9
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
Agilent Technologies, Inc. 2.3%
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CMS Energy Corp. 2.1
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Everest Re Group Ltd. 2.0
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Omnicare, Inc. 2.0
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Oshkosh Truck Corp. 1.8
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Invitrogen Corp. 1.7
- --------------------------------------------------------------------------------
Affiliated Managers Group, Inc. 1.7
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National Financial Partners Corp. 1.6
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E*TRADE Financial Corp. 1.6
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NewAlliance Bancshares, Inc. 1.6
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
8 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Financials 22.8%
Consumer Discretionary 14.4
Information Technology 13.3
Industrials 12.3
Health Care 10.1
Utilities 8.2
Materials 8.1
Energy 5.6
Consumer Staples 4.1
Telecommunication Services 1.1
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on the total market value of common stocks.
- --------------------------------------------------------------------------------
9 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2006, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. For the 12-month period ending
October 31, 2006, Oppenheimer Small- & Mid- Cap Value Fund's Class A shares
(without sales charge) outperformed its Lipper MidCap Value peer group category
and outperformed its benchmark, the Russell 2500 Index. The Fund underperformed
its former benchmark, the Russell 2000 Index, which returned 19.98% over the
same period. In terms of sectors, top contributors were the consumer
discretionary, industrials and materials. In contrast, the bottom-performers
were the information technology and energy sectors. The Fund remained
underweight in real estate investment trusts (REITs) versus its benchmark, an
area that outperformed. The benchmark was composed of more small-cap securities
versus the Fund, a situation that detracted from Fund performance, as small-caps
continued to outperform mid-caps for the 12-month period.
Regardless of the broader market environment, we follow a consistent
management strategy. We choose investments through a bottom-up, research driven
stock selection process that focuses on small- and mid-cap companies. We target
those companies we believe are competitively positioned within their marketplace
and which offer strong earnings prospects with accomplished management teams at
attractive valuations.
Given our investment approach, we made a few adjustments to the Fund's
sector weightings. For example, we increased our position within the consumer
discretionary sector, as concerns over consumer spending strength abated once
oil prices dropped and the Federal Reserve (the "Fed") ended its interest rate
hike program. By contrast, we decreased our exposure to the energy sector from
slightly overweight to neutral. In terms of the energy sector, we believe energy
companies will come under increased pressure as commodity prices stabilize at
lower levels and service costs increase, which could result in a deceleration in
earnings growth. Within the financials sector, we maintained our underweight
exposure to the REITs market based on the unattractive valuations and poor
growth opportunities we were finding in this area. Although this strategy
detracted from performance over the short term, as REITs performed well, we
believe that by adhering to our disciplined investment process, the Fund will
benefit over the longer term. Additionally, we have started to see a shift in
valuations of small-cap stocks with higher capitalizations becoming slightly
more attractively valued. Therefore, we have increased the Fund's market
capitalization weightings accordingly. Although this move slightly hurt
performance over the period as small-caps continued to outperform, we believe
going forward the Fund is well-positioned.
10 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
Also detracting from performance were disappointing results from
securities in the information technology and energy sectors. Within the
information technology sector, top detractors included Take-Two Interactive
Software, Inc. and Compuware Corp. Video game company Take-Two Interactive
Software, Inc., declined as the company had disappointing earnings. Compuware,
an IT services company, suffered as it faced execution issues. Within the energy
sector, poor results from individual stocks combined with an overweight in coal
companies, detracted from performance. Over the period, the Fund maintained an
overweight to coal companies, which benefited performance as coal prices rose,
but later detracted from performance as prices tumbled during the last six
months of the period. Notable detractors were coal producers, Alpha Natural
Resources, Inc. and Arch Coal, Inc. We exited our postion in all four companies.
On the positive side, the Fund gained from strong results generated by
holdings within the consumer discretionary, industrials and materials sectors.
Top performers within consumer discretionary were Cablevision Systems Corp. and
Marvel Entertainment, Inc. Cablevision, a leading media, entertainment and
telecommunications company, benefited from its shareholder friendly actions,
which included a large dividend payment and an announcement that it would be
taken private. Marvel Entertainment, a prominent character-based entertainment
company, advanced on a new agreement that will allow the company to take greater
profits from movies that use its characters. We sold our position in Marvel
Entertainment and took profits. Within the industrials sector, the best
performing security was Foster Wheeler Ltd., a global engineering and
construction contractor. The company continued to win new business, which drove
up profits. Also adding to results were securities in the materials sector. Top
contributors included Phelps Dodge Corp., a copper production company and Texas
Industries, Inc., a supplier of cement and concrete products. Phelps Dodge
outperformed as a result of supply and demand. As copper production has grown
increasingly difficult, demand has remained solid and as a result, copper prices
have risen, benefiting the company. Texas Industries posted strong results based
on successful execution of its business strategy and a solid pricing environment
for its product.
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, 2006. In the case of Class A, Class B
and Class C shares, performance is measured over a ten-fiscal-year period. In
the case of Class N shares, performance is measured from inception of the Class
on March 1, 2001. In the case of Class Y shares, performance is measure from
inception of the Class on October 24, 2005. The Fund's performance reflects the
deduction of the maximum initial sales charge on
11 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class A shares, the applicable contingent deferred sales charge on Class B,
Class C and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Fund changed primary benchmarks from the Russell 2000 Index to the
Russell 2500 Index, due to an investment policy change expanding the Fund's
investments to include mid-cap stocks. The Fund's performance is compared to
that of the Russell 2500 Index. The Russell 2500 Index measures the performance
of the 2,500 smallest securities in the Russell 3000 Index. The Russell 2000
Index measures the performance of the 2,000 smallest securities in the Russell
3000 Index. Index performance reflects the reinvestment of income but does not
consider the effect of transaction costs, and none of the data in the graphs
shows the effect of taxes. The Fund's performance reflects the effects of the
Fund's business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
12 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small- & Mid- Cap Value Fund (Class A)
Russell 2500 Index
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Small- & Mid- Cap Russell Russell
Value Fund (Class A) 2500 Index 2000 Index
-------------------- ---------- ----------
10/31/1996 $ 9,425 $10,000 $10,000
01/31/1997 $10,306 $10,920 $10,898
04/30/1997 $10,098 $10,401 $10,161
07/31/1997 $12,194 $12,516 $12,323
10/31/1997 $12,509 $12,912 $12,933
01/31/1998 $12,390 $13,013 $12,868
04/30/1998 $13,607 $14,625 $14,469
07/31/1998 $11,634 $13,004 $12,608
10/31/1998 $10,626 $11,918 $11,402
01/31/1999 $10,882 $13,243 $12,911
04/30/1999 $11,320 $13,768 $13,130
07/31/1999 $11,903 $14,421 $13,542
10/31/1999 $10,667 $14,063 $13,097
01/31/2000 $10,870 $16,090 $15,202
04/30/2000 $11,606 $17,157 $15,549
07/31/2000 $12,595 $16,964 $15,407
10/31/2000 $13,483 $17,336 $15,377
01/31/2001 $13,859 $17,736 $15,763
04/30/2001 $13,618 $17,069 $15,104
07/31/2001 $14,114 $17,194 $15,143
10/31/2001 $13,076 $15,227 $13,424
01/31/2002 $14,848 $17,166 $15,196
04/30/2002 $16,185 $17,985 $16,113
07/31/2002 $13,175 $14,508 $12,424
10/31/2002 $12,886 $13,836 $11,871
01/31/2003 $12,591 $13,909 $11,872
04/30/2003 $13,417 $14,925 $12,768
07/31/2003 $15,439 $17,604 $15,294
10/31/2003 $17,542 $19,604 $17,019
01/31/2004 $19,665 $21,549 $18,761
04/30/2004 $19,644 $20,957 $18,132
07/31/2004 $19,552 $20,803 $17,904
10/31/2004 $21,209 $22,023 $19,015
01/31/2005 $23,690 $23,768 $20,388
04/30/2005 $23,041 $22,750 $18,987
07/31/2005 $26,635 $26,371 $22,341
10/31/2005 $25,846 $25,305 $21,312
01/31/2006 $28,800 $28,469 $24,239
04/30/2006 $29,758 $29,655 $25,341
07/31/2006 $27,669 $27,379 $23,289
10/31/2006 $30,509 $29,780 $25,570
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 11.26% 5-Year 17.07% 10-Year 11.80%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small- & Mid- Cap Value Fund (Class B)
Russell 2500 Index
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Small- & Mid- Cap Russell Russell
Value Fund (Class B) 2500 Index 2000 Index
-------------------- ---------- ----------
10/31/1996 $10,000 $10,000 $10,000
01/31/1997 $10,919 $10,920 $10,898
04/30/1997 $10,683 $10,401 $10,161
07/31/1997 $12,885 $12,516 $12,323
10/31/1997 $13,205 $12,912 $12,933
01/31/1998 $13,059 $13,013 $12,868
04/30/1998 $14,325 $14,625 $14,469
07/31/1998 $12,230 $13,004 $12,608
10/31/1998 $11,163 $11,918 $11,402
01/31/1999 $11,412 $13,243 $12,911
04/30/1999 $11,857 $13,768 $13,130
07/31/1999 $12,453 $14,421 $13,542
10/31/1999 $11,145 $14,063 $13,097
01/31/2000 $11,337 $16,090 $15,202
04/30/2000 $12,090 $17,157 $15,549
07/31/2000 $13,104 $16,964 $15,407
10/31/2000 $14,014 $17,336 $15,377
01/31/2001 $14,386 $17,736 $15,763
04/30/2001 $14,110 $17,069 $15,104
07/31/2001 $14,610 $17,194 $15,143
10/31/2001 $13,509 $15,227 $13,424
01/31/2002 $15,318 $17,166 $15,196
04/30/2002 $16,670 $17,985 $16,113
07/31/2002 $13,551 $14,508 $12,424
10/31/2002 $13,241 $13,836 $11,871
01/31/2003 $12,938 $13,909 $11,872
04/30/2003 $13,787 $14,925 $12,768
07/31/2003 $15,865 $17,604 $15,294
10/31/2003 $18,026 $19,604 $17,019
01/31/2004 $20,207 $21,549 $18,761
04/30/2004 $20,185 $20,957 $18,132
07/31/2004 $20,091 $20,803 $17,904
10/31/2004 $21,794 $22,023 $19,015
01/31/2005 $24,343 $23,768 $20,388
04/30/2005 $23,676 $22,750 $18,987
07/31/2005 $27,370 $26,371 $22,341
10/31/2005 $26,559 $25,305 $21,312
01/31/2006 $29,594 $28,469 $24,239
04/30/2006 $30,578 $29,655 $25,341
07/31/2006 $28,431 $27,379 $23,289
10/31/2006 $31,350 $29,780 $25,570
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 12.08% 5-Year 17.34% 10-Year 12.10%
14 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small- & Mid- Cap Value Fund (Class C)
Russell 2500 Index
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Small- & Mid- Cap Russell Russell
Value Fund (Class C) 2500 Index 2000 Index
-------------------- ---------- ----------
10/31/1996 $10,000 $10,000 $10,000
01/31/1997 $10,920 $10,920 $10,898
04/30/1997 $10,684 $10,401 $10,161
07/31/1997 $12,890 $12,516 $12,323
10/31/1997 $13,205 $12,912 $12,933
01/31/1998 $13,064 $13,013 $12,868
04/30/1998 $14,333 $14,625 $14,469
07/31/1998 $12,234 $13,004 $12,608
10/31/1998 $11,165 $11,918 $11,402
01/31/1999 $11,421 $13,243 $12,911
04/30/1999 $11,860 $13,768 $13,130
07/31/1999 $12,457 $14,421 $13,542
10/31/1999 $11,147 $14,063 $13,097
01/31/2000 $11,346 $16,090 $15,202
04/30/2000 $12,101 $17,157 $15,549
07/31/2000 $13,116 $16,964 $15,407
10/31/2000 $14,022 $17,336 $15,377
01/31/2001 $14,394 $17,736 $15,763
04/30/2001 $14,118 $17,069 $15,104
07/31/2001 $14,612 $17,194 $15,143
10/31/2001 $13,516 $15,227 $13,424
01/31/2002 $15,328 $17,166 $15,196
04/30/2002 $16,683 $17,985 $16,113
07/31/2002 $13,550 $14,508 $12,424
10/31/2002 $13,237 $13,836 $11,871
01/31/2003 $12,909 $13,909 $11,872
04/30/2003 $13,733 $14,925 $12,768
07/31/2003 $15,772 $17,604 $15,294
10/31/2003 $17,885 $19,604 $17,019
01/31/2004 $20,011 $21,549 $18,761
04/30/2004 $19,950 $20,957 $18,132
07/31/2004 $19,812 $20,803 $17,904
10/31/2004 $21,453 $22,023 $19,015
01/31/2005 $23,911 $23,768 $20,388
04/30/2005 $23,217 $22,750 $18,987
07/31/2005 $26,774 $26,371 $22,341
10/31/2005 $25,925 $25,305 $21,312
01/31/2006 $28,837 $28,469 $24,239
04/30/2006 $29,739 $29,655 $25,341
07/31/2006 $27,599 $27,379 $23,289
10/31/2006 $30,376 $29,780 $25,570
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 16.17% 5-Year 17.58% 10-Year 11.75%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small- & Mid- Cap Value Fund (Class N)
Russell 2500 Index
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Small- & Mid- Cap Russell Russell
Value Fund (Class N) 2500 Index 2000 Index
-------------------- ---------- ----------
03/01/2001 $10,000 $10,000 $10,000
04/30/2001 $10,383 $10,286 $10,255
07/31/2001 $10,761 $10,362 $10,281
10/31/2001 $ 9,964 $ 9,176 $ 9,114
01/31/2002 $11,311 $10,344 $10,317
04/30/2002 $12,326 $10,838 $10,940
07/31/2002 $10,030 $ 8,743 $ 8,435
10/31/2002 $ 9,804 $ 8,338 $ 8,060
01/31/2003 $ 9,574 $ 8,382 $ 8,061
04/30/2003 $10,199 $ 8,994 $ 8,668
07/31/2003 $11,726 $10,609 $10,384
10/31/2003 $13,315 $11,814 $11,555
01/31/2004 $14,918 $12,986 $12,738
04/30/2004 $14,854 $12,629 $12,310
07/31/2004 $14,773 $12,536 $12,155
10/31/2004 $16,016 $13,272 $12,910
01/31/2005 $17,876 $14,323 $13,842
04/30/2005 $17,369 $13,710 $12,891
07/31/2005 $20,054 $15,892 $15,168
10/31/2005 $19,446 $15,249 $14,470
01/31/2006 $21,654 $17,156 $16,457
04/30/2006 $22,354 $17,871 $17,205
07/31/2006 $20,770 $16,499 $15,811
10/31/2006 $22,879 $17,946 $17,360
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 16.65% 5-Year 18.09% Since Inception (3/1/01) 15.73%
16 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Small- & Mid- Cap Value Fund (Class Y)
Russell 2500 Index
Russell 2000 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Small- & Mid- Cap Russell Russell
Value Fund (Class Y) 2500 Index 2000 Index
-------------------- ---------- ----------
10/24/2005 $10,000 $10,000 $10,000
10/31/2005 $ 9,910 $10,000 $10,000
01/31/2006 $11,058 $11,251 $11,374
04/30/2006 $11,438 $11,719 $11,891
07/31/2006 $10,650 $10,820 $10,927
10/31/2006 $11,758 $11,769 $11,998
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/06
1-Year 18.64% 5-Year N/A Since Inception (10/24/05) 17.22%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 18 FOR FURTHER
INFORMATION.
17 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES
- --------------------------------------------------------------------------------
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
Prior to 4/28/00, the Fund's sub-advisor was OpCap Advisors, Inc., its advisor
until 11/22/95.
CLASS A shares of the Fund were first publicly offered on 1/3/89. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. Class A shares are subject to a maximum annual 0.25%
asset-based sales charge. The asset-based sales charge is subject to a voluntary
waiver of a portion or all of the charge as described in the Prospectus, and the
Board of Trustees has set the rate at zero.
CLASS B shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charges of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B does not
include any contingent deferred sales charges on redemption and uses Class A
performance for the period after conversion. Class B shares are subject to an
annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 9/1/93. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
18 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
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 10/24/05. 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.
19 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2006.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to exceptions
20 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(5/1/06) (10/31/06) OCTOBER 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,025.30 $5.78
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.51 5.77
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,021.10 9.98
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.38 9.95
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,021.40 9.73
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.63 9.70
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,023.50 7.68
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.64 7.66
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,028.00 3.48
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.78 3.47
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,
excluding affiliated fund indirect expenses, based on the 6-month period ended
October 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 1.13%
- -----------------------------
Class B 1.95
- -----------------------------
Class C 1.90
- -----------------------------
Class N 1.50
- -----------------------------
Class Y 0.68
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
21 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF INVESTMENTS October 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--94.7%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.6%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--4.9%
Boyd Gaming Corp. 750,000 $ 29,602,500
- --------------------------------------------------------------------------------
Hilton Hotels Corp. 1,200,000 34,704,000
- --------------------------------------------------------------------------------
Penn National
Gaming, Inc. 1 1,200,000 43,884,000
- --------------------------------------------------------------------------------
Scientific Games
Corp., Cl. A 1 1,000,000 28,030,000
- --------------------------------------------------------------------------------
Starwood Hotels &
Resorts Worldwide,
Inc. 575,000 34,350,500
---------------
170,571,000
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--2.1%
Harman International
Industries, Inc. 325,000 33,263,750
- --------------------------------------------------------------------------------
Jarden Corp. 1 1,100,000 39,578,000
---------------
72,841,750
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.9%
ValueVision Media,
Inc., Cl. A 1,2 2,500,000 32,275,000
- --------------------------------------------------------------------------------
MEDIA--4.2%
Cablevision Systems
Corp. New York
Group, Cl. A 1 1,200,000 33,348,000
- --------------------------------------------------------------------------------
Clear Channel
Outdoor Holdings,
Inc., Cl. A 1 1,600,000 39,280,000
- --------------------------------------------------------------------------------
GateHouse
Media, Inc. 171,500 3,678,675
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series A 1 1,275,000 33,456,000
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series C 1 1,375,000 34,966,250
---------------
144,728,925
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--0.5%
Urban Outfitters,
Inc. 1,3 1,000,000 17,500,000
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.0%
Quicksilver, Inc. 1 2,500,000 34,875,000
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSUMER STAPLES--3.9%
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.3%
CVS Corp. 1,400,000 $ 43,932,000
- --------------------------------------------------------------------------------
FOOD PRODUCTS--2.6%
Bunge Ltd. 600,000 38,466,000
- --------------------------------------------------------------------------------
ConAgra Foods, Inc. 2,050,000 53,607,500
---------------
92,073,500
- --------------------------------------------------------------------------------
ENERGY--5.3%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--2.9%
Cameron International
Corp. 1 350,000 17,535,000
- --------------------------------------------------------------------------------
FMC Technologies,
Inc. 1 150,000 9,067,500
- --------------------------------------------------------------------------------
National Oilwell
Varco, Inc. 1 650,000 39,260,000
- --------------------------------------------------------------------------------
Weatherford
International Ltd. 1 850,000 34,918,000
---------------
100,780,500
- --------------------------------------------------------------------------------
OIL & GAS--2.4%
Kinder Morgan
Management LLC 1 1 31
- --------------------------------------------------------------------------------
Murphy Oil Corp. 350,000 16,506,000
- --------------------------------------------------------------------------------
Peabody Energy
Corp. 825,000 34,625,250
- --------------------------------------------------------------------------------
Range Resources
Corp. 1,150,000 31,222,500
---------------
82,353,781
- --------------------------------------------------------------------------------
FINANCIALS--21.6%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--3.6%
Affiliated Managers
Group, Inc. 1 575,000 57,580,500
- --------------------------------------------------------------------------------
E*TRADE Financial
Corp. 1 2,450,000 57,036,000
- --------------------------------------------------------------------------------
Granahan McCourt
Acquisition Corp. 1,2 1,350,000 10,665,000
---------------
125,281,500
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--2.7%
Cullen/Frost
Bankers, Inc. 300,000 16,248,000
22 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Marshall & Ilsley
Corp. 725,000 $ 34,756,500
- --------------------------------------------------------------------------------
Zions Bancorp 550,000 44,220,000
---------------
95,224,500
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.5%
CIT Group, Inc. 675,000 35,133,750
- --------------------------------------------------------------------------------
iShares Russell Midcap
Value Index Fund 375,000 53,081,250
---------------
88,215,000
- --------------------------------------------------------------------------------
INSURANCE--7.3%
ACE Ltd. 300,000 17,175,000
- --------------------------------------------------------------------------------
Everest Re Group
Ltd. 700,000 69,426,000
- --------------------------------------------------------------------------------
Fidelity National
Financial, Inc. 1,000,000 22,300,000
- --------------------------------------------------------------------------------
Fidelity National Title
Group, Inc., Cl. A 2 2,250,000 49,522,500
- --------------------------------------------------------------------------------
First Mercury Financial
Corp. 1 46,700 966,690
- --------------------------------------------------------------------------------
National Financial
Partners Corp. 1,450,000 57,130,000
- --------------------------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 1,200,000 35,832,000
---------------
252,352,190
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--2.7%
American Financial
Realty Trust 1,770,300 20,659,401
- --------------------------------------------------------------------------------
BioMed Realty
Trust, Inc. 1,000,000 32,230,000
- --------------------------------------------------------------------------------
Douglas Emmett,
Inc. 1 450,000 10,732,500
- --------------------------------------------------------------------------------
Strategic Hotels &
Resorts, Inc. 1,400,000 29,778,000
---------------
93,399,901
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.7%
Grubb & Ellis Co. 1,2 2,000,000 24,380,000
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--2.1%
Countrywide
Financial Corp. 500,000 $ 19,060,000
- --------------------------------------------------------------------------------
NewAlliance
Bancshares, Inc. 3,500,000 54,180,000
---------------
73,240,000
- --------------------------------------------------------------------------------
HEALTH CARE--9.5%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--1.1%
MedImmune, Inc. 1 1,200,000 38,448,000
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--5.0%
Coventry Health
Care, Inc. 1 700,000 32,865,000
- --------------------------------------------------------------------------------
DaVita, Inc. 1 625,000 34,768,750
- --------------------------------------------------------------------------------
Omnicare, Inc. 1,800,000 68,184,000
- --------------------------------------------------------------------------------
Triad Hospitals, Inc. 1 1,000,000 37,030,000
---------------
172,847,750
- --------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--3.0%
Fisher Scientific
International, Inc. 1 550,000 47,091,000
- --------------------------------------------------------------------------------
Invitrogen Corp. 1 1,000,000 58,010,000
---------------
105,101,000
- --------------------------------------------------------------------------------
PHARMACEUTICALS--0.4%
Sepracor, Inc. 1 300,000 15,528,000
- --------------------------------------------------------------------------------
INDUSTRIALS--11.7%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.5%
Empresa Brasileira
de Aeronautica
SA, ADR 1,000,000 41,630,000
- --------------------------------------------------------------------------------
Goodrich Corp. 1,050,000 46,294,500
- --------------------------------------------------------------------------------
Stanley, Inc. 1 3,100 54,002
---------------
87,978,502
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.8%
Acco Brands Corp. 1 500,000 12,150,000
- --------------------------------------------------------------------------------
TeleTech
Holdings, Inc. 1 816,762 15,853,350
---------------
28,003,350
23 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--1.4%
Foster Wheeler Ltd. 1 1,100,000 $ 49,445,000
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--2.4%
AMETEK, Inc. 1,000,000 46,680,000
- --------------------------------------------------------------------------------
Cooper Industries
Ltd., Cl. A 400,000 35,780,000
---------------
82,460,000
- --------------------------------------------------------------------------------
MACHINERY--2.9%
Actuant Corp., Cl. A 800,000 41,072,000
- --------------------------------------------------------------------------------
Oshkosh Truck Corp. 1,350,000 61,033,500
---------------
102,105,500
- --------------------------------------------------------------------------------
MARINE--0.8%
Alexander &
Baldwin, Inc. 600,000 27,618,000
- --------------------------------------------------------------------------------
ROAD & RAIL--0.9%
Hunt (J.B.) Transport
Services, Inc. 1,350,000 29,214,000
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--12.5%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.8%
Finisar Corp. 1 989,883 3,444,793
- --------------------------------------------------------------------------------
Juniper Networks,
Inc. 1 1,500,000 25,830,000
- --------------------------------------------------------------------------------
Optium Corp. 1 20,400 413,100
---------------
29,687,893
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.8%
Seagate Technology 1,250,000 28,225,000
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--3.0%
Agilent Technologies,
Inc. 1 2,200,000 78,320,000
- --------------------------------------------------------------------------------
Amphenol Corp.,
Cl. A 400,000 27,160,000
---------------
105,480,000
- --------------------------------------------------------------------------------
IT SERVICES--0.5%
BISYS Group,
Inc. (The) 1 1,500,000 16,560,000
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.9%
Analog Devices, Inc. 600,000 $ 19,092,000
- --------------------------------------------------------------------------------
ASML Holding NV 1 1,500,000 34,260,000
- --------------------------------------------------------------------------------
Conexant Systems,
Inc. 1 6,000,000 11,580,000
- --------------------------------------------------------------------------------
Fairchild Semiconductor
International, Inc.,
Cl. A 1 500,000 8,055,000
- --------------------------------------------------------------------------------
Marvell Technology
Group Ltd. 1 1,500,000 27,420,000
---------------
100,407,000
- --------------------------------------------------------------------------------
SOFTWARE--4.5%
Activision, Inc. 1 2,500,000 38,550,000
- --------------------------------------------------------------------------------
Novell, Inc. 1 6,000,000 36,000,000
- --------------------------------------------------------------------------------
Nuance
Communications,
Inc. 1 3,700,000 42,698,000
- --------------------------------------------------------------------------------
Synopsys, Inc. 1 1,750,000 39,392,500
---------------
156,640,500
- --------------------------------------------------------------------------------
MATERIALS--7.7%
- --------------------------------------------------------------------------------
CHEMICALS--2.8%
Ashland, Inc. 600,000 35,460,000
- --------------------------------------------------------------------------------
Chemtura Corp. 4,000,000 34,320,000
- --------------------------------------------------------------------------------
Mosaic Co. (The) 1 1,500,000 28,080,000
---------------
97,860,000
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--2.5%
Martin Marietta
Materials, Inc. 425,000 37,400,000
- --------------------------------------------------------------------------------
Texas Industries, Inc. 800,000 49,680,000
---------------
87,080,000
- --------------------------------------------------------------------------------
METALS & MINING--2.4%
Phelps Dodge Corp. 300,000 30,114,000
- --------------------------------------------------------------------------------
Steel Dynamics, Inc. 300,000 18,033,000
24 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
United States Steel
Corp. 500,000 $ 33,800,000
---------------
81,947,000
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.1%
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--1.1%
Crown Castle
International Corp. 1 1,125,000 37,856,250
- --------------------------------------------------------------------------------
UTILITIES--7.8%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.0%
Edison International,
Inc. 800,000 35,552,000
- --------------------------------------------------------------------------------
ENERGY TRADERS--3.7%
AES Corp. (The) 1 2,200,000 48,378,000
- --------------------------------------------------------------------------------
Mirant Corp. 1 1,200,000 35,484,000
- --------------------------------------------------------------------------------
NRG Energy, Inc. 1 900,000 43,335,000
---------------
127,197,000
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
GAS UTILITIES--1.0%
Southern Union Co. 1,200,000 $ 33,216,000
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--2.1%
CMS Energy Corp. 1 5,000,000 74,450,000
---------------
Total Common Stocks
(Cost $2,894,986,499) 3,294,932,292
- --------------------------------------------------------------------------------
MONEY MARKET FUND--4.8%
- --------------------------------------------------------------------------------
Oppenheimer
Institutional Money
Market Fund, Cl. E, 5.23% 2,4
(Cost $165,612,944) 165,612,944 165,612,944
EXPIRATION
DATE STRIKE CONTRACTS
- --------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
- --------------------------------------------------------------------------------------------------
Urban Outfitters Put 1 (Cost $447,497) 12/18/06 $ 17.50 5,000 550,000
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $3,061,046,940) 99.5% 3,461,095,236
- --------------------------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES 0.5 17,779,243
----------------------------
NET ASSETS 100.0% $ 3,478,874,479
============================
25 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENTS OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Represents ownership of at least 5% of the voting securities of the issuer,
and is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended October 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
OCTOBER 31, 2005 ADDITIONS REDUCTIONS OCTOBER 31, 2006
- -------------------------------------------------------------------------------------------------------------------
Double Hull Tankers, Inc. 2,000,000 -- 2,000,000 --
Fidelity National Title Group, Inc., Cl. A -- 2,250,000 -- 2,250,000
Granahan McCourt Acquisition Corp. -- 1,350,000 -- 1,350,000
Grubb & Ellis Co. -- 2,200,000 200,000 2,000,000
Horizon Lines, Inc., Cl. A 2,500,000 -- 2,500,000 --
NorthStar Realty Finance Corp. 2,000,000 500,000 2,500,000 --
Oppenheimer Institutional Money
Market Fund, Cl. E, 5.23%* -- 251,602,898 85,989,954 165,612,944
ValueVision Media, Inc., Cl. A 2,000,000 600,000 100,000 2,500,000
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------
Double Hull Tankers, Inc. $ -- $ 1,131,158 $ 1,697,435
Fidelity National Title Group, Inc., Cl. A 49,522,500 348,020 --
Granahan McCourt Acquisition Corp. 10,665,000 -- --
Grubb & Ellis Co. 24,380,000 -- 35,617
Horizon Lines, Inc., Cl. A -- 473,297 6,688,750
NorthStar Realty Finance Corp. -- 1,275,000 6,312,394
Oppenheimer Institutional Money
Market Fund, Cl. E, 5.23%* 165,612,944 297,146 --
ValueVision Media, Inc., Cl. A 32,275,000 -- (44,164)
--------------------------------------------------
$ 282,455,444 $ 3,524,621 $ 14,690,032
==================================================
*The money market fund and the Fund are affiliated by having the same investment
advisor.
3. A sufficient amount of securities has been designated to cover outstanding
written put options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO PUT DATE PRICE RECEIVED SEE NOTE 5
- ------------------------------------------------------------------------------------------
Urban Outfitters, Inc. 10,000 12/18/06 $ 15 $179,994 $250,000
4. Rate shown is the 7-day yield as of October 31, 2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement
of investments:
Unaffiliated companies (cost $2,796,110,195) $ 3,178,639,792
Affiliated companies (cost $264,936,745) 282,455,444
----------------
3,461,095,236
- --------------------------------------------------------------------------------
Cash 634,639
- --------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 63,720,328
Shares of beneficial interest sold 11,494,582
Interest and dividends 758,271
Other 94,871
----------------
Total assets 3,537,797,927
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Options written, at value (premiums received $179,994)--
see accompanying statement of investments 250,000
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 50,411,737
Shares of beneficial interest redeemed 6,358,017
Distribution and service plan fees 707,063
Transfer and shareholder servicing agent fees 693,686
Trustees' compensation 270,106
Shareholder communications 176,886
Other 55,953
----------------
Total liabilities 58,923,448
- --------------------------------------------------------------------------------
NET ASSETS $ 3,478,874,479
================
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 967,923
- --------------------------------------------------------------------------------
Additional paid-in capital 2,891,643,101
- --------------------------------------------------------------------------------
Accumulated net investment loss (277,699)
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 186,562,864
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 399,978,290
----------------
NET ASSETS $ 3,478,874,479
================
27 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ---------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$2,343,715,020 and 63,424,325 shares of beneficial interest outstanding) $ 36.95
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $ 39.20
- ---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $327,907,647
and 9,823,453 shares of beneficial interest outstanding) $ 33.38
- ---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $542,273,331
and 16,256,261 shares of beneficial interest outstanding) $ 33.36
- ---------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $229,340,064
and 6,328,579 shares of beneficial interest outstanding) $ 36.24
- ---------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $35,638,417 and 959,683 shares of beneficial interest outstanding) $ 37.14
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding
taxes of $107,861) $ 28,632,343
Affiliated companies 3,524,621
- --------------------------------------------------------------------------------
Interest 3,514,842
- --------------------------------------------------------------------------------
Other income 41,003
----------------
Total investment income 35,712,809
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 18,046,466
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 4,647,893
Class B 3,071,329
Class C 4,282,245
Class N 854,481
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 3,963,522
Class B 855,929
Class C 993,333
Class N 571,007
Class Y 2,683
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 373,167
Class B 98,279
Class C 104,320
Class N 14,180
Class Y 128
- --------------------------------------------------------------------------------
Trustees' compensation 229,785
- --------------------------------------------------------------------------------
Custodian fees and expenses 18,337
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 312,194
----------------
Total expenses 38,440,778
Less reduction to custodian expenses (4,823)
Less waivers and reimbursements of expenses (14,643)
----------------
Net expenses 38,421,312
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (2,708,503)
29 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies $ 207,930,588
Affiliated companies 14,690,032
----------------
Net realized gain 222,620,620
- --------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on:
Investments 209,781,413
Option contracts (70,006)
----------------
Net change in unrealized appreciation 209,711,407
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 429,623,524
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2006 2005
- ------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------
Net investment loss $ (2,708,503) $ (5,529,882)
- ------------------------------------------------------------------------------------------------------------------
Net realized gain 222,620,620 134,128,520
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 209,711,407 86,417,734
----------------------------------
Net increase in net assets resulting from operations 429,623,524 215,016,372
- ------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (77,804,945) (61,107,717)
Class B (16,849,275) (22,765,841)
Class C (19,268,301) (14,629,531)
Class N (6,894,529) (4,196,588)
Class Y (927,666) --
- ------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 833,598,110 681,217,184
Class B 24,936,974 54,529,663
Class C 205,626,330 156,100,810
Class N 107,130,883 60,721,673
Class Y 33,195,013 1,000
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Total increase 1,512,366,118 1,064,887,025
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 1,966,508,361 901,621,336
----------------------------------
End of period (including accumulated net investment loss
of $277,699 and $92,400, respectively) $ 3,478,874,479 $ 1,966,508,361
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.08 $ 30.08 $ 26.11 $ 19.18 $ 19.53
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .05 1 (.04) 1 (.17) 1 (.04) (.19)
Net realized and unrealized gain (loss) 5.69 6.22 5.42 6.97 (.09)
-----------------------------------------------------------------------------
Total from investment operations 5.74 6.18 5.25 6.93 (.28)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.87) (3.18) (1.28) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 36.95 $ 33.08 $ 30.08 $ 26.11 $ 19.18
=============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 18.04% 21.87% 20.90% 36.13% (1.45)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 2,343,715 $ 1,298,204 $ 543,999 $ 330,215 $ 222,029
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,884,099 $ 893,501 $ 436,617 $ 245,319 $ 231,657
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.13% (0.11)% (0.61)% (0.12)% (0.69)%
Total expenses 1.14% 4 1.23% 1.35% 1.59% 1.68%
Expenses after payments and waivers and
reduction to custodian expenses 1.14% 1.23% 1.35% 1.56% 1.66%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 121% 163% 163% 151%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.14%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.29 $ 28.01 $ 24.59 $ 18.20 $ 18.65
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.22) 1 (.29) 1 (.37) 1 (.17) (.18)
Net realized and unrealized gain (loss) 5.18 5.75 5.07 6.56 (.20)
-----------------------------------------------------------------------------
Total from investment operations 4.96 5.46 4.70 6.39 (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.87) (3.18) (1.28) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 33.38 $ 30.29 $ 28.01 $ 24.59 $ 18.20
=============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.08% 20.82% 19.91% 35.11% (2.06)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 327,908 $ 272,643 $ 198,971 $ 171,896 $ 129,885
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 307,618 $ 243,754 $ 190,251 $ 137,734 $ 134,304
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.71)% (0.98)% (1.43)% (0.85)% (1.34)%
Total expenses 1.97% 4 2.09% 2.18% 2.42% 2.34%
Expenses after payments and waivers and
reduction to custodian expenses 1.97% 2.09% 2.18% 2.29% 2.32%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 121% 163% 163% 151%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.97%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.25 $ 27.97 $ 24.55 $ 18.17 $ 18.62
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.20) 1 (.27) 1 (.37) 1 (.13) (.10)
Net realized and unrealized gain (loss) 5.18 5.73 5.07 6.51 (.28)
-----------------------------------------------------------------------------
Total from investment operations 4.98 5.46 4.70 6.38 (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.87) (3.18) (1.28) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 33.36 $ 30.25 $ 27.97 $ 24.55 $ 18.17
=============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.17% 20.85% 19.95% 35.11% (2.06)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 542,273 $ 292,689 $ 122,329 $ 71,779 $ 46,360
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 429,214 $ 199,650 $ 96,555 $ 53,649 $ 45,455
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.64)% (0.91)% (1.42)% (0.85)% (1.33)%
Total expenses 1.92% 4 2.03% 2.16% 2.40% 2.33%
Expenses after payments and waivers and
reduction to custodian expenses 1.92% 2.03% 2.16% 2.30% 2.31%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 121% 163% 163% 151%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.92%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
CLASS N YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.58 $ 29.77 $ 25.98 $ 19.13 $ 19.51
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.08) 1 (.14) 1 (.26) 1 (.11) (.27)
Net realized and unrealized gain (loss) 5.61 6.13 5.33 6.96 (.04)
-----------------------------------------------------------------------------
Total from investment operations 5.53 5.99 5.07 6.85 (.31)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.87) (3.18) (1.28) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 36.24 $ 32.58 $ 29.77 $ 25.98 $ 19.13
=============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.65% 21.42% 20.29% 35.81% (1.61)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 229,340 $ 102,971 $ 36,322 $ 11,216 $ 4,558
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 171,305 $ 68,779 $ 21,951 $ 6,722 $ 2,882
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.22)% (0.44)% (0.93)% (0.36)% (0.78)%
Total expenses 1.50% 4 1.57% 1.70% 2.01% 1.82%
Expenses after payments and waivers and
reduction to custodian expenses 1.50% 1.57% 1.66% 1.80% 1.80%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 121% 163% 163% 151%
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. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.50%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED OCTOBER 31, 2006 2005 1
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.08 $ 33.38
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 2 .26 -- 3
Net realized and unrealized gain (loss) 5.67 (.30)
--------------------------------------
Total from investment operations 5.93 (.30)
- --------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (1.87) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.14 $ 33.08
======================================
- --------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 18.64% (0.90)%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 35,638 $ 1
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 12,164 $ 1
- --------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) 0.76% (0.32)%
Total expenses 0.68% 6,7,8 0.90% 6
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 136% 121%
1. For the period from October 24, 2005 (inception of offering) to October 31,
2005.
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.
6. Reduction to custodian expenses less than 0.01%.
7. Voluntary waiver of management fees less than 0.01%.
8. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 0.68%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Small- & Mid- Cap Value Fund (the Fund), a series of Oppenheimer
Quest For Value Funds, is an open-end management investment company registered
under the Investment Company Act of 1940, as amended. The Fund's investment
objective is to seek capital appreciation. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, 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 Fund assesses a 2% fee on the proceeds of
fund shares that are redeemed (either by selling or exchanging to another
Oppenheimer fund) within 30 days of their purchase. The fee, which is retained
by the Fund, is accounted for as an addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. 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(R) 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, as 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
37 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
having a remaining maturity in excess of sixty days and all mortgage-backed
securities will be valued at the mean between the "bid" and "asked" prices.
Futures contracts traded on a commodities or futures exchange will be valued at
the final settlement price or official closing price on the principal exchange
as reported by such principal exchange at its trading session 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 Trustees. Investments in open-end registered
investment companies are valued at that fund's net asset value. Short-term
"money market type" debt securities with remaining maturities of sixty days or
less are valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
AFFILIATED FUNDS. The Fund is permitted to invest daily available cash balances
in affiliated money market funds. Each day, the Fund invests the available cash
in Oppenheimer Institutional Money Market Fund ("IMMF") which seeks current
income and stability of principal. The Manager is also the investment advisor of
IMMF. The Fund's investment in IMMF is included in the Statement of Investments.
Included in the net earnings received from IMMF is a 0.10% management fee paid
to the Manager by IMMF. The Manager will waive fees and/or reimburse Fund
expenses in an amount equal to the indirect management fees incured through the
Fund's investment in IMMF.
38 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF-BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential loss on a particular financial instrument is
greater than the value of such financial instrument, as reflected in the Fund's
Statement of Assets and Liabilities in the annual and semiannual reports.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
------------------------------------------------------------------------
$110,104,749 $92,871,997 $ -- $383,564,408
1. During the fiscal year ended October 31, 2006, the Fund did not utilized any
capital loss carryforward.
2. During the fiscal year ended October 31, 2005, the Fund did not utilized any
capital loss carryforward.
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, 2006. Net assets of the
Fund were unaffected by the reclassifications.
39 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL LOSS ON INVESTMENTS 3
------------------------------------------------------------------------
$24,855,041 $2,523,204 $27,378,245
3. $24,855,041, including $12,564,006 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended October 31, 2006
and October 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 73,885,502 $ 66,423,473
Long-term capital gain 47,859,214 36,276,204
------------------------------------
Total $121,744,716 $102,699,677
====================================
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, 2006 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 $ 3,077,460,822
Federal tax cost of other investments (179,994)
----------------
Total federal tax cost $ 3,077,280,828
================
Gross unrealized appreciation $ 438,189,609
Gross unrealized depreciation (54,625,201)
----------------
Net unrealized appreciation $ 383,564,408
================
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended October
31, 2006, the Fund's projected benefit obligations were increased by $189,030
and payments of $4,934 were made to retired trustees, resulting in an
accumulated liability of $270,106 as of October 31, 2006.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund
40 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
asset equal to the deferred compensation liability. Such assets are included as
a component of "Other" within the asset section of the Statement of Assets and
Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets
of the Fund, and will not materially affect the Fund's assets, liabilities or
net investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. 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, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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.
41 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.01 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005 1
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
CLASS A
Sold 37,106,616 $ 1,282,205,333 26,126,619 $ 843,808,397
Dividends and/or
distributions reinvested 2,094,799 68,918,902 1,967,502 57,903,518
Redeemed (15,026,011) (517,526,125) 2 (6,928,846) (220,494,731) 3
----------------------------------------------------------------------
Net increase 24,175,404 $833,598,110 21,165,275 $681,217,184
======================================================================
- ------------------------------------------------------------------------------------------------------
CLASS B
Sold 3,195,736 $ 100,252,356 3,465,166 $ 102,291,118
Dividends and/or
distributions reinvested 505,807 15,143,846 780,877 21,200,799
Redeemed (2,880,075) (90,459,228) 2 (2,347,347) (68,962,254) 3
----------------------------------------------------------------------
Net increase 821,468 $ 24,936,974 1,898,696 $ 54,529,663
======================================================================
- ------------------------------------------------------------------------------------------------------
CLASS C
Sold 8,543,881 $ 267,752,421 6,056,884 $ 179,229,772
Dividends and/or
distributions reinvested 473,830 14,172,254 473,750 12,843,349
Redeemed (2,436,172) (76,298,345) 2 (1,229,743) (35,972,311) 3
----------------------------------------------------------------------
Net increase 6,581,539 $205,626,330 5,300,891 $156,100,810
======================================================================
- ------------------------------------------------------------------------------------------------------
CLASS N
Sold 4,522,723 $ 153,395,550 2,445,507 $ 77,193,747
Dividends and/or
distributions reinvested 184,925 5,986,033 130,920 3,807,139
Redeemed (1,539,472) (52,250,700) 2 (636,113) (20,279,213) 3
----------------------------------------------------------------------
Net increase 3,168,176 $107,130,883 1,940,314 $ 60,721,673
======================================================================
- ------------------------------------------------------------------------------------------------------
CLASS Y
Sold 1,347,807 $ 46,153,192 29.958 $ 1,000
Dividends and/or
distributions reinvested 28,178 927,610 -- --
Redeemed (416,332) (13,885,789) 2 -- --
----------------------------------------------------------------------
Net increase 959,653 $ 33,195,013 29.958 $ 1,000
======================================================================
1. For the year ended October 31, 2005, for Class A, Class B, Class C and Class
N shares and for the period from October 24, 2005 (inception of offering) to
October 31, 2005, for Class Y shares.
2. Net of redemption fees of $25,973, $4,241, $5,917, $2,361 and $168 for Class
A, Class B, Class C, Class N and Class Y, respectively.
3. Net of redemption fees of $36,403, $9,931, $8,134 and $2,802 for Class A,
Class B, Class C and Class N, respectively.
42 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
- --------------------------------------------------------------------------------
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, 2006, were as
follows:
PURCHASES SALES
- ------------------------------------------------------------
Investment securities $4,792,527,785 $3,720,646,857
- --------------------------------------------------------------------------------
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 which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE EFFECTIVE JANUARY 1, 2006 FEE SCHEDULE NOVEMBER 1, 2005 TO DECEMBER 31, 2005
- -----------------------------------------------------------------------------------------------
Up to $400 million 0.80% Up to $400 million 0.80%
Next $400 million 0.75 Next $400 million 0.75
Next $1.2 billion 0.60 Over $800 million 0.60
Over$2.0 billion 0.58
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2006, the Fund paid
$6,067,599 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 up to 0.25% of the average annual net assets
of Class A shares. The Distributor currently uses all of those fees to pay
dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Under the plan, the Fund may also pay an asset-based sales
charge to the Distributor. Beginning January 1, 2003, the Board of Trustees set
the annual asset-based sales charge rate at zero. Fees incurred by the Fund
under the plan are detailed in the Statement of Operations.
43 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 up to 0.25% per year under each plan. If either the Class B,
Class C or Class N plan is terminated by the Fund or by the shareholders of a
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2006 for Class B, Class C and Class N shares were $2,890,752, $5,583,417 and
$1,291,971, 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 following table 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, 2006 $1,715,792 $12,461 $448,189 $98,446 $73,919
- --------------------------------------------------------------------------------
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. During the year ended October 31, 2006, OFS
waived $8,442 for Class N shares. This undertaking may be amended or withdrawn
at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the year ended October 31, 2006, the Manager waived $6,201 for IMMF
management fees.
- --------------------------------------------------------------------------------
5. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
44 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call or put options are noted
in the Statement of Investments where applicable. Contracts subject to call or
put, expiration date, exercise price, premium received and market value are
detailed in a note to the Statement of Investments. Options written are reported
as a liability in the Statement of Assets and Liabilities. Realized gains and
losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended October 31, 2006 was as
follows:
PUT OPTIONS
-----------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- --------------------------------------------------------
Options outstanding as of
October 31, 2005 -- $ --
Options written 10,000 179,994
-----------------------
Options outstanding as of
October 31, 2006 10,000 $ 179,994
=======================
- --------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax
45 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS Continued
position that, in Management's judgment, will not be fully realized. FIN 48 is
effective for fiscal years beginning after December 15, 2006. As of October 31,
2006, the Manager is evaluating the implications of FIN 48. Its impact in the
Fund's financial statements has not yet been determined.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of October
31, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
- --------------------------------------------------------------------------------
7. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
46 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER QUEST FOR VALUE FUNDS:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Small- & Mid- Cap Value Fund (one of the portfolios constituting the
Oppenheimer Quest For Value Funds), including the statement of investments, as
of October 31, 2006, 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, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Small- & Mid- Cap Value Fund as of October 31, 2006, 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 12, 2006
47 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $0.7343 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December 8,
2005. 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, 2006 which are not designated as capital gain distributions should be
multiplied by 14.19% 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, 2006 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. $20,111,986 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2007, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended October 31, 2006, $122,910,352 or 100% of the short-term capital gain
distribution paid by the Fund qualifies as a short-term capital gain dividend.
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.
48 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file 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.
49 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR A 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
Chairman of the Board Partner of Trivest Venture Fund (private venture capital fund); President of
of Trustees (since 2001), Investment Counseling Federated Investors, Inc. (1973-1982); Trustee of the
Trustee (since 1987) following open-end investment companies: Cash Assets Trust (1984), Premier VIT
Age: 73 (formerly PIMCO Advisors VIT), Tax Free Trust of Arizona (since 1984) and four
funds for the Hawaiian Tax Free Trust. Oversees 10 portfolios in the
OppenheimerFunds complex.
DAVID K. DOWNES, President, Chief Executive Officer and Board Member of CRAFund Advisors, Inc.
Trustee (since 2005) (investment management company) (since January 2004); President of The Community
Age: 66 Reinvestment Act Qualified Investment Fund (investment management company) (since
January 2004); Independent Chairman of the Board of Trustees of Quaker Investment
Trust (registered investment company) (since January 2004); Director of Internet
Capital Group (information technology company) (since October 2003); Chief
Operating Officer and Chief Financial Officer of Lincoln National Investment
Companies, Inc. (subsidiary of Lincoln National Corporation, a publicly traded
company) and Delaware Investments U.S., Inc. (investment management subsidiary of
Lincoln National Corporation) (1995-2003); President, Chief Executive Officer and
Trustee of Delaware Investment Family of Funds (1995-2003); President and Board
Member of Lincoln National Convertible Securities Funds, Inc. and the Lincoln
National Income Funds, TDC (1995-2003); Chairman and Chief Executive Officer of
Retirement Financial Services, Inc. (registered transfer agent and investment
adviser and subsidiary of Delaware Investments U.S., Inc.) (1995-2003); President
and Chief Executive Officer of Delaware Service Company, Inc. (1995-2003); Chief
Administrative Officer, Chief Financial Officer, Vice Chairman and Director of
Equitable Capital Management Corporation (investment subsidiary of Equitable Life
Assurance Society) (1985-1992); Corporate Controller of Merrill Lynch & Company
(financial services holding company) (1977-1985); held the following positions at
the Colonial Penn Group, Inc. (insurance company): Corporate Budget Director
(1974-1977), Assistant Treasurer (1972-1974) and Director of Corporate Taxes
(1969-1972); held the following positions at Price Waterhouse & Company (financial
services firm): Tax Manager (1967-1969), Tax Senior (1965-1967) and Staff
Accountant (1963-1965); United States Marine Corps (1957-1959). Oversees 10
portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 55 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 73
LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Group of Funds (open-end investment
Trustee (since 1987) company) (since December 2004); Chairman of Aquila Management Corporation and
Age: 77 Aquila Investment Management LLC (since August 1984); Chief Executive Officer and
President of Aquila Management Corporation (August 1984-December 1994); 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;
Sub-Advisor and
50 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
LACY B. HERRMANN, Administrator of Prime Cash Fund & Short Term Asset Reserves; Director of OCC Cash
Continued Reserves, Inc. (open-end investment company) (June 2003-December 2004); Trustee of
Premier VIT (formerly PIMCO Advisors VIT) (investment company) (since 1994);
Trustee of OCC Accumulation Trust (open-end investment company) (until December
2004); 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);
Trustee (since 2001) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 63 (since September 2004); Member, Zurich Financial Investment Advisory Board
(insurance) (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. (May 2000-April 2002) (executive
search firm); President and Chief Executive Officer of the Delaware Group of Mutual
Funds (1992-1995); Chairman, President and Chief Executive Officer of Equitable
Capital Management Corporation (1985-1992); Vice President, Senior Vice President,
Executive Vice President and Chief Investment Officer at The Equitable Life
Assurance Society of the U.S. (1979-1992); Vice President and Co-manager of
Fundamental Equities Research at Smith Barney, Harris Upham and Company
(1970-1979); Engineer, Sperry Gyroscope Company (1966-1970); former governor of the
Association for Investment Management and Research; former chairman of the
Institute of Chartered Financial Analysts; Chartered Financial Analyst. Oversees 55
portfolios in the OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE MR. MURPHY IS AN "INTERESTED TRUSTEE" BECAUSE HE IS AFFILIATED WITH THE MANAGER
AND OFFICER BY VIRTUE OF HIS POSITIONS AS AN OFFICER AND DIRECTOR OF THE MANAGER, AND AS A
SHAREHOLDER OF ITS PARENT COMPANY. THE ADDRESS OF MR. MURPHY IS TWO WORLD
FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008.
MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President
Trustee (since 2005) and (since September 2000) of the Manager; President and director or trustee of other
President and Principal Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC")
Executive Officer (since 2001) (the Manager's parent holding company) and of Oppenheimer Partnership Holdings,
Age: 57 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
51 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JOHN V. MURPHY, Corporation (holding company parent of Babson Capital Management LLC) (since June
Continued 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
92 portfolios in the OppenheimerFunds complex.
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OTHER OFFICERS OF THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. LEAVY,
THE FUND DAMIAN, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY
STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN,
SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH
OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT,
DEATH OR REMOVAL.
CHRISTOPHER LEAVY, Senior Vice President of the Manager (since September 2000); portfolio manager of
Vice President and Portfolio Morgan Stanley Dean Witter Investment Management (1997-September 2000). An officer
Manager (since 2000) of 7 portfolios in the OppenheimerFunds complex.
Age: 35
JOHN DAMIAN, Vice President of the Manager (since September 2001); Senior Analyst/Director for
Vice President and Portfolio Citigroup Asset Management (November 1999-September 2001); Senior Research Analyst
Manager (since 2005) for Pzena Investment Management (October 1997-November 1999). An officer of 2
Age: 38 portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March
Vice President and Chief 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset
Compliance Officer Management Corporation and Shareholder Services, Inc. (since June 1983). Former
(since 2004) Vice President and Director of Internal Audit of the Manager (1997-February 2004).
Age: 56 An officer of 92 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer
Treasurer and Principal of the following: HarbourView Asset Management Corporation, Shareholder Financial
Financial and Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Officer (since 1999) Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Age: 47 Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
(since May 2000), OppenheimerFunds plc (since May 2000), 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 92 portfolios in the OppenheimerFunds
complex.
52 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Manager/Financial
Assistant Treasurer Product Accounting of the Manager (November 1998-July 2002). An officer of 92
(since 2004) portfolios in the OppenheimerFunds complex.
Age: 36
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004);
(since 2005) Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003);
Age: 36 Director of Mutual Fund Operations at American Data Services, Inc. (September
2000-May 2001). An officer of 92 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2001) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 58 December 2001); General 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
92 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
(since 2001) (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
Age: 41 Management Corporation (since October 2003); Vice President and Assistant Secretary
of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since December 2001);
Assistant Counsel of the Manager (August 1994-October 2003). An officer of 92
portfolios in the OppenheimerFunds complex.
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First
Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December
(since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant
Age: 38 General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (formerly,
PaineWebber Incorporated). An officer of 92 portfolios in the OppenheimerFunds
complex.
53 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since September
Assistant Secretary 2004); First Vice President (2001-September 2004); Director (2000-September 2004)
(since 2004) and Vice President (1998-2000) of Merrill Lynch Investment Management. An officer
Age: 42 of 92 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS IS AVAILABLE WITHOUT CHARGE UPON REQUEST,
BY CALLING 1.800.525.7048.
54 | OPPENHEIMER SMALL- & MID- CAP VALUE FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that David Downes, a
member of the Board's Audit Committee, is an audit committee financial expert
and that Mr. Downes is "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $72,500 in fiscal 2006 and $70,000 in fiscal 2005.
(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 $195,954 in fiscal 2006 and $156,805 in fiscal 2005 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 include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2006 and $6,536 in fiscal 2005 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 include: Preparation of form 5500
(d) All Other 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 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 $195,954 in fiscal 2006 and $163,341 in fiscal
2005 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) No such services were rendered.
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, 2006, 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 For Value Funds
By: /s/ John V. Murphy
_______________________________
John V. Murphy
Principal Executive Officer
Date: December 12, 2006
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 12, 2006
By: /s/ Brian W. Wixted
_______________________________
Brian W. Wixted
Principal Financial Officer
Date: December 12, 2006