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: October 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Diversified Financial Services 13.9%
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Media 7.8
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Health Care Equipment & Supplies 7.5
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Insurance 6.8
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Commercial Banks 6.8
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Machinery 6.7
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Health Care Providers & Services 6.0
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Specialty Retail 4.6
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Hotels, Restaurants & Leisure 4.5
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Oil & Gas 4.2
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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JPMorgan Chase & Co. 3.7%
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Citigroup, Inc. 3.6
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Zions Bancorp 2.9
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Omnicom Group, Inc. 2.9
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Thermo Electron Corp. 2.7
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DaVita, Inc. 2.6
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TJX Cos., Inc. (The) 2.6
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Cinergy Corp. 2.5
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Eaton Corp. 2.5
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Laboratory Corp. of America Holdings 2.5
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
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7 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
TOP HOLDINGS AND ALLOCATIONS
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Financials 31.8%
Diversified Financial Services 14.8
Insurance 7.3
Commercial Banks 7.2
Thrifts & Mortgage Finance 2.2
Capital Markets 0.3
Consumer Discretionary 19.9
Health Care 14.3
Industrials 13.7
Information Technology 7.5
Energy 6.9
Utilities 3.7
Materials 1.1
Telecommunication Services 1.1
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2005, and are based on the total market value of common stocks.
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8 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Quest Capital Value
Fund, Inc.'s Class A shares without sales charge outperformed the broad U.S.
equity market during the one-year period ended October 31, 2005. We attribute
the Fund's return to our bottom-up approach to stock selection. Strong gains for
individual industrial and technology holdings and one energy stock (National
Oilwell Varco, Inc., a supplier of equipment and components used in oil and gas
drilling and production) more than offset the negative effect of being
underweight in the S&P 500's best-performing sectors (energy and utilities).
As always, we selected stocks based on a combination of the companies'
merits, attractive purchase prices and our views of how companies' specific
businesses would be affected by the macro environment - in this case, a strong
economy, relatively stable earnings growth, and upward pressure on inflation and
interest rates. We found few financial or utility stocks that met our criteria.
Financial services were generally too susceptible to rising interest rates; and
utilities, too vulnerable to interest rates and too highly priced.
Our criteria led us more often to industrial, healthcare, technology and
consumer companies, including the Fund's two largest contributors to
performance: Oshkosh Truck Corp. and Pacer International, Inc. Oshkosh designs
and builds severe-duty vehicles for use by the military, emergency services,
airports and municipalities. Its business is growing along with the U.S.
economy, the expansion of U.S. cities, and the need for equipment to fight the
war on terrorism at home and abroad. Pacer, a rail-freight forwarding operation,
has benefited from a shortage of rail capacity that allowed it to raise prices
for some customers.
Another major contributor was Alliant Techsystems. Alliant designs, builds
and supports communications and computing systems. We purchased the stock after
concerns about the future of one of Alliant's most high-profile clients (the
U.S. space shuttle program) triggered a sell-off. Our analysis concluded that
the stock's decline was a matter of market perception, not fundamentals. Whether
the shuttle program was reinitiated or not, the impact on Alliant's finances
would be negligible, since other areas of its business (e.g., ammunition and
precision weaponry programs) showed hearty growth. After the shuttle program was
relaunched, market perception improved dramatically, and we sold our shares at a
profit.
9 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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We also sold our position in Dycom Industries, which provides construction
and maintenance services to telecommunications and utilities companies. We were
disappointed with management's execution of a major contract. Another poorly
performing stock was Beckman Coulter, a leading manufacturer of biomedical
testing instrument systems, tests and supplies. The company leases its systems
and, due to an accounting change, now must recognize the associated revenues
over a longer time period. We believe the market overreacted to this development
and maintained our position in this stock.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until October 31, 2005. In the case of Class A shares, performance is
measured over a ten-fiscal-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. Past performance cannot guarantee
future results.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of income but does not consider the
effect of transaction costs, and none of the data in the graphs shows the effect
of taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the investments in the index.
10 | 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.(SM) (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Capital Value
Fund, Inc.(SM) (Class A) S&P 500 Index
12/31/1994 9,425 10,000
03/31/1995 10,551 10,973
06/30/1995 11,709 12,019
09/30/1995 12,867 12,973
12/31/1995 12,649 13,753
03/31/1996 13,800 14,491
06/30/1996 14,473 15,141
09/30/1996 13,977 15,609
10/31/1996 1 14,547 16,039
01/31/1997 14,773 17,965
04/30/1997 13,949 18,399
07/31/1997 16,138 22,014
10/31/1997 16,662 21,188
01/31/1998 16,935 22,798
04/30/1998 19,304 25,955
07/31/1998 19,239 26,264
10/31/1998 18,875 25,852
01/31/1999 21,088 30,209
04/30/1999 21,404 31,620
07/31/1999 20,370 31,570
10/31/1999 20,473 32,486
01/31/2000 20,322 33,333
04/30/2000 22,656 34,820
07/31/2000 23,067 34,400
10/31/2000 24,697 34,461
01/31/2001 25,515 33,033
04/30/2001 24,993 30,306
07/31/2001 24,557 29,473
10/31/2001 22,248 25,884
01/31/2002 24,125 27,703
04/30/2002 24,516 26,482
07/31/2002 20,529 22,513
10/31/2002 20,714 21,976
01/31/2003 20,442 21,330
04/30/2003 21,572 22,959
07/31/2003 23,723 24,908
10/31/2003 25,754 26,544
01/31/2004 27,960 28,698
04/30/2004 27,796 28,209
07/31/2004 28,452 28,186
10/31/2004 29,415 29,043
01/31/2005 31,494 30,484
04/30/2005 31,187 29,995
07/31/2005 33,125 32,145
10/31/2005 32,298 31,574
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 3.49% 5-Year 4.27% 10-Year 9.54%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
SINCE-INCEPTION RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION.
1. The Fund changed its fiscal year end from 12/31 to 10/31.
11 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Capital Value
Fund, Inc.(SM) (Class B) S&P 500 Index
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
01/31/2004 18,162 15,850
04/30/2004 18,055 15,580
07/31/2004 18,481 15,567
10/31/2004 19,107 16,040
01/31/2005 20,457 16,836
04/30/2005 20,258 16,566
07/31/2005 21,516 17,754
10/31/2005 20,979 17,438
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 3.81% 5-Year 4.44% Since Inception (3/3/97) 8.93%
12 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Capital Value
Fund, Inc.(SM) (Class C) S&P 500 Index
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
01/31/2004 18,008 15,850
04/30/2004 17,866 15,580
07/31/2004 18,241 15,567
10/31/2004 18,818 16,040
01/31/2005 20,099 16,836
04/30/2005 19,862 16,566
07/31/2005 21,043 17,754
10/31/2005 20,473 17,438
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 7.80% 5-Year 4.69% Since Inception (3/3/97) 8.63%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
SINCE-INCEPTION RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION.
13 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Quest Capital Value
Fund, Inc.(SM) (Class N) S&P 500 Index
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
01/31/2004 11,219 9,559
04/30/2004 11,144 9,396
07/31/2004 11,392 9,388
10/31/2004 11,768 9,674
01/31/2005 12,581 10,154
04/30/2005 12,447 9,991
07/31/2005 13,207 10,707
10/31/2005 12,863 10,517
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/05
1-Year 8.31% 5-Year N/A Since Inception (3/1/01) 5.54%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
SINCE-INCEPTION RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION.
14 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
OppenheimerFunds, Inc. became the Fund's advisor on 2/28/97. The Fund's
subadvisor since 1/1/05 is Oppenheimer Capital LLC, parent to the Fund's
subadvisor prior to 1/1/05, 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
15 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES
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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 currently. The asset-based sales charge is subject to a voluntary waiver
of a portion or all of the charge as described in the Prospectus, and the Board
of Directors has set the rate at zero.
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" returns 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 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
17 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FUND EXPENSES
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the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(5/1/05) (10/31/05) OCTOBER 31, 2005
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Class A Actual $1,000.00 $1,035.60 $ 6.90
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Class A Hypothetical 1,000.00 1,018.45 6.84
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Class B Actual 1,000.00 1,030.80 11.74
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Class B Hypothetical 1,000.00 1,013.71 11.64
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Class C Actual 1,000.00 1,030.70 11.58
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Class C Hypothetical 1,000.00 1,013.86 11.49
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Class N Actual 1,000.00 1,033.40 9.01
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Class N Hypothetical 1,000.00 1,016.38 8.93
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended October 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.34%
- ------------------------
Class B 2.28
- ------------------------
Class C 2.25
- ------------------------
Class N 1.75
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
- --------------------------------------------------------------------------------
18 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF INVESTMENTS October 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--93.9%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--18.7%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.8%
Gentex Corp. 177,100 $ 3,333,022
- --------------------------------------------------------------------------------
Lear Corp. 177,100 5,394,466
------------
8,727,488
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--4.5%
Applebee's International, Inc. 207,900 4,555,089
- --------------------------------------------------------------------------------
Brinker International, Inc. 1 118,100 4,501,972
- --------------------------------------------------------------------------------
La Quinta Corp. 1 850,500 7,101,675
- --------------------------------------------------------------------------------
Ruby Tuesday, Inc. 239,700 5,251,827
------------
21,410,563
- --------------------------------------------------------------------------------
MEDIA--7.8%
Lamar Advertising Co., Cl. A 1 126,800 5,657,816
- --------------------------------------------------------------------------------
News Corp., Inc., Cl. A 433,100 6,171,675
- --------------------------------------------------------------------------------
Omnicom Group, Inc. 164,121 13,615,478
- --------------------------------------------------------------------------------
Viacom, Inc., Cl. B 137,400 4,255,278
- --------------------------------------------------------------------------------
WPP Group plc, Sponsored ADR 154,600 7,615,596
------------
37,315,843
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--4.6%
Claire's Stores, Inc. 361,000 9,404,050
- --------------------------------------------------------------------------------
TJX Cos., Inc. (The) 573,500 12,347,455
------------
21,751,505
- --------------------------------------------------------------------------------
ENERGY--6.5%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--2.3%
National Oilwell Varco, Inc. 1 177,800 11,107,166
- --------------------------------------------------------------------------------
OIL & GAS--4.2%
BP plc, ADR 69,700 4,628,080
- --------------------------------------------------------------------------------
Delta Petroleum Corp. 1 192,200 3,390,408
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 116,100 6,517,854
- --------------------------------------------------------------------------------
XTO Energy, Inc. 120,500 5,236,930
------------
19,773,272
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--29.8%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--0.2%
Ameriprise Financial, Inc. 1 30,280 $ 1,127,022
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--6.8%
M&T Bank Corp. 45,300 4,873,374
- --------------------------------------------------------------------------------
Prosperity Bancshares, Inc. 81,700 2,491,033
- --------------------------------------------------------------------------------
TCF Financial Corp. 305,800 8,287,180
- --------------------------------------------------------------------------------
Texas Regional Bancshares, Inc., Cl. A 95,600 2,803,948
- --------------------------------------------------------------------------------
Zions Bancorp 188,000 13,812,360
------------
32,267,895
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--13.9%
American Express Co. 106,000 5,275,620
- --------------------------------------------------------------------------------
Capital One Financial Corp. 62,600 4,779,510
- --------------------------------------------------------------------------------
CIT Group, Inc. 238,300 10,897,459
- --------------------------------------------------------------------------------
Citigroup, Inc. 376,900 17,254,482
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 477,700 17,493,374
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 165,600 10,720,944
------------
66,421,389
- --------------------------------------------------------------------------------
INSURANCE--6.8%
Conseco, Inc. 1 300,300 6,096,090
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 93,300 7,440,675
- --------------------------------------------------------------------------------
Partnerre Holdings Ltd. 138,300 8,812,476
- --------------------------------------------------------------------------------
Reinsurance Group of America, Inc. 221,700 10,142,775
------------
32,492,016
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--2.1%
Countrywide Financial Corp. 145,900 4,635,243
- --------------------------------------------------------------------------------
MGIC Investment Corp. 86,800 5,142,032
------------
9,777,275
19 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE--13.5%
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--7.5%
Beckman Coulter, Inc. 237,100 $11,679,546
- --------------------------------------------------------------------------------
Thermo Electron Corp. 1 430,100 12,984,719
- --------------------------------------------------------------------------------
Waters Corp. 1 305,000 11,041,000
------------
35,705,265
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--6.0%
DaVita, Inc. 1 253,000 12,442,540
- --------------------------------------------------------------------------------
Kindred Healthcare, Inc. 1 155,200 4,345,600
- --------------------------------------------------------------------------------
Laboratory Corp. of America Holdings 1 243,100 11,729,575
------------
28,517,715
- --------------------------------------------------------------------------------
INDUSTRIALS--12.9%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.0%
DRS Technologies, Inc. 50,600 2,492,556
- --------------------------------------------------------------------------------
L-3 Communications Holdings, Inc. 93,000 7,237,260
------------
9,729,816
- --------------------------------------------------------------------------------
AIRLINES--1.5%
Continental Airlines, Inc., Cl. B 1 538,000 6,967,100
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--1.5%
General Electric Co. 207,400 7,032,934
- --------------------------------------------------------------------------------
MACHINERY--6.7%
Actuant Corp., Cl. A 151,100 7,358,570
- --------------------------------------------------------------------------------
Eaton Corp. 199,400 11,730,702
- --------------------------------------------------------------------------------
Gardner Denver, Inc. 1 136,600 6,638,760
- --------------------------------------------------------------------------------
Oshkosh Truck Corp. 141,266 6,153,547
------------
31,881,579
- --------------------------------------------------------------------------------
ROAD & RAIL--1.2%
Pacer International, Inc. 218,705 5,653,524
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--7.0%
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.2%
Amphenol Corp., Cl. A 219,000 $ 8,753,430
- --------------------------------------------------------------------------------
Jabil Circuit, Inc. 1 60,200 1,796,970
------------
10,550,400
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.3%
Digitas, Inc. 1 574,500 6,204,600
- --------------------------------------------------------------------------------
IT SERVICES--0.6%
MoneyGram International, Inc. 121,700 2,957,310
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS--1.5%
Zebra Technologies Corp., Cl. A 1 161,000 6,940,710
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.4%
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 855,100 6,909,208
- --------------------------------------------------------------------------------
MATERIALS--1.0%
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING--1.0%
Smurfit-Stone Container Corp. 1 471,000 4,973,760
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.0%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.0%
Alltel Corp. 76,700 4,744,662
- --------------------------------------------------------------------------------
UTILITIES--3.5%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.5%
Cinergy Corp. 300,200 11,977,980
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--1.0%
SCANA Corp. 117,000 4,641,390
------------
Total Common Stocks
(Cost $416,730,888) 447,559,387
20 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
SHORT-TERM NOTES--4.5%
- --------------------------------------------------------------------------------
American Express Credit Corp.,
3.78%, 11/7/05 $ 5,000,000 $ 4,996,850
- --------------------------------------------------------------------------------
Federal Home Loan Bank,
3.65%, 11/1/05 4,309,000 4,309,000
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
3.72%, 11/8/05 12,000,000 11,991,413
-------------
Total Short-Term Notes
(Cost $21,297,263) 21,297,263
VALUE
SEE NOTE 1
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $438,028,151) 98.4% $468,856,650
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 1.6 7,860,858
---------------------
NET ASSETS 100.0% $476,717,508
=====================
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES October 31, 2005
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------
Investments, at value (cost $438,028,151)--see accompanying statement
of investments $ 468,856,650
- -------------------------------------------------------------------------------------------------
Cash 110,762
- -------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 8,222,776
Shares of capital stock sold 431,411
Interest and dividends 301,853
Other 35,219
--------------
Total assets 477,958,671
- -------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of capital stock redeemed 849,734
Shareholder communications 140,236
Distribution and service plan fees 93,785
Transfer and shareholder servicing agent fees 90,736
Directors' compensation 47,724
Other 18,948
--------------
Total liabilities 1,241,163
- -------------------------------------------------------------------------------------------------
NET ASSETS $ 476,717,508
==============
- -------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 1,784
- -------------------------------------------------------------------------------------------------
Additional paid-in capital 395,568,620
- -------------------------------------------------------------------------------------------------
Accumulated net investment loss (44,003)
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency
transactions 50,362,608
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 30,828,499
--------------
NET ASSETS $ 476,717,508
==============
22 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$339,702,920 and 12,425,560 shares of capital stock outstanding) $ 27.34
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $ 29.01
- -------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $74,003,829 and
2,947,050 shares of capital stock outstanding) $ 25.11
- -------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $46,559,869 and
1,851,906 shares of capital stock outstanding) $ 25.14
- -------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $16,450,890 and
611,232 shares of capital stock outstanding) $ 26.91
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENT OF OPERATIONS For the Year Ended October 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $21,197) $ 4,127,449
- --------------------------------------------------------------------------------
Interest 868,760
- --------------------------------------------------------------------------------
Portfolio lending fees 33,290
- --------------------------------------------------------------------------------
Other income 11,418
--------------
Total investment income 5,040,917
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 3,743,238
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 718,634
Class B 732,916
Class C 425,589
Class N 69,123
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 548,633
Class B 217,447
Class C 127,370
Class N 93,053
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 132,501
Class B 56,090
Class C 27,013
Class N 4,282
- --------------------------------------------------------------------------------
Directors' compensation 25,113
- --------------------------------------------------------------------------------
Custodian fees and expenses 10,280
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 104,838
--------------
Total expenses 7,037,620
Less reduction to custodian expenses (3,480)
Less waivers and reimbursements of expenses (44,831)
--------------
Net expenses 6,989,309
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,948,392)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on:
Investments 58,632,698
Foreign currency transactions 434
--------------
Net realized gain 58,633,132
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (21,273,522)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 35,411,218
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2005 2004
- ------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment loss $ (1,948,392) $ (2,056,779)
- ------------------------------------------------------------------------------------------
Net realized gain 58,633,132 35,194,517
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation (21,273,522) 7,472,308
-------------------------------
Net increase in net assets resulting from operations 35,411,218 40,610,046
- ------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (20,205,360) (1,407,511)
Class B (5,450,917) (421,504)
Class C (2,913,193) (234,513)
Class N (840,494) (47,778)
- ------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from
capital stock transactions:
Class A 81,732,028 31,831,708
Class B 9,594,810 1,735,308
Class C 11,963,644 144,639
Class N 5,726,757 3,167,760
- ------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------
Total increase 115,018,493 75,378,155
- ------------------------------------------------------------------------------------------
Beginning of period 361,699,015 286,320,860
-------------------------------
End of period (including accumulated net investment loss
of $44,003 and $32,742, respectively) $ 476,717,508 $ 361,699,015
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.89 $ 23.71 $ 19.07 $ 20.91 $ 33.65
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment loss (.05) 1 (.10) (.09) (.13) (.11)
Net realized and unrealized gain (loss) 2.58 3.45 4.73 (1.25) (2.59)
-----------------------------------------------------------------------
Total from investment operations 2.53 3.35 4.64 (1.38) (2.70)
- -----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain (2.08) (.17) -- (.46) (10.04)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.34 $ 26.89 $ 23.71 $ 19.07 $ 20.91
=======================================================================
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.80% 14.22% 24.33% (6.90)% (9.91)%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $339,703 $252,661 $193,955 $ 150,161 $154,346
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $309,617 $225,711 $165,906 $ 164,479 $161,187
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.19)% (0.37)% (0.43)% (0.61)% (0.44)%
Total expenses 1.34% 4 1.40% 4,5 1.56% 4,5 1.71% 4,5 1.67% 4
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 61% 74% 75% 80%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS B YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.07 $ 22.31 $ 18.09 $ 19.99 $ 32.77
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.28) 1 (.29) (.22) (.19) .05
Net realized and unrealized gain (loss) 2.40 3.22 4.44 (1.25) (2.79)
-------------------------------------------------------
Total from investment operations 2.12 2.93 4.22 (1.44) (2.74)
- ---------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.08) (.17) -- (.46) (10.04)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 25.11 $ 25.07 $ 22.31 $ 18.09 $ 19.99
=======================================================
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.81% 13.22% 23.33% (7.53)% (10.48)%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $74,004 $64,069 $55,449 $42,010 $34,278
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $73,417 $60,460 $46,785 $42,900 $27,144
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.10)% (1.26)% (1.23)% (1.30)% (1.13)%
Total expenses 2.25% 2.30% 2.43% 2.41% 2.26%
Expenses after payments and waivers and
reduction to custodian expenses 2.25% 2.30% 2.36% 2.41% 2.26%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 61% 74% 75% 80%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.10 $ 22.34 $ 18.11 $ 20.01 $ 32.80
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.27) 1 (.29) (.14) (.13) .11
Net realized and unrealized gain (loss) 2.39 3.22 4.37 (1.31) (2.86)
--------------------------------------------------------------------------
Total from investment operations 2.12 2.93 4.23 (1.44) (2.75)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.08) (.17) -- (.46) (10.04)
--------------------------------------------------------------------------
Net asset value, end of period $ 25.14 $ 25.10 $ 22.34 $ 18.11 $ 20.01
==========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.80% 13.20% 23.36% (7.52)% (10.50)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 46,560 $ 34,414 $ 30,510 $ 16,979 $ 10,272
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 42,635 $ 32,051 $ 20,901 $ 15,323 $ 7,898
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.09)% (1.26)% (1.24)% (1.30)% (1.13)%
Total expenses 2.24% 2.31% 2.43% 2.41% 2.26%
Expenses after payments and waivers and
reduction to custodian expenses 2.24% 2.31% 2.36% 2.41% 2.26%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 61% 74% 75% 80%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS N YEAR ENDED OCTOBER 31, 2005 2004 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.61 $ 23.56 $ 19.00 $ 20.88 $ 23.25
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.16) 2 (.19) (.15) (.17) (.03)
Net realized and unrealized gain (loss) 2.54 3.41 4.71 (1.25) (2.34)
--------------------------------------------------------------------------
Total from investment operations 2.38 3.22 4.56 (1.42) (2.37)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.08) (.17) -- (.46) --
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.91 $ 26.61 $ 23.56 $ 19.00 $ 20.88
==========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 9.31% 13.75% 24.00% (7.10)% (10.19)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 16,451 $ 10,554 $ 6,408 $ 2,983 $ 187
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 13,849 $ 8,724 $ 4,218 $ 1,475 $ 38
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.61)% (0.78)% (0.75)% (0.88)% (0.96)%
Total expenses 2.08% 2.20% 1.97% 1.87% 1.75%
Expenses after payments and waivers and
reduction to custodian expenses 1.76% 1.81% 1.87% 1.87% 1.75%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 61% 74% 75% 80%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | 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). Effective
January 1, 2005, Oppenheimer Capital LLC (the Sub-Advisor) replaced OpCap
Advisors as the Fund's Sub-Advisor, and assumed its responsibility for providing
day-to-day portfolio management for the Fund. Oppenheimer Capital LLC is the
parent company of 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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Directors. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, in the country that is identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by
30 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
such principal exchange at its trading session ending at, or most recently prior
to, the time when the Fund's assets are valued. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Foreign and domestic securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Directors. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Directors.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
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 following table represent
distribution requirements the Fund must satisfy under the income tax
regulations, losses the Fund may be
31 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
able to offset against income and gains realized in future years and unrealized
appreciation or depreciation of securities and other investments for federal
income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
------------------------------------------------------------------------
$1,372,888 $48,989,721 $-- $30,828,499
1. During the fiscal year ended October 31, 2005, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended October 31, 2004, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for October 31, 2005. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL LOSS ON INVESTMENTS 3
------------------------------------------------------
$6,208,581 $1,937,131 $8,145,712
3. $6,208,581, including $6,039,334 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, 2005
and October 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
OCT. 31, 2005 OCT. 31, 2004
-----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 7,524,389 $ 1,717,729
Long-term capital gain 21,885,575 393,577
-------------------------------------
Total $ 29,409,964 $ 2,111,306
=====================================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
32 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Federal tax cost of securities $ 438,028,151
===============
Gross unrealized appreciation $ 45,749,287
Gross unrealized depreciation (14,920,788)
---------------
Net unrealized appreciation $ 30,828,499
===============
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
October 31, 2005, the Fund's projected benefit obligations were increased by
$11,266 and payments of $604 were made to retired directors, resulting in an
accumulated liability of $38,550 as of October 31, 2005.
The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors to elect to defer receipt of all or
a portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Director under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Director. The
Fund purchases shares of the funds selected for deferral by the Director in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of directors' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
33 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK
The Fund has authorized one billion shares of $0.0001 par value capital stock in
the aggregate to be apportioned among each class of shares. Transactions in
shares of capital stock were as follows:
YEAR ENDED OCTOBER 31, 2005 YEAR ENDED OCTOBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
CLASS A
Sold 5,126,318 $ 139,073,180 2,915,233 $ 75,259,490
Dividends and/or
distributions reinvested 685,289 17,830,853 49,931 1,200,855
Redeemed (2,781,682) (75,172,005) (1,750,878) (44,628,637)
-----------------------------------------------------------------
Net increase 3,029,925 $ 81,732,028 1,214,286 $ 31,831,708
=================================================================
- -----------------------------------------------------------------------------------------------------------
CLASS B
Sold 1,048,244 $ 26,362,973 778,873 $ 18,762,947
Dividends and/or
distributions reinvested 211,813 5,102,574 17,259 390,238
Redeemed (868,351) (21,870,737) (725,869) (17,417,877)
-----------------------------------------------------------------
Net increase 391,706 $ 9,594,810 70,263 $ 1,735,308
=================================================================
- -----------------------------------------------------------------------------------------------------------
CLASS C
Sold 752,642 $ 18,936,146 495,377 $ 11,909,650
Dividends and/or
distributions reinvested 110,036 2,654,047 8,074 182,716
Redeemed (381,897) (9,626,549) (498,192) (11,947,727)
-----------------------------------------------------------------
Net increase 480,781 $ 11,963,644 5,259 $ 144,639
=================================================================
- -----------------------------------------------------------------------------------------------------------
CLASS N
Sold 306,714 $ 8,253,911 208,517 $ 5,296,582
Dividends and/or
distributions reinvested 32,272 829,719 1,999 47,770
Redeemed (124,402) (3,356,873) (85,885) (2,176,592)
-----------------------------------------------------------------
Net increase 214,584 $ 5,726,757 124,631 $ 3,167,760
=================================================================
34 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2005, were as
follows:
PURCHASES SALES
- ---------------------------------------------------------------
Investment securities $437,349,978 $363,492,129
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund. Effective January 1, 2005, the Fund
provides for a fee of 0.85% of the first $400 million of average annual net
assets of the Fund, 0.80% of the next $400 million, 0.75% of the next $400
million, 0.65% of the next $400 million, 0.60% of the next $400 million and
0.50% of average annual net assets in excess of $2 billion. From January 1, 2004
thru December 31, 2004, the annual advisory rate was 0.90% of the first $400
million of average annual net assets of the Fund, 0.85% of the next $400
million, 0.80% of the next $400 million, 0.70% of the next $400 million, 0.65%
of the next $400 million and 0.60% of average annual net assets in excess of $2
billion.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Manager retains Oppenheimer Capital LLC (the
"Sub-Advisor") to provide the day-to-day portfolio management of the Fund. Under
the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual fee in
monthly installments, based on the average daily net assets of the Fund. The fee
paid to the Sub-Advisor under the Sub-Advisory agreement is paid by the Manager,
not by the Fund. The fee is calculated as a percentage of the fee the Fund pays
the Manager. The rate is 40% of the advisory fee collected by the Manager based
on the net assets of the Fund as of February 28, 1997, and remaining 120 days
later, plus 30% of the fee collected by the Manager on assets in excess of that
amount. In each case the fee is calculated after any waivers of the Manager's
fee from the Fund. For the year ended October 31, 2005, the Manager paid
$1,069,324 and $334,091 to the Sub-Advisor and OpCap Advisors, respectively for
their services to the Fund. The sub-advisory agreement between the Manager and
OpCap Advisors was terminated on December 31, 2004.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2005, the Fund paid
$923,022 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
35 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the plan, the Fund pays
a service fee to the Distributor of 0.25% of the average annual net assets of
Class A shares. The Distributor currently uses all of those fees to pay dealers,
brokers, banks and other financial institutions quarterly for providing personal
services and maintenance of accounts of their customers that hold Class A
shares. Under the plan, the Fund may also pay an asset-based sales charge to the
Distributor. Beginning January 1, 2003, the Board of Directors has set the
annual asset-based sales charge rate at zero. Fees incurred by the Fund under
the plan are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a class, the
Board of Directors and its independent directors must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at October 31, 2005 for Class B and Class
N shares were $889,702 and $199,318, respectively. Fees incurred by the Fund
under the plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------------
October 31, 2005 $346,285 $2,564 $125,289 $8,178 $18,483
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended October 31, 2005, OFS
waived $44,831 for Class N shares. This undertaking may be amended or withdrawn
at any time.
36 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- --------------------------------------------------------------------------------
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 to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. 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 prevailing foreign currency exchange rates.
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 transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of October 31, 2005, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of U.S.
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower. As of October 31, 2005,
the Fund had no securities on loan.
- --------------------------------------------------------------------------------
7. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the
37 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LITIGATION Continued
complaint alleges that the Manager charged excessive fees for distribution and
other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
38 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2005, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2005, by correspondence with
the custodian. 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, 2005, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended, in
conformity with U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
December 20, 2005
39 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Distributions of $2.0798 per share were paid to Class A, Class B, Class C
and Class N shareholders, respectively, on December 8, 2004, of which $1.5476
was designated as a "capital gain distribution" for federal income tax purposes.
Whether received in stock or in cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of the capital assets held for
more than one year (long-term capital gains).
Dividends, if any, paid by the Fund during the fiscal year ended October
31, 2005 which are not designated as capital gain distributions should be
multiplied by 100% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended October 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $4,092,602 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2006, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
40 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
41 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH DIRECTOR IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
DIRECTORS COLORADO 80112-3924. EACH DIRECTOR SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm) (since 1982); General
Chairman of the Board Partner of Trivest Venture Fund (private venture capital fund); President of
(since 2001), Investment Counseling Federated Investors, Inc. (1973-1982); Trustee of the following
Director (since 1996) open-end investment companies: Cash Assets Trust, PIMCO Advisors VIT, Tax Free Trust of
Age: 72 Arizona (since 1984) and four funds for the Hawaiian Tax Free Trust. Oversees 11 portfolios
in the OppenheimerFunds complex.
PAUL Y. CLINTON, Principal of Clinton Management Associates (financial and venture capital consulting
Director (since 1996) firm) (since 1996); Trustee of PIMCO Advisors VIT (open-end investment company);
Age: 74 Trustee of Capital Cash Management Trust (money market fund) (1979-December 2004);
Trustee of Narragansett Insured Tax-Free Income Fund (tax-exempt bond fund)
(1996-December 2004); Trustee of Prime Cash Fund (1996-December 2004); and Director of
OCC Cash Reserves, Inc. (open-end investment company) (1989-December 2002). Oversees
11 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 48 portfolios in the
Director (since 1998) OppenheimerFunds complex.
Age: 72
LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Management Corporation (open-end investment
Director (since 1996) company) (since December 2004); Chairman and Chief Executive Officer of Aquila
Age: 76 Management Corporation (since August 1984); Chairman of the Board and President of
Aquila Management Corporation (August 1984-December 1984); Vice President, Director
and Secretary of Aquila Distributors, Inc. (distributor of Aquila Management
Corporation); Treasurer of Aquila Distributors, Inc.; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"); President and Director of
STCM Management Company, Inc. (sponsor and adviser to CCMT); Chairman, President and
Director of InCap Management Corporation (nature of business); Sub-Advisor and
Administrator of Prime Cash Fund & Short Term Asset Reserves (nature of business);
Director of OCC Cash Reserves, Inc. (open-end investment company) (until June 2003);
Trustee of OCC Accumulation Trust (open-end investment company); Chairman of the Board
of Trustees and President of Hawaiian Tax-Free Trust (open-end investment company)
(February 1985-December 2003); Trustee Emeritus of Brown University (since June 1983).
Oversees 11 portfolios in the OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Director (since 2001) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 62 (since September 2004); Director of Zurich Financial Investment Advisory Board
(affiliate of the Manager's parent company) (since October 2004); Board of Governing
Trustees of The Jackson Laboratory (non-profit) (since August 1990); Trustee of the
Institute for Advanced Study (non-profit educational institute) (since May 1992);
Special Limited Partner of Odyssey Investment Partners, LLC (private equity
investment) (January 1999-September 2004); Trustee of Research Foundation of AIMR
(2000-2002) (investment research, non-profit); Governor, Jerome Levy Economics
Institute of Bard College (August 1990-September 2001) (economics research); Director
of Ray & Berendtson, Inc. (May
42 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
BRIAN F. WRUBLE, 2000-April 2002) (executive search firm). Oversees 48 portfolios in the
Continued OppenheimerFunds complex.
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OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. MURPHY
AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK
10281-1008, FOR MESSRS. VANDEHEY AND WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO
80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President (since
President (since 2001) September 2000) of the Manager; President and director or trustee of other Oppenheimer
Age: 56 funds; President and Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's
parent holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company
subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds
Distributor, Inc. (subsidiary of the Manager) (since November 2001); Chairman and
Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the Manager) (since July 2001); President and
Director of OppenheimerFunds Legacy Program (charitable trust program established by
the Manager) (since July 2001); Director of the following investment advisory
subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment Management Corporation and Tremont
Capital Management, Inc. (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President (since
November 1, 2001) and Director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC's
parent company) (since February 1997); Director of DLB Acquisition Corporation
(holding company parent of Babson Capital Management LLC) (since June 1995); Member
of the Investment Company Institute's Board of Governors (since October 3, 2003);
Chief Operating Officer of the Manager (September 2000-June 2001); President and
Trustee of MML Series Investment Fund and MassMutual Select Funds (open-end investment
companies) (November 1999-November 2001); Director of C.M. Life Insurance Company
(September 1999-August 2000); President, Chief Executive Officer and Director of MML
Bay State Life Insurance Company (September 1999-August 2000); Director of Emerald
Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle
Bancorp) (June 1989-June 1998). Oversees 77 portfolios in the OppenheimerFunds complex
as a director or trustee and officer and an additional 10 portfolios as an officer.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Chief Compliance Officer Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President
(since 2004) and Director of Internal Audit of the Manager (1997-February 2004). An officer of 87
Age: 55 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer (since 1999) the following: HarbourView Asset Management Corporation, Shareholder Financial
Age: 46 Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
(since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since June 2003); Treasurer
and Chief Financial Officer of
43 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DIRECTORS AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
BRIAN W. WIXTED, OFI Trust Company (trust company subsidiary of the Manager) (since May 2000);
Continued Assistant Treasurer of the following: OAC (since March 1999),Centennial Asset
Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March 1999). An officer of 87
portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002)
Secretary (since 2001) of the Manager; General Counsel and Director of the Distributor (since December 2001);
Age: 57 General Counsel of Centennial Asset Management Corporation (since December 2001);
Senior Vice President and General Counsel of HarbourView Asset Management Corporation
(since December 2001); Secretary and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and
Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President,
General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder
Services, Inc. (since December 2001); Senior Vice President, General Counsel and
Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001);
Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc. (since
November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
Senior Vice President (May 1985-December 2003), Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the
Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S DIRECTORS AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
44 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee financial expert," whether
through the type of specialized education or experience described in that
Instruction. The Board has concluded that while the members of the Audit
Committee collectively have the necessary attributes and experience required to
serve effectively as an Audit Committee, no single member possesses all of the
required technical attributes through the particular methods of education or
experience set forth in the Instructions to be designated as an audit committee
financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $10,000 in fiscal 2005 and $10,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $156,805 in fiscal 2005 and $39,500 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and $6,000 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: Computations of capital gain tax liability, preparation of tax
returns, preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2005 and $37 in fiscal 2004.
Such services: the cost to the principal accountant of attending audit committee
meetings.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $161,805 in fiscal 2005 and $45,537 in fiscal
2004 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S AUDIT COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Audit Committee (the "Committee") will evaluate potential Board
candidates to assess their qualifications. The Committee shall have the
authority, upon approval of the Board, to retain an executive search firm
to assist in this effort. The Committee may consider recommendations by
business and personal contacts of current Board members and by executive
search firms which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider the
advice and recommendation of the Funds' investment manager and its
affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee
evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of October 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's management,
including its principal executive officer and principal financial officer, to
allow timely decisions regarding required disclosure, and (b) is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms adopted by the U.S. Securities and Exchange Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Quest Capital Value Fund, Inc.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: December 20, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: December 20, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: December 20, 2005