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 811-04797
Oppenheimer Quest Capital Value Fund, Inc.
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: October 31
Date of reporting period: November 1, 2002 - October 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
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, 2003, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index. The Fund's portfolio manager is employed by its
sub-advisor, OpCap Advisors.
Management's Discussion of Fund Performance. Oppenheimer Quest Capital Value
Fund, Inc. outperformed the broad U.S. equity market, as measured by the S&P
500, during the one-year period ended October 31, 2003. We attribute the Fund's
strong results to our focus on undervalued companies that we believed were well
positioned to benefit from an improving economy. We carefully selected
businesses whose relatively low stock prices were in our opinion due more to the
state of the economy than to company- or industry-specific problems.
While this focus on quality paid off handsomely during the period, the Fund
did miss some of the markets run up, as it owned fewer of the lesser-quality,
higher beta issues that led the market rally. We did not believe that most of
them were worth the additional risk.
The largest contributors to the Fund's total return were industrial and
consumer discretionary corporations, including Diebold, Inc., Paccar, Inc., and
Omnicom Group, Inc. During the summer, Diebold, a manufacturer and servicer of
ATM and electronic voting machines, received the largest order for electronic
voting machines in its history. Also, the company benefited from the possibility
of a banking industry ATM upgrade, which was driven by new check imaging
legislation and would enable banks to enhance efficiency and reduce costs.
Paccar, maker of heavy trucks, saw large sales increases as fleet owners
initiated a round of replacement buying. Advertising conglomerate Omnicom, in
contrast, did well simply by meeting projected sales and revenues in the midst
of an advertising recession.
Offsetting those gains were declines for Electro Scientific Industries, Inc.,
and Time Warner, Inc., among others. Electro Scientific, a semiconductor capital
equipment manufacturer, was sold at a loss after the company delayed the
certification of its financial statements, a circumstance that caused us to lose
conviction in the company as a quality investment. As for Time Warner, we sold
our investment and redeployed the assets into areas more leveraged directly to
advertising rebound like Lamar Advertising Co.
Near the end of the period, we started to seek investment opportunities that
we believed could fare well in a moderate recovery where stock price gains do
not come so easily as in the past six months. Among the areas we viewed
positively were the consumer discretionary sector; we believe that many
discretionary products are now considered core expenditures, like fast food or
satellite TV, and to a lesser extent, casual dining. We've increased the Fund's
exposure to consumer goods especially where we would benefit when employment
levels rise.
5 | OPPENHEIMER QUEST CAPITAL VALUE FUND
FUND PERFORMANCE DISCUSSION
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, 2003. In the case of Class A (formerly Capital
shares) shares performance is measured over a 10-year period. In the case of
Class B and Class C, performance is measured from inception of those classes on
March 3, 1997. In the case of Class N shares, performance is measured from
inception of the Class on March 1, 2001. 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 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.
6 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Capital Value Fund, Inc. (Class A)
S&P 500 Index
[LINE CHART]
Value of S&P 500 Index
Investment Reinvested
Date In Fund Monthly
12/31/1993 $ 9,425 $10,000
03/31/1994 9,239 9,621
06/30/1994 9,355 9,662
09/30/1994 9,506 10,133
12/31/1994 9,132 10,131
03/31/1995 10,223 11,117
06/30/1995 11,345 12,176
09/30/1995 12,467 13,143
12/31/1995 12,256 13,934
03/31/1996 13,372 14,682
06/30/1996 14,024 15,340
09/30/1996 13,543 15,814
10/31/1996 1 14,095 16,250
01/31/1997 14,314 18,201
04/30/1997 13,515 18,641
07/31/1997 15,637 22,303
10/31/1997 16,145 21,466
01/31/1998 16,409 23,097
04/30/1998 18,704 26,295
07/31/1998 18,642 26,609
10/31/1998 18,289 26,191
01/31/1999 20,433 30,606
04/30/1999 20,739 32,035
07/31/1999 19,737 31,985
10/31/1999 19,837 32,913
01/31/2000 19,691 33,771
04/30/2000 21,953 35,278
07/31/2000 22,351 34,852
10/31/2000 23,929 34,913
01/31/2001 24,722 33,467
04/30/2001 24,217 30,704
07/31/2001 23,795 29,861
10/31/2001 21,557 26,224
01/31/2002 23,375 28,067
04/30/2002 23,754 26,830
07/31/2002 19,892 22,809
10/31/2002 20,071 22,265
01/31/2003 19,808 21,610
04/30/2003 20,902 23,260
07/31/2003 22,986 25,235
10/31/2003 24,954 26,893
Average Annual Total Returns of Class A Shares of the Fund at 10/31/03 2
1-Year 17.18% 5-Year 5.16% 10-Year 9.36%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Capital Value Fund, Inc. (Class B)
S&P 500 Index
[LINE CHART]
Value of S&P 500 Index
Investment Reinvested
Date In Fund Monthly
03/03/1997 $10,000 $10,000
04/30/1997 9,387 10,162
07/31/1997 10,842 12,158
10/31/1997 11,180 11,702
01/31/1998 11,344 12,591
04/30/1998 12,911 14,335
07/31/1998 12,844 14,506
10/31/1998 12,582 14,278
01/31/1999 14,034 16,685
04/30/1999 14,223 17,464
07/31/1999 13,517 17,436
10/31/1999 13,566 17,942
01/31/2000 13,455 18,410
04/30/2000 14,976 19,231
07/31/2000 15,229 19,000
10/31/2000 16,283 19,033
01/31/2001 16,801 18,244
04/30/2001 16,429 16,738
07/31/2001 16,115 16,278
10/31/2001 14,577 14,296
01/31/2002 15,782 15,300
04/30/2002 16,013 14,626
07/31/2002 13,390 12,434
10/31/2002 13,480 12,138
01/31/2003 13,278 11,780
04/30/2003 14,012 12,680
07/31/2003 15,409 13,757
10/31/2003 16,729 14,661
Average Annual Total Returns of Class B Shares of the Fund at 10/31/03 2
1-Year 18.33% 5-Year 5.50% Since Inception 8.03%
1. The Fund changed its fiscal year end from 12/31 to 10/31.
2. See Notes on page 9 for further details.
The performance information for the S&P 500 Index in the graphs begins on
12/31/93 for Class A, 2/28/97 for Class B and Class C and 2/28/01 for Class N
shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
7 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Capital Value Fund, Inc. (Class C)
S&P 500 Index
[LINE CHART]
Value of S&P 500 Index
Investment Reinvested
Date In Fund Monthly
03/03/1997 $10,000 $10,000
04/30/1997 9,390 10,162
07/31/1997 10,845 12,158
10/31/1997 11,182 11,702
01/31/1998 11,346 12,591
04/30/1998 12,912 14,335
07/31/1998 12,845 14,506
10/31/1998 12,579 14,278
01/31/1999 14,030 16,685
04/30/1999 14,218 17,464
07/31/1999 13,513 17,436
10/31/1999 13,562 17,942
01/31/2000 13,451 18,410
04/30/2000 14,975 19,231
07/31/2000 15,223 19,000
10/31/2000 16,281 19,033
01/31/2001 16,793 18,244
04/30/2001 16,429 16,738
07/31/2001 16,116 16,278
10/31/2001 14,572 14,296
01/31/2002 15,783 15,300
04/30/2002 16,014 14,626
07/31/2002 13,387 12,434
10/31/2002 13,476 12,138
01/31/2003 13,275 11,780
04/30/2003 13,982 12,680
07/31/2003 15,344 13,757
10/31/2003 16,624 14,661
Average Annual Total Returns of Class C Shares of the Fund at 10/31/03 2
1-Year 22.36% 5-Year 5.73% Since Inception 7.93%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Quest Capital Value Fund, Inc. (Class N)
S&P 500 Index
[LINE CHART]
Value of S&P 500 Index
Investment Reinvested
Date In Fund Monthly
03/01/2001 $10,000 $10,000
04/30/2001 10,103 10,094
07/31/2001 9,914 9,817
10/31/2001 8,981 8,621
01/31/2002 9,739 9,227
04/30/2002 9,884 8,821
07/31/2002 8,277 7,499
10/31/2002 8,343 7,320
01/31/2003 8,233 7,104
04/30/2003 8,677 7,647
07/31/2003 9,537 8,296
10/31/2003 10,345 8,841
Average Annual Total Returns of Class N Shares of the Fund at 10/31/03 2
1-Year 23.00% Since Inception 1.28%
1. The Fund changed its fiscal year end from 12/31 to 10/31.
2. See Notes on page 9 for further details.
The performance information for the S&P 500 Index in the graphs begins on
12/31/93 for Class A, 2/28/97 for Class B and Class C and 2/28/01 for Class N
shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
8 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
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 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. 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.CALL OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.
OppenheimerFunds, Inc. became the Fund's advisor on 2/28/97. The Fund's
Subadvisor is OpCap Advisors (the Fund's advisor until 2/28/97). The Fund
commenced operations on 2/13/87 as a closed-end investment company, formerly
named Quest for Value Dual Purpose Fund, Inc., with a dual purpose structure and
two classes of shares, Income shares and Capital shares. Under the prior
dual-purpose structure, Capital shares were entitled to all gains and losses on
all Fund assets and no expenses were allocated to such shares; the Income shares
bore all of the Fund's operating expenses. On 1/31/97, the Fund redeemed its
Income shares, which are no longer outstanding, and its dual-purpose structure
terminated. On 3/3/97, the Fund converted from a closed-end fund to an open-end
fund, and its outstanding Capital shares were designated as Class A shares now
bearing their allocable share of the Fund's expenses.
Class A (formerly Capital) shares of the Fund were first publicly offered on
2/13/87. Unless otherwise noted, Class A shares total returns reflect the
historical performance of the Class A shares of the Fund (formerly Capital
shares) as adjusted for the fees and expenses of Class A shares in effect as of
3/3/97 (without giving effect to any fee waivers). Unless otherwise noted,
average annual total returns for Class A shares includes the current 5.75%
maximum initial sales charge. Class A shares are subject to a maximum annual
0.25% asset-based sales charge. There is a voluntary waiver of a portion of the
Class A asset-based sales charge as described in the Prospectus.
9 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES
Class B shares of the Fund were first publicly offered on 3/3/97. 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 a maximum annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 3/3/97. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the one-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
Class N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the one-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF INVESTMENTS October 31, 2003
Market Value
Shares See Note 1
- -------------------------------------------------------------
Common Stocks--92.5%
- -------------------------------------------------------------
Consumer Discretionary--16.5%
- -------------------------------------------------------------
Automobiles--1.7%
Winnebago
Industries, Inc. 84,900 $ 4,949,670
- -------------------------------------------------------------
Hotels, Restaurants
& Leisure--1.5%
Yum! Brands, Inc. 1 129,500 4,421,130
- -------------------------------------------------------------
Media--7.8%
Lamar Advertising Co.,
Cl. A 1 327,900 9,935,370
- -------------------------------------------------------------
Liberty Media
Corp., Cl. A 1 217,000 2,189,530
- -------------------------------------------------------------
Omnicom
Group, Inc. 86,121 6,872,456
- -------------------------------------------------------------
WPP Group plc,
Sponsored ADR 70,300 3,372,994
---------------
22,370,350
- -------------------------------------------------------------
Multiline Retail--2.5%
Dollar
General Corp. 193,600 4,350,192
- -------------------------------------------------------------
Target Corp. 68,300 2,714,242
---------------
7,064,434
- -------------------------------------------------------------
Specialty Retail--3.0%
Office Depot, Inc. 1 173,000 2,582,890
- -------------------------------------------------------------
Ross Stores, Inc. 119,200 5,961,192
---------------
8,544,082
- -------------------------------------------------------------
Consumer Staples--2.5%
- -------------------------------------------------------------
Household Products--2.5%
Dial Corp. (The) 295,100 7,082,400
- -------------------------------------------------------------
Energy--6.3%
- -------------------------------------------------------------
Energy Equipment & Services--3.2%
GlobalSantaFe
Corp. 149,300 3,360,743
- -------------------------------------------------------------
Nabors
Industries Ltd. 1 36,400 1,375,920
- -------------------------------------------------------------
National-Oilwell, Inc. 1 232,700 4,437,589
---------------
9,174,252
- -------------------------------------------------------------
Oil & Gas--3.1%
Anadarko
Petroleum Corp. 141,100 6,154,782
- -------------------------------------------------------------
BP plc, ADR 62,000 2,627,560
---------------
8,782,342
Market Value
Shares See Note 1
- -------------------------------------------------------------
Financials--17.3%
- -------------------------------------------------------------
Commercial Banks--5.7%
Bank One Corp. 68,500 $ 2,907,825
- -------------------------------------------------------------
M&T Bank Corp. 45,300 4,253,670
- -------------------------------------------------------------
SouthTrust Corp. 183,100 5,831,735
- -------------------------------------------------------------
Trustmark Corp. 119,800 3,410,706
---------------
16,403,936
- -------------------------------------------------------------
Diversified Financial Services--2.2%
Citigroup, Inc. 129,800 6,152,520
- -------------------------------------------------------------
Insurance--6.7%
American International
Group, Inc. 62,000 3,771,460
- -------------------------------------------------------------
Nationwide
Financial
Services, Inc., Cl. A 198,500 6,743,045
- -------------------------------------------------------------
Partnerre
Holdings Ltd. 57,000 3,093,390
- -------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 89,000 2,557,860
- -------------------------------------------------------------
XL Capital
Ltd., Cl. A 42,200 2,932,900
---------------
19,098,655
- -------------------------------------------------------------
Thrifts & Mortgage Finance--2.7%
Freddie Mac 139,800 7,846,974
- -------------------------------------------------------------
Health Care--9.2%
- -------------------------------------------------------------
Biotechnology--1.8%
Charles River
Laboratories
International, Inc. 1 163,000 5,255,120
- -------------------------------------------------------------
Health Care Equipment & Supplies--3.1%
Millipore Corp. 1 202,032 8,859,103
- -------------------------------------------------------------
Health Care Providers & Services--4.3%
LifePoint
Hospitals, Inc. 1 69,100 1,776,561
- -------------------------------------------------------------
Omnicare, Inc. 82,600 3,166,884
- -------------------------------------------------------------
Pharmaceutical Product
Development, Inc. 1 167,714 5,043,160
- -------------------------------------------------------------
Triad
Hospitals, Inc. 1 77,600 2,384,648
---------------
12,371,253
- -------------------------------------------------------------
Industrials--28.5%
- -------------------------------------------------------------
Aerospace & Defense--4.7%
Alliant
Techsystems, Inc. 1 131,126 6,787,082
11 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
- -------------------------------------------------------------
Aerospace & Defense Continued
General
Dynamics Corp. 26,500 $ 2,218,050
- -------------------------------------------------------------
Rockwell
Collins, Inc. 157,400 4,320,630
---------------
13,325,762
- -------------------------------------------------------------
Commercial Services & Supplies--4.0%
Aramark
Corp., Cl. B 1 433,200 11,575,104
- -------------------------------------------------------------
Electrical Equipment--3.0%
AMETEK, Inc. 66,700 3,138,235
- -------------------------------------------------------------
Roper
Industries, Inc. 112,000 5,535,040
---------------
8,673,275
- -------------------------------------------------------------
Industrial Conglomerates--1.9%
General Electric Co. 185,100 5,369,751
- -------------------------------------------------------------
Machinery--9.2%
Actuant
Corp., Cl. A 1 97,600 3,146,624
- -------------------------------------------------------------
Eaton Corp. 75,300 7,548,072
- -------------------------------------------------------------
Navistar
International Corp. 1 80,800 3,266,744
- -------------------------------------------------------------
Oshkosh
Truck Corp. 159,400 7,305,302
- -------------------------------------------------------------
Paccar, Inc. 65,800 5,195,568
---------------
26,462,310
- -------------------------------------------------------------
Road & Rail--5.7%
Canadian National
Railway Co. 172,700 10,396,540
- -------------------------------------------------------------
Pacer
International, Inc. 1 280,300 5,779,786
---------------
16,176,326
- -------------------------------------------------------------
Information Technology--9.2%
- -------------------------------------------------------------
Electronic Equipment & Instruments--8.0%
Arrow
Electronics, Inc. 1 100,000 2,135,000
- -------------------------------------------------------------
Diebold, Inc. 135,800 7,748,748
- -------------------------------------------------------------
Jabil Circuit, Inc. 1 60,200 1,676,570
- -------------------------------------------------------------
Mettler-Toledo
International, Inc. 1 177,500 6,805,350
- -------------------------------------------------------------
Waters Corp. 1 143,538 4,511,399
---------------
22,877,067
Market Value
Shares See Note 1
- -------------------------------------------------------------
IT Services--1.2%
Certegy, Inc. 104,000 $3,500,640
- -------------------------------------------------------------
Utilities--3.0%
- -------------------------------------------------------------
Electric Utilities--3.0%
Cinergy Corp. 151,000 5,482,810
- -------------------------------------------------------------
Exelon Corp. 49,200 3,121,740
---------------
8,604,550
---------------
Total Common Stocks
(Cost $220,355,234) 264,941,006
- -------------------------------------------------------------
Preferred Stocks--0.5%
EIX Trust II, 8.60%
Cum. Quarterly
Income Preferred
Securities, Series B,
Non-Vtg. 1
(Cost $1,415,409) 47,000 1,459,350
Principal
Amount
- -------------------------------------------------------------
Short-Term Notes--7.0%
American Express
Credit Corp.,
1.02%, 11/12/03 $ 4,000,000 3,998,753
- -------------------------------------------------------------
Federal Home
Loan Bank:
0.97%, 12/2/03 4,000,000 3,996,659
1.09%, 11/7/03 4,000,000 3,999,347
- -------------------------------------------------------------
Student Loan
Marketing Assn.,
0.94%, 11/3/03 8,041,000 8,040,580
---------------
Total Short-Term
Notes (Cost $20,035,339) 20,035,339
- -------------------------------------------------------------
Total Investments,
at Value
(Cost $241,805,982) 100.0% 286,435,695
- -------------------------------------------------------------
Liabilities in Excess
of Other Assets (0.0) (114,835)
---------------------------
Net Assets 100.0% $ 286,320,860
===========================
Footnote to Statement of Investments
1. Non-income producing security.
See accompanying Notes to Financial Statements.
12 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES October 31, 2003
- --------------------------------------------------------------------------
Assets
Investments, at value (cost $241,805,982)--
see accompanying statement $ 286,435,695
- --------------------------------------------------------------------------
Cash 60,818
- --------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 341,993
Interest and dividends 178,097
Other 9,719
--------------
Total assets 287,026,322
- --------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Shares of capital stock redeemed 475,869
Transfer and shareholder servicing agent fees 61,150
Distribution and service plan fees 58,746
Shareholder reports 51,094
Directors' compensation 24,556
Other 34,047
--------------
Total liabilities 705,462
- --------------------------------------------------------------------------
Net Assets $286,320,860
==============
- --------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of capital stock $ 1,230
- --------------------------------------------------------------------------
Additional paid-in capital 239,661,840
- --------------------------------------------------------------------------
Accumulated net investment loss (23,341)
- --------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 2,051,418
- --------------------------------------------------------------------------
Net unrealized appreciation on investments 44,629,713
--------------
Net Assets $ 286,320,860
==============
13 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$193,954,830 and 8,181,349 shares of capital stock outstanding) $23.71
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $25.16
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$55,448,722 and 2,485,081 shares of capital stock outstanding) $22.31
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$30,509,708 and 1,365,866 shares of capital stock outstanding) $22.34
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $6,407,600
and 272,017 shares of capital stock outstanding) $23.56
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF OPERATIONS For the Year Ended October 31, 2003
- -------------------------------------------------------------------------
Investment Income
Dividends (net of foreign withholding taxes of $29,795) $ 2,570,764
- -------------------------------------------------------------------------
Interest 125,376
------------
Total investment income 2,696,140
- -------------------------------------------------------------------------
Expenses
Management fees 2,276,055
- -------------------------------------------------------------------------
Distribution and service plan fees:
Class A 431,506
Class B 467,475
Class C 208,636
Class N 21,044
- -------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 471,112
Class B 192,345
Class C 86,691
Class N 18,885
- -------------------------------------------------------------------------
Shareholder reports 105,696
- -------------------------------------------------------------------------
Directors' compensation 23,055
- -------------------------------------------------------------------------
Custodian fees and expenses 4,070
- -------------------------------------------------------------------------
Other 19,560
------------
Total expenses 4,326,130
Less reduction to custodian expenses (469)
Less voluntary waiver of transfer and
shareholder servicing agent fees--Class A (1,987)
Less voluntary waiver of transfer and
shareholder servicing agent fees--Class B (33,933)
Less voluntary waiver of transfer and
shareholder servicing agent fees--Class C (13,965)
Less voluntary waiver of transfer and
shareholder servicing agent fees--Class N (4,377)
------------
Net expenses 4,271,399
- -------------------------------------------------------------------------
Net Investment Loss (1,575,259)
- -------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain on investments 8,272,859
- -------------------------------------------------------------------------
Net change in unrealized appreciation on investments 46,887,264
- -------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $53,584,864
=============
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended October 31, 2003 2002
- --------------------------------------------------------------------------------
Operations
Net investment loss $ (1,575,259) $ (1,768,281)
- --------------------------------------------------------------------------------
Net realized gain (loss) 8,272,859 (4,187,269)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 46,887,264 (14,161,865)
---------------------------
Net increase (decrease) in net assets resulting
from operations 53,584,864 (20,117,415)
- --------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Distributions from net realized gain:
Class A -- (3,391,280)
Class B -- (804,584)
Class C -- (259,169)
Class N -- (6,440)
- --------------------------------------------------------------------------------
Capital Stock Transactions
Net increase in net assets resulting from
capital stock transactions:
Class A 6,104,178 12,204,180
Class B 3,216,603 13,511,982
Class C 8,915,736 8,834,017
Class N 2,367,129 3,077,772
- --------------------------------------------------------------------------------
Net Assets
Total increase 74,188,510 13,049,063
- --------------------------------------------------------------------------------
Beginning of period 212,132,350 199,083,287
---------------------------
End of period [including accumulated net investment
loss of $23,341 and $22,114, respectively] $286,320,860 $212,132,350
===========================
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Year Ended October 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $19.07 $20.91 $33.65 $33.66 $32.11
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.09) (.13) (.11) (.25) (.06)
Net realized and unrealized gain (loss) 4.73 (1.25) (2.59) 6.08 2.70
-------------------------------------------------------
Total from investment operations 4.64 (1.38) (2.70) 5.83 2.64
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- (.04)
Dividends in excess of net investment income -- -- -- -- -- 1
Distributions from net realized gain -- (.46) (10.04) (5.84) (1.05)
--------------------------------------------------------
Total dividends and/or
distributions to shareholders -- (.46) (10.04) (5.84) (1.09)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.71 $19.07 $20.91 $33.65 $33.66
========================================================
- ---------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 24.33% (6.90)% (9.91)% 20.63% 8.47%
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $193,955 $150,161 $154,346 $177,876 $224,995
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $165,906 $164,479 $161,187 $181,216 $256,450
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.43)% (0.61)% (0.44)% (0.73)% (0.17)%
Total expenses 1.56% 1.71% 1.67% 1.73% 1.71%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 4,5 N/A 4,5 N/A 4 N/A 4 1.58%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 75% 80% 77% 79%
1. Less than $0.005 per share.
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.
17 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FINANCIAL HIGHLIGHTS Continued
Class B Year Ended October 31, 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $18.09 $19.99 $ 32.77 $33.07 $31.71
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.22) (.19) .05 (.34) (.19)
Net realized and unrealized gain (loss) 4.44 (1.25) (2.79) 5.88 2.60
---------------------------------------------------------
Total from investment operations 4.22 (1.44) (2.74) 5.54 2.41
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- --
Dividends in excess of net investment income -- -- -- -- -- 1
Distributions from net realized gain -- (.46) (10.04) (5.84) (1.05)
---------------------------------------------------------
Total dividends and/or
distributions to shareholders -- (.46) (10.04) (5.84) (1.05)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.31 $18.09 $ 19.99 $32.77 $33.07
=========================================================
- -----------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 23.33% (7.53)% (10.48)% 20.02% 7.83%
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $55,449 $42,010 $34,278 $17,429 $15,634
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $46,785 $42,900 $27,144 $15,719 $14,112
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.23)% (1.30)% (1.13)% (1.26)% (0.80)%
Total expenses 2.43% 2.41% 2.26% 2.27% 2.27%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.36% N/A 4,5 N/A 4 N/A 4 2.19%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 75% 80% 77% 79%
1. Less than $0.005 per share.
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.
18 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Class C Year Ended October 31, 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $18.11 $20.01 $ 32.80 $33.09 $31.73
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.14) (.13) .11 (.38) (.17)
Net realized and unrealized gain (loss) 4.37 (1.31) (2.86) 5.93 2.58
Total from investment operations 4.23 (1.44) (2.75) 5.55 2.41
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- --
Dividends in excess of
net investment income -- -- -- -- -- 1
Distributions from net realized gain -- (.46) (10.04) (5.84) (1.05)
---------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (.46) (10.04) (5.84) (1.05)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.34 $18.11 $ 20.01 $32.80 $33.09
=========================================================
- -----------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 23.36% (7.52)% (10.50)% 20.05% 7.82%
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $30,510 $16,979 $10,272 $5,053 $4,632
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $20,901 $15,323 $ 7,898 $4,969 $4,117
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.24)% (1.30)% (1.13)% (1.25)% (0.80)%
Total expenses 2.43% 2.41% 2.26% 2.27% 2.26%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.36% N/A 4,5 N/A 4 N/A 4 2.18%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 75% 80% 77% 79%
1. Less than $0.005 per share.
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.
19 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FINANCIAL HIGHLIGHTS Continued
Class N Year Ended October 31, 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $19.00 $20.88 $23.25
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.15) (.17) (.03)
Net realized and unrealized gain (loss) 4.71 (1.25) (2.34)
----------------------------------
Total from investment operations 4.56 (1.42) (2.37)
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- --
Dividends in excess of net investment income -- -- --
Distributions from net realized gain -- (.46) --
----------------------------------
Total dividends and/or distributions
to shareholders -- (.46) --
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.56 $19.00 $20.88
=================================
- -----------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 24.00% (7.10)% (10.19)%
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,408 $2,983 $187
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,218 $1,475 $ 38
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.75)% (0.88)% (0.96)%
Total expenses 1.97% 1.87% 1.75%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.87% N/A 4,5 N/A 4
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 75% 80%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Assumes an 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. 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.
20 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Quest Capital Value Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Manager has entered into a sub-advisory agreement with OpCap
Advisors.
The Fund offers Class A, Class B, Class C and Class N 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. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C and N
have separate distribution and/or service plans. 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. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities (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 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 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.
21 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax 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
Undistributed on Cost of Securities
Net Undistributed Accumulated and Other Investments
Investment Long-Term Loss for Federal Income
Income Gain Carryforward 1 Tax Purposes
---------------------------------------------------------------------------------------
$1,667,786 $383,631 $-- $44,629,713
1. During the fiscal year October 31, 2003, the Fund utilized $3,944,756 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year October 31, 2002, the Fund did not utilize any capital
loss carryforwards.
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, 2003. Net assets
of the Fund were unaffected by the reclassifications.
From From Net
Ordinary Capital Tax Return Investment
Loss Gain 2 of Capital Loss
---------------------------------------------------------------------------------------
$1,574,032 $1,842,983 $-- $--
2. $268,951, including $50,288 of long-term capital gain, was distributed in
connection with Fund share redemptions.
The tax character of distributions paid during the years ended October 31, 2003
and October 31, 2002 was as follows:
Year Ended Year Ended
October 31, 2003 October 31, 2002
- ---------------------------------------------------------------------------------------------------
Distributions paid from:
Long-term capital gain $-- $4,461,473
22 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
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, 2003 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 and
other investments $241,805,982
============
Gross unrealized appreciation $ 47,110,251
Gross unrealized depreciation (2,480,538
------------
Net unrealized appreciation $ 44,629,713
============
- --------------------------------------------------------------------------------
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, 2003, the Fund's projected benefit obligations were increased by
$1,786 and payments of $563 were made to retired directors, resulting in an
accumulated liability of $23,339 as of October 31, 2003.
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. Under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or are invested in other
Oppenheimer funds selected by the Director. 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.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
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.
23 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
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.
- --------------------------------------------------------------------------------
2. Shares of Capital Stock
The Fund has authorized one billion shares of $0.0001 par value capital stock
of each class. Transactions in shares of capital stock were as follows:
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------
Class A
Sold 2,110,627 $42,829,597 2,235,230 $47,891,615
Dividends and/or
distributions reinvested -- -- 104,423 2,298,369
Redeemed (1,805,326) (36,725,419) (1,845,506) (37,985,804)
---------------------------------------------------------------
Net increase 305,301 $ 6,104,178 494,147 $12,204,180
===============================================================
- ----------------------------------------------------------------------------------------------
Class B
Sold 849,036 $16,481,174 1,385,300 $28,277,580
Dividends and/or
distributions reinvested -- -- 34,608 726,779
Redeemed (686,631) (13,264,571) (812,006) (15,492,377)
---------------------------------------------------------------
Net increase 162,405 $ 3,216,603 607,902 $13,511,982
===============================================================
- ----------------------------------------------------------------------------------------------
Class C
Sold 902,743 $18,309,043 691,805 $14,002,918
Dividends and/or
distributions reinvested -- -- 10,995 231,241
Redeemed (474,437) (9,393,307) (278,450) (5,400,142)
---------------------------------------------------------------
Net increase 428,306 $ 8,915,736 424,350 $ 8,834,017
===============================================================
- ----------------------------------------------------------------------------------------------
Class N
Sold 176,429 $ 3,643,164 163,175 $ 3,353,343
Dividends and/or
distributions reinvested -- -- 292 6,420
Redeemed (61,386) (1,276,035) (15,463) (281,991)
---------------------------------------------------------------
Net increase 115,043 $ 2,367,129 148,004 $ 3,077,772
===============================================================
- --------------------------------------------------------------------------------
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, 2003, were
$186,385,225 and $169,280,508, respectively.
24 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund. Effective June 15, 2003, the
agreement provides for a fee at an annual rate of 0.90% of the first $400
million of average annual net assets of the Fund, 0.85% of the next $600
million, 0.80% of the next $2 billion, 0.70% of the next $1 billion, 0.65% of
the next $1 billion and 0.60% of average annual net assets in excess of $5
billion. Prior to June 15, 2003, the annual advisory fee rate was 1.00% of the
first $400 million of average annual net assets of the Fund, 0.90% of the next
$400 million and 0.85% of average annual net assets in excess of $800 million.
- --------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager retains OpCap Advisors (the Sub-Advisor) to
provide the day-to-day portfolio management of the Fund. For the year ended
October 31, 2003, the Manager paid $858,498 to the Sub-Advisor for its services
to the Fund.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended October 31, 2003, the Fund
paid $704,495 to OFS for services to the Fund.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (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 Concessions Concessions Concessions Concessions
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, 2003 $380,381 $111,449 $7,733 $310,827 $65,110 $27,337
1. The Distributor advances concession 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, 2003 $1,203 $119,717 $7,691 $9,966
- --------------------------------------------------------------------------------
Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the plan the Fund paid
an asset-based sales charge to the Distributor at an annual rate equal to 0.15%
of average annual net assets
25 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
representing Class A shares purchased before September 1, 1993 and 0.10% of
average annual net assets representing Class A shares purchased on or before
December 31, 2002. Beginning January 1, 2003, the Board of Directors set the
annual rate at zero. The Fund also pays a service fee to the Distributor of
0.25% of the average annual net assets of Class A shares. For the year ended
October 31, 2003, expense under the Class A plan totaled $431,506, all of which
were paid by the Distributor to recipients, which included $3,603 retained by
the Distributor and $13,443 which was paid to an affiliate of the Manager.
- --------------------------------------------------------------------------------
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. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Distribution fees paid to the Distributor for the year ended October 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Uncompensated
Uncompensated Expenses as %
Total Expenses Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- ---------------------------------------------------------------------------------
Class B Plan $467,475 $351,691 $1,247,483 2.25%
Class C Plan 208,636 73,934 325,053 1.07
Class N Plan 21,044 17,801 115,421 1.80
- --------------------------------------------------------------------------------
5. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Directors,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at October 31, 2003.
26 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Oppenheimer Quest Capital Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Quest Capital Value Fund, Inc., including the statement of
investments, as of October 31, 2003, 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 four 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. The financial highlights for the year
ended October 31, 1999, were audited by other auditors whose report dated
November 19, 1999, expressed an unqualified opinion on this information.
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, 2003, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Quest Capital Value Fund, Inc. as of October 31, 2003, 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 four 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, 2003
27 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended October 31,
2003 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.
$50,288 has been designated as a "capital gain distribution" for federal
income tax purposes during the current year. Whether received in stock or in
cash, the capital gain distribution should be treated by shareholders as a gain
from the sale of capital assets held for more than one year (long-term capital
gains).
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended October 31, 2003 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.
$2,113,391 of the Fund's fiscal year taxable income may be eligible for the
lower individual income tax rates. In early 2004, 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.
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES 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 1.800.225.5677, (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 will be 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 first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
28 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited
Name, Position(s) Held Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships
with Fund, Length of Held by Director; Number of Portfolios in Fund Complex Currently Overseen by
Service, Age Director
INDEPENDENT DIRECTORS The address of each Director in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Director serves for an indefinite term, until
his or her resignation, retirement, death or removal.
Thomas W. Courtney, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Partner of Trivest Venture Fund (private venture capital fund); former President
Board of Directors, of Investment Counseling Federated Investors, Inc.; Trustee of the following
Director (since 1996) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free
Age: 70 Trust of Arizona and Hawaiian Tax Free Trust. Oversees 11 portfolios in the
OppenheimerFunds complex.
Paul Y. Clinton, Principal of Clinton Management Associates, a financial and venture capital
Director (since 1996) consulting firm; Trustee of the following open-end investment companies: Trustee
Age: 71 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Formerly: Director, External Affairs,
Kravco Corporation, a national real estate owner and property management
corporation; President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture capital
partnership; a general partner of Essex Limited Partnership, an investment
partnership; President of Geneve Corp., a venture capital fund; Chairman of
Woodland Capital Corp., a small business investment company; and Vice Presid
of W.R. Grace & Co. Oversees 11 portfolios in the OppenheimerFunds complex.
Robert G. Galli, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the
Director (since 1998) OppenheimerFunds complex.
Age: 70
Lacy B. Herrmann, Chairman and Chief Executive Officer of Aquila Management Corporation, the
Director (since 1996) sponsoring organization and manager, administrator and/or sub-adviser to the
Age: 74 following open-end investment companies, and Chairman of the Board of Trustees
and President of each: Churchill Cash Reserves Trust, Aquila-Cascadia Equity
Fund, Cash Assets Trust, Prime Cash Fund, Narragansett Insured Tax-Free Inco
Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free
of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian
Tax-Free Trust, and Aquila Rocky Mountain Equity Fund and PIMCO ADVISORS VIT
Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc., distributor of the above funds; President and Chairman of
the Board of Trustees of Capital Cash Management Trust ("CCMT"), and an Officer
and Trustee/Director of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President and
Director of InCap Management Corporation, formerly sub-adviser and administrator
of Prime Cash Fund and Short Term Asset Reserves; Trustee Emeritus of Brown
University. Oversees 11 portfolios in the OppenheimerFunds complex.
29 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited / Continued
Brian Wruble, Special Limited Partner (since January 1999) of Odyssey Investment Partners, LLC
Director (since 2001) (private equity investment); General Partner (since September 1996) of Odyssey
Age: 60 Partners, L.P. (hedge fund in distribution since 1/1/97); Board of Governing
Trustees (since August 1990) of The Jackson Laboratory (non-profit); Trustee
(since May 1992) of Institute for Advanced Study (educational institute);
formerly Trustee (May 2000 - 2002) of Research Foundation of AIMR (investment
research, non-profit); Governor, Jerome Levy Economics Institute of Bard College
(economics research) (August 1990-September 2001); Director of Ray & Berendtson,
Inc. (executive search firm) (May 2000-April 2002). Oversees 10 portfolios in
the OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Murphy
and Zack, Two World Financial Center, 225 Liberty St., New York, NY 10281-1008,
for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer
serves for an annual term or until his or her earlier resignation, death or
removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President (since 2001) (since September 2000) of the Manager; President and a director or trustee of
Age: 54 other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer 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 investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and Centennial Asset Management
Corporation (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.; a director (since November 2001) of Trinity Investment Management Corp.
and Tremont Advisers, Inc. (investment advisory affiliates of the Manager);
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 David
L. Babson & Company, Inc.); 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 72 portfolios as
Trustee/Officer and 10 portfolios as Officer in the OppenheimerFunds complex.
30 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 44 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management,
Inc. (since November 2000) (offshore fund management subsidiaries of the
Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 82 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Secretary (since 2001) of the Manager; General Counsel and a director (since November 2001) of
Age: 55 OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly 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); OppenheimerFunds International Ltd. and OppenheimerFunds
plc (October 1997-November 2001). An officer of 82 port- folios 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.
31 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Directors of the Fund has determined that the Fund does not have an
audit committee financial expert serving on its Audit Committee. In this regard,
no member of the Audit Committee was identified as having all of the technical
attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to qualify as
an "audit committee financial expert," whether through the type of specialized
education or experience described in that Instruction. The Board has concluded
that while the members of the Audit Committee collectively have the necessary
attributes and experience required to serve effectively as an Audit Committee,
no single member possesses all of the required technical attributes through the
particular methods of education or experience set forth in the Instructions to
be designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. 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, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure 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 or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)