N-CSR 1 ra375_11980.txt RA375_11980.TXT 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 811-3346 Oppenheimer Value Fund (Exact name of registrant as specified in charter) 6803 South Tucson Way, Centennial, Colorado 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. Two World Financial Center, New York, New York 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: October 31 Date of reporting period: November 1, 2003 - October 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS -------------------------------------------------------------------------------- TOP TEN COMMON STOCK HOLDINGS ------------------------------------------------------------------------------- BP plc, ADR 5.2% ------------------------------------------------------------------------------- International Business Machines Corp. 5.2 ------------------------------------------------------------------------------- Altria Group, Inc. 5.2 ------------------------------------------------------------------------------- UnitedGlobalCom, Inc., Cl. A 4.8 ------------------------------------------------------------------------------- Raytheon Co. 4.8 ------------------------------------------------------------------------------- Bank of America Corp. 4.6 ------------------------------------------------------------------------------- Cendant Corp. 4.4 ------------------------------------------------------------------------------- General Electric Co. 4.2 ------------------------------------------------------------------------------- Take-Two Interactive Software, Inc. 4.1 ------------------------------------------------------------------------------- Citigroup, Inc. 4.0 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2004, and are based on net assets. For more current Fund holdings, please visit www.oppenheimerfunds.com. TOP TEN COMMON STOCK INDUSTRIES ------------------------------------------------------------------------------- Diversified Financial Services 10.4% ------------------------------------------------------------------------------- Media 8.8 ------------------------------------------------------------------------------- Commercial Banks 8.1 ------------------------------------------------------------------------------- Oil & Gas 7.9 ------------------------------------------------------------------------------- Industrial Conglomerates 6.5 ------------------------------------------------------------------------------- Aerospace & Defense 6.4 ------------------------------------------------------------------------------- Computers & Peripherals 5.5 ------------------------------------------------------------------------------- Diversified Telecommunication Services 5.2 ------------------------------------------------------------------------------- Tobacco 5.2 ------------------------------------------------------------------------------- Software 5.1 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2004, and are based on net assets. 8 | OPPENHEIMER VALUE FUND -------------------------------------------------------------------------------- SECTOR ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Financials 26.3% Diversified Financial Services 10.5 Commercial Banks 8.3 Insurance 5.0 Thrifts & Mortgage Finance 2.5 Industrials 17.8 Information Technology 12.4 Consumer Discretionary 12.2 Energy 9.1 Telecommunication Services 5.3 Consumer Staples 5.3 Utilities 4.8 Materials 4.1 Health Care 2.7 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2004, and are based on common stocks. -------------------------------------------------------------------------------- 9 | OPPENHEIMER 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, 2004, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund generated successful results during the past 12 months, driven partly by the portfolio's overweighting of the industrials sector and strong stock selection in the industrials, health care and technology sectors. Our management strategy remained consistent during the period, as it does in all types of market environments. We look for companies with strong fundamentals and whose long-term earnings power we believe is being underestimated by Wall Street. The portfolio's weighting in consumer staples stocks fell during the period as we followed our investment strategy. Much of that reduction stemmed from our sale of warehouse club retailer Costco Wholesale Corp. This company had performed well for the Fund, and we sold our shares as they rose and began reflecting the company's improving margin prospects. At the same time, the portfolio's technology weighting increased, fueled in part by our purchase of video game maker Take-Two Interactive Software, Inc. In our opinion, this company was significantly undervalued and poised to benefit from the forthcoming release of San Andreas, the next game in the company's popular Grand Theft Auto franchise. As we mentioned, the industrials sector added to the Fund's results. In particular, we benefited from defense contractor Raytheon Co. and a leading defense contractor. Raytheon, a large holding for most of the reporting period, has been a classic turnaround story. The company has gained market share as a result of its significant emphasis in electronics, intelligence and communications. The Fund also benefited from stock selection in the health care sector. A managed healthcare provider was successful in turning around its operations and was an especially positive contributor during the period. Also, the pharmaceutical stocks owned in the portfolio performed well compared to other drug companies. On the negative side, the telecommunications sector dragged down performance, especially our investment in IDT Corp. Investors worried that recent regulatory changes affecting the telecom-services company's competitive local exchange business could squeeze profit margins. Despite this challenge, we continued to hold onto our shares of IDT. The company owns other attractive businesses and offered strong value, in our opinion. Being underweighted in the energy sector during a time of rising oil prices also hurt performance. While we benefited overall from the energy stocks we did own, such as U.K.-based petroleum giant BP plc, ADR, maintaining a smaller weighting in energy companies relative to the benchmark detracted from results. 10 | OPPENHEIMER VALUE FUND COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until October 31, 2004. In the case of Class A shares, performance is measured over a ten-fiscal-year period. In the case of Class B, performance is measured from inception of the class on October 2, 1995. In the case of Class C, performance is measured from inception of the class on May 1, 1996. 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, 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 Standard & Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded as a general measure of the performance of the U.S. equity securities market. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of the Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the index. 11 | OPPENHEIMER VALUE FUND FUND PERFORMANCE DISCUSSION -------------------------------------------------------------------------------- CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Value Fund (Class A) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Value Date Fund (Class A) S&P 500 Index 12/31/1993 9,425 10,000 03/31/1994 9,207 9,621 06/30/1994 9,027 9,662 09/30/1994 9,488 10,133 12/31/1994 9,363 10,131 03/31/1995 10,188 11,117 06/30/1995 11,052 12,176 09/30/1995 11,991 13,143 12/31/1995 12,772 13,934 03/31/1996 13,380 14,682 06/30/1996 13,548 15,340 09/30/1996 13,925 15,814 10/31/1996 1 14,229 16,250 01/31/1997 15,742 18,201 04/30/1997 15,750 18,641 07/31/1997 18,585 22,303 10/31/1997 18,156 21,466 01/31/1998 18,419 23,097 04/30/1998 20,748 26,295 07/31/1998 19,478 26,609 10/31/1998 18,564 26,191 01/31/1999 20,635 30,606 04/30/1999 20,802 32,035 07/31/1999 20,449 31,985 10/31/1999 19,232 32,913 01/31/2000 18,094 33,771 04/30/2000 19,477 35,278 07/31/2000 19,049 34,852 10/31/2000 18,731 34,913 01/31/2001 20,357 33,467 04/30/2001 19,935 30,704 07/31/2001 20,191 29,861 10/31/2001 17,682 26,224 01/31/2002 19,395 28,067 04/30/2002 19,417 26,830 07/31/2002 16,373 22,809 10/31/2002 16,418 22,265 01/31/2003 16,777 21,610 04/30/2003 17,300 23,260 07/31/2003 19,349 25,235 10/31/2003 20,551 26,893 01/31/2004 23,201 29,075 04/30/2004 22,375 28,579 07/31/2004 22,486 28,556 10/31/2004 23,602 29,424 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 10/31/04 1-Year 8.24% 5-Year 2.95% 10-Year 8.73% 1. The Fund changed its fiscal year-end from 12/31 to 10/31. 12 | OPPENHEIMER VALUE FUND CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Value Fund (Class B) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Value Date Fund (Class B) S&P 500 Index 10/02/1995 10,000 10,000 12/31/1995 10,804 10,602 03/31/1996 11,294 11,170 06/30/1996 11,399 11,671 09/30/1996 11,683 12,032 10/31/1996 1 11,930 12,364 01/31/1997 13,169 13,848 04/30/1997 13,143 14,183 07/31/1997 15,487 16,969 10/31/1997 15,105 16,332 01/31/1998 15,287 17,573 04/30/1998 17,188 20,007 07/31/1998 16,114 20,245 10/31/1998 15,327 19,928 01/31/1999 17,002 23,286 04/30/1999 17,109 24,374 07/31/1999 16,780 24,335 10/31/1999 15,754 25,041 01/31/2000 14,798 25,694 04/30/2000 15,901 26,841 07/31/2000 15,515 26,517 10/31/2000 15,237 26,563 01/31/2001 16,526 25,463 04/30/2001 16,158 23,360 07/31/2001 16,328 22,719 10/31/2001 14,280 19,952 01/31/2002 15,663 21,354 04/30/2002 15,680 20,413 07/31/2002 13,223 17,354 10/31/2002 13,258 16,940 01/31/2003 13,549 16,442 04/30/2003 13,971 17,697 07/31/2003 15,625 19,200 10/31/2003 16,596 20,461 01/31/2004 18,736 22,121 04/30/2004 18,069 21,744 07/31/2004 18,159 21,727 10/31/2004 19,061 22,387 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 10/31/04 1-Year 8.75% 5-Year 2.99% Since Inception (10/2/95) 7.36% 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 SINCE INCEPTION RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION. 1. The Fund changed its fiscal year-end from 12/31 to 10/31. 13 | OPPENHEIMER VALUE FUND FUND PERFORMANCE DISCUSSION -------------------------------------------------------------------------------- CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Value Fund (Class C) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Value Date Fund (Class C) S&P 500 Index 05/01/1996 10,000 10,000 06/30/1996 10,061 10,297 09/30/1996 10,314 10,615 10/31/1996 1 10,535 10,908 01/31/1997 11,629 12,217 04/30/1997 11,606 12,512 07/31/1997 13,676 14,971 10/31/1997 13,341 14,409 01/31/1998 13,508 15,503 04/30/1998 15,186 17,650 07/31/1998 14,233 17,861 10/31/1998 13,537 17,581 01/31/1999 15,012 20,544 04/30/1999 15,115 21,503 07/31/1999 14,821 21,469 10/31/1999 13,918 22,092 01/31/2000 13,070 22,668 04/30/2000 14,049 23,679 07/31/2000 13,712 23,394 10/31/2000 13,463 23,435 01/31/2001 14,600 22,464 04/30/2001 14,270 20,609 07/31/2001 14,423 20,043 10/31/2001 12,605 17,602 01/31/2002 13,804 18,839 04/30/2002 13,795 18,009 07/31/2002 11,607 15,310 10/31/2002 11,616 14,945 01/31/2003 11,841 14,505 04/30/2003 12,195 15,613 07/31/2003 13,602 16,939 10/31/2003 14,423 18,051 01/31/2004 16,241 19,516 04/30/2004 15,638 19,183 07/31/2004 15,678 19,168 10/31/2004 16,418 19,750 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 10/31/04 1-Year 12.83% 5-Year 3.36% Since Inception (5/1/96) 6.01% 1. The Fund changed its fiscal year-end from 12/31 to 10/31. 14 | OPPENHEIMER VALUE FUND CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Value Fund (Class N) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Value Date Fund (Class N) S&P 500 Index 03/01/2001 10,000 10,000 04/30/2001 9,928 10,094 07/31/2001 10,050 9,817 10/31/2001 8,794 8,621 01/31/2002 9,635 9,227 04/30/2002 9,640 8,821 07/31/2002 8,126 7,499 10/31/2002 8,143 7,320 01/31/2003 8,307 7,104 04/30/2003 8,563 7,647 07/31/2003 9,564 8,296 10/31/2003 10,154 8,841 01/31/2004 11,453 9,559 04/30/2004 11,034 9,396 07/31/2004 11,079 9,388 10/31/2004 11,615 9,674 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 10/31/04 1-Year 13.39% 5-Year N/A Since Inception (3/1/01) 4.17% 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. SEE PAGE 17 FOR FURTHER INFORMATION. 15 | OPPENHEIMER VALUE FUND FUND PERFORMANCE DISCUSSION -------------------------------------------------------------------------------- CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Value Fund (Class Y) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Value Date Fund (Class Y) S&P 500 Index 12/16/1996 10,000 10,000 01/31/1997 10,699 10,624 04/30/1997 10,693 10,881 07/31/1997 12,637 13,019 10/31/1997 12,362 12,531 01/31/1998 12,552 13,482 04/30/1998 14,145 15,349 07/31/1998 13,292 15,532 10/31/1998 12,687 15,289 01/31/1999 14,111 17,866 04/30/1999 14,238 18,700 07/31/1999 13,984 18,670 10/31/1999 13,170 19,212 01/31/2000 12,392 19,713 04/30/2000 13,355 20,593 07/31/2000 13,062 20,344 10/31/2000 12,851 20,380 01/31/2001 13,980 19,536 04/30/2001 13,709 17,923 07/31/2001 13,905 17,431 10/31/2001 12,196 15,308 01/31/2002 13,387 16,383 04/30/2002 13,409 15,661 07/31/2002 11,321 13,314 10/31/2002 11,321 12,997 01/31/2003 11,557 12,614 04/30/2003 11,981 13,578 07/31/2003 13,391 14,730 10/31/2003 14,240 15,698 01/31/2004 16,090 16,972 04/30/2004 15,541 16,683 07/31/2004 15,633 16,669 10/31/2004 16,418 17,176 AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/04 1-Year 15.30% 5-Year 4.51% Since Inception (12/16/96) 6.50% 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. SEE PAGE 17 FOR FURTHER INFORMATION. 16 | OPPENHEIMER 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. CLASS A shares of the Fund were first publicly offered on 9/16/85. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 10/2/95. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since inception" return for Class B 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 5/1/96. 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. 17 | OPPENHEIMER VALUE FUND FUND EXPENSES -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended October 31, 2004. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 18 | OPPENHEIMER VALUE 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 (5/1/04) (10/31/04) OCTOBER 31, 2004 --------------------------------------------------------------------- Class A Actual $ 1,000.00 $ 1,054.90 $ 5.54 --------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,019.76 5.45 --------------------------------------------------------------------- Class B Actual 1,000.00 1,049.70 10.15 --------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,015.28 9.98 --------------------------------------------------------------------- Class C Actual 1,000.00 1,049.90 9.73 --------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,015.69 9.57 --------------------------------------------------------------------- Class N Actual 1,000.00 1,052.60 7.35 --------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,018.00 7.23 --------------------------------------------------------------------- Class Y Actual 1,000.00 1,056.40 3.16 --------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,022.07 3.11 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended October 31, 2004 are as follows: CLASS EXPENSE RATIOS ------------------------ Class A 1.07% ------------------------ Class B 1.96 ------------------------ Class C 1.88 ------------------------ Class N 1.42 ------------------------ Class Y 0.61 19 | OPPENHEIMER VALUE FUND STATEMENT OF INVESTMENTS October 31, 2004 -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- COMMON STOCKS--98.1% -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--11.9% -------------------------------------------------------------------------------- HOTELS,RESTAURANTS & LEISURE--3.1% McDonald's Corp. 657,670 $ 19,171,081 -------------------------------------------------------------------------------- MEDIA--8.8% Liberty Media Corp., Cl. A 1 2,704,670 24,125,656 -------------------------------------------------------------------------------- UnitedGlobalCom, Inc., Cl. A 1 3,932,062 29,411,824 ------------- 53,537,480 -------------------------------------------------------------------------------- CONSUMER STAPLES--5.2% -------------------------------------------------------------------------------- TOBACCO--5.2% Altria Group, Inc. 649,600 31,479,616 -------------------------------------------------------------------------------- ENERGY--8.9% -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--1.0% Halliburton Co. 164,710 6,100,858 -------------------------------------------------------------------------------- OIL & GAS--7.9% BP plc, ADR 547,130 31,870,323 -------------------------------------------------------------------------------- Kinder Morgan, Inc. 70,730 4,552,890 -------------------------------------------------------------------------------- LUKOIL, Sponsored ADR 94,850 11,832,538 ------------- 48,255,751 -------------------------------------------------------------------------------- FINANCIALS--25.9% -------------------------------------------------------------------------------- COMMERCIAL BANKS--8.1% Bank of America Corp. 620,538 27,793,897 -------------------------------------------------------------------------------- Commerce Bancorp, Inc. 63,600 3,767,664 -------------------------------------------------------------------------------- Wells Fargo & Co. 302,260 18,050,967 ------------- 49,612,528 -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--10.4% Citigroup, Inc. 551,746 24,480,970 -------------------------------------------------------------------------------- Franklin Resources, Inc. 322,060 19,523,277 -------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc. 234,200 19,239,530 ------------- 63,243,777 -------------------------------------------------------------------------------- INSURANCE--4.9% Genworth Financial, Inc., Cl. A 111,300 2,655,618 -------------------------------------------------------------------------------- Platinum Underwriters Holdings Ltd. 161,800 4,732,650 -------------------------------------------------------------------------------- Prudential Financial, Inc. 477,650 22,196,396 ------------- 29,584,664 -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE--2.5% Freddie Mac 227,930 15,180,138 -------------------------------------------------------------------------------- HEALTH CARE--2.6% -------------------------------------------------------------------------------- BIOTECHNOLOGY--2.6% MedImmune, Inc. 1 108,700 3,089,254 -------------------------------------------------------------------------------- Wyeth 325,970 12,924,711 ------------- 16,013,965 -------------------------------------------------------------------------------- INDUSTRIALS--17.5% -------------------------------------------------------------------------------- AEROSPACE & DEFENSE--6.4% Empresa Brasileira de Aeronautica SA, ADR 370,200 9,825,108 -------------------------------------------------------------------------------- Raytheon Co. 800,890 29,216,467 ------------- 39,041,575 -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--4.4% Cendant Corp. 1,291,290 26,587,661 -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--6.5% General Electric Co. 755,510 25,778,001 -------------------------------------------------------------------------------- Tyco International Ltd. 443,770 13,823,436 ------------- 39,601,437 -------------------------------------------------------------------------------- MACHINERY--0.2% Deere & Co. 23,900 1,428,742 -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--12.2% -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--5.5% Hewlett-Packard Co. 97,480 1,818,977 -------------------------------------------------------------------------------- International Business Machines Corp. 351,170 31,517,508 ------------- 33,336,485 20 | OPPENHEIMER VALUE FUND VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.6% National Semiconductor Corp. 1 560,900 $ 9,367,030 -------------------------------------------------------------------------------- SOFTWARE--5.1% Compuware Corp. 1 549,220 3,179,984 -------------------------------------------------------------------------------- Novell, Inc. 1 435,700 3,132,683 -------------------------------------------------------------------------------- Take-Two Interactive Software, Inc. 1 756,450 24,932,592 ------------- 31,245,259 -------------------------------------------------------------------------------- MATERIALS--4.0% -------------------------------------------------------------------------------- CHEMICALS--2.4% Dow Chemical Co. 66,850 3,004,239 -------------------------------------------------------------------------------- Praxair, Inc. 280,280 11,827,816 ------------- 14,832,055 -------------------------------------------------------------------------------- METALS & MINING--1.6% Alcan, Inc. 91,600 4,242,912 -------------------------------------------------------------------------------- Inco Ltd. 1 145,830 5,162,382 ------------- 9,405,294 -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--5.2% -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--5.2% IDT Corp., Cl. B 1 1,216,793 16,816,079 -------------------------------------------------------------------------------- SBC Communications, Inc. 353,770 8,936,230 -------------------------------------------------------------------------------- Verizon Communications, Inc. 157,800 6,169,980 ------------- 31,922,289 -------------------------------------------------------------------------------- UTILITIES--4.7% -------------------------------------------------------------------------------- ELECTRIC UTILITIES--3.6% AES Corp. (The) 1 1,443,330 15,732,295 -------------------------------------------------------------------------------- PG&E Corp. 1 197,920 6,341,357 ------------- 22,073,652 -------------------------------------------------------------------------------- GAS UTILITIES--1.1% Sempra Energy 191,800 6,432,972 ------------- Total Common Stocks (Cost $532,345,109) 597,454,309 PRINCIPAL AMOUNT -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--2.3% -------------------------------------------------------------------------------- Undivided interest of 24.40% in joint repurchase agreement (Principal Amount/ Value $57,987,000, with a maturity value of $57,995,553) with Zions Bank/Capital Markets Group, 1.77%, dated 10/29/04, to be repurchased at $14,150,087 on 11/1/04, collateralized by U.S. Treasury Nts., 2.375%, 8/15/06, with a value of $59,191,443 (Cost $14,148,000) $14,148,000 14,148,000 -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $546,493,109) 100.4% 611,602,309 -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.4) (2,619,304) ---------------------------- NET ASSETS 100.0% $ 608,983,005 ============================ FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Non-income producing security. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | OPPENHEIMER VALUE FUND STATEMENT OF ASSETS AND LIABILITIES October 31, 2004 --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------- ASSETS ------------------------------------------------------------------------------------------------------- Investments, at value (cost $546,493,109)--see accompanying statement of investments $ 611,602,309 ------------------------------------------------------------------------------------------------------- Cash 262,537 ------------------------------------------------------------------------------------------------------- Receivables and other assets: Shares of capital stock sold 1,562,927 Investments sold 1,480,621 Interest and dividends 698,414 Other 9,733 ---------------- Total assets 615,616,541 ------------------------------------------------------------------------------------------------------- LIABILITIES ------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 5,574,009 Shares of capital stock redeemed 657,311 Transfer and shareholder servicing agent fees 120,617 Distribution and service plan fees 118,868 Shareholder communications 69,271 Directors' compensation 56,919 Other 36,541 ---------------- Total liabilities 6,633,536 ------------------------------------------------------------------------------------------------------- NET ASSETS $ 608,983,005 ================ ------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ------------------------------------------------------------------------------------------------------- Par value of shares of capital stock $ 29,023 ------------------------------------------------------------------------------------------------------- Additional paid-in capital 537,262,821 ------------------------------------------------------------------------------------------------------- Accumulated net investment income 1,545,458 ------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 5,036,503 ------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 65,109,200 ---------------- NET ASSETS $ 608,983,005 ================
22 | OPPENHEIMER VALUE FUND
--------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE --------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $378,784,635 and 17,913,014 shares of capital stock outstanding) $ 21.15 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 22.44 --------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $85,683,190 and 4,143,459 shares of capital stock outstanding) $ 20.68 --------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $79,501,358 and 3,894,456 shares of capital stock outstanding) $ 20.41 --------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $33,099,610 and 1,591,177 shares of capital stock outstanding) $ 20.80 --------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $31,914,212 and 1,481,389 shares of capital stock outstanding) $ 21.54
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | OPPENHEIMER VALUE FUND STATEMENT OF OPERATIONS For the Year Ended October 31, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- INVESTMENT INCOME -------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $86,289) $ 8,092,346 -------------------------------------------------------------------------------- Interest 114,391 --------------- Total investment income 8,206,737 -------------------------------------------------------------------------------- EXPENSES -------------------------------------------------------------------------------- Management fees 2,702,576 -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 743,002 Class B 772,119 Class C 612,515 Class N 116,310 -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 636,014 Class B 249,851 Class C 160,911 Class N 80,227 Class Y 2,098 -------------------------------------------------------------------------------- Shareholder communications: Class A 58,120 Class B 43,767 Class C 15,791 Class N 264 -------------------------------------------------------------------------------- Directors' compensation 19,021 -------------------------------------------------------------------------------- Accounting service fees 15,000 -------------------------------------------------------------------------------- Custodian fees and expenses 8,269 -------------------------------------------------------------------------------- Other 101,195 --------------- Total expenses 6,337,050 Less reduction to custodian expenses (2,417) Less payments and waivers of expenses (3,739) --------------- Net expenses 6,330,894 -------------------------------------------------------------------------------- NET INVESTMENT INCOME 1,875,843 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN -------------------------------------------------------------------------------- Net realized gain on: Investments 36,947,651 Foreign currency transactions 38,230 Net increase from payment by affiliate 126,396 --------------- Net realized gain 37,112,277 -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments 18,764,765 -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 57,752,885 =============== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | OPPENHEIMER VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2004 2003 --------------------------------------------------------------------------------------------- OPERATIONS --------------------------------------------------------------------------------------------- Net investment income $ 1,875,843 $ 300,084 --------------------------------------------------------------------------------------------- Net realized gain 37,112,277 15,182,559 --------------------------------------------------------------------------------------------- Net change in unrealized appreciation 18,764,765 39,305,650 ---------------------------------- Net increase in net assets resulting from operations 57,752,885 54,788,293 --------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS --------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (574,991) (328,372) Class B -- -- Class C -- -- Class N (59,111) (4,026) Class Y (16,057) (1,634) --------------------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS --------------------------------------------------------------------------------------------- Net increase in net assets resulting from capital stock transactions: Class A 126,690,468 35,867,196 Class B 15,328,730 2,513,021 Class C 40,268,281 14,468,487 Class N 23,054,671 5,433,039 Class Y 28,001,783 1,172,727 --------------------------------------------------------------------------------------------- NET ASSETS --------------------------------------------------------------------------------------------- Total increase 290,446,659 113,908,731 -------------------------------------------------------------------------------------------- Beginning of period 318,536,346 204,627,615 ---------------------------------- End of period (including accumulated net investment income of $1,545,458 and $158,891, respectively) $ 608,983,005 $ 318,536,346 ==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 18.46 $ 14.78 $ 15.93 $ 17.06 $ 20.69 ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .13 1 .04 .07 .03 .16 Net realized and unrealized gain (loss) 2.61 3.67 (1.21) (.98) (.65) --------------------------------------------------------------------------- Total from investment operations 2.74 3.71 (1.14) (.95) (.49) ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.05) (.03) (.01) (.18) (.16) Distributions from net realized gain -- -- -- -- (2.98) --------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.05) (.03) (.01) (.18) (3.14) ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 21.15 $ 18.46 $ 14.78 $ 15.93 $ 17.06 =========================================================================== ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 14.85% 25.18% (7.15)% (5.60)% (2.60)% ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 378,785 $ 215,019 $ 141,563 $ 166,285 $ 181,566 ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 303,560 $ 166,143 $ 166,319 $ 181,631 $ 234,840 ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment income 0.66% 0.37% 0.38% 0.19% 0.66% Total expenses 1.07% 4,5 1.22% 4,5 1.22% 4,5 1.26% 4 1.17% 4 ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 85% 117% 150% 336% 86%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 26 | OPPENHEIMER VALUE FUND
CLASS B YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000 ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 18.18 $ 14.64 $ 15.89 $ 16.99 $ 20.58 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.05) 1 (.06) (.10) (.11) (.05) Net realized and unrealized gain (loss) 2.55 3.60 (1.15) (.97) (.56) ------------------------------------------------------------------------ Total from investment operations 2.50 3.54 (1.25) (1.08) (.61) ---------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.02) -- Distributions from net realized gain -- -- -- -- (2.98) ------------------------------------------------------------------------ Total dividends and/or distributions to shareholders -- -- -- (.02) (2.98) ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 20.68 $ 18.18 $ 14.64 $ 15.89 $ 16.99 ======================================================================== ---------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 13.75% 24.18% (7.87)% (6.34)% (3.28)% ---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ---------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 85,683 $ 60,858 $ 47,323 $ 57,584 $ 64,287 ---------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 77,341 $ 51,476 $ 56,200 $ 65,115 $ 79,239 ---------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (0.24)% (0.44)% (0.40)% (0.57)% (0.14)% Total expenses 1.98% 2.14% 2.01% 2.01% 1.93% Expenses after payments and waivers and reduction to custodian expenses N/A 4 2.05% N/A 4,5 N/A 4 N/A 4 ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 117% 150% 336% 86%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 27 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS Continued --------------------------------------------------------------------------------
CLASS C YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.93 $ 14.44 $ 15.67 $ 16.77 $ 20.35 ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.03) 1 .03 (.01) (.08) (.04) Net realized and unrealized gain (loss) 2.51 3.46 (1.22) (.99) (.56) ------------------------------------------------------------------------- Total from investment operations 2.48 3.49 (1.23) (1.07) (.60) ----------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.03) -- Distributions from net realized gain -- -- -- -- (2.98) ------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- -- -- (.03) (2.98) ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 20.41 $ 17.93 $ 14.44 $ 15.67 $ 16.77 ========================================================================= ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 13.83% 24.17% (7.85)% (6.38)% (3.27)% ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 79,501 $ 32,625 $ 13,466 $ 10,494 $ 9,849 ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 61,387 $ 21,366 $ 12,977 $ 11,088 $ 11,975 ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (0.17)% (0.49)% (0.41)% (0.56)% (0.14)% Total expenses 1.89% 4,5 2.07% 4,5 2.00% 4,5 2.01% 4 1.93% 4 ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 117% 150% 336% 86%
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. 28 | OPPENHEIMER VALUE FUND
CLASS N YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 1 ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 18.25 $ 14.68 $ 15.90 $ 18.08 ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .06 2 .03 .05 (.02) Net realized and unrealized gain (loss) 2.56 3.59 (1.22) (2.16) --------------------------------------------------------- Total from investment operations 2.62 3.62 (1.17) (2.18) ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.07) (.05) (.05) -- Distributions from net realized gain -- -- -- -- --------------------------------------------------------- Total dividends and/or distributions to shareholders (.07) (.05) (.05) -- ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 20.80 $ 18.25 $ 14.68 $ 15.90 ========================================================= ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 14.39% 24.70% (7.41)% (12.06)% ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 33,100 $ 7,417 $ 1,201 $ 12 ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 23,344 $ 3,275 $ 508 $ 5 ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income (loss) 0.28% (0.03)% 0.00% (0.45)% Total expenses 1.45% 1.61% 1.49% 1.61% Expenses after payments and waivers and reduction to custodian expenses N/A 5,6 1.55% N/A 5,6 N/A 5 ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 117% 150% 336%
1. For the period from March 1, 2001 (inception of offering) to October 31, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 4. Annualized for periods of less than one full year. 5. Reduction to custodian expenses less than 0.01%. 6. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 29 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS Continued --------------------------------------------------------------------------------
CLASS Y YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000 ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 18.79 $ 14.96 $ 16.20 $ 17.07 $ 20.72 ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .24 1 (1.86) 1 .06 1 .10 1 .17 1 Net realized and unrealized gain (loss) 2.62 5.71 1 (1.21) 1 (.97) 1 (.63) 1 ------------------------------------------------------------------------ Total from investment operations 2.86 3.85 (1.15) (.87) (.46) ---------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.11) (.02) (.09) -- (.21) Distributions from net realized gain -- -- -- -- (2.98) ------------------------------------------------------------------------ Total dividends and/or distributions to shareholders (.11) (.02) (.09) -- (3.19) ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 21.54 $ 18.79 $ 14.96 $ 16.20 $ 17.07 ======================================================================== ---------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 15.30% 25.78% (7.18)% (5.10)% (2.42)% ---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ---------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 31,914 $ 2,617 $ 1,074 $ 638 $ 1 ---------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 8,398 $ 1,558 $ 955 $ 155 $ 48,714 ---------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 1.17% 0.76% 0.33% 0.62% 1.06% Total expenses 0.61% 1.19% 3.77% 1.20% 0.97% Expenses after payments and waivers and reduction to custodian expenses N/A 4 0.80% 1.23% 0.83% N/A 4 ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 85% 117% 150% 336% 86%
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%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 30 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Value Fund (the Fund), a series of Oppenheimer Series Fund, Inc. (the Company), is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek long-term growth of capital by investing primarily in common stocks with low price earnings ratios and better-than-anticipated earnings. 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 listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Corporate, government and municipal debt instruments having a remaining maturity in excess of 60 days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Directors. 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 31 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued value is determined in good faith using consistently applied procedures under the supervision of the Board of Directors. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. Foreign exchange rates may be valued primarily using dealer supplied valuations or a portfolio pricing service authorized by the Board of Directors. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. -------------------------------------------------------------------------------- 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 32 | OPPENHEIMER VALUE FUND 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 ------------------------------------------------------------------------ $ 1,601,750 $ 5,711,852 $ -- $ 64,433,852 1. During the fiscal year ended October 31, 2004, the Fund utilized $29,785,615 a,b of capital loss carryforward to offset capital gains realized in that fiscal year. a. Includes $1,348,115 of capital loss carryforwards acquired in the November 6, 2003 merger of Oppenheimer Select Managers Salomon Brothers All Cap Fund. b. Includes $444,392 of capital loss carryforwards acquired in the September 18, 2003 merger of Oppenheimer Trinity Value Fund. 2. During the fiscal year ended October 31, 2003, the Fund utilized $13,852,965 c of capital loss carryforward to offset capital gains realized in that fiscal year. c. Includes $52,353 of capital loss carryforwards acquired in the September 18, 2003 merger of Oppenheimer Trinity Value Fund. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for October 31, 2004. Net assets of the Fund were unaffected by the reclassifications. INCREASE TO REDUCTION TO ACCUMULATED ACCUMULATED NET INCREASE TO NET INVESTMENT REALIZED GAIN PAID-IN CAPITAL INCOME ON INVESTMENTS 3 --------------------------------------------------------- $ 2,377,284 $ 160,883 $ 2,538,167 3. $618,995, all of which was long-term capital gain, was distributed in connection with Fund share redemptions. The tax character of distributions paid during the years ended October 31, 2004 and October 31, 2003 was as follows: YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 --------------------------------------------------------------- Distributions paid from: Ordinary income $ 650,159 $ 334,032 33 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of October 31, 2004 are noted below. The primary difference between 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 $ 547,168,457 ============== Gross unrealized appreciation $ 70,083,866 Gross unrealized depreciation (5,650,014) -------------- Net unrealized appreciation $ 64,433,852 ============== -------------------------------------------------------------------------------- DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent directors. Benefits are based on years of service and fees paid to each director during the years of service. During the year ended October 31, 2004, the Fund's projected benefit obligations were increased by $6,163 and payments of $2,806 were made to retired directors, resulting in an accumulated liability of $47,797 as of October 31, 2004. The Board of Directors has adopted a deferred compensation plan for independent directors that enables directors to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Director. The Fund purchases shares of the funds selected for deferral by the Director in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of directors' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. -------------------------------------------------------------------------------- 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 34 | OPPENHEIMER VALUE FUND account during the period. The Fund pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. -------------------------------------------------------------------------------- 2. SHARES OF CAPITAL STOCK The Fund has authorized 600 million shares of $0.001 par value capital stock of each class. Transactions in shares of capital stock were as follows:
YEAR ENDED OCTOBER 31, 2004 YEAR ENDED OCTOBER 31, 2003 SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------------------- CLASS A Sold 8,369,840 $ 170,220,679 4,264,565 $ 70,376,827 Dividends and/or distributions reinvested 26,697 512,868 20,386 312,728 Acquisition-Note 5 393,950 7,335,351 248,058 4,532,025 Redeemed (2,522,842) (51,378,430) (2,463,894) (39,354,384) -------------------------------------------------------------------- Net increase 6,267,645 $ 126,690,468 2,069,115 $ 35,867,196 ==================================================================== ---------------------------------------------------------------------------------------------------- CLASS B Sold 2,032,579 $ 40,623,831 1,231,988 $ 19,785,723 Dividends and/or distributions reinvested -- -- -- -- Acquisition-Note 5 286,209 5,246,208 113,904 2,051,415 Redeemed (1,523,503) (30,541,309) (1,230,153) (19,324,117) -------------------------------------------------------------------- Net increase 795,285 $ 15,328,730 115,739 $ 2,513,021 ==================================================================== ---------------------------------------------------------------------------------------------------- CLASS C Sold 2,218,314 $ 43,763,468 1,864,248 $ 28,908,203 Dividends and/or distributions reinvested -- -- -- -- Acquisition-Note 5 440,763 7,968,992 101,608 1,804,555 Redeemed (584,362) (11,464,179) (1,078,588) (16,244,271) -------------------------------------------------------------------- Net increase 2,074,715 $ 40,268,281 887,268 $ 14,468,487 ====================================================================
35 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 2. SHARES OF CAPITAL STOCK Continued
YEAR ENDED OCTOBER 31, 2004 YEAR ENDED OCTOBER 31, 2003 SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------------------- CLASS N Sold 1,012,546 $ 20,320,194 348,563 $ 5,697,204 Dividends and/or distributions reinvested 3,115 59,100 264 4,022 Acquisition-Note 5 452,633 8,332,974 31,233 564,383 Redeemed (283,432) (5,657,597) (55,602) (832,570) -------------------------------------------------------------------- Net increase 1,184,862 $ 23,054,671 324,458 $ 5,433,039 ==================================================================== ---------------------------------------------------------------------------------------------------- CLASS Y Sold 1,405,605 $ 29,328,236 65,067 $ 1,092,179 Dividends and/or distributions reinvested 822 16,039 105 1,632 Acquisition-Note 5 51 969 33,446 621,753 Redeemed (64,351) (1,343,461) (31,137) (542,837) -------------------------------------------------------------------- Net increase 1,342,127 $ 28,001,783 67,481 $ 1,172,727 ====================================================================
-------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended October 31, 2004, were $627,996,449 and $392,688,685, respectively. -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of 0.625% of the first $300 million of average annual net assets of the Fund, 0.50% of the next $100 million, and 0.45% of average annual net assets in excess of $400 million. -------------------------------------------------------------------------------- ACCOUNTING FEES. The Manager acts as the accounting agent for the Fund at an annual fee of $15,000, plus out-of-pocket costs and expenses reasonably incurred. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended October 31, 2004, the Fund paid $1,071,535 to OFS for services to the Fund. Additionally, Class Y shares are subject to minimum fees of $10,000 for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. -------------------------------------------------------------------------------- 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. 36 | OPPENHEIMER VALUE FUND -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions quarterly for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B and Class C shares and 0.25% per year on Class N shares. The Distributor also receives a service fee of up to 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Directors and its independent directors must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at October 31, 2004 for Class B, Class C and Class N shares were $2,650,135, $954,749 and $408,066, respectively. Fees incurred by the Fund under the plans are detailed in the Statement of Operations. -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR ------------------------------------------------------------------------------------------------- October 31, 2004 $ 515,449 $ 2,362 $ 142,868 $ 14,466 $ 13,039
-------------------------------------------------------------------------------- PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage commissions for sales that is permitted under its investment advisory agreement, the Fund's Manager terminated that practice in July 2003. Subsequently, the Manager paid the Fund $126,396, an amount equivalent to certain of such commissions incurred in prior years. 37 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended October 31, 2004, OFS waived $1,801, $535, and $1,403 for Class A, Class C and Class N shares, respectively. This undertaking may be amended or withdrawn at any time. -------------------------------------------------------------------------------- 5. ACQUISITION OF OPPENHEIMER TRINITY VALUE FUND AND OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND OPPENHEIMER TRINITY VALUE FUND. On September 18, 2003, the Fund acquired all of the net assets of Oppenheimer Trinity Value Fund, pursuant to an Agreement and Plan of Reorganization approved by the Oppenheimer Trinity Value Fund shareholders on September 12, 2003. The Fund issued (at an exchange ratio of 0.462030 for Class A, 0.454702 for Class B, 0.467218 for Class C, 0.462387 for Class N and 0.458575 for Class Y of the Fund to one share of Oppenheimer Value Fund 248,058; 113,904; 101,608; 31,233 and 33,446 shares of capital stock for Class A, Class B, Class C, Class N and Class Y, respectively, valued at $4,532,025, $2,051,415, $1,804,555, $564,383 and $621,753 in exchange for the net assets, resulting in combined Class A net assets of $199,379,468, Class B net assets of $59,597,524, Class C net assets $31,165,757, Class N net assets of $6,114,820 and Class Y net assets of $2,499,533 on September 18, 2003. The net assets acquired included net unrealized appreciation of $721,866 and an unused capital loss carryforward of $2,018,832, potential utilization subject to tax limitations. The exchange qualified as a tax-free reorganization for federal income tax purposes. -------------------------------------------------------------------------------- OPPENHEIMER SELECT MANAGERS SALOMON BROTHERS ALL CAP FUND. On November 6, 2003, the Fund acquired all of the net assets of Oppenheimer Select Managers Salomon Brothers All Cap Fund, pursuant to an Agreement and Plan of Reorganization approved by the Oppenheimer Select Managers Salomon Brothers All Cap Fund shareholders on October 31, 2003. The Fund issued (at an exchange ratio of 0.516576 for Class A, 0.514763 for Class B, 0.521451 for Class C, 0.517683 for Class N and 0.511551 for Class Y of the Fund to one share of Oppenheimer Value Fund) 393,950; 286,209; 440,763; 452,633 and 51 shares of beneficial interest for Class A, Class B, Class C, Class N and Class Y, respectively, valued at $7,335,351, $5,246,208, $7,968,992, $8,332,974 and $969 in exchange for the net assets, resulting in combined Class A net assets of $227,060,486, Class B net assets of $66,085,206, Class C net assets of $41,217,738, Class N net assets of $15,907,953 and Class Y net assets of $2,648,868 on November 6, 2003. The net assets acquired included net unrealized appreciation of $2,862,951 and an unused capital loss carryforward of $2,523,977, potential utilization subject to tax limitation. The exchange qualified as a tax-free reorganization for federal income tax purposes. 38 | OPPENHEIMER VALUE FUND -------------------------------------------------------------------------------- 6. LITIGATION Six complaints have been filed as putative derivative and class actions against the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund, and nine Directors/ Trustees of certain of the Funds (collectively, the "Directors/Trustees"). The complaints allege that the Manager charged excessive fees for distribution and other costs, improperly used assets of the Funds in the form of directed brokerage commissions and 12b-1 fees to pay brokers to promote sales of the Funds, and failed to properly disclose the use of Fund assets to make those payments in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. The complaints further allege that by permitting and/or participating in those actions, the Directors/Trustees breached their fiduciary duties to Fund shareholders under the Investment Company Act of 1940 and at common law. By order dated October 27, 2004, these six actions, and future related actions, were consolidated by the U.S. District Court for the Southern District of New York into a single consolidated proceeding in contemplation of the filing of a superseding consolidated and amended complaint. OppenheimerFunds believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to them, the Funds or the Directors/Trustees and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. However, OppenheimerFunds, the Funds and the Directors/Trustees believe that the allegations contained in the complaints are without merit and intend to defend these lawsuits vigorously. 39 | OPPENHEIMER VALUE FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER SERIES FUND, INC.: We have audited the accompanying statement of assets and liabilities of Oppenheimer Value Fund (one of the portfolios constituting the Oppenheimer Series Fund, Inc.), including the statement of investments, as of October 31, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2004, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Value Fund as of October 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Denver, Colorado December 16, 2004 40 | OPPENHEIMER VALUE FUND FEDERAL INCOME TAX INFORMATION Unaudited -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- In early 2005, if applicable, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2004. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends of $0.0463, $0.0688 and $0.1121 per share were paid to Class A, Class N and Class Y shareholders, respectively, on December 5, 2003, all of which was designated as ordinary income for federal income tax purposes. Dividends, if any, paid by the Fund during the fiscal year ended October 31, 2004 which are not designated as capital gain distributions should be multiplied by 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, 2004 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $7,441,939 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2005, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 41 | OPPENHEIMER VALUE FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file new Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q -filings are available on the SEC's website at www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 42 | OPPENHEIMER VALUE FUND DIRECTORS AND OFFICERS Unaudited --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD FUND, LENGTH OF SERVICE, AGE BY DIRECTOR; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY DIRECTOR INDEPENDENT THE ADDRESS OF EACH DIRECTOR IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, DIRECTORS CO 80112-3924. EACH DIRECTOR SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL CLAYTON K. YEUTTER, Of Counsel (since June 1993) Hogan & Hartson (a law firm); a director (since 2002) Chairman of the Board of of Danielson Holding Corp. Formerly a director of Weyerhaeuser Corp. (1999-April Directors (since 2003); 2004), Caterpillar, Inc. (1993-December 2002), ConAgra Foods (1993-2001), Texas Director (since 1996) Instruments (1993-2001) and FMC Corporation (1993-2001). Oversees 25 portfolios in Age: 73 the OppenheimerFunds complex. ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the Director (since 1996) OppenheimerFunds complex. Age: 71 PHILLIP A. GRIFFITHS, A director (since 1991) of the Institute for Advanced Study, Princeton, N.J., a Director (since 1999) director (since 2001) of GSI Lumonics, a trustee (since 1983) of Woodward Academy, Age: 66 a Senior Advisor (since 2001) of The Andrew W. Mellon Foundation. A member of: the National Academy of Sciences (since 1979), American Academy of Arts and Sciences (since 1995), American Philosophical Society (since 1996) and Council on Foreign Relations (since 2002). Formerly a director of Bankers Trust New York Corporation (1994-1999). Oversees 25 portfolios in the OppenheimerFunds complex. MARY F. MILLER, Formerly a Senior Vice President and General Auditor, American Express Company Director (since 2004) (July 1998-February 2003). Member of Trustees of the American Symphony Orchestra Age: 62 (October 1998 to present). Oversees 25 portfolios in the OppenheimerFunds complex. JOEL W. MOTLEY, Director (since January 2002) Columbia Equity Financial Corp. (privately-held Director (since 2002) financial adviser); Managing Director (since January 2002) Carmona Motley, Inc. Age: 52 (privately-held financial adviser). Formerly a Managing Director of Carmona Motley Hoffman Inc. (privately-held financial adviser) (January 1998-December 2001). Oversees 25 portfolios in the OppenheimerFunds complex. KENNETH A. RANDALL, A director (since February 1972) of Dominion Resources, Inc. (electric utility Director (since 1996) holding company); formerly a director of Prime Retail, Inc. (real estate Age: 77 investment trust) and Dominion Energy, Inc. (electric power and oil & gas producer), President and Chief Executive Officer of The Conference Board, Inc. (international economic and business research) and a director of Lumbermens Mutual Casualty Company, American Motorists Insurance Company and American Manufacturers Mutual Insurance Company. Oversees 25 portfolios in the OppenheimerFunds complex. EDWARD V. REGAN, President, Baruch College, CUNY; a director of RBAsset (real estate manager); a Director (since 1996) director of OffitBank; formerly Trustee, Financial Accounting Foundation (FASB and Age: 74 GASB), Senior Fellow of Jerome Levy Economics Institute, Bard College, Chairman of Municipal Assistance Corporation for the City of New York, New York State Comptroller and Trustee of New York State and Local Retirement Fund. Oversees 25 investment companies in the OppenheimerFunds complex.
43 | OPPENHEIMER VALUE FUND DIRECTORS AND OFFICERS Unaudited / Continued -------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- RUSSELL S. REYNOLDS, JR., Chairman (since 1993) of The Directorship Search Group, Inc. (corporate governance Director (since 1996) consulting and executive recruiting); a Life Trustee of International House Age: 72 (non-profit educational organization); a former trustee of The Historical Society of the Town of Greenwich. Oversees 25 portfolios in the OppenheimerFunds complex. ----------------------------------------------------------------------------------------------------------------- INTERESTED DIRECTOR THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225 AND OFFICER LIBERTY STREET NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION, DEATH OR REMOVAL. JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President President and Director, (since September 2000) of the Manager; President and a director or trustee of Director (since 2001) other Oppenheimer funds; President and a director (since July 2001) of Oppenheimer Age: 55 Acquisition Corp. (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager); President and a director (since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation (a holding company that owns the shares of Babson Capital Management LLC); a member of the Investment Company Institute's Board of Governors (elected to serve from October 3, 2003 through September 30, 2006). Formerly, Chief Operating Officer (September 2000-June 2001) of the Manager; President and trustee (November 1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 63 portfolios as Trustee/Director and 21 additional portfolios as Officer in the OppenheimerFunds complex. ----------------------------------------------------------------------------------------------------------------- OFFICERS OF THE FUND THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. LEAVY AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008, AND FOR MR. WIXTED AND MR. VANDEHEY, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS EARLIER RESIGNATION, DEATH OR REMOVAL. CHRISTOPHER LEAVY, Senior Vice President of the Manager since September 2000; an officer of 7 Vice President and Portfolio portfolios in the OppenheimerFunds complex. Formerly a portfolio manager of Manager (since 2000) Morgan Stanley Dean Witter Investment Management (1997 - September 2000). Age: 33
44 | OPPENHEIMER VALUE FUND ----------------------------------------------------------------------------------------------------------------- BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer Treasurer (since 1999) of HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Age: 44 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management, Inc. (since November 2000), and of OppenheimerFunds Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer (March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services Division. An officer of 84 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February Secretary (since 2001) 2002) of the Manager; General Counsel and a director (since November 2001) of the Age: 56 Distributor; General Counsel (since November 2001) of Centennial Asset Management Corporation; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Secretary and General Counsel (since November 2001) of Oppenheimer Acquisition Corp.; Assistant Secretary and a director (since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and a director (since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and OFI Trust Company; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Senior Vice President and General Counsel (since November 2001) of OFI Institutional Asset Management, Inc.; a director (since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May 1985-December 2003), Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); and OppenheimerFunds International Ltd. (October 1997-November 2001). An officer of 84 portfolios in the OppenheimerFunds complex. MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Vice President and Manager; Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Chief Compliance Officer Centennial Asset Management Corporation and Shareholder Services, Inc. Formerly (since 2004) (until February 2004) Vice President and Director of Internal Audit of the Age: 54 Manager. An officer of 84 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S DIRECTORS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST, BY CALLING 1.800.525.7048. 45 | OPPENHEIMER 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 Directors of the registrant has determined that Edward V. Regan, the Chairman of the Board's Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an "audit committee financial expert," and has designated Mr. Regan as the Audit Committee's financial expert. Mr. Regan is an "independent" Director pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $13,000 in fiscal 2004 and $10,000 in fiscal 2003. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2004 and $5,000 in fiscal 2003. The principal accountant for the audit of the registrant's annual financial statements billed $39,500 in fiscal 2004 and no such fees in fiscal 2003 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include, among others: due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions and internal control reviews. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed $6,250 in fiscal 2004 and no such fees during fiscal 2003 to the registrant. The principal accountant for the audit of the registrant's annual financial statements billed $6,000 in fiscal 2004 and $5,000 in fiscal 2003 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include, among others: tax compliance, tax planning and tax advice. Tax compliance generally involves preparation of original and amended tax returns, claims for a refund and tax payment-planning services. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2004 and $52 in fiscal 2003. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include consultations regarding the registrant's retirement plan with respect to its directors. (e) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Pre-approval of non-audit services is waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed $45,500 in fiscal 2004 and $16,302 in fiscal 2003 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (h) The registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal account's independence. No such services were rendered. ITEM 5. NOT APPLICABLE ITEM 6. SCHEDULE OF INVESTMENTS Not applicable ITEM 7. NOT APPLICABLE ITEM 8. NOT APPLICABLE ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At a meeting of the Board of Directors of the registrant held on February 18, 2004, the Board adopted (1) a policy that, should the Board determine that a vacancy exists or is likely to exist on the Board, the Governance Committee of the Board, which is comprised entirely of independent directors, shall consider any candidates for Board membership recommended by the registrant's security holders and (2) a policy that security holders wishing to submit a nominee for election to the Board may do so by mailing their submission to the offices of OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street - 11th Floor, New York, NY 10281-1008, to the attention of the Chair of the Governance Committee. Prior to February 18, 2004, the Board did not have a formalized policy with respect to consideration of security holder nominees or a procedure by which security holders may make their submissions. In addition to security holder nominees, the Governance Committee may also consider nominees recommended by independent Board members or recommended by any other Board members and is authorized under its Charter, upon Board approval, to retain an executive search firm to assist in screening potential candidates. Upon Board approval, the Governance Committee may also obtain legal, financial, or other external counsel that may be necessary or desirable in the screening process. ITEM 10. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940 (17 CFR 270.30a-2(c)) as of October 31, 2004, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls over financial reporting that occurred during the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT APPLICABLE TO SEMIANNUAL REPORTS) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)