N-30D 1 opp211599.txt ANNUAL REPORT [photo of mountain range] Annual Report October 31, 2001 Oppenheimer Value Fund [logo]OppenheimerFunds(R) The Right Way to Invest REPORT HIGHLIGHTS Fund Objective Oppenheimer Value Fund(1) seeks long-term growth of capital by investing primarily in common stocks with low price/earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration. CONTENTS 1 Letter to Shareholders 3 An Interview with Your Fund's Manager 7 Fund Performance 13 Financial Statements 33 Independent Auditors' Report 34 Federal Income Tax Information 35 Officers and Directors --------------------------------- Average Annual Total Returns* For the 1-Year Period Ended 10/31/01 Without With Sales Chg. Sales Chg. --------------------------------- Class A -5.60% -11.03% --------------------------------- Class B -6.34 -11.01 --------------------------------- Class C -6.38 -7.31 --------------------------------- Class N -12.06 -12.94 --------------------------------- Class Y -5.10 --------------------------------- Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. *See Notes on page 11 for further details. 1. The Fund changed its name from Oppenheimer Disciplined Value Fund on 3/1/01. LETTER TO SHAREHOLDERS [photo of John V. Murphy] John V. Murphy Chairman, President and Chief Executive Officer OppenheimerFunds, Inc. Dear Shareholder, We are all learning to live and cope in an incredible and unprecedented period in our nation's history. At OppenheimerFunds, we know and understand that these are difficult times. Yet out of the September 11 tragedy, I believe a new resolve, determination and strength was born and has emerged in all of us. I would like to thank everyone who wrote to me. Your letters were a source of inspiration for all of us at OppenheimerFunds. The road to recovery is ahead of us. As of mid October, the markets started to recoup much of the loss since the September 11 attack. The Federal Reserve cut the overnight rate for the tenth time this year to its lowest level since 1962. And as economists have mentioned, the market has fundamental and underlying strengths. The groundwork is being laid for economic recovery. During these trying times for investors, we encourage you to work closely with your financial advisor and to stay focused on your long-term investment goals keeping in mind the benefits of diversification and the importance of a long-term perspective. It is also important and reassuring to remember that our portfolio management teams are an experienced group of investment professionals. They are diligently monitoring the events that are shaping the economy and the financial world, while using their proven expertise to manage your fund. Just as your financial advisor employs diversification and asset alloca-tion to determine the appropriate balance of risk and reward for your portfolio, OppenheimerFunds' portfolio managers are guided by similar principles: using broad diversification, keeping a focus on business fundamentals and maintaining a long-term investment perspective. As a firm directly affected by the events of September 11, we stand strong, resolute and united with America and we will be forever indebted to those who helped save lives and who continue to serve so heroically in this time of great uncertainty and need. 1 | OPPENHEIMER VALUE FUND LETTER TO SHAREHOLDERS To express our gratitude, we have established the "World Trade Center Legacy Relief Fund." We pledge to match the first $1 million in donations to this Fund and send all proceeds to qualified, prescreened charities that support victims' families, which initially are the "Twin Towers Fund," the "Lumina Foundation for Education-Families of Freedom Scholarship Fund" and the "Windows of Hope Family Relief Fund." For more information regarding the "World Trade Center Legacy Relief Fund," please go to our website, www.oppenheimerfunds.com, or contact the Legacy Program at 1.877.634.4483. At OppenheimerFunds, we thank you for your continued support and confidence. We look forward to showing and sharing with you the strength, expertise and resolve that make OppenheimerFunds The Right Way to Invest. Sincerely, /s/ John V. Murphy John V. Murphy November 21, 2001 These general market views represent opinions of OppenheimerFunds, Inc. and are not intended to predict performance of the securities markets or any particular fund. Specific information that applies to your Fund is contained in the pages that follow. 2 | OPPENHEIMER VALUE FUND AN INTERVIEW WITH YOUR FUND'S MANAGER Portfolio Manager Chris Leavy Q How did Oppenheimer Value Fund perform during the 12-month period that ended October 31, 2001? A. Although the Fund produced negative returns in a very difficult market environment, we are nevertheless pleased that the Fund handily outperformed both its benchmark, the S&P Barra Value Index, as well as its peer group, the Lipper Large Cap Value category. We attribute the Fund's negative absolute returns to an increasingly weak U.S. economy. As consumers and businesses spent less, corporate earnings declined, causing stock prices to fall. In addition, the stock market was in the midst of a protracted bear market caused, in large part, by the sharp reversals experienced by formerly high-flying technology stocks. While the value-oriented stocks in which the Fund invests generally performed significantly better than growth stocks, they also experienced difficulty in a lackluster economic climate. Finally, near the end of the reporting period, virtually all stocks were hurt by the terrorist attacks of September 11. To what do you attribute the Fund's good performance relative to its benchmark and peer group? Our value-oriented approach requires that the stocks in which we invest not only sell at less than what we believe to be their intrinsic worth, but also have what we believe to be good prospects for future earnings growth. In our opinion, and as it is designed to do, this dual emphasis helped the Fund outperform its benchmark and peer group. In fact, the end of the current 12-month period represents the first anniversary of the current portfolio management team's oversight of the Fund's investments. Although we arrived at the start of a very challenging period, we are pleased that we have gotten off to a good start. 3 | OPPENHEIMER VALUE FUND AN INTERVIEW WITH YOUR FUND'S MANAGER What strategies contributed most to the Fund's performance during the reporting period? Our stock selection strategy was particularly effective within the market's technology sector. Using our company-by-company approach to fundamental securities analysis, we were able to identify a number of businesses that were not as severely affected by the problems plaguing most technology companies. For example, one of the Fund's largest holdings at the beginning of October 2001, The Titan Corp., is a conglomerate with businesses in computer systems, defense, food safety and wireless technologies. Due to promising technological developments in the food safety area, Titan's stock rose during the period.2 Also, in the technology area, we received strong results from individual companies in the video game industries. In both cases, we sold some of the stocks during the period in order to lock in profits. Our stock selection strategy also benefited performance within the Fund's financial services industry holdings. In fact, financial companies represented the Fund's single largest concentration of assets. We received particularly robust returns from government-sponsored enterprises, which are financial companies created by Congress to provide funds for mortgage loans, college tuition and other activities considered beneficial to America. For example, the Federal Home Loan Mortgage Corp., also known as Freddie Mac, was the Fund's largest holding as of October 31, 2001.(2) Freddie Mac benefited from lower interest rates, which made home ownership more affordable for more people. As a result, Freddie Mac's loan volume and profit margins rose. Also benefiting from lower interest rates was USA Education, Inc., formerly known as Sallie Mae, which achieved higher profit margins. [sidebar] Our value-oriented approach, which emphasizes low valuations and bright future earnings prospects, helped the Fund produce above- average returns relative to its benchmark and peers under difficult conditions. [end sidebar] 2. See page 13 for a complete listing of the Fund's holdings as of 10/31/01. 4 | OPPENHEIMER VALUE FUND How did the events of September 11 affect the Fund? Stocks declined across the board after terrorists attacked the Pentagon in Washington, D.C. and the World Trade Center in New York's financial district. Airline and other travel-related stocks were particularly hard hit, including Boeing Co., the nation's leading aircraft manufacturer. Cendant Corp., a Fund holding as of 10/31/01 and a diversified company with interests in hotels and rental car agencies, was also adversely affected by the falloff in vacation and business travel after the attacks.(3) While we expect shares of travel-related companies to remain weak until people are more comfortable traveling, other Fund holdings may benefit in the wake of the attacks. For example, defense contractors may see revenues rise as America beefs up its military capabilities for the war on terrorism. How is the Fund positioned for the future? Over the near term, we believe that companies whose stocks are priced at a discount to their intrinsic values will continue to hold up better than shares with higher valuations. Over the longer term, we are optimistic that the overall stock market will resume the advance that has historically enabled investors to build wealth over long periods of time. Accordingly, the portfolio is currently biased toward traditionally conservative names, including the government-sponsored enterprises mentioned earlier. We have also recently emphasized stocks that we believe dropped too far during the recent correction, such as a carefully researched group of technology companies, as well as defense contractors that could benefit from higher defense spending. -------------------------------- Average Annual Total Returns For the Periods Ended 9/30/01(4) Class A 1-Year 5-Year 10-Year -------------------------------- -16.07% 2.93% 9.68% Class B Since 1-Year 5-Year Inception -------------------------------- -16.06% 3.09% 5.39% Class C Since 1-Year 5-Year Inception -------------------------------- -12.53% 3.38% 3.71% Class N Since 1-Year 5-Year Inception -------------------------------- N/A N/A -15.95% Class Y Since 1-Year 5-Year Inception -------------------------------- -10.48% N/A 3.46% -------------------------------- 3. See page 13 for a complete listing of the Fund's holdings as of 10/31/01. 4. See Notes on page 11 for further details. 5 | OPPENHEIMER VALUE FUND AN INTERVIEW WITH YOUR FUND'S MANAGER Regardless of when the economy and stock market rebound, we believe that the Fund's value-oriented strategy makes it an excellent choice for investors seeking long-term profits in the stock market. Providing such choices is an important part of what makes Oppenheimer Value Fund The Right Way to Invest. Top Ten Common Stock Holdings(6) ----------------------------------------------------------- Freddie Mac 5.8% ----------------------------------------------------------- ChevronTexaco Corp. 5.6 ----------------------------------------------------------- Raytheon Co. 4.9 ----------------------------------------------------------- Hartford Financial Services Group, Inc. 4.0 ----------------------------------------------------------- Micron Technology, Inc. 3.9 ----------------------------------------------------------- Lockheed Martin Corp. 3.8 ----------------------------------------------------------- News Corp. Ltd. (The), Sponsored ADR, Preference 3.8 ----------------------------------------------------------- Dominion Resources, Inc. 3.6 ----------------------------------------------------------- Bank One Corp. 3.4 ----------------------------------------------------------- Allstate Corp. 3.3 Top Five Common Stock Industries(6) ----------------------------------------------------------- Diversified Financial 14.5% ----------------------------------------------------------- Aerospace/Defense 10.1 ----------------------------------------------------------- Insurance 9.0 ----------------------------------------------------------- Manufacturing 8.0 ----------------------------------------------------------- Oil: Domestic 6.2 Sector Allocation(5) o Financial 30.8% Diversified Financial 16.6 Insurance 10.3 Banks 3.9 o Capital Goods 20.6 o Technology 11.5 o Energy 9.9 o Consumer Staples 6.7 o Communication Services 6.4 o Utilities 4.8 o Basic Materials 4.1 o Consumer Cyclicals 3.6 o Healthcare 1.6 5. Portfolio is subject to change. Percentages are as of October 31, 2001, and are based on total market value of common stock. 6. Portfolio is subject to change. Percentages are as of October 31, 2001, and are based on net assets. 6 | OPPENHEIMER VALUE FUND FUND PERFORMANCE How has the Fund performed during the period? Below is a discussion, by OppenheimerFunds, Inc., of the Fund's performance during its fiscal year ended October 31, 2001, followed by a graphical comparison of the Fund's performance to an appropriate broad-based market index. Management's discussion of performance. During the fiscal year that ended October 31, 2001, Oppenheimer Value Fund's performance was strongly influenced by its strategy of seeking long-term capital growth through companies that have a combination of low stock valuations and good prospects for future earnings growth. Although the Fund's returns were negative for the period, they were better than those provided by the Fund's benchmark and peer group. The management team's approach worked well in a highly challenging market environment characterized by a weakening U.S. economy, sharply lower interest rates and, near the end of the period, the terrorist attacks of September 11. The Fund particularly benefited from its investments in financial stocks, especially government-sponsored enterprises, as well as its emphasis on technology stocks that, in the portfolio management team's view, were less susceptible than other technology companies to the fundamental business problems currently plaguing the technology industry group. 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, 2001. In the case of Class A shares, performance is measured over a 10-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. 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 dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of Fund 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 securities in the index. 7 | OPPENHEIMER VALUE FUND FUND PERFORMANCE Class A Shares Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Value Fund (Class A) S&P 500 Index 12/31/91 9,425 10,000 03/31/92 9,661 9,748 06/30/92 9,452 9,933 09/30/92 9,554 10,246 12/31/92 10,555 10,761 03/31/93 11,402 11,230 06/30/93 12,047 11,284 09/30/93 12,585 11,575 12/31/93 12,762 11,843 03/31/94 12,467 11,395 06/30/94 12,223 11,442 09/30/94 12,848 12,001 12/31/94 12,678 11,999 03/31/95 13,795 13,166 06/30/95 14,965 14,421 09/30/95 16,237 15,566 12/31/95 17,293 16,502 03/31/96 18,117 17,388 06/30/96 18,345 18,167 09/30/96 18,855 18,729 10/31/96 (1) 19,266 19,245 01/31/97 21,315 21,555 04/30/97 21,326 22,076 07/31/97 25,165 26,414 10/31/97 24,585 25,423 01/31/98 24,940 27,354 04/30/98 28,094 31,142 07/31/98 26,375 31,513 10/31/98 25,136 31,019 01/31/99 27,941 36,247 04/30/99 28,167 37,940 07/31/99 27,689 37,880 10/31/99 26,040 38,979 01/31/00 24,500 39,995 04/30/00 26,373 41,779 07/31/00 25,794 41,276 10/31/00 25,362 41,348 01/31/01 27,565 39,635 04/30/01 26,993 36,362 07/31/01 27,339 35,364 10/31/01 23,942 31,057
Average Annual Total Returns of Class A Shares of the Fund at 10/31/01(2) 1-Year -11.03% 5-Year 3.21% 10-Year 9.64% Class B Shares Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Value Fund (Class B) S&P 500 Index 10/02/95 10,000 10,000 12/31/95 10,804 10,602 03/31/96 11,294 11,170 06/30/96 11,399 11,671 09/30/96 11,683 12,032 10/31/96 (1) 11,930 12,364 01/31/97 13,169 13,848 04/30/97 13,143 14,183 07/31/97 15,487 16,969 10/31/97 15,105 16,332 01/31/98 15,287 17,573 04/30/98 17,188 20,007 07/31/98 16,114 20,245 10/31/98 15,327 19,928 01/31/99 17,002 23,286 04/30/99 17,109 24,374 07/31/99 16,780 24,335 10/31/99 15,754 25,041 01/31/00 14,798 25,694 04/30/00 15,901 26,841 07/31/00 15,515 26,517 10/31/00 15,237 26,563 01/31/01 16,526 25,463 04/30/01 16,158 23,360 07/31/01 16,328 22,719 10/31/01 14,280 19,952
Average Annual Total Returns of Class B Shares of the Fund at 10/31/01(2) 1-Year -11.01% 5-Year 3.37% Since Inception 6.03% 1. The Fund changed its fiscal year-end from 12/31 to 10/31. 2. See Notes on page 11 for further details. 8 | OPPENHEIMER VALUE FUND Class C Shares Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Value Fund (Class C) S&P 500 Index 05/01/96 10,000 10,000 06/30/96 10,061 10,297 09/30/96 10,314 10,615 10/31/96 (1) 10,535 10,908 01/31/97 11,629 12,217 04/30/97 11,606 12,512 07/31/97 13,676 14,971 10/31/97 13,341 14,409 01/31/98 13,508 15,503 04/30/98 15,186 17,650 07/31/98 14,233 17,861 10/31/98 13,537 17,581 01/31/99 15,012 20,544 04/30/99 15,115 21,503 07/31/99 14,821 21,469 10/31/99 13,918 22,092 01/31/00 13,070 22,668 04/30/00 14,049 23,679 07/31/00 13,712 23,394 10/31/00 13,463 23,435 01/31/01 14,600 22,464 04/30/01 14,270 20,609 07/31/01 14,423 20,043 10/31/01 12,605 17,602
Average Annual Total Returns of Class C Shares of the Fund at 10/31/01(2) 1-Year -7.31% 5-Year 3.65% Since Inception 4.30% Class N Shares Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Value Fund (Class N) S&P 500 Index 03/01/01 10,000 10,000 04/30/01 9,928 10,094 07/31/01 10,050 9,817 10/31/01 8,706 8,621
Cumulative Total Return of Class N Shares of the Fund at 10/31/01(2) Since Inception -12.94% The performance information for the S&P 500 Index in the graphs begins on 12/31/91 for Class A, 9/30/95 for Class B, 4/30/96 for Class C, 2/28/01 for Class N and 12/31/96 for Class Y. Past performance cannot guarantee future results. Graphs are not drawn to same scale. 9 | OPPENHEIMER VALUE FUND FUND PERFORMANCE Class Y Shares Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Value Fund (Class Y) S&P 500 Index 12/16/96 10,000 10,000 01/31/97 10,699 10,624 04/30/97 10,693 10,881 07/31/97 12,637 13,019 10/31/97 12,362 12,531 01/31/98 12,552 13,482 04/30/98 14,145 15,349 07/31/98 13,292 15,532 10/31/98 12,687 15,289 01/31/99 14,111 17,866 04/30/99 14,238 18,700 07/31/99 13,984 18,670 10/31/99 13,170 19,212 01/31/00 12,392 19,713 04/30/00 13,355 20,593 07/31/00 13,062 20,344 10/31/00 12,851 20,380 01/31/01 13,980 19,536 04/30/01 13,709 17,923 07/31/01 13,905 17,431 10/31/01 12,196 15,308
Average Annual Total Returns of Class Y Shares of the Fund at 10/31/01(1) 1-Year -5.10% Since Inception 4.16% 1. See Notes on page 11 for further details. The performance information for S&P 500 Index in the graphs begins on 12/31/91 for Class A, 9/30/95 for Class B, 4/30/96 for Class C, 2/28/01 for Class N and 12/31/96 for Class Y. Past performance cannot guarantee future results. Graphs are not drawn to same scale. 10 | OPPENHEIMER VALUE FUND NOTES In reviewing performance and rankings, please remember that past performance cannot guarantee future results. 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 the original cost. Because of ongoing market volatility, the Fund's performance may be subject to substantial fluctuations, and current performance may be more or less than the results shown. For updates on the Fund's performance, visit our website at www.oppenheimerfunds.com. 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 effects 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. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.525.7048 or visit the OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus carefully before you invest or send money. 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), 2% (5-year) and 1% (since inception). 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. For this reason, the cumulative total return information shown in this report is not annualized. Class N shares are offered only through retirement plans. 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. 11 | OPPENHEIMER VALUE FUND Financials 12 | OPPENHEIMER VALUE FUND STATEMENT OF INVESTMENTS October 31, 2001
Market Value Shares See Note 1 =================================================================================== Common Stocks--87.5% ----------------------------------------------------------------------------------- Basic Materials--3.6% ----------------------------------------------------------------------------------- Metals--0.6% Alcoa, Inc. 42,000 $ 1,355,340 ----------------------------------------------------------------------------------- Paper--3.0% Sappi Ltd., Sponsored ADR 743,800 7,095,852 ----------------------------------------------------------------------------------- Capital Goods--18.1% ----------------------------------------------------------------------------------- Aerospace/Defense--10.1% Boeing Co. 100,700 3,282,820 ----------------------------------------------------------------------------------- Lockheed Martin Corp. 183,200 8,934,664 ----------------------------------------------------------------------------------- Raytheon Co. 356,200 11,487,450 ------------ 23,704,934 ----------------------------------------------------------------------------------- Manufacturing--8.0% Caterpillar, Inc. 167,500 7,490,600 ----------------------------------------------------------------------------------- Titan Corp. (The)(1) 243,200 6,354,816 ----------------------------------------------------------------------------------- Tyco International Ltd. 99,700 4,899,258 ------------ 18,744,674 ----------------------------------------------------------------------------------- Communication Services--5.6% ----------------------------------------------------------------------------------- Telecommunications: Long Distance--4.2% AT&T Corp.(2) 369,300 5,631,825 ----------------------------------------------------------------------------------- Qwest Communications International, Inc. 322,000 4,169,900 ------------ 9,801,725 ----------------------------------------------------------------------------------- Telecommunications: Wireless--1.4% Leap Wireless International, Inc.(1) 227,500 3,382,925 ----------------------------------------------------------------------------------- Consumer Cyclicals--3.2% ----------------------------------------------------------------------------------- Consumer Services--3.2% Cendant Corp.(1) 572,200 7,415,712 ----------------------------------------------------------------------------------- Consumer Staples--5.9% ----------------------------------------------------------------------------------- Broadcasting--0.3% Comcast Corp., Cl. A Special(1) 17,000 609,280 ----------------------------------------------------------------------------------- Entertainment--3.8% News Corp. Ltd. (The), Sponsored ADR, Preference 375,300 8,932,140 ----------------------------------------------------------------------------------- Tobacco--1.8% Philip Morris Cos., Inc. 90,000 4,212,000 ----------------------------------------------------------------------------------- Energy--8.6% ----------------------------------------------------------------------------------- Energy Services--2.4% Noble Drilling Corp.(1) 184,200 5,627,310 ----------------------------------------------------------------------------------- Oil: Domestic--6.2% Anadarko Petroleum Corp. 25,900 1,477,595 ----------------------------------------------------------------------------------- ChevronTexaco Corp. 149,000 13,193,950 ------------ 14,671,545
13 | OPPENHEIMER VALUE FUND STATEMENT OF INVESTMENTS Continued
Market Value Shares See Note 1 =================================================================================== Financial--26.9% ----------------------------------------------------------------------------------- Banks--3.4% Bank One Corp. 243,000 $ 8,065,170 ----------------------------------------------------------------------------------- Diversified Financial--14.5% Citigroup Inc. 93,966 4,277,332 ----------------------------------------------------------------------------------- Fannie Mae 49,000 3,967,040 ----------------------------------------------------------------------------------- Franklin Resources, Inc. 155,000 4,975,500 ----------------------------------------------------------------------------------- Freddie Mac 202,000 13,699,640 ----------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 61,600 2,692,536 ----------------------------------------------------------------------------------- USA Education, Inc. 55,800 4,551,048 ------------- 34,163,096 ----------------------------------------------------------------------------------- Insurance--9.0% Aetna, Inc.(1) 142,000 3,924,880 ----------------------------------------------------------------------------------- Allstate Corp. 243,700 7,647,306 ----------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. 176,000 9,504,000 ------------- 21,076,186 ----------------------------------------------------------------------------------- Healthcare--1.4% ----------------------------------------------------------------------------------- Healthcare/Drugs--1.4% Pharmacia Corp. 79,100 3,205,132 ----------------------------------------------------------------------------------- Technology--10.0% ----------------------------------------------------------------------------------- Computer Hardware--3.3% Lexmark International, Inc., Cl. A(1) 67,300 3,011,675 ----------------------------------------------------------------------------------- SanDisk Corp.(1) 432,200 4,728,268 ------------- 7,739,943 ----------------------------------------------------------------------------------- Communications Equipment--2.8% Lucent Technologies, Inc.(2) 902,700 6,048,090 ----------------------------------------------------------------------------------- Metawave Communications Corp.(1) 260,000 520,000 ------------- 6,568,090 ----------------------------------------------------------------------------------- Electronics--3.9% Micron Technology, Inc.(1) 407,000 9,263,320 ----------------------------------------------------------------------------------- Utilities--4.2% ----------------------------------------------------------------------------------- Electric Utilities--4.2% Dominion Resources, Inc. 140,000 8,556,800 ----------------------------------------------------------------------------------- Duke Energy Corp 37,200 1,428,852 ----------------------------------------------------------------------------------- 9,985,652 ------------- Total Common Stocks (Cost $213,104,234) 205,620,026
14 | OPPENHEIMER VALUE FUND
Principal Market Value Amount See Note 1 ===================================================================================================== Short-Term Notes--1.5% Federal Home Loan Bank, 2.46%, 11/1/01 (Cost $3,500,000) $ 3,500,000 $ 3,500,000 ===================================================================================================== Repurchase Agreements--4.4% Repurchase agreement with Zion First National Bank, 2.54%, dated 10/31/01, to be repurchased at $10,351,730 on 11/1/01, collateralized by U.S. Treasury Nts., 4.75%-7%, 12/31/01-2/15/10, with a value of $9,541,498 and U.S. Treasury Bills, 4/25/02, with a value of $1,024,612 (Cost $10,351,000) 10,351,000 10,351,000 ----------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $226,955,234) 93.4% 219,471,026 ----------------------------------------------------------------------------------------------------- Other Assets Net of Liabilities 6.6 15,541,953 ----------------------------- Net Assets 100.0% $235,012,979 =============================
Footnotes to Statement of Investments 1. Non-income-producing security. 2. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
Contracts Expiration Exercise Premium Market Value Subject to Call Dates Price Received See Note 1 ------------------------------------------------------------------------------------------------------------- AT&T Corp. 1,200 1/21/02 $22.50 $164,394 $12,000 Lucent Technologies, Inc. 1,400 1/21/02 7.50 103,597 63,000 ----------------------------- $267,991 $75,000 =============================
See accompanying Notes to Financial Statements. 15 | OPPENHEIMER VALUE FUND STATEMENT OF ASSETS AND LIABILITIES October 31, 2001 =================================================================================== Assets Investments, at value (cost $226,955,234)-- see accompanying statement $219,471,026 ----------------------------------------------------------------------------------- Cash 97,868 ----------------------------------------------------------------------------------- Receivables and other assets: Investments sold 17,329,217 Shares of capital stock sold 275,846 Interest and dividends 130,250 Other 1,793 ------------- Total assets 237,306,000 ==================================================================================== Liabilities Options written, at value (premiums received $267,991)-- see accompanying statement 75,000 ----------------------------------------------------------------------------------- Payables and other liabilities: Shares of capital stock redeemed 1,003,602 Investments purchased 885,215 Shareholder reports 173,707 Distribution and service plan fees 51,136 Directors' compensation 45,216 Transfer and shareholder servicing agent fees 647 Other 58,498 ------------- Total liabilities 2,293,021 =================================================================================== Net Assets $235,012,979 ============= =================================================================================== Composition of Net Assets Par value of shares of capital stock $ 14,771 ----------------------------------------------------------------------------------- Additional paid-in capital 259,860,326 ----------------------------------------------------------------------------------- Undistributed (overdistributed) net investment income (44,695) ----------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments and foreign currency transactions (17,526,206) ----------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies (7,291,217) ------------- Net Assets $235,012,979 =============
16 | OPPENHEIMER VALUE FUND ================================================================================================== Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $166,285,323 and 10,437,937 shares of capital stock outstanding) $15.93 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $16.90 -------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $57,583,942 and 3,623,680 shares of capital stock outstanding) $15.89 -------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $10,493,922 and 669,494 shares of capital stock outstanding) $15.67 -------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $12,129 and 763 shares of capital stock outstanding) $15.90 -------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $637,663 and 39,366 shares of capital stock outstanding) $16.20
See accompanying Notes to Financial Statements. 17 | OPPENHEIMER VALUE FUND STATEMENT OF OPERATIONS For the Year Ended October 31, 2001 =================================================================================== Investment Income Dividends (net of foreign withholding taxes of $4,543) $ 2,675,276 ----------------------------------------------------------------------------------- Interest 1,058,461 ------------- Total income 3,733,737 =================================================================================== Expenses Management fees 1,612,092 ----------------------------------------------------------------------------------- Distribution and service plan fees: Class A 444,087 Class B 651,050 Class C 110,817 Class N 18 ----------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 445,103 Class B 159,197 Class C 26,663 Class N 10 Class Y 667 ----------------------------------------------------------------------------------- Shareholder reports 168,103 ----------------------------------------------------------------------------------- Legal, auditing and other professional fees 134,598 ----------------------------------------------------------------------------------- Accounting service fees 15,000 ----------------------------------------------------------------------------------- Directors' compensation 6,852 ----------------------------------------------------------------------------------- Custodian fees and expenses 5,286 ----------------------------------------------------------------------------------- Other 51,537 ------------- Total expenses 3,831,080 Less reduction to custodian expenses (5,286) Less voluntary waiver of transfer and shareholder servicing agent fees--Class Y (578) ------------- Net expenses 3,825,216 =================================================================================== Net Investment Loss (91,479) =================================================================================== Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments (8,169,397) Closing and expiration of option contracts written 535,734 Foreign currency transactions (208,257) ------------- Net realized gain (loss) (7,841,920) ----------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (7,972,149) Translation of assets and liabilities denominated in foreign currencies 159,977 ------------- Net change (7,812,172) ------------- Net realized and unrealized gain (loss) (15,654,092) =================================================================================== Net Decrease in Net Assets Resulting from Operations $(15,745,571) ============= See accompanying Notes to Financial Statements.
18 | OPPENHEIMER VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS
Year Ended October 31, 2001 2000 =================================================================================== Operations Net investment income (loss) $ (91,479) $ 1,939,388 ----------------------------------------------------------------------------------- Net realized gain (loss) (7,841,920) (7,463,634) ----------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (7,812,172) (5,479,690) ---------------------------- Net increase (decrease) in net assets resulting from operations (15,745,571) (11,003,936) =================================================================================== Dividends and/or Distributions to Shareholders Dividends from net investment income: Class A (1,847,746) (2,996,645) Class B (87,334) -- Class C (18,346) -- Class N -- -- Class Y -- (789,687) ----------------------------------------------------------------------------------- Distributions from net realized gain: Class A -- (55,606,463) Class B -- (14,307,425) Class C -- (2,028,859) Class N -- -- Class Y -- (11,069,300) =================================================================================== Capital Stock Transactions Net increase (decrease) in net assets resulting from capital stock transactions: Class A (3,267,773) (142,579,205) Class B (2,239,487) (21,169,838) Class C 1,787,816 (2,279,249) Class N 13,360 -- Class Y 716,127 (66,839,216) =================================================================================== Net Assets Total decrease (20,688,954) (330,669,823) ----------------------------------------------------------------------------------- Beginning of period 255,701,933 586,371,756 ---------------------------- End of period [including undistributed (overdistributed) net investment income of $(44,695) and $1,774,733, respectively] $235,012,979 $255,701,933 ============================
See accompanying Notes to Financial Statements. 19 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS
Class A Year Ended October 31, 2001 2000 1999 1998 1997 ========================================================================================================================= Per Share Operating Data Net asset value, beginning of period $17.06 $20.69 $20.91 $23.31 $19.65 ------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .03 .16 .17 .16 .23(1) Net realized and unrealized gain (loss) (.98) (.65) .64 .32 4.91(1) ----------------------------------------------------------------------- Total income (loss) from investment operations (.95) (.49) .81 .48 5.14 ------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.18) (.16) (.17) (.12) (.07) Distributions from net realized gain -- (2.98) (.86) (2.76) (1.41) ----------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.18) (3.14) (1.03) (2.88) (1.48) ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $15.93 $17.06 $20.69 $20.91 $23.31 ======================================================================= ========================================================================================================================= Total Return, at Net Asset Value(2) (5.60)% (2.60)% 3.60% 2.24% 27.60% ========================================================================================================================= Ratios/Supplemental Data Net assets, end of period (in thousands) $166,285 $181,566 $392,483 $456,264 $371,810 ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $181,631 $234,840 $448,884 $442,138 $234,314 ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 0.19% 0.66% 0.68% 0.84% 1.05% Expenses 1.26% 1.17% 1.02% 0.98%(4) 1.07%(4) ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 336% 86% 135% 106% 103%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes a $1,000 hypothetical initial 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. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 20 | OPPENHEIMER VALUE FUND
Class B Year Ended October 31, 2001 2000 1999 1998 1997 ======================================================================================================================== Per Share Operating Data Net asset value, beginning of period $16.99 $20.58 $20.83 $23.32 $19.77 ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (.11) (.05) (.03) .02 .09(1) Net realized and unrealized gain (loss) (.97) (.56) .66 .30 4.91(1) ---------------------------------------------------------------------- Total income (loss) from investment operations (1.08) (.61) .63 .32 5.00 ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.02) -- (.02) (.05) (.04) Distributions from net realized gain -- (2.98) (.86) (2.76) (1.41) ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.02) (2.98) (.88) (2.81) (1.45) ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $15.89 $16.99 $20.58 $20.83 $23.32 ====================================================================== ======================================================================================================================== Total Return, at Net Asset Value(2) (6.34)% (3.28)% 2.79% 1.47% 26.61% ======================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $57,584 $64,287 $102,736 $123,260 $83,291 ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $65,115 $79,239 $123,616 $110,240 $30,019 ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets:(3) Net investment income (loss) (0.57)% (0.14)% (0.08)% 0.08% 0.22% Expenses 2.01% 1.93% 1.77% 1.73%(4) 1.84%(4) ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 336% 86% 135% 106% 103%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes a $1,000 hypothetical initial 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. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 21 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS Continued
Class C Year Ended October 31, 2001 2000 1999 1998 1997 ======================================================================================================================== Per Share Operating Data Net asset value, beginning of period $16.77 $20.35 $20.60 $23.07 $19.57 ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (.08) (.04) (.02) .01 .10(1) Net realized and unrealized gain (loss) (.99) (.56) .65 .31 4.85(1) ---------------------------------------------------------------------- Total income (loss) from investment operations (1.07) (.60) .63 .32 4.95 ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.03) -- (.02) (.03) (.04) Distributions from net realized gain -- (2.98) (.86) (2.76) (1.41) ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.03) (2.98) (.88) (2.79) (1.45) ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $15.67 $16.77 $20.35 $20.60 $23.07 ====================================================================== ======================================================================================================================== Total Return, at Net Asset Value(2) (6.38)% (3.27)% 2.82% 1.47% 26.64% ======================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $10,494 $ 9,849 $14,582 $18,204 $10,243 ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $11,088 $11,975 $17,746 $15,355 $ 4,477 ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets:(3) Net investment income (loss) (0.56)% (0.14)% (0.07)% 0.06% 0.17% Expenses 2.01% 1.93% 1.77% 1.73%(4) 1.86%(4) ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 336% 86% 135% 106% 103%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes a $1,000 hypothetical initial 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. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 22 | OPPENHEIMER VALUE FUND Period Ended Class N October 31, 2001(1) ========================================================================== Per Share Operating Data Net asset value, beginning of period $ 18.08 -------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.02) Net realized and unrealized income (loss) (2.16) --------- Total income (loss) from investment operations (2.18) -------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- Distributions from net realized gain -- --------- Total dividends and/or distributions to shareholders -- -------------------------------------------------------------------------- Net asset value, end of period $15.90 ======== ========================================================================== Total Return at Net Asset Value(2) (12.06)% ========================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $12 -------------------------------------------------------------------------- Average net assets (in thousands) $ 5 -------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment loss (0.45)% Expenses 1.61% -------------------------------------------------------------------------- Portfolio turnover rate 336% 1. For the period from March 1, 2001 (inception of offering) to October 31, 2001. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), 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. 3. Annualized for periods of less than one full year. See accompanying Notes to Financial Statements. 23 | OPPENHEIMER VALUE FUND FINANCIAL HIGHLIGHTS Continued
Class Y Year Ended October 31, 2001 2000 1999 1998 1997(1) ======================================================================================================================== Per Share Operating Data Net asset value, beginning of period $17.07 $20.72 $20.97 $23.34 $20.31 ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .10(2) .17(2) .22 .22 .31(2) Net realized and unrealized gain (loss) (.97)(2) (.63)(2) .64 .34 4.20(2) ---------------------------------------------------------------------- Total income (loss) from investment operations (.87) (.46) .86 .56 4.51 ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.21) (.25) (.17) (.07) Distributions from net realized gain -- (2.98) (.86) (2.76) (1.41) ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- (3.19) (1.11) (2.93) (1.48) ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $16.20 $17.07 $20.72 $20.97 $23.34 ====================================================================== ======================================================================================================================== Total Return, at Net Asset Value(3) (5.10)% (2.42)% 3.81% 2.63% 23.62% ======================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $638 $ 1 $76,571 $136,729 $90,994 ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $155 $48,714 $95,765 $118,010 $51,775 ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets:(4) Net investment income 0.62% 1.06% 0.90% 1.19% 1.21% Expenses 1.20% 0.97% 0.76% 0.62%(5) 0.78%(5) Expenses, net of voluntary waiver of transfer agent fees 0.83% N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 336% 86% 135% 106% 103%
1. For the period from December 16, 1996 (inception of offering) to October 31, 1997. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), 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. 4. Annualized for periods of less than one full year. 5. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. See accompanying Notes to Financial Statements. 24 | 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), which operated under the name of Oppenheimer Disciplined Value Fund through February 28, 2001, 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. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes 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. 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. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Directors, or at their fair value. Fair value is determined in good faith under 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 accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. 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. 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. 25 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 1. Significant Accounting Policies Continued Repurchase Agreements. The Fund requires its custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. -------------------------------------------------------------------------------- Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily 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. -------------------------------------------------------------------------------- Directors' Compensation. The Fund has adopted an unfunded retirement plan for the Fund's independent Board of 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, 2001, the Fund's projected benefit obligations were increased by $1,210 and payments of $3,892 were made to retired directors, resulting in an accumulated liability of $44,695 as of October 31, 2001. 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 annual compensation they are entitled to receive from the Fund. Under the plan, the compensation deferred is periodically adjusted as though an equivalent amount had been invested for the Board of Directors in shares of one or more Oppenheimer funds selected by the director. The amount paid to the Board of Directors under the plan will be determined based upon the performance of the selected funds. 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. -------------------------------------------------------------------------------- Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. As of October 31, 2001, the Fund had available for federal income tax purposes unused capital loss carryovers as follows: Expiring -------------------------------------- 2008 $ 9,239,162 2009 5,386,519 ----------- Total $14,625,681 =========== 26 | OPPENHEIMER VALUE FUND -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- Classification of Dividends and Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for 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 realized gain was recorded by the Fund. The Fund adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended October 31, 2001, amounts have been reclassified to reflect a decrease in paid-in capital of $263,383, a decrease in undistributed net investment loss of $225,477, and a decrease in accumulated net realized loss on investments of $37,906. Net assets of the Fund were unaffected by the reclassifications. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- Security Transactions. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. 27 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 2. Shares of Capital Stock The Fund has authorized 600 million shares of $0.001 par value capital stock. Transactions in shares of capital stock were as follows:
Year Ended October 31, 2001(1) Year Ended October 31, 2000 Shares Amount Shares Amount ----------------------------------------------------------------------------------- Class A Sold 2,495,305 $ 43,546,414 2,615,441 $ 46,627,592 Dividends and/or distributions reinvested 110,601 1,770,750 2,212,164 38,403,153 Redeemed (2,809,551) (48,584,937) (13,157,255) (227,609,950) ------------------------------------------------------- Net increase (decrease) (203,645) $ (3,267,773) (8,329,650) $(142,579,205) ======================================================= ----------------------------------------------------------------------------------- Class B Sold 1,321,460 $ 23,155,557 917,803 $ 16,207,594 Dividends and/or distributions reinvested 5,009 80,552 782,867 13,622,443 Redeemed (1,487,290) (25,475,596) (2,907,576) (50,999,875) ------------------------------------------------------- Net increase (decrease) (160,821) $ (2,239,487) (1,206,906) $ (21,169,838) ======================================================= ----------------------------------------------------------------------------------- Class C Sold 535,330 $ 9,404,405 360,348 $ 6,294,284 Dividends and/or distributions reinvested 1,085 17,218 110,349 1,894,720 Redeemed (454,363) (7,633,807) (599,882) (10,468,253) ------------------------------------------------------- Net increase (decrease) 82,052 $ 1,787,816 (129,185) $ (2,279,249) ======================================================= ----------------------------------------------------------------------------------- Class N Sold 763 $ 13,364 -- $ -- Dividends and/or distributions reinvested -- -- -- -- Redeemed -- (4) -- -- ------------------------------------------------------- Net increase (decrease) 763 $ 13,360 -- $ -- ======================================================= ----------------------------------------------------------------------------------- Class Y Sold 42,200 $ 765,652 1,046,725 $ 17,938,175 Dividends and/or distributions reinvested -- -- 683,909 11,858,987 Redeemed (2,892) (49,525) (5,426,667) (96,636,378) ------------------------------------------------------- Net increase (decrease) 39,308 $ 716,127 (3,696,033) $ (66,839,216) =======================================================
1. For the year ended October 31, 2001, for Class A, B, C and Y shares and for the period from March 1, 2001 (inception of offering) to October 31, 2001, for Class N shares. ================================================================================ 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, 2001, were $792,712,099 and $801,637,028, respectively. 28 | OPPENHEIMER VALUE FUND As of October 31, 2001, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $229,855,757 was: Gross unrealized appreciation $ 12,234,399 Gross unrealized depreciation (22,619,130) ------------ Net unrealized appreciation (depreciation) $(10,384,731) ============ ================================================================================ 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 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. The Fund's management fee for the year ended October 31, 2001, was an annualized rate of 0.625%. -------------------------------------------------------------------------------- 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 an agreed-upon per account fee. OFS has voluntarily undertaken to waive a portion of its transfer agent fee for Classes A, B, C, N and Y shares. This voluntary waiver of expenses limits transfer agent fees to 0.35% of average net assets for Classes A, B, C and N shares effective October 1, 2001, and 0.25% of average net assets for Class Y shares effective January 1, 2001. -------------------------------------------------------------------------------- Distribution and Service Plan Fees. Under its General Distributor's Agreement with the Manager, the Distributor acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
Aggregate Class A Commissions Commissions Commissions Commissions Front-End Front-End on Class A on Class B on Class C on Class N Sales Charges Sales Charges Shares Shares Shares Shares on Class A Retained by Advanced by Advanced by Advanced by Advanced by Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1) Distributor(1) ---------------------------------------------------------------------------------------------------------------------- October 31, 2001 $317,775 $140,878 $46,553 $289,729 $26,187 $118
1. The Distributor advances commission payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale.
Class A Class B Class C Class N Contingent Contingent Contingent Contingent Deferred Deferred Deferred Deferred Sales Charges Sales Charges Sales Charges Sales Charges Retained by Retained by Retained by Retained by Year Ended Distributor Distributor Distributor Distributor -------------------------------------------------------------------------------------------- October 31, 2001 $4,991 $151,152 $2,314 $--
29 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 4. Fees and Other Transactions with Affiliates Continued The Fund has adopted a Service Plan for Class A shares and Distribution and Service Plans for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the Distributor for all or a portion of its costs incurred in connection with the distribution and/or servicing of the shares of the particular class. -------------------------------------------------------------------------------- Class A Service Plan Fees. Under the Class A service plan, the Distributor currently uses the fees it receives from the Fund to pay brokers, dealers and other financial institutions. The Class A service plan permits reimbursements to the Distributor at a rate of up to a specified percent of average annual net assets of Class A shares purchased. The Distributor makes payments to plan recipients quarterly at an annual rate not to exceed a specified percent of the average annual net assets consisting of Class A shares of the Fund. For the year ended October 31, 2001, payments under the Class A plan totaled $444,087, all of which were paid by the Distributor to recipients, and included $189,704 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. -------------------------------------------------------------------------------- Class B, Class C and Class N Distribution and Service Plan Fees. Under each plan, service fees and distribution fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular business day during the period. The Class B, Class C and Class N plans provide for the Distributor to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the plan during the period for which the fee is paid. The Distributor retains the asset-based sales charge on Class B shares. The Distributor retains the asset-based sales charge on Class C shares during the first year the shares are outstanding. The Distributor retains the asset-based sales charge on Class N shares. The asset-based sales charges on Class B, Class C and Class N shares allow investors to buy shares without a front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The Distributor's actual expenses in selling Class B, Class C and Class N shares may be more than the payments it receives from the contingent deferred sales charges collected on redeemed shares and asset-based sales charges from the Fund under the plans. If any plan is terminated by the Fund, the Board of Directors may allow the Fund to continue payments of the asset-based sales charge to the Distributor for distributing shares before the plan was terminated. The plans allow for the carryforward of distribution expenses, to be recovered from asset-based sales charges in subsequent fiscal periods. 30 | OPPENHEIMER VALUE FUND Distribution fees paid to the Distributor for the year ended October 31, 2001, were as follows:
Distributor's Distributor's Aggregate Aggregate Unreimbursed Unreimbursed Expenses as % Total Payments Amount Retained Expenses of Net Assets Under Plan by Distributor Under Plan of Class ---------------------------------------------------------------------------------------------- Class B Plan $651,050 $507,131 $2,298,966 3.99% Class C Plan 110,817 21,105 265,441 2.53 Class N Plan 18 13 -- --
================================================================================ 5. Foreign Currency Contracts A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. ================================================================================ 6. Option Activity The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. 31 | OPPENHEIMER VALUE FUND NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 6. Option Activity Continued Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended October 31, 2001, was as follows: Call Options ------------------------------ Number of Amount of Contracts Premiums -------------------------------------------------------------------------------- Options outstanding as of October 31, 2000 -- $ -- Options written 10,150 1,910,336 Options closed or expired (7,550) (1,642,345) ------------------------------ Options outstanding as of October 31, 2001 2,600 $ 267,991 ============================== ================================================================================ 7. Bank Borrowings The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.08% per annum. The Fund had no borrowings outstanding during the year ended or at October 31, 2001. Effective November 13, 2001, the Fund will no longer participate in this agreement. 32 | OPPENHEIMER VALUE FUND INDEPENDENT AUDITORS' REPORT ================================================================================ The Board of Directors and Shareholders of Oppenheimer Value Fund: We have audited the accompanying statement of assets and liabilities of Oppenheimer Value Fund (formerly Oppenheimer Disciplined Value Fund), including the statement of investments, as of October 31, 2001, 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 auditing standards generally accepted in the United States of America. 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, 2001, 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, 2001, 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 accounting principles generally accepted in the United States of America. KPMG LLP Denver, Colorado November 21, 2001 33 | OPPENHEIMER VALUE FUND FEDERAL INCOME TAX INFORMATION Unaudited ================================================================================ In early 2002, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2001. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends of $0.1757, $0.0236 and $0.0312 per share were paid to Class A, Class B and Class C shareholders, respectively, on December 5, 2000, all of which was designated as ordinary income for federal income tax purposes. Dividends paid by the Fund during the fiscal year ended October 31, 2001, 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. 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. 34 | OPPENHEIMER VALUE FUND OPPENHEIMER VALUE FUND A Series of Oppenheimer Series Fund, Inc. ======================================================================================================= Officers and Directors Leon Levy, Chairman of the Board of Directors Donald W. Spiro, Vice Chairman of the Board of Directors John V. Murphy, Director and President Robert G. Galli, Director Phillip A. Griffiths, Director Benjamin Lipstein, Director Elizabeth B. Moynihan, Director Kenneth A. Randall, Director Edward V. Regan, Director Russell S. Reynolds, Jr., Director Clayton K. Yeutter, Director Christopher Leavy, Vice President Robert G. Zack, Secretary Brian W. Wixted, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Katherine P. Feld, Assistant Secretary Kathleen T. Ives, Assistant Secretary Denis R. Molleur, Assistant Secretary ======================================================================================================= Investment Advisor OppenheimerFunds, Inc. ======================================================================================================= Distributor OppenheimerFunds Distributor, Inc. ======================================================================================================= Transfer and Shareholder OppenheimerFunds Services Servicing Agent ======================================================================================================= Custodian of The Bank of New York Portfolio Securities ======================================================================================================= Independent Auditors KPMG LLP ======================================================================================================= Legal Counsel Mayer, Brown & Platt Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. 498 Seventh Avenue, New York, NY 10018 (C)Copyright 2001 OppenheimerFunds, Inc. All rights reserved.
35 | OPPENHEIMER VALUE FUND OPPENHEIMERFUNDS FAMILY Global Equity Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund Europe Fund Global Growth & Income Fund International Growth Fund ------------------------------------------------------------------------------------------------------- Equity Stock Stock & Bond Emerging Technologies Fund Quest Opportunity Value Fund Emerging Growth Fund Total Return Fund Enterprise Fund Quest Balanced Value Fund Discovery Fund Capital Income Fund Main Street(R) Small Cap Fund Multiple Strategies Fund Small Cap Value Fund Disciplined Allocation Fund MidCap Fund Convertible Securities Fund Main Street(R) Opportunity Fund Specialty Growth Fund Real Asset Fund(R) Capital Appreciation Fund Gold & Special Minerals Fund Main Street(R) Growth & Income Fund Value Fund Quest Capital Value Fund Trinity Large Cap Growth Fund(1) Trinity Core Fund Trinity Value Fund ------------------------------------------------------------------------------------------------------- Income Taxable Municipal International Bond Fund California Municipal Fund(4) High Yield Fund New Jersey Municipal Fund(4) Champion Income Fund New York Municipal Fund(4) Strategic Income Fund Pennsylvania Municipal Fund(4) Bond Fund Municipal Bond Fund Senior Floating Rate Fund Intermediate Municipal Fund U.S. Government Trust Limited-Term Government Fund Capital Preservation Fund(2) Rochester Division Rochester National Municipals(3) Rochester Fund Municipals Limited Term New York Municipal Fund ------------------------------------------------------------------------------------------------------- Select Managers Stock Stock & Bond Mercury Advisors Focus Growth Fund QM Active Balanced Fund(2) Gartmore Millennium Growth Fund II(5) Jennison Growth Fund Salomon Brothers Capital Fund Mercury Advisors S&P 500(R)Index Fund(2) ------------------------------------------------------------------------------------------------------- Money Market(6) Money Market Fund Cash Reserves
1. Oppenheimer Trinity Growth Fund was reorganized into Oppenheimer Large Cap Growth Fund and was renamed Oppenheimer Trinity Large Cap Growth Fund effective 10/12/01. 2. Available only through qualified retirement plans. 3. The Fund's name was changed from "Oppenheimer Florida Municipal Fund" on 10/1/01. 4. Available to investors only in certain states. 5. The Fund's name was changed from "Oppenheimer Select Managers Gartmore Millennium Growth Fund" on 5/11/01. 6. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. For more complete information about any of the Oppenheimer funds, including charges, expenses and risks, ask for a prospectus from your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.525.7048 or visit the OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus carefully before you invest or send money. 36 | OPPENHEIMER VALUE FUND INFORMATION AND SERVICES As an Oppenheimer fund shareholder, you can benefit from special services designed to make investing simple. Whether it's automatic investment plans, timely market updates, or immediate account access, you can count on us whenever you need assistance.(1) So call us today, or visit our website -- we're here to help. -------------------------------------------------------------------------------- Internet 24-hr access to account information and transactions(2) www.oppenheimerfunds.com -------------------------------------------------------------------------------- General Information Mon-Fri 8am-9pm ET, Sat 10am-4pm ET 1.800.525.7048 -------------------------------------------------------------------------------- Telephone Transactions Mon-Fri 8am-9pm ET, Sat 10am-4pm ET 1.800.852.8457 -------------------------------------------------------------------------------- PhoneLink(2) 24-hr automated information and automated transactions 1.800.CALL OPP (1.800.225.5677) -------------------------------------------------------------------------------- Telecommunications Device for the Deaf (TDD) Mon-Fri 9am-6:30pm ET 1.800.843.4461 -------------------------------------------------------------------------------- Transfer and Shareholder Servicing Agent OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 -------------------------------------------------------------------------------- eDocs Direct Receive shareholder report and prospectus notifications for your funds via email. Sign up at www.oppenheimerfunds.com. -------------------------------------------------------------------------------- Ticker Symbols Class A: CGRWX Class B: CGRBX Class C: CGRCX Class N: CGRNX Class Y: CGRYX -------------------------------------------------------------------------------- 1. Automatic investment plans do not assure profit or protect against losses in declining markets. 2. At times the website or PhoneLink may be inaccessible or their transaction features may be unavailable. qwerRA0375.001.1001 December 30, 2001 [logo]OppenheimerFunds(R) Distributor, Inc.