N-CSRS 1 rs835_15589nscrs.txt RS835_15589NSCRS.TXT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04797 OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. ------------------------------------------ (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 ------------------------------------------------------ (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. Two World Financial Center, New York, New York 10281-1008 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 -------------- Date of fiscal year end: OCTOBER 31 ---------- Date of reporting period: NOVEMBER 1, 2004 - APRIL 30, 2005 --------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TOP TEN COMMON STOCK INDUSTRIES -------------------------------------------------------------------------------- Machinery 8.7% -------------------------------------------------------------------------------- Diversified Financial Services 8.2 -------------------------------------------------------------------------------- Health Care Providers & Services 8.1 -------------------------------------------------------------------------------- Media 7.8 -------------------------------------------------------------------------------- Oil & Gas 5.0 -------------------------------------------------------------------------------- Health Care Equipment & Supplies 4.3 -------------------------------------------------------------------------------- Energy Equipment & Services 4.0 -------------------------------------------------------------------------------- Specialty Retail 3.7 -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 3.1 -------------------------------------------------------------------------------- Commercial Services & Supplies 3.0 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2005, and are based on net assets. TOP TEN COMMON STOCK HOLDINGS -------------------------------------------------------------------------------- Omnicom Group, Inc. 3.1% -------------------------------------------------------------------------------- Oshkosh Truck Corp. 3.0 -------------------------------------------------------------------------------- Citigroup, Inc. 3.0 -------------------------------------------------------------------------------- Lamar Advertising Co., Cl. A. 2.8 -------------------------------------------------------------------------------- Laboratory Corp. of America Holdings 2.8 -------------------------------------------------------------------------------- Beckman Coulter, Inc. 2.6 -------------------------------------------------------------------------------- Avon Products, Inc. 2.5 -------------------------------------------------------------------------------- Eaton Corp. 2.3 -------------------------------------------------------------------------------- National Oilwell Varco, Inc. 2.2 -------------------------------------------------------------------------------- BP plc, ADR 2.2 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2005, and are based on net assets. For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com -------------------------------------------------------------------------------- 9 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. TOP HOLDINGS AND ALLOCATIONS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECTOR ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Industrials 22.3% Health Care 18.0 Consumer Discretionary 16.5 Financials 15.8 Energy 10.2 Information Technology 5.7 Consumer Staples 5.6 Materials 2.9 Utilities 1.9 Telecommunication Services 1.1 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2005, and are based on common stocks. -------------------------------------------------------------------------------- 10 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A (formerly Capital) shares of the Fund were first publicly offered on 2/13/87. Unless otherwise noted, Class A shares total returns reflect the historical performance of the Class A shares of the Fund (formerly Capital shares) as adjusted for the fees and expenses of Class A shares in effect as of 3/3/97 (without giving effect to any fee waivers). Unless otherwise noted, average annual total returns for Class A shares includes the current 5.75% maximum initial sales charge. Class A shares are subject to a maximum annual 0.25% asset-based sales charge 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 Trustees 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 "10-year" 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. 11 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES -------------------------------------------------------------------------------- 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. 12 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND EXPENSES -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended April 30, 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 13 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND EXPENSES -------------------------------------------------------------------------------- the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (11/1/04) (4/30/05) APRIL 30, 2005 -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,060.30 $ 6.82 -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,018.20 6.68 -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,055.60 11.27 -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,013.88 11.04 -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,055.50 11.37 -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,013.79 11.15 -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,057.70 9.02 -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,016.07 8.84 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 181/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended April 30, 2005 are as follows: CLASS EXPENSE RATIOS ------------------------------ Class A 1.33% ------------------------------ Class B 2.20 ------------------------------ Class C 2.22 ------------------------------ Class N 1.76 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. -------------------------------------------------------------------------------- 14 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF INVESTMENTS April 30, 2005 / Unaudited -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- COMMON STOCKS--88.6% -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--14.6% -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--3.1% Brinker International, Inc. 1 118,100 $ 3,991,780 -------------------------------------------------------------------------------- Ruby Tuesday, Inc. 239,700 5,393,250 -------------------------------------------------------------------------------- Yum! Brands, Inc. 85,300 4,005,688 -------------- 13,390,718 -------------------------------------------------------------------------------- MEDIA--7.8% Lamar Advertising Co., Cl. A 1 327,900 12,256,902 -------------------------------------------------------------------------------- Omnicom Group, Inc. 164,121 13,605,631 -------------------------------------------------------------------------------- WPP Group plc, Sponsored ADR 2 154,600 8,365,406 -------------- 34,227,939 -------------------------------------------------------------------------------- SPECIALTY RETAIL--3.7% Claire's Stores, Inc. 361,000 7,877,020 -------------------------------------------------------------------------------- Pacific Sunwear of California, Inc. 1 364,000 8,230,040 -------------- 16,107,060 -------------------------------------------------------------------------------- CONSUMER STAPLES--5.0% -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING--1.8% Wal-Mart Stores, Inc. 159,800 7,532,972 -------------------------------------------------------------------------------- FOOD PRODUCTS--0.7% Dean Foods Co. 1 90,500 3,109,580 -------------------------------------------------------------------------------- PERSONAL PRODUCTS--2.5% Avon Products, Inc. 274,000 10,981,920 -------------------------------------------------------------------------------- ENERGY--9.0% -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--4.0% Nabors Industries Ltd. 1 142,800 7,692,636 -------------------------------------------------------------------------------- National Oilwell Varco, Inc. 1 241,800 9,609,132 -------------- 17,301,768 -------------------------------------------------------------------------------- OIL & GAS--5.0% BP plc, ADR 156,700 9,543,030 -------------------------------------------------------------------------------- ConocoPhillips 23,100 2,422,035 VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- OIL & GAS Continued Delta Petroleum Corp. 1 311,300 $ 3,480,334 -------------------------------------------------------------------------------- Exxon Mobil Corp. 116,100 6,621,183 -------------- 22,066,582 -------------------------------------------------------------------------------- FINANCIALS--14.0% -------------------------------------------------------------------------------- COMMERCIAL BANKS--2.5% M&T Bank Corp. 45,300 4,686,285 -------------------------------------------------------------------------------- Zions Bancorp 87,300 6,113,619 -------------- 10,799,904 -------------------------------------------------------------------------------- CONSUMER FINANCE--0.5% MoneyGram International, Inc. 121,700 2,360,980 -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--8.2% American Express Co. 151,400 7,978,780 -------------------------------------------------------------------------------- Citigroup, Inc. 275,800 12,951,568 -------------------------------------------------------------------------------- JPMorgan Chase & Co. 222,500 7,896,525 -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 127,500 6,876,075 -------------- 35,702,948 -------------------------------------------------------------------------------- INSURANCE--0.6% Platinum Underwriters Holdings Ltd. 89,000 2,634,400 -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE--2.2% MGIC Investment Corp. 161,400 9,522,600 -------------------------------------------------------------------------------- HEALTH CARE--15.9% -------------------------------------------------------------------------------- BIOTECHNOLOGY--1.3% Amgen, Inc. 1 96,700 5,628,907 -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--4.3% Beckman Coulter, Inc. 167,400 11,167,254 -------------------------------------------------------------------------------- Thermo Electron Corp. 1 163,700 4,089,226 -------------------------------------------------------------------------------- Waters Corp. 1 91,400 3,622,182 -------------- 18,878,662 15 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF INVESTMENTS Unaudited / Continued -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--8.1% Community Health Systems, Inc. 1 242,800 $ 8,850,060 -------------------------------------------------------------------------------- Covance, Inc. 1 157,500 7,188,300 -------------------------------------------------------------------------------- DaVita, Inc. 1 178,800 7,205,640 -------------------------------------------------------------------------------- Laboratory Corp. of America Holdings 1 243,100 12,033,450 -------------- 35,277,450 -------------------------------------------------------------------------------- PHARMACEUTICALS--2.2% Barr Pharmaceuticals, Inc. 1 140,500 7,286,330 -------------------------------------------------------------------------------- Par Pharmaceutical Cos., Inc. 1 80,800 2,426,424 -------------- 9,712,754 -------------------------------------------------------------------------------- INDUSTRIALS--19.8% -------------------------------------------------------------------------------- AEROSPACE & DEFENSE--2.4% Alliant Techsystems, Inc. 1 121,426 8,400,251 -------------------------------------------------------------------------------- DRS Technologies, Inc. 1 50,600 2,239,050 -------------- 10,639,301 -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--3.0% Aramark Corp., Cl. B 237,400 5,818,674 -------------------------------------------------------------------------------- Dun & Bradstreet Corp. 1 114,400 7,143,136 -------------- 12,961,810 -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING--1.1% Dycom Industries, Inc. 1 211,600 4,921,816 -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--1.2% AMETEK, Inc. 133,400 5,051,858 -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--1.5% General Electric Co. 185,100 6,700,620 -------------------------------------------------------------------------------- MACHINERY--8.7% Actuant Corp., Cl. A 1 151,100 6,435,349 -------------------------------------------------------------------------------- Eaton Corp. 171,100 10,035,015 -------------------------------------------------------------------------------- Gardner Denver, Inc. 1 55,500 2,027,970 -------------------------------------------------------------------------------- Oshkosh Truck Corp. 175,200 13,166,280 VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- MACHINERY Continued Wabash National Corp. 239,100 $ 6,097,050 -------------- 37,761,664 -------------------------------------------------------------------------------- ROAD & RAIL--1.9% Canadian National Railway Co. 67,850 3,881,699 -------------------------------------------------------------------------------- Pacer International, Inc. 1 218,705 4,533,755 -------------- 8,415,454 -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--5.1% -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--2.8% Amphenol Corp., Cl. A 107,300 4,231,912 -------------------------------------------------------------------------------- Arrow Electronics, Inc. 1 257,300 6,262,682 -------------------------------------------------------------------------------- Jabil Circuit, Inc. 1 60,200 1,661,520 -------------- 12,156,114 -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--1.3% Digitas, Inc. 1 574,500 5,727,765 -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.0% Texas Instruments, Inc. 169,000 4,218,240 -------------------------------------------------------------------------------- MATERIALS--2.6% -------------------------------------------------------------------------------- CONTAINERS & PACKAGING--0.8% Smurfit-Stone Container Corp. 272,700 3,575,097 -------------------------------------------------------------------------------- METALS & MINING--1.8% Inco Ltd. 1 217,400 7,769,876 -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--0.9% -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--0.9% Iowa Telecommunications Services, Inc. 128,500 2,454,350 -------------------------------------------------------------------------------- Valor Communications Group, Inc. 120,300 1,624,048 -------------- 4,078,398 16 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. VALUE SHARES SEE NOTE 1 -------------------------------------------------------------------------------- UTILITIES--1.7% -------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.7% Cinergy Corp. 188,300 $ 7,456,680 -------------- Total Common Stocks (Cost $342,633,103) 386,671,837 PRINCIPAL AMOUNT -------------------------------------------------------------------------------- SHORT-TERM NOTES--11.0% -------------------------------------------------------------------------------- American Express Credit Corp., 2.80%, 5/19/05 $ 6,000,000 5,991,600 -------------------------------------------------------------------------------- Federal Home Loan Bank: 2.65%, 5/2/05 7,053,000 7,052,481 2.67%, 5/3/05 15,000,000 14,997,775 2.72%, 5/9/05 10,000,000 9,993,956 2.81%, 5/31/05 10,000,000 9,976,583 -------------- Total Short-Term Notes (Cost $48,012,395) 48,012,395 -------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $390,645,498) 434,684,232 PRINCIPAL VALUE AMOUNT SEE NOTE 1 -------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--0.5% -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--0.5% Undivided interest of 0.06% in joint repurchase agreement (Principal Amount/Value $3,500,000,000, with a maturity value of $3,501,158,889) with Nomura Securities, 2.98%, dated 4/29/05, to be repurchased at $2,009,765 on 5/2/05, collateralized by U.S. Agency Mortgages, 0%-7%, 1/15/08-3/15/46, with a value of $3,633,391,066 3 (Cost $2,009,100) $ 2,009,100 $ 2,009,100 -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $392,654,598) 100.1% 436,693,332 -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (388,029) ------------------------------ NET ASSETS 100.0% $ 436,305,303 ============================== FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Partial or fully-loaned security--See Note 6 of Notes to Financial Statements. 3. The security has been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 6 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES Unaudited -------------------------------------------------------------------------------- April 30, 2005 ------------------------------------------------------------------------------------------------------------------ ASSETS ------------------------------------------------------------------------------------------------------------------ Investments, at value (including securities loaned of $1,958,782) (cost $392,654,598) --see accompanying statement of investments $ 436,693,332 ------------------------------------------------------------------------------------------------------------------ Cash 160,189 ------------------------------------------------------------------------------------------------------------------ Receivables and other assets: Shares of capital stock sold 1,349,429 Investments sold 563,504 Interest and dividends 318,309 Other 58,772 ---------------- Total assets 439,143,535 ------------------------------------------------------------------------------------------------------------------ LIABILITIES ------------------------------------------------------------------------------------------------------------------ Return of collateral for securities loaned 2,009,100 ------------------------------------------------------------------------------------------------------------------ Payables and other liabilities: Shares of capital stock redeemed 581,720 Distribution and service plan fees 83,803 Transfer and shareholder servicing agent fees 72,641 Directors' compensation 45,264 Shareholder communications 33,719 Other 11,985 ---------------- Total liabilities 2,838,232 ------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 436,305,303 ================ ------------------------------------------------------------------------------------------------------------------ COMPOSITION OF NET ASSETS ------------------------------------------------------------------------------------------------------------------ Par value of shares of capital stock $ 1,690 ------------------------------------------------------------------------------------------------------------------ Additional paid-in capital 363,949,699 ------------------------------------------------------------------------------------------------------------------ Accumulated net investment loss (1,216,731) ------------------------------------------------------------------------------------------------------------------ Accumulated net realized gain on investments and foreign currency transactions 29,531,911 ------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation on investments 44,038,734 ---------------- NET ASSETS $ 436,305,303 ================
18 | 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 $306,163,141 and 11,597,150 shares of capital stock outstanding) $26.40 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $28.01 ----------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $74,603,191 and 3,062,051 shares of capital stock outstanding) $24.36 ----------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $42,185,176 and 1,729,625 shares of capital stock outstanding) $24.39 ----------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $13,353,795 and 512,757 shares of capital stock outstanding) $26.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF OPERATIONS Unaudited -------------------------------------------------------------------------------- For the Six Months Ended April 30, 2005 -------------------------------------------------------------------------------- INVESTMENT INCOME -------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $12,626) $ 1,684,609 -------------------------------------------------------------------------------- Interest 303,295 -------------------------------------------------------------------------------- Portfolio lending fees 29,004 ---------------- Total investment income 2,016,908 -------------------------------------------------------------------------------- EXPENSES -------------------------------------------------------------------------------- Management fees 1,751,302 -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 336,696 Class B 349,928 Class C 193,067 Class N 30,570 -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 258,871 Class B 99,069 Class C 57,796 Class N 43,578 -------------------------------------------------------------------------------- Shareholder communications: Class A 20,396 Class B 12,734 Class C 6,516 Class N 1,418 -------------------------------------------------------------------------------- Directors' compensation 17,028 -------------------------------------------------------------------------------- Custodian fees and expenses 9,354 -------------------------------------------------------------------------------- Other 36,844 ---------------- Total expenses 3,225,167 Less reduction to custodian expenses (2,580) Less waivers and reimbursements of expenses (21,690) ---------------- Net expenses 3,200,897 -------------------------------------------------------------------------------- NET INVESTMENT LOSS (1,183,989) -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN -------------------------------------------------------------------------------- Net realized gain on: Investments 29,656,998 Foreign currency transactions 350 ---------------- Net realized gain 29,657,348 -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments (8,063,287) -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,410,072 ================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2005 OCTOBER 31, (UNAUDITED) 2004 -------------------------------------------------------------------------------------------------------------- OPERATIONS -------------------------------------------------------------------------------------------------------------- Net investment loss $ (1,183,989) $ (2,056,779) -------------------------------------------------------------------------------------------------------------- Net realized gain 29,657,348 35,194,517 -------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (8,063,287) 7,472,308 ------------------------------------ Net increase in net assets resulting from operations 20,410,072 40,610,046 -------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS -------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (20,204,331) (1,407,511) Class B (5,452,560) (421,504) Class C (2,913,204) (234,513) Class N (840,494) (47,778) -------------------------------------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS -------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from capital stock transactions: Class A 59,112,538 31,831,708 Class B 12,517,942 1,735,308 Class C 8,899,567 144,639 Class N 3,076,758 3,167,760 -------------------------------------------------------------------------------------------------------------- NET ASSETS -------------------------------------------------------------------------------------------------------------- Total increase 74,606,288 75,378,155 -------------------------------------------------------------------------------------------------------------- Beginning of period 361,699,015 286,320,860 ------------------------------------ End of period (including accumulated net investment loss of $1,216,731 and $32,742, respectively) $ 436,305,303 $ 361,699,015 ====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FINANCIAL HIGHLIGHTS --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2005 OCT. 31, CLASS A (UNAUDITED) 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 26.89 $ 23.71 $ 19.07 $ 20.91 $ 33.65 $ 33.66 ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.05) 1 (.10) (.09) (.13) (.11) (.25) Net realized and unrealized gain (loss) 1.64 3.45 4.73 (1.25) (2.59) 6.08 ---------------------------------------------------------------------------------------- Total from investment operations 1.59 3.35 4.64 (1.38) (2.70) 5.83 ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Distributions from net realized gain (2.08) (.17) -- (.46) (10.04) (5.84) ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 26.40 $ 26.89 $ 23.71 $ 19.07 $ 20.91 $ 33.65 ======================================================================================== ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 6.03% 14.22% 24.33% (6.90)% (9.91)% 20.63% ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 306,163 $252,661 $193,955 $150,161 $154,346 $177,876 ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 287,255 $225,711 $165,906 $164,479 $161,187 $181,216 ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment loss (0.33)% (0.37)% (0.43)% (0.61)% (0.44)% (0.73)% Total expenses 1.33% 4 1.40% 4,5 1.56% 4,5 1.71% 4,5 1.67% 4 1.73% 4 ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 34% 61% 74% 75% 80% 77%
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. 22 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2005 OCT. 31, CLASS B (UNAUDITED) 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.07 $ 22.31 $ 18.09 $ 19.99 $ 32.77 $ 33.07 ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.15) 1 (.29) (.22) (.19) .05 (.34) Net realized and unrealized gain (loss) 1.52 3.22 4.44 (1.25) (2.79) 5.88 ------------------------------------------------------------------------------------ Total from investment operations 1.37 2.93 4.22 (1.44) (2.74) 5.54 ----------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.08) (.17) -- (.46) (10.04) (5.84) ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 24.36 $ 25.07 $ 22.31 $ 18.09 $ 19.99 $ 32.77 ==================================================================================== ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 5.56% 13.22% 23.33% (7.53)% (10.48)% 20.02% ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 74,603 $ 64,069 $ 55,449 $ 42,010 $ 34,278 $ 17,429 ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 70,751 $ 60,460 $ 46,785 $ 42,900 $ 27,144 $ 15,719 ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.21)% (1.26)% (1.23)% (1.30)% (1.13)% (1.26)% Total expenses 2.20% 2.30% 2.43% 2.41% 2.26% 2.27% Expenses after payments and waivers and reduction to custodian expenses N/A 4 N/A 4 2.36% N/A 4,5 N/A 4 N/A 4 ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 34% 61% 74% 75% 80% 77%
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. 23 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FINANCIAL HIGHLIGHTS Continued --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2005 OCT. 31, CLASS C (UNAUDITED) 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.10 $ 22.34 $ 18.11 $ 20.01 $ 32.80 $ 33.09 ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.15) 1 (.29) (.14) (.13) .11 (.38) Net realized and unrealized gain (loss) 1.52 3.22 4.37 (1.31) (2.86) 5.93 ------------------------------------------------------------------------------------ Total from investment operations 1.37 2.93 4.23 (1.44) (2.75) 5.55 ----------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.08) (.17) -- (.46) (10.04) (5.84) ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 24.39 $ 25.10 $ 22.34 $ 18.11 $ 20.01 $ 32.80 ==================================================================================== ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 5.55% 13.20% 23.36% (7.52)% (10.50)% 20.05% ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 42,185 $ 34,414 $ 30,510 $ 16,979 $ 10,272 $ 5,053 ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 39,034 $ 32,051 $ 20,901 $ 15,323 $ 7,898 $ 4,969 ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.22)% (1.26)% (1.24)% (1.30)% (1.13)% (1.25)% Total expenses 2.22% 2.31% 2.43% 2.41% 2.26% 2.27% Expenses after payments and waivers and reduction to custodian expenses N/A 4 N/A 4 2.36% N/A 4,5 N/A 4 N/A 4 ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 34% 61% 74% 75% 80% 77%
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. 24 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2005 OCT. 31, CLASS N (UNAUDITED) 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 (.10) 2 (.19) (.15) (.17) (.03) Net realized and unrealized gain (loss) 1.61 3.41 4.71 (1.25) (2.34) ---------------------------------------------------------------------- Total from investment operations 1.51 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 $ 26.04 $26.61 $ 23.56 $ 19.00 $ 20.88 ====================================================================== ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 5.77% 13.75% 24.00% (7.10)% (10.19)% ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 13,354 $ 10,554 $ 6,408 $ 2,983 $ 187 ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 12,358 $ 8,724 $ 4,218 $ 1,475 $ 38 ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment loss (0.77)% (0.78)% (0.75)% (0.88)% (0.96)% Total expenses 2.12% 2.20% 1.97% 1.87% 1.75% Expenses after payments and waivers and reduction to custodian expenses 1.76% 1.81% 1.87% N/A 5,6 N/A 5 ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 34% 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. 5. Reduction to custodian expenses less than 0.01%. 6. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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 listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing "bid" and "asked" prices, and if not, at the closing bid price. Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund's assets are valued. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Directors. Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session end- 26 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. ing 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. 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 27 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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. As of April 30, 2005, the Fund had no estimated unused capital loss carryforward available for federal income tax purposes. During the year ended October 31, 2004, the Fund did not utilize any capital loss carryforward. -------------------------------------------------------------------------------- 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 six months ended April 30, 2005, the Fund's projected benefit obligations were increased by $3,719 and payments of $604 were made to retired directors, resulting in an accumulated liability of $31,003 as of April 30, 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 28 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. -------------------------------------------------------------------------------- 2. SHARES OF CAPITAL STOCK The Fund has authorized 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:
SIX MONTHS ENDED APRIL 30, 2005 YEAR ENDED OCTOBER 31, 2004 SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------ CLASS A Sold 3,124,722 $ 84,406,288 2,915,233 $ 75,259,490 Dividends and/or distributions reinvested 685,235 17,829,822 49,931 1,200,855 Redeemed (1,608,442) (43,123,572) (1,750,878) (44,628,637) -------------------------------------------------------------- Net increase 2,201,515 $ 59,112,538 1,214,286 $ 31,831,708 ============================================================== ------------------------------------------------------------------------------------------ CLASS B Sold 701,886 $ 17,652,834 778,873 $ 18,762,947 Dividends and/or distributions reinvested 211,881 5,104,216 17,259 390,238 Redeemed (407,060) (10,239,108) (725,869) (17,417,877) -------------------------------------------------------------- Net increase 506,707 $ 12,517,942 70,263 $ 1,735,308 ============================================================== ------------------------------------------------------------------------------------------ CLASS C Sold 421,027 $ 10,584,279 495,377 $ 11,909,650 Dividends and/or distributions reinvested 110,035 2,654,057 8,074 182,716 Redeemed (172,562) (4,338,769) (498,192) (11,947,727) -------------------------------------------------------------- Net increase 358,500 $ 8,899,567 5,259 $ 144,639 ============================================================== ------------------------------------------------------------------------------------------ CLASS N Sold 149,540 $ 4,017,829 208,517 $ 5,296,582 Dividends and/or distributions reinvested 32,272 829,719 1,999 47,770 Redeemed (65,703) (1,770,790) (85,885) (2,176,592) -------------------------------------------------------------- Net increase 116,109 $ 3,076,758 124,631 $ 3,167,760 ==============================================================
29 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended April 30, 2005, were $160,413,602 and $131,676,497, respectively. -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund. 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, 065% 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 SERVICES. 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 six months ended April 30, 2005, the Manager paid $445,847 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 six months ended April 30, 2005, the Fund paid $437,069 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. -------------------------------------------------------------------------------- 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 30 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. 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 April 30, 2005 for Class B, Class C and Class N shares were $889,572, $435,943 and $164,798, 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 SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR ----------------------------------------------------------------------------------------------------------- April 30, 2005 $191,495 $2,438 $52,939 $2,661 $1,506
-------------------------------------------------------------------------------- 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 six months ended April 30, 2005, OFS waived $21,690 for Class N shares. This undertaking may be amended or withdrawn at any time. 31 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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 April 30, 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 US 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 also continues to receive interest or dividends paid on the securities loaned. As of April 30, 2005, the Fund had on loan securities valued at $1,958,782. Collateral of $2,009,100 was received for the loans, all of which was received in cash and subsequently invested in approved instruments. -------------------------------------------------------------------------------- 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- 32 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. filed putative derivative and class action complaints. Like those prior complaints, the 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. 33 | 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 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. 34 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Each year, the Board of Directors (the "Board"), including a majority of the independent Directors, is required to determine whether to renew the advisory and sub-advisory agreements. The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager and sub-adviser provide, such information as may be reasonably necessary to evaluate the terms of the advisory and sub-advisory agreements. The Board employs an independent consultant to prepare a report that provides information, including comparative information, that the Board requests for this purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance. NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's advisory agreement and sub-advisory agreement for the current year, the Board evaluated the nature and extent of the services provided by the Manager, OpCap Advisors the Fund's former sub-adviser ("OpCap"), a subsidiary of Oppenheimer Capital LLC ("Oppenheimer Capital"), and each of their affiliates. The Manager provides the Fund with office space, facilities and equipment; administrative, accounting, clerical, legal and compliance personnel; securities trading services; oversight of third party service providers. Until January 1, 2005, OpCap provided the Fund with the services of the portfolio manager and OpCap's investment team, who provided research, analysis and other advisory services in regard to the Fund's investments. QUALITY OF SERVICES. The Board also considered the quality of the services provided and the quality of the Manager's and OpCap's resources that are available to the Fund. The Board noted that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager's administrative, accounting, legal and compliance services and information the Board received regarding the experience and professional qualifications of the Manager's personnel and the size and functions of its staff. The Board members also considered their experiences as directors or trustees of the Fund and other funds advised by the Manager. The Board received and reviewed information regarding the quality of services provided by affiliates of the Manager, which it also reviews at other times during the year in connection with the renewal of the Fund's service agreements. The Board noted that the relatively low redemption rate for funds advised by the Manager provided an indication of shareholder satisfaction with the overall level of services provided by the Manager. The Board also considered the quality of the services provided by OpCap. OpCap had served as the Fund's investment adviser from the Fund's inception in April 1980 until February 1997, when the Manager became the Fund's investment adviser and OpCap was retained as the Fund's sub-adviser. Oppenheimer Capital, the parent company of OpCap, 35 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued -------------------------------------------------------------------------------- has been an equity investment manager since its inception in 1969 and as of September 2004 had over $24 billion in assets under management. PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of Louis P. Goldstein and the Manager's Small/Mid-Cap investment team and analysts. Mr. Goldstein has had over 22 years of experience managing equity investments. Mr. Goldstein has been primarily responsible for the day-to-day management of the Fund's portfolio since February 1999 and is a Managing Director of Oppenheimer Capital. The Board also reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund's historical performance to relevant market indices and to the performance of other multi-cap value funds (including both funds advised by the Manager and funds advised by other investment advisers). The Board also receives and reviews comparative performance information regarding the Fund and other funds at each Board meeting. The Board noted that the Fund's one-, three-, and five-year performance was better than its peer group average. However its ten-year performance was slightly below its peer group average. MANAGEMENT FEES AND EXPENSES. The Board also reviewed information, including comparative information, regarding the fees paid to the Manager and its affiliates and the other expenses borne by the Fund. The independent consultant provided comparative data in regard to the fees and expenses of the Fund, other multi-cap value funds and other funds with comparable assets levels and distribution features. The Board noted that the Fund's contractual and actual management fees and its total expenses were higher than its peer group average. In addition, the Board evaluated the comparability of the fees charged and the services provided to the Fund to the fees charged and services provided to other types of entities advised by the Manager. The Board noted that the Manager, not the Fund, pays the sub-advisory fee under the terms of the sub- advisory agreement. PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed information regarding the cost of services provided by the Manager and its affiliates and the Manager's profitability. The Board considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide services to the Fund and that maintaining the financial viability of the Manager is important in order for the Manager to continue to provide significant services to the Fund and its shareholders. In addition the Board considered information that was provided regarding the direct and indirect benefits the Manager, OpCap and Oppenheimer Capital have received and may receive as a result of their relationship with the Fund, including compensation paid to affiliates and research provided in connection with permissible brokerage arrangements (soft dollar arrangements). 36 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may realize economies of scale in managing and supporting the Fund and the current level of Fund assets in relation to the Fund's breakpoint schedule for its management fees. The Board noted that the fund has recently experienced significant asset growth and that, based on current asset levels, however the Fund is not yet approaching its last management fee breakpoint. CHANGES TO MANAGEMENT ARRANGEMENTS. Following discussion of the roles of OpCap and its parent company Oppenheimer Capital in the management of the Fund's portfolio investments, the Board and the Manager concluded that it was in the best interests of the Fund and its shareholders for Oppenheimer Capital to advise the Fund directly, rather than through its OpCap subsidiary. In addition, the Board requested and the Manager agreed to a revised breakpoint schedule that provides for a lower management fee, at an annual rate 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, 065% 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. CONCLUSIONS. The above factors, and the changes to the management arrangements, were also considered by the independent Directors meeting separately from the full Board, assisted by experienced counsel to the Fund. Fund counsel is independent of the Manager and Oppenheimer Capital within the meaning and intent of the Securities and Exchange Commission Rules. The Board was aware that there are alternatives to retaining the Manager. Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Directors, concluded that the nature, extent and quality of the services provided to the Fund by the Manager, and to be provided by Oppenheimer Capital, are a benefit to the Fund and in the best interest of the Fund's shareholders and that the amount and structure of the compensation received by the Manager and its affiliates, and the revised fee structure adopted by the Board and the Manager are reasonable in relation to the services provided. Accordingly, the Board elected to continue the investment advisory agreement for another year and to approve the sub-advisory agreement between the Manager and Oppenheimer Capital, which became effective on January 1, 2005. In arriving at this decision, the Board did not single out any factor or factors as being more important than others, but considered all of the factors together. The Board judged the terms and conditions of the advisory agreement, including the management fee, in light of all of the surrounding circumstances. OpCap and Oppenheimer Capital are not affiliated with the Manager. 37 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. ITEM 2. CODE OF ETHICS Not applicable to semiannual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not applicable to semiannual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable to semiannual reports. ITEM 5. NOT APPLICABLE ITEM 6. SCHEDULE OF INVESTMENTS Not applicable ITEM 7. DISCLOSURE OF PROXY POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES Not applicable ITEM 9. PURCHASE 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 Board is responsible for approving nominees for election as directors. To assist in this task, the Board has designated the Audit Committee as the nominating committee for the Board. It reviews and recommends nominees to the Board. The Committee is comprised entirely of disinterested directors as defined in Section 2(a)(19) of the Investment Company Act of 1940. The Audit Committee charter describes the responsibilities of the Committee in nominating candidates for election as independent Directors of the Registrant. The Registrant's Board has adopted a written charter for the Committee. A current copy of the Audit Committee charter is available to shareholders on the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM. Under the current policy, if the Board determines that a vacancy exists or is likely to exist on the Board, the Audit Committee of the Board will consider candidates for Board membership including recommended by Registrant shareholders. The Audit Committee will consider nominees recommended by independent Board members or recommended by any other Board members including Board members affiliated with the Registrant's investment advisors. The Committee may, upon Board approval, retain an executive search firm to assist in screening potential candidates. Upon Board approval, the Audit Committee may also use the services of legal, financial, or other external counsel that it deems necessary or desirable in the screening process. Shareholders wishing to submit a nominee for election to the Board may do so by mailing their submission to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO 80112, to the attention of the Board of Directors of the named Registrant, c/o the Secretary of the Registrant. The Committee's process for identifying and evaluating nominees for directors includes a number of factors. In screening candidates for board membership, whether the candidate is suggested by Board members, shareholders or others, the Committee considers the candidate's professional experience, soundness of judgment, integrity, ability to make independent, analytical inquiries, collegiality, willingness and ability to devote the time required to perform Board activities adequately, ability to represent the interests of all shareholders of the Registrant, and diversity relative to the board's composition. Candidates are expected to provide a mix of attributes, experience, perspective and skills necessary to effectively advance the interests of shareholders. ITEM 11. CONTROLS AND PROCEDURES (a) Based on their evaluation of 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 April 30, 2005, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no changes in registrant's internal controls over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT APPLICABLE TO SEMIANNUAL REPORTS) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) (C) EXHIBITS ATTACHED HERETO. (ATTACH PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES AS REQUIRED BY ITEM 7) 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: June 15, 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: June 15, 2005 By: /S/ BRIAN W. WIXTED ---------------------------- Brian W. Wixted Chief Financial Officer Date: June 15, 2005