-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E57zMkdJBwnBuTrb0PoViNo5ZXOuvUxS6kKaKm7tyQe9J42YlorHmV2WrpPG1niA 9sZ2kMCeYPYUafvMQdWxMg== 0000935069-06-003437.txt : 20061228 0000935069-06-003437.hdr.sgml : 20061228 20061227192507 ACCESSION NUMBER: 0000935069-06-003437 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20061031 FILED AS OF DATE: 20061228 DATE AS OF CHANGE: 20061227 EFFECTIVENESS DATE: 20061228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER QUEST CAPITAL VALUE FUND INC CENTRAL INDEX KEY: 0000799029 IRS NUMBER: 132527171 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04797 FILM NUMBER: 061301448 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: QUEST FOR VALUE DUAL PURPOSE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: QFV DUAL PURPOSE FUND INC DATE OF NAME CHANGE: 19870111 0000799029 S000008498 OPPENHEIMER QUEST CAPITAL VALUE FUND INC C000023330 A C000023331 B C000031353 C C000031354 N N-CSR 1 ra835_35960ncsr.txt RA835_35960NCSR.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: OCTOBER 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOP TEN COMMON STOCK INDUSTRIES - -------------------------------------------------------------------------------- Insurance 11.3% - -------------------------------------------------------------------------------- Diversified Financial Services 9.9 - -------------------------------------------------------------------------------- Multi-Utilities & Unregulated Power 7.0 - -------------------------------------------------------------------------------- Media 5.9 - -------------------------------------------------------------------------------- Commercial Banks 5.6 - -------------------------------------------------------------------------------- Aerospace & Defense 5.5 - -------------------------------------------------------------------------------- Electronic Equipment & Instruments 5.1 - -------------------------------------------------------------------------------- Specialty Retail 4.9 - -------------------------------------------------------------------------------- Life Sciences Tools & Services 4.5 - -------------------------------------------------------------------------------- Health Care Providers & Services 3.6 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2006, and are based on net assets. TOP TEN COMMON STOCK HOLDINGS - -------------------------------------------------------------------------------- JPMorgan Chase & Co. 4.3% - -------------------------------------------------------------------------------- Duke Energy Corp. 3.9 - -------------------------------------------------------------------------------- Citigroup, Inc. 3.9 - -------------------------------------------------------------------------------- L-3 Communications Holdings, Inc. 3.2 - -------------------------------------------------------------------------------- Zions Bancorp 3.1 - -------------------------------------------------------------------------------- Laboratory Corp. of America Holdings 3.1 - -------------------------------------------------------------------------------- TJX Cos., Inc. (The) 3.1 - -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 2.7 - -------------------------------------------------------------------------------- Omnicom Group, Inc. 2.7 - -------------------------------------------------------------------------------- Thermo Electron Corp. 2.7 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2006, and are based on net assets. For more current Fund holdings, please visit www.oppenheimerfunds.com. - -------------------------------------------------------------------------------- 7 | 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.] Financials 32.4% Insurance 11.5 Diversified Financial Services 10.1 Commercial Banks 5.8 Capital Markets 2.8 Thrifts & Mortgage Finance 2.2 Consumer Discretionary 17.1 Health Care 13.4 Information Technology 12.8 Industrials 10.1 Utilities 7.2 Energy 3.8 Telecommunication Services 1.8 Materials 1.4 Portfolio holdings and allocations are subject to change. Percentages are as of October 31, 2006, and are based on the total market value of common stocks. - -------------------------------------------------------------------------------- 8 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Quest Capital Value Fund, Inc. outpaced the broad U.S. equity market during the one-year period ended October 31, 2006. We attribute the outperformance to favorable sector allocation and, more importantly, good individual stock selections. Strong gains for holdings in a variety of industries were only partially offset by the Fund's few underachievers. As always, we selected stocks based on a combination of the companies' unique merits, attractive purchase prices and our views of how specific businesses would be affected by the macro environment--in this case, moderating but still positive economic growth in the United States and robust economic expansion overseas. The market, in contrast, increasingly agonized about rising interest rates and the possibility of a U.S. recession. In keeping with our more sanguine outlook, we chose to capitalize on the market's fears, finding undervalued opportunities in beaten-down sectors like information technology, consumer discretionary, industrials and financial services. This strategy worked well; among the top contributors to results were JPMorgan Chase & Co., TJX Cos., Inc., Amphenol Corp. and Continental Airlines, Inc. We have since exited our position in Continental Airlines. At JPMorgan Chase, strategic acquisitions, cost-cutting efforts and a managerial turnaround helped to override the market's interest rate concerns. Continental benefited from much improved industry conditions, including higher traffic volumes, declining fuel costs as the period progressed, and a stable labor situation. TJX, owner of the TJ Maxx and Marshall's discount retail stores, rebounded as investors realized they had overestimated the impact of high gas prices on consumer spending. Another positive for this stock: a management change that brought discipline back to TJX's purchasing process. Amphenol, a maker of electronic connectors, is growing along with the expanding use of electronics in a wide variety of products, including consumer goods. In addition to this positive secular trend, Amphenol benefits from a strategy of customization. Working with end-product manufacturers early in their design processes, Amphenol manufactures connectors to customers' individual specifications. Once Amphenol's connectors are "designed in" in this way, customers are less likely to switch to another supplier. The gains for these and others stocks were modestly offset by weakness in two automotive-supplier manufacturers (Gentex Corp. and Lear Corp.), an industrial holding (ChoicePoint, Inc.) and at Omnicare, Inc. a provider of pharmaceuticals and pharmacy services to nursing, assisted living and healthcare facilities. Omnicare was hurt by a dispute with its largest customer. 9 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- We sold our position in Lear Corp., which designs and manufacturers automotive interior systems and components. Feeling the effects of troubles at its biggest customers, America's major auto manufacturers, the company is struggling to find a reliable way to improve profits. Gentex also has been impacted by the weakness among American auto makers, as well as manufacturing issues of its own. We maintained our position in Gentex, however, in the belief that this company can recover. We also maintained our investments in ChoicePoint. ChoicePoint, a provider of data and data analysis to industry and government, experienced slower-than-expected growth. In both cases, we believe the issues can be resolved positively. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until October 31, 2006. In the case of Class A shares, performance is measured over a ten-fiscal-year period. In the case of Class B and Class C, performance is measured from inception of those classes on March 3, 1997. In the case of Class N shares, performance is measured from inception of the Class on March 1, 2001. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. Past performance cannot guarantee future results. The Fund's performance is compared to the performance of the Standard & Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded as a general measure of the performance of the U.S. equity securities market. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of the Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the index. 10 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class A) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class A) S&P 500 Index ------------------- ------------- 10/31/1996 $ 9,425 $ 10,000 01/31/1997 $ 9,571 $ 13,062 04/30/1997 $ 9,037 $ 13,378 07/31/1997 $ 10,456 $ 16,006 10/31/1997 $ 10,795 $ 15,406 01/31/1998 $ 10,972 $ 16,576 04/30/1998 $ 12,507 $ 18,871 07/31/1998 $ 12,465 $ 19,096 10/31/1998 $ 12,229 $ 18,797 01/31/1999 $ 13,663 $ 21,965 04/30/1999 $ 13,867 $ 22,991 07/31/1999 $ 13,198 $ 22,954 10/31/1999 $ 13,265 $ 23,621 01/31/2000 $ 13,167 $ 24,236 04/30/2000 $ 14,679 $ 25,318 07/31/2000 $ 14,945 $ 25,012 10/31/2000 $ 16,001 $ 25,056 01/31/2001 $ 16,531 $ 24,018 04/30/2001 $ 16,193 $ 22,035 07/31/2001 $ 15,911 $ 21,430 10/31/2001 $ 14,415 $ 18,820 01/31/2002 $ 15,630 $ 20,143 04/30/2002 $ 15,884 $ 19,255 07/31/2002 $ 13,301 $ 16,369 10/31/2002 $ 13,421 $ 15,979 01/31/2003 $ 13,245 $ 15,509 04/30/2003 $ 13,976 $ 16,693 07/31/2003 $ 15,370 $ 18,110 10/31/2003 $ 16,686 $ 19,300 01/31/2004 $ 18,115 $ 20,866 04/30/2004 $ 18,009 $ 20,510 07/31/2004 $ 18,434 $ 20,494 10/31/2004 $ 19,058 $ 21,117 01/31/2005 $ 20,405 $ 22,165 04/30/2005 $ 20,206 $ 21,809 07/31/2005 $ 21,461 $ 23,372 10/31/2005 $ 20,926 $ 22,957 01/31/2006 $ 23,200 $ 24,464 04/30/2006 $ 24,322 $ 25,169 07/31/2006 $ 23,157 $ 24,629 10/31/2006 $ 24,781 $ 26,705 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 10/31/06 1-Year 11.62% 5-Year 10.13% 10-Year 9.50% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE-INCEPTION" RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION. 11 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class B) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class B) S&P 500 Index ------------------- ------------- 03/03/1997 $ 10,000 $ 10,000 04/30/1997 $ 9,387 $ 10,162 07/31/1997 $ 10,842 $ 12,158 10/31/1997 $ 11,180 $ 11,702 01/31/1998 $ 11,344 $ 12,591 04/30/1998 $ 12,911 $ 14,335 07/31/1998 $ 12,844 $ 14,506 10/31/1998 $ 12,582 $ 14,278 01/31/1999 $ 14,034 $ 16,685 04/30/1999 $ 14,223 $ 17,464 07/31/1999 $ 13,517 $ 17,436 10/31/1999 $ 13,566 $ 17,942 01/31/2000 $ 13,455 $ 18,410 04/30/2000 $ 14,976 $ 19,231 07/31/2000 $ 15,229 $ 19,000 10/31/2000 $ 16,283 $ 19,033 01/31/2001 $ 16,801 $ 18,244 04/30/2001 $ 16,429 $ 16,738 07/31/2001 $ 16,115 $ 16,278 10/31/2001 $ 14,577 $ 14,296 01/31/2002 $ 15,782 $ 15,300 04/30/2002 $ 16,013 $ 14,626 07/31/2002 $ 13,390 $ 12,434 10/31/2002 $ 13,480 $ 12,138 01/31/2003 $ 13,278 $ 11,780 04/30/2003 $ 14,012 $ 12,680 07/31/2003 $ 15,409 $ 13,757 10/31/2003 $ 16,729 $ 14,661 01/31/2004 $ 18,162 $ 15,850 04/30/2004 $ 18,055 $ 15,580 07/31/2004 $ 18,481 $ 15,567 10/31/2004 $ 19,107 $ 16,040 01/31/2005 $ 20,457 $ 16,836 04/30/2005 $ 20,258 $ 16,566 07/31/2005 $ 21,516 $ 17,754 10/31/2005 $ 20,979 $ 17,438 01/31/2006 $ 23,259 $ 18,583 04/30/2006 $ 24,384 $ 19,118 07/31/2006 $ 23,217 $ 18,708 10/31/2006 $ 24,845 $ 20,285 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 10/31/06 1-Year 12.37% 5-Year 10.25% Since Inception (3/3/97) 9.88% 12 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class C) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class C) S&P 500 Index ------------------- ------------- 03/03/1997 $ 10,000 $ 10,000 04/30/1997 $ 9,390 $ 10,162 07/31/1997 $ 10,845 $ 12,158 10/31/1997 $ 11,182 $ 11,702 01/31/1998 $ 11,346 $ 12,591 04/30/1998 $ 12,912 $ 14,335 07/31/1998 $ 12,845 $ 14,506 10/31/1998 $ 12,579 $ 14,278 01/31/1999 $ 14,030 $ 16,685 04/30/1999 $ 14,218 $ 17,464 07/31/1999 $ 13,513 $ 17,436 10/31/1999 $ 13,562 $ 17,942 01/31/2000 $ 13,451 $ 18,410 04/30/2000 $ 14,975 $ 19,231 07/31/2000 $ 15,223 $ 19,000 10/31/2000 $ 16,281 $ 19,033 01/31/2001 $ 16,793 $ 18,244 04/30/2001 $ 16,429 $ 16,738 07/31/2001 $ 16,116 $ 16,278 10/31/2001 $ 14,572 $ 14,296 01/31/2002 $ 15,783 $ 15,300 04/30/2002 $ 16,014 $ 14,626 07/31/2002 $ 13,387 $ 12,434 10/31/2002 $ 13,476 $ 12,138 01/31/2003 $ 13,275 $ 11,780 04/30/2003 $ 13,982 $ 12,680 07/31/2003 $ 15,344 $ 13,757 10/31/2003 $ 16,624 $ 14,661 01/31/2004 $ 18,008 $ 15,850 04/30/2004 $ 17,866 $ 15,580 07/31/2004 $ 18,241 $ 15,567 10/31/2004 $ 18,818 $ 16,040 01/31/2005 $ 20,099 $ 16,836 04/30/2005 $ 19,862 $ 16,566 07/31/2005 $ 21,043 $ 17,754 10/31/2005 $ 20,473 $ 17,438 01/31/2006 $ 22,646 $ 18,583 04/30/2006 $ 23,696 $ 19,118 07/31/2006 $ 22,499 $ 18,708 10/31/2006 $ 24,034 $ 20,285 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 10/31/06 1-Year 16.39% 5-Year 10.53% Since Inception (3/3/97) 9.50% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE-INCEPTION" RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION. 13 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class N) S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Quest Capital Value Fund, Inc.(SM) (Class N) S&P 500 Index ------------------- ------------- 03/01/2001 $ 10,000 $ 10,000 04/30/2001 $ 10,103 $ 10,094 07/31/2001 $ 9,914 $ 9,817 10/31/2001 $ 8,981 $ 8,621 01/31/2002 $ 9,739 $ 9,227 04/30/2002 $ 9,884 $ 8,821 07/31/2002 $ 8,277 $ 7,499 10/31/2002 $ 8,343 $ 7,320 01/31/2003 $ 8,233 $ 7,104 04/30/2003 $ 8,677 $ 7,647 07/31/2003 $ 9,537 $ 8,296 10/31/2003 $ 10,345 $ 8,841 01/31/2004 $ 11,219 $ 9,559 04/30/2004 $ 11,144 $ 9,396 07/31/2004 $ 11,392 $ 9,388 10/31/2004 $ 11,768 $ 9,674 01/31/2005 $ 12,581 $ 10,154 04/30/2005 $ 12,447 $ 9,991 07/31/2005 $ 13,207 $ 10,707 10/31/2005 $ 12,863 $ 10,517 01/31/2006 $ 14,249 $ 11,207 04/30/2006 $ 14,925 $ 11,530 07/31/2006 $ 14,191 $ 11,282 10/31/2006 $ 15,170 $ 12,234 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 10/31/06 1-Year 16.93% 5-Year 11.05% Since Inception (3/1/01) 7.63% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE-INCEPTION" RETURN FOR CLASS B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 15 FOR FURTHER INFORMATION. 14 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES - -------------------------------------------------------------------------------- Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. OppenheimerFunds, Inc. became the Fund's advisor on 2/28/97. The Fund's subadvisor since 1/1/05 is Oppenheimer Capital LLC, parent to the Fund's subadvisor prior to 1/1/05, OpCap Advisors (the Fund's advisor until 2/28/97). The Fund commenced operations on 2/13/87 as a closed-end investment company, formerly named Quest for Value Dual Purpose Fund, Inc., with a dual purpose structure and two classes of shares, Income shares and Capital shares. Under the prior dual-purpose structure, Capital shares were entitled to all gains and losses on all Fund assets and no expenses were allocated to such shares; the Income shares bore all of the Fund's operating expenses. On 1/31/97, the Fund redeemed its Income shares, which are no longer outstanding, and its dual-purpose structure terminated. On 3/3/97, the Fund converted from a closed-end fund to an open-end fund, and its outstanding Capital shares were designated as Class A shares now bearing their allocable share of the Fund's expenses. 15 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES - -------------------------------------------------------------------------------- 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 Directors has set the rate at zero. CLASS B shares of the Fund were first publicly offered on 3/3/97. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since-inception" returns for Class B uses Class A performance for the period after conversion. Class B shares are subject to a maximum annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 3/3/97. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 16 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended October 31, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 17 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FUND EXPENSES - -------------------------------------------------------------------------------- the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (5/1/06) (10/31/06) OCTOBER 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,018.90 $ 6.53 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,018.75 6.53 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,014.30 11.03 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,014.32 11.03 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,014.30 11.03 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,014.32 11.03 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,016.40 8.73 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,016.59 8.73 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended October 31, 2006 are as follows: CLASS EXPENSE RATIOS - ------------------------ Class A 1.28% - ------------------------ Class B 2.16 - ------------------------ Class C 2.16 - ------------------------ Class N 1.71 The expense ratios reflect voluntary waivers or reimbursements of expenses by the Fund's Transfer Agent that can be terminated at any time, without advance notice. The "Financial Highlights" tables in the Fund's financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements. - -------------------------------------------------------------------------------- 18 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF INVESTMENTS October 31, 2006 - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS--97.8% - -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--16.7% - -------------------------------------------------------------------------------- AUTO COMPONENTS--0.8% Gentex Corp. 291,521 $ 4,638,099 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES--2.2% Centex Corp. 221,300 11,573,990 - -------------------------------------------------------------------------------- MEDIA--5.9% Lamar Advertising Co., Cl. A 1 126,800 7,313,824 - -------------------------------------------------------------------------------- Omnicom Group, Inc. 140,421 14,245,710 - -------------------------------------------------------------------------------- WPP Group plc, Sponsored ADR 154,600 9,894,400 --------------- 31,453,934 - -------------------------------------------------------------------------------- MULTILINE RETAIL--1.2% Federated Department Stores, Inc. 144,200 6,331,822 - -------------------------------------------------------------------------------- SPECIALTY RETAIL--4.9% Claire's Stores, Inc. 332,100 9,415,035 - -------------------------------------------------------------------------------- TJX Cos., Inc. (The) 573,500 16,602,825 --------------- 26,017,860 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS--1.7% K-Swiss, Inc., Cl. A 258,000 9,112,560 - -------------------------------------------------------------------------------- ENERGY--3.7% - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--0.9% National Oilwell Varco, Inc. 1 74,000 4,469,600 - -------------------------------------------------------------------------------- OIL & GAS--2.8% ConocoPhillips 86,200 5,192,688 - -------------------------------------------------------------------------------- Range Resources Corp. 158,400 4,300,560 - -------------------------------------------------------------------------------- XTO Energy, Inc. 120,500 5,622,530 --------------- 15,115,778 - -------------------------------------------------------------------------------- FINANCIALS--31.7% - -------------------------------------------------------------------------------- CAPITAL MARKETS--2.7% Merrill Lynch & Co., Inc. 165,600 14,476,752 - -------------------------------------------------------------------------------- COMMERCIAL BANKS--5.6% M&T Bank Corp. 45,300 5,517,993 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMERCIAL BANKS Continued Prosperity Bancshares, Inc. 81,700 $ 2,834,173 - -------------------------------------------------------------------------------- TCF Financial Corp. 188,600 4,909,258 - -------------------------------------------------------------------------------- Zions Bancorp 208,000 16,723,200 --------------- 29,984,624 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--9.9% CIT Group, Inc. 177,700 9,249,285 - -------------------------------------------------------------------------------- Citigroup, Inc. 417,700 20,951,832 - -------------------------------------------------------------------------------- JPMorgan Chase & Co. 477,700 22,662,088 --------------- 52,863,205 - -------------------------------------------------------------------------------- INSURANCE--11.3% Conseco, Inc. 1 300,300 6,108,102 - -------------------------------------------------------------------------------- Everest Re Group Ltd. 127,600 12,655,368 - -------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. (The) 93,300 8,132,961 - -------------------------------------------------------------------------------- MBIA, Inc. 82,900 5,141,458 - -------------------------------------------------------------------------------- Partnerre Holdings Ltd. 110,200 7,705,184 - -------------------------------------------------------------------------------- Reinsurance Group of America, Inc. 221,700 12,503,880 - -------------------------------------------------------------------------------- StanCorp Financial Group, Inc. 172,200 7,867,818 --------------- 60,114,771 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE--2.2% MGIC Investment Corp. 197,000 11,575,720 - -------------------------------------------------------------------------------- HEALTH CARE--13.1% - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.7% Beckman Coulter, Inc. 154,700 8,906,079 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--3.6% Laboratory Corp. of America Holdings 1 243,100 16,649,919 - -------------------------------------------------------------------------------- Omnicare, Inc. 69,300 2,625,084 --------------- 19,275,003 19 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES--4.5% Invitrogen Corp. 1 174,300 $ 10,111,143 - -------------------------------------------------------------------------------- Thermo Electron Corp. 1 330,200 14,155,674 --------------- 24,266,817 - -------------------------------------------------------------------------------- PHARMACEUTICALS--3.3% Pfizer, Inc. 220,000 5,863,000 - -------------------------------------------------------------------------------- Roche Holdings AG 66,000 11,549,536 --------------- 17,412,536 - -------------------------------------------------------------------------------- INDUSTRIALS--9.9% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE--5.5% DRS Technologies, Inc. 152,400 6,739,128 - -------------------------------------------------------------------------------- Goodrich Corp. 130,100 5,736,109 - -------------------------------------------------------------------------------- L-3 Communications Holdings, Inc. 211,500 17,029,980 --------------- 29,505,217 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--1.1% ChoicePoint, Inc. 1 154,800 5,633,172 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--1.4% General Electric Co. 207,400 7,281,814 - -------------------------------------------------------------------------------- MACHINERY--1.9% Actuant Corp., Cl. A 108,000 5,544,720 - -------------------------------------------------------------------------------- Oshkosh Truck Corp. 103,700 4,688,277 --------------- 10,232,997 - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--12.5% - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--2.2% Motorola, Inc. 502,700 11,592,262 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--5.1% Amphenol Corp., Cl. A 110,300 7,489,370 - -------------------------------------------------------------------------------- CDW Corp. 135,400 8,891,718 - -------------------------------------------------------------------------------- Jabil Circuit, Inc. 381,800 10,961,478 --------------- 27,342,566 - -------------------------------------------------------------------------------- OFFICE ELECTRONICS--2.1% Zebra Technologies Corp., Cl. A 1 299,600 11,166,092 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.1% KLA-Tencor Corp. 169,500 8,334,315 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT Continued Taiwan Semiconductor Manufacturing Co. Ltd., ADR 880,744 $ 8,543,217 --------------- 16,877,532 - -------------------------------------------------------------------------------- MATERIALS--1.4% - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING--1.4% Smurfit-Stone Container Corp. 1 683,200 7,282,912 - -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--1.8% - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.0% Windstream Corp. 395,802 5,430,403 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--0.8% Alltel Corp. 76,700 4,088,877 - -------------------------------------------------------------------------------- UTILITIES--7.0% - -------------------------------------------------------------------------------- MULTI-UTILITIES & UNREGULATED POWER--7.0% Dominion Resources, Inc. 145,000 11,743,550 - -------------------------------------------------------------------------------- Duke Energy Corp. 663,300 20,986,812 - -------------------------------------------------------------------------------- SCANA Corp. 117,000 4,675,321 --------------- 37,405,683 --------------- Total Common Stocks (Cost $453,522,617) 521,428,677 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------- SHORT-TERM NOTES--2.2% - -------------------------------------------------------------------------------- Federal Home Loan Bank, 4.98%, 11/1/06 (Cost $11,854,000) $ 11,854,000 11,854,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $465,376,617) 100.0% 533,282,677 - -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS 0.0 (204,076) ------------------------------- NET ASSETS 100.0% $ 533,078,601 =============================== FOOTNOTE TO STATEMENT OF INVESTMENTS 1. Non-income producing security. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------- Investments, at value (cost $465,376,617)--see accompanying statement of investments $ 533,282,677 - ------------------------------------------------------------------------------------------------------- Cash 70,245 - ------------------------------------------------------------------------------------------------------- Receivables and other assets: Shares of capital stock sold 771,883 Interest and dividends 185,876 Other 28,210 --------------- Total assets 534,338,891 - ------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------- Payables and other liabilities: Shares of capital stock redeemed 924,816 Distribution and service plan fees 110,718 Transfer and shareholder servicing agent fees 94,396 Directors' compensation 62,920 Shareholder communications 46,411 Other 21,029 --------------- Total liabilities 1,260,290 - ------------------------------------------------------------------------------------------------------- NET ASSETS $ 533,078,601 =============== - ------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------------- Par value of shares of capital stock $ 1,880 - ------------------------------------------------------------------------------------------------------- Additional paid-in capital 425,005,087 - ------------------------------------------------------------------------------------------------------- Accumulated net investment income 387,927 - ------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 39,776,555 - ------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 67,907,152 --------------- NET ASSETS $ 533,078,601 ===============
21 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES Continued - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $382,512,571 and 13,123,521 shares of capital stock outstanding) $29.15 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $30.93 - ------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $76,582,576 and 2,915,340 shares of capital stock outstanding) $26.27 - ------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $54,970,804 and 2,089,574 shares of capital stock outstanding) $26.31 - ------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $19,012,650 and 666,665 shares of capital stock outstanding) $28.52
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF OPERATIONS For the Year Ended October 31, 2006 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $84,644) $ 7,477,751 - ------------------------------------------------------------------------------------------------------- Interest 789,931 - ------------------------------------------------------------------------------------------------------- Portfolio lending fees 323 - ------------------------------------------------------------------------------------------------------- Other income 12,011 --------------- Total investment income 8,280,016 - ------------------------------------------------------------------------------------------------------- EXPENSES - ------------------------------------------------------------------------------------------------------- Management fees 4,322,669 - ------------------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 862,463 Class B 765,315 Class C 517,710 Class N 89,847 - ------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 605,017 Class B 221,794 Class C 145,855 Class N 93,824 - ------------------------------------------------------------------------------------------------------- Shareholder communications: Class A 72,508 Class B 22,499 Class C 12,961 Class N 1,969 - ------------------------------------------------------------------------------------------------------- Directors' compensation 33,205 - ------------------------------------------------------------------------------------------------------- Custodian fees and expenses 5,566 - ------------------------------------------------------------------------------------------------------- Administration service fees 1,500 - ------------------------------------------------------------------------------------------------------- Other 114,832 --------------- Total expenses 7,889,534 Less reduction to custodian expenses (5,566) Less waivers and reimbursements of expenses (32,951) --------------- Net expenses 7,851,017 - ------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 428,999
23 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENT OF OPERATIONS Continued - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN - ------------------------------------------------------------------------------------------------------- Net realized gain on: Investments $ 45,672,731 Foreign currency transactions 2,931 --------------- Net realized gain 45,675,662 - ------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments 36,971,342 Translation of assets and liabilities denominated in foreign currencies 107,311 --------------- Net change in unrealized appreciation 37,078,653 - ------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 83,183,314 ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2006 2005 - ------------------------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------------------------ Net investment income (loss) $ 428,999 $ (1,948,392) - ------------------------------------------------------------------------------------------------------------------ Net realized gain 45,675,662 58,633,132 - ------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation 37,078,653 (21,273,522) ------------------------------ Net increase in net assets resulting from operations 83,183,314 35,411,218 - ------------------------------------------------------------------------------------------------------------------ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------ Distributions from net realized gain: Class A (35,134,229) (20,205,360) Class B (8,357,741) (5,450,917) Class C (5,324,375) (2,913,193) Class N (1,754,083) (840,494) - ------------------------------------------------------------------------------------------------------------------ CAPITAL STOCK TRANSACTIONS - ------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from capital stock transactions: Class A 18,026,045 81,732,028 Class B (1,297,118) 9,594,810 Class C 5,624,017 11,963,644 Class N 1,395,263 5,726,757 - ------------------------------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------------------------------ Total increase 56,361,093 115,018,493 - ------------------------------------------------------------------------------------------------------------------ Beginning of period 476,717,508 361,699,015 ------------------------------ End of period (including accumulated net investment income (loss) of $387,927 and $(44,003), respectively) $ 533,078,601 $476,717,508 ==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 27.34 $ 26.89 $ 23.71 $ 19.07 $ 20.91 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .09 1 (.05) 1 (.10) (.09) (.13) Net realized and unrealized gain (loss) 4.61 2.58 3.45 4.73 (1.25) ----------------------------------------------------------------------------- Total from investment operations 4.70 2.53 3.35 4.64 (1.38) - --------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.89) (2.08) (.17) -- (.46) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07 ============================================================================= - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 18.43% 9.80% 14.22% 24.33% (6.90)% - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 382,512 $ 339,703 $ 252,661 $ 193,955 $ 150,161 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 369,074 $ 309,617 $ 225,711 $ 165,906 $ 164,479 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) 0.32% (0.19)% (0.37)% (0.43)% (0.61)% Total expenses 1.29% 1.34% 1.40% 1.56% 1.71% Expenses after payments and waivers and reduction to custodian expenses 1.28% 1.34% 1.40% 1.56% 1.71% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 56% 89% 61% 74% 75%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 26 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.11 $ 25.07 $ 22.31 $ 18.09 $ 19.99 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.14) 1 (.28) 1 (.29) (.22) (.19) Net realized and unrealized gain (loss) 4.19 2.40 3.22 4.44 (1.25) ----------------------------------------------------------------------------- Total from investment operations 4.05 2.12 2.93 4.22 (1.44) - --------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.89) (2.08) (.17) -- (.46) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 26.27 $ 25.11 $ 25.07 $ 22.31 18.09 ============================================================================= - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 17.37% 8.81% 13.22% 23.33% (7.53)% - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 76,583 $ 74,004 $ 64,069 $ 55,449 $ 42,010 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 76,606 $ 73,417 $ 60,460 $ 46,785 $ 42,900 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (0.58)% (1.10)% (1.26)% (1.23)% (1.30)% Total expenses 2.19% 2.25% 2.30% 2.43% 2.41% Expenses after payments and waivers and reduction to custodian expenses 2.19% 2.25% 2.30% 2.36% 2.41% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 56% 89% 61% 74% 75%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 27 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS C YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.14 $ 25.10 $ 22.34 $ 18.11 $ 20.01 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.14) 1 (.27) 1 (.29) (.14) (.13) Net realized and unrealized gain (loss) 4.20 2.39 3.22 4.37 (1.31) ----------------------------------------------------------------------------- Total from investment operations 4.06 2.12 2.93 4.23 (1.44) - --------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.89) (2.08) (.17) -- (.46) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11 ============================================================================= - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 17.39% 8.80% 13.20% 23.36% (7.52)% - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 54,971 $ 46,560 $ 34,414 $ 30,510 $ 16,979 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 51,822 $ 42,635 $ 32,051 $ 20,901 $ 15,323 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (0.57)% (1.09)% (1.26)% (1.24)% (1.30)% Total expenses 2.17% 2.24% 2.31% 2.43% 2.41% Expenses after payments and waivers and reduction to custodian expenses 2.17% 2.24% 2.31% 2.36% 2.41% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 56% 89% 61% 74% 75%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 28 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS N YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 26.91 $ 26.61 $ 23.56 $ 19.00 $ 20.88 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.03) 1 (.16) 1 (.19) (.15) (.17) Net realized and unrealized gain (loss) 4.53 2.54 3.41 4.71 (1.25) ----------------------------------------------------------------------------- Total from investment operations 4.50 2.38 3.22 4.56 (1.42) - --------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions from net realized gain (2.89) (2.08) (.17) -- (.46) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00 ============================================================================= - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 17.93% 9.31% 13.75% 24.00% (7.10)% - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 19,013 $ 16,451 $ 10,554 $ 6,408 $ 2,983 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 17,985 $ 13,849 $ 8,724 $ 4,218 $ 1,475 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (0.12)% (0.61)% (0.78)% (0.75)% (0.88)% Total expenses 1.90% 2.08% 2.20% 1.97% 1.87% Expenses after payments and waivers and reduction to custodian expenses 1.72% 1.76% 1.81% 1.87% 1.87% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 56% 89% 61% 74% 75%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 29 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Quest Capital Value Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager has entered into a subadvisory agreement with Oppenheimer Capital LLC. The Fund offers Class A, Class B, Class C and Class N shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Directors. Securities listed or traded on National Stock Exchanges or other domestic exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. Securities traded on NASDAQ(R) are valued based on the closing price provided by NASDAQ prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing "bid" and "asked" prices, and if not, at the closing bid price. Securities traded on foreign exchanges are valued based on the last sale price on the principal exchan-ge on which the security is traded, as identified by the portfolio pricing service, prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the official closing price on the principal exchange. Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund's assets are valued. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring 30 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. 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. Investments in open-end registered investment companies are valued at that fund's net asset value. 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 recor-ded 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. Oper-ating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes. 31 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued NET UNREALIZED APPRECIATION BASED ON COST OF SECURITIES AND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES ------------------------------------------------------------------------ $13,044,241 $27,185,677 $-- $67,907,152 1. During the fiscal year ended October 31, 2006, the Fund did not utilize any capital loss carryforward. 2. During the fiscal year ended October 31, 2005, the Fund did not utilize any capital loss carryforward. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for October 31, 2006. Net assets of the Fund were unaffected by the reclassifications. INCREASE TO REDUCTION TO ACCUMULATED ACCUMULATED NET INCREASE TO NET INVESTMENT REALIZED GAIN PAID-IN CAPITAL INCOME ON INVESTMENTS 3 ------------------------------------------------------------ $5,688,356 $2,931 $5,691,287 3. $5,688,356, including $4,227,865 of long-term capital gain, was distributed in connection with Fund share redemptions. The tax character of distributions paid during the years ended October 31, 2006 and October 31, 2005 was as follows: YEAR ENDED YEAR ENDED OCT. 31, 2006 OCT. 31, 2005 ------------------------------------------------------------ Distributions paid from: Ordinary income $ 1,473,065 $ 7,524,389 Long-term capital gain 49,097,363 21,885,575 ------------------------------- Total $ 50,570,428 $ 29,409,964 =============================== The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of October 31, 2006 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. 32 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. Federal tax cost of securities $ 465,376,617 ============== Gross unrealized appreciation $ 79,933,681 Gross unrealized depreciation (12,026,529) -------------- Net unrealized appreciation $ 67,907,152 ============== - -------------------------------------------------------------------------------- DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent directors. Benefits are based on years of service and fees paid to each director during the years of service. During the year ended October 31, 2006, the Fund's projected benefit obligations were increased by $25,417 and payments of $5,029 were made to retired directors, resulting in an accumulated liability of $58,938 as of October 31, 2006. 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, to the extent they are not offset by positive cash balances maintained by the Fund, 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 33 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Fund's organizational documents provide current and former directors and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- 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 aggregate to be apportioned among each class of shares. Transactions in shares of capital stock were as follows:
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------ CLASS A Sold 3,428,582 $ 94,959,032 5,126,318 $139,073,180 Dividends and/or distributions reinvested 1,216,605 31,765,567 685,289 17,830,853 Redeemed (3,947,226) (108,698,554) (2,781,682) (75,172,005) ------------------------------------------------------------ Net increase 697,961 $ 18,026,045 3,029,925 $ 81,732,028 ============================================================ - ------------------------------------------------------------------------------------------ CLASS B Sold 662,085 $ 16,582,767 1,048,244 $ 26,362,973 Dividends and/or distributions reinvested 332,565 7,888,450 211,813 5,102,574 Redeemed (1,026,360) (25,768,335) (868,351) (21,870,737) ------------------------------------------------------------ Net increase (decrease) (31,710) $ (1,297,118) 391,706 $ 9,594,810 ============================================================
34 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------ CLASS C Sold 534,433 $ 13,374,856 752,642 $ 18,936,146 Dividends and/or distributions reinvested 203,472 4,832,457 110,036 2,654,047 Redeemed (500,237) (12,583,296) (381,897) (9,626,549) ------------------------------------------------------------ Net increase 237,668 $ 5,624,017 480,781 $ 11,963,644 ============================================================ - ------------------------------------------------------------------------------------------ CLASS N Sold 185,780 $ 5,032,410 306,714 $ 8,253,911 Dividends and/or distributions reinvested 64,913 1,664,380 32,272 829,719 Redeemed (195,260) (5,301,527) (124,402) (3,356,873) ------------------------------------------------------------ Net increase 55,433 $ 1,395,263 214,584 $ 5,726,757 ============================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended October 31, 2006, were as follows: PURCHASES SALES - ------------------------------------------------------------ Investment securities $277,791,975 $286,626,453 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of average net assets as shown in the following table: FEE SCHEDULE -------------------------------------------- Up to $400 million 0.85% Next $400 million 0.80 Next $400 million 0.75 Next $400 million 0.65 Next $400 million 0.60 Over $2.0 billion 0.50 - -------------------------------------------------------------------------------- ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund's tax returns. - -------------------------------------------------------------------------------- SUB-ADVISOR FEES. The Manager retains Oppenheimer Capital LLC (the "Sub-Advisor") to provide the day-to-day portfolio management of the Fund. Under the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual fee in monthly installments, based on the average daily net assets of the Fund. The fee paid to the Sub-Advisor under the Sub-Advisory agreement is paid by the Manager, not by the Fund. The fee is calculated as a percentage of the fee the Fund pays the Manager. The rate is 40% of the advisory fee collected by the Manager based on the net assets of the Fund as of February 28, 1997, and remaining 120 days later, plus 30% of the fee collected by the Manager on assets in excess of that amount. In each case the fee is calculated after any waivers of the 35 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued Manager's fee from the Fund. For the year ended October 31, 2006, the Manager paid $1,581,320 to the Sub-Advisor for its services to the Fund. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended October 31, 2006, the Fund paid $1,029,879 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 Distributor of up to 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 periodically 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 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 up to 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Directors and its independent directors must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor determines its uncompensated expenses under the plan at calendar quarter ends. The Distributor's aggregate uncompensated expenses under the plan at September 30, 2006 for Class B, Class C and Class N shares were $625,348, $584,895 and $249,221, 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 following table for the period indicated. 36 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ------------------------------------------------------------------------------------------------------ October 31, 2006 $240,266 $7,369 $124,391 $18,111 $4,783
- -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended October 31, 2006, OFS waived $32,951 for Class N shares. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Contracts closed or settled with the same broker are recorded as net realized gains or losses. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of October 31, 2006, 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 securities, letters of credit 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 each day. If the Fund is undercollateralized at the close of business due to an increase in market value of securities on loan, additional collateral is requested from the borrowing counterparty and is delivered to the Fund on the next business day. Cash collateral may be invested in approved investments and the Fund bears the risk of any loss in value of these investments. The Fund retains a portion of the interest earned from the collateral. If the borrower defaults on its obligation to return the securities loaned because of insolvency 37 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. SECURITIES LENDING Continued or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower. As of Ocotber 31, 2006, the Fund had no securities on loan. - -------------------------------------------------------------------------------- 7. RECENT ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES . FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, ACCOUNTING FOR INCOME TAXES . FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Fund's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of October 31, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Fund's financial statements has not yet been determined. In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. As of October 31, 2006, the Manager does not believe the adoption of SFAS No. 157 will materially impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. - -------------------------------------------------------------------------------- 8. LITIGATION A consolidated amended complaint was filed as a putative class action against the Man-ager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds including the Fund) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. 38 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 39 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.: We have audited the accompanying statement of assets and liabilities of Oppenheimer Quest Capital Value Fund, Inc., including the statement of investments, as of October 31, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2006, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Quest Capital Value Fund, Inc. as of October 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Denver, Colorado December 12, 2006 40 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2007, if applicable, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2006. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Capital gain distributions of $2.8067 per share were paid to Class A, Class B, Class C and Class N shareholders, respectively, on December 8, 2005. Whether received in stock or in cash, the capital gain distribution should be treated by shareholders as a gain from the sale of the capital assets held for more than one year (long-term capital gains). Dividends, if any, paid by the Fund during the fiscal year ended October 31, 2006 which are not designated as capital gain distributions should be multiplied by 45.50% to arrive at the amount eligible for the corporate dividend-received deduction. A portion, if any, of the dividends paid by the Fund during the fiscal year ended October 31, 2006 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $7,562,394 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2007, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. Recent tax legislation allows a regulated investment company to designate distributions not designated as capital gain distributions, as either interest related dividends or short-term capital gain dividends, both of which are exempt from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal year ended October 31, 2006, $14,151,547 or 100% of the short-term capital gain distribution paid by the Fund qualifies as a short-term capital gain dividend. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 41 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's voting record is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 42 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. DIRECTORS AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ NAME, POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER HELD WITH THE FUND, LENGTH TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE OF SERVICE, AGE FUND COMPLEX CURRENTLY OVERSEEN INDEPENDENT DIRECTORS THE ADDRESS OF EACH DIRECTOR IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH DIRECTOR SERVES FOR A INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm) Chairman of the Board (since 1982); General Partner of Trivest Venture Fund of Directors (since 2001), (private venture capital fund); President of Investment Director (since 1996) Counseling Federated Investors, Inc. (1973-1982); Trustee of Age: 73 the following open-end investment companies: Cash Assets Trust (1984), Premier VIT (formerly PIMCO Advisors VIT), Tax Free Trust of Arizona (since 1984) and four funds for the Hawaiian Tax Free Trust. Oversees 11 portfolios in the OppenheimerFunds complex. DAVID K. DOWNES, President, Chief Executive Officer and Board Member of Director (since 2005) CRAFund Advisors, Inc. (investment management company) Age: 66 (since January 2004); President of The Community Reinvestment Act Qualified Investment Fund (investment management company) (since January 2004); Independent Chairman of the Board of Trustees of Quaker Investment Trust (registered investment company) (since January 2004); Director of Internet Capital Group (information technology company) (since October 2003); Chief Operating Officer and Chief Financial Officer of Lincoln National Investment Companies, Inc. (subsidiary of Lincoln National Corporation, a publicly traded company) and Delaware Investments U.S., Inc. (investment management subsidiary of Lincoln National Corporation) (1995-2003); President, Chief Executive Officer and Trustee of Delaware Investment Family of Funds (1995-2003); President and Board Member of Lincoln National Convertible Securities Funds, Inc. and the Lincoln National Income Funds, TDC (1995-2003); Chairman and Chief Executive Officer of Retirement Financial Services, Inc. (registered transfer agent and investment adviser and subsidiary of Delaware Investments U.S., Inc.) (1995-2003); President and Chief Executive Officer of Delaware Service Company, Inc. (1995-2003); Chief Administrative Officer, Chief Financial Officer, Vice Chairman and Director of Equitable Capital Management Corporation (investment subsidiary of Equitable Life Assurance Society) (1985-1992); Corporate Controller of Merrill Lynch & Company (financial services holding company) (1977-1985); held the following positions at the Colonial Penn Group, Inc. (insurance company): Corporate Budget Director (1974-1977), Assistant Treasurer (1972-1974) and Director of Corporate Taxes (1969-1972); held the following positions at Price Waterhouse & Company (financial services firm): Tax Manager (1967-1969), Tax Senior (1965-1967) and Staff Accountant (1963-1965); United States Marine Corps (1957-1959). Oversees 10 portfolios in the OppenheimerFunds complex. ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees Director (since 1998) 55 portfolios in the OppenheimerFunds complex. Age: 73 LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Group of Funds Director (since 1996) (open-end investment company) (since December 2004); Age: 77 Chairman of Aquila Management Corporation and Aquila Investment Management LLC (since August 1984); Chief Executive Officer and President of Aquila Management Corporation (August 1984-December 1994); Vice President, Director and Secretary of Aquila Distributors, Inc. (distributor of Aquila Management Corporation); Treasurer of Aquila Distributors, Inc.; President and Chairman of the Board of Trustees of Capital Cash Management Trust ("CCMT"); President and Director of STCM Management Company, Inc. (sponsor and adviser to CCMT); Chairman,
43 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. DIRECTORS AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- LACY B. HERRMANN, President and Director of InCap Management Corporation; Continued Sub-Advisor and Administrator of Prime Cash Fund & Short Term Asset Reserves; Director of OCC Cash Reserves, Inc. (open-end investment company) (June 2003-December 2004); Trustee of Premier VIT (formerly PIMCO Advisors VIT) (investment com- pany) (since 1994); Trustee of OCC Accumulation Trust (open-end investment company) (until December 2004); Trustee Emeritus of Brown University (since June 1983). Oversees 11 portfolios in the OppenheimerFunds complex. BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since Director (since 2001) September 1995); Director of Special Value Opportunities Age: 63 Fund, LLC (registered investment company) (since September 2004); Member, Zurich Financial Investment Advisory Board (insurance) (affiliate of the Manager's parent company) (since October 2004); Board of Governing Trustees of The Jackson Laboratory (non-profit) (since August 1990); Trustee of the Institute for Advanced Study (non-profit educational institute) (since May 1992); Special Limited Partner of Odyssey Investment Partners, LLC (private equity investment) (January 1999-September 2004); Trustee of Research Foundation of AIMR (2000-2002) (investment research, non-profit); Governor, Jerome Levy Economics Institute of Bard College (August 1990-September 2001) (economics research); Director of Ray & Berendtson, Inc. (May 2000-April 2002) (executive search firm); President and Chief Executive Officer of the Delaware Group of Mutual Funds (1992-1995); Chairman, President and Chief Executive Officer of Equitable Capital Management Corporation (1985-1992); Vice President, Senior Vice President, Executive Vice President and Chief Investment Officer at The Equitable Life Assurance Society of the U.S. (1979-1992); Vice President and Co-manager of Fundamental Equities Research at Smith Barney, Harris Upham and Company (1970-1979); Engineer, Sperry Gyroscope Company (1966-1970); former governor of the Association for Investment Management and Research; former chairman of the Institute of Chartered Financial Analysts; Chartered Financial Analyst. Oversees 55 portfolios in the OppenheimerFunds complex. - ------------------------------------------------------------------------------------------------ INTERESTED DIRECTOR MR. MURPHY IS AN "INTERESTED DIRECTOR" BECAUSE HE IS AND OFFICER AFFILIATED WITH THE MANAGER BY VIRTUE OF HIS POSITIONS AS AN OFFICER AND DIRECTOR OF THE MANAGER, AND AS A SHAREHOLDER OF ITS PARENT COMPANY. THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A DIRECTOR FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June Director (since 2005) and 2001) and President (since September 2000) of the Manager; President and Principal President and director or trustee of other Oppenheimer funds; Executive Officer (since 2001) President and Director of Oppenheimer Acquisition Corp. Age: 57 ("OAC") (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November 2001); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since July 2001); Director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and Director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company
44 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. JOHN V. MURPHY, (OAC's parent company) (since February 1997); Director of DLB Continued Acquisition Corporation (holding company parent of Babson Capital Management LLC) (since June 1995); Member of the Investment Company Institute's Board of Governors (since October 3, 2003); Chief Operating Officer of the Manager (September 2000-June 2001); President and Trustee of MML Series Investment Fund and MassMutual Select Funds (open-end investment companies) (November 1999-November 2001); Director of C.M. Life Insurance Company (September 1999-August 2000); President, Chief Executive Officer and Director of MML Bay State Life Insurance Company (September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees 92 portfolios in the OppenheimerFunds complex. - ------------------------------------------------------------------------------------------------ OTHER OFFICERS OF THE THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FUND FOLLOWS: FOR MESSRS. ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Vice President and Chief Manager (since March 2004); Vice President of Compliance Officer OppenheimerFunds Distributor, Inc., Centennial Asset (since 2004) Management Corporation and Shareholder Services, Inc. (since Age: 56 June 1983). Former Vice President and Director of Internal Audit of the Manager (1997-February 2004). An officer of 92 portfolios in the OppenheimerFunds complex. BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since Treasurer and Principal March 1999); Treasurer of the following: HarbourView Asset Financial and Accounting Management Corporation, Shareholder Financial Services, Inc., Officer (since 1999) Shareholder Services, Inc., Oppenheimer Real Asset Management Age: 47 Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. (since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March 1995-March 1999). An officer of 92 portfolios in the OppenheimerFunds complex. BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Assistant Treasurer Manager/Financial Product Accounting of the Manager (November (since 2004) 1998-July 2002). An officer of 92 portfolios in the Age: 36 OppenheimerFunds complex. BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Assistant Treasurer Director of Financial Reporting and Compliance of First Data (since 2005) Corporation (April 2003-July 2004); Manager of Compliance of Age: 36 Berger Financial Group LLC (May 2001-March 2003); Director of Mutual Fund Operations at American Data Services, Inc. (September 2000-May 2001). An officer of 92 portfolios in the OppenheimerFunds complex.
45 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. DIRECTORS AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- ROBERT G. ZACK, Executive Vice President (since January 2004) and General Secretary (since 2001) Counsel (since March 2002) of the Manager; General Counsel Age: 58 and Director of the Distributor (since December 2001); General Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May 1985-December 2003), Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An officer of 92 portfolios in the OppenheimerFunds complex. KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary Assistant Secretary (since October 2003) of the Manager; Vice (since 2001) President (since 1999) and Assistant Secretary (since Age: 41 October 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Assistant Counsel of the Manager (August 1994-October 2003). An officer of 92 portfolios in the OppenheimerFunds complex. LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since Assistant Secretary May 2004); First Vice President (April 2001-April 2004), (since 2004) Associate General Counsel (December 2000-April 2004), Age: 38 Corporate Vice President (May 1999-April 2001) and Assistant General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber Incorporated). An officer of 92 portfolios in the OppenheimerFunds complex. PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Assistant Secretary Manager (since September 2004); First Vice President (since 2004) (2001-September 2004); Director (2000-September 2004) and Age: 42 Vice President (1998-2000) of Merrill Lynch Investment Management. An officer of 92 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S DIRECTORS AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST, BY CALLING 1.800.525.7048. 46 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Directors of the registrant has determined that David Downes, a member of the Board's Audit Committee, is an audit committee financial expert and that Mr. Downes is "independent" for purposes of this Item 3. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $12,500 in fiscal 2006 and $10,000 in fiscal 2005. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed $195,954 in fiscal 2006 and $156,805 in fiscal 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: internal control reviews. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2006 and $6,536 in fiscal 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: Preparation of form 5500 (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. (e) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Under applicable laws, pre-approval of non-audit services maybe waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed $195,954 in fiscal 2006 and $163,341 in fiscal 2005 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (h) No such services were rendered. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. THE FUND'S AUDIT COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS 1. The Fund's Audit Committee (the "Committee") will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds' investment manager and its affiliates in making the selection. 2. The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the Committee considers, among other things, an individual's background, skills, and experience; whether the individual is an "interested person" as defined in the Investment Company Act of 1940; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder. 3. The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following: o the name, address, and business, educational, and/or other pertinent background of the person being recommended; o a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; o any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and o the name and address of the person submitting the recommendation and, if that person is a shareholder, the period for which that person held Fund shares. The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation. 4. Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds' investment adviser) would be deemed an "interested person" under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an "interested person." 5. Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company. ITEM 11. CONTROLS AND PROCEDURES. Based on their evaluation of the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of October 31, 2006, the registrant's principal executive officer and principal financial officer found the registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. There have been no changes in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Exhibit attached hereto. (2) Exhibits attached hereto. (3) Not applicable. (b) Exhibit attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer Quest Capital Value Fund, Inc. By: /s/ John V. Murphy _______________________________ John V. Murphy Principal Executive Officer Date: December 12, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ John V. Murphy _______________________________ John V. Murphy Principal Executive Officer Date: December 12, 2006 By: /s/ Brian W. Wixted _______________________________ Brian W. Wixted Principal Financial Officer Date: December 12, 2006 EX-99.CODE ETH 2 ra835_35960codeeth.txt RA835_35960CODEETH EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF THE OPPENHEIMER FUNDS AND OF OPPENHEIMERFUNDS, INC. This Code of Ethics for Principal Executive and Senior Financial Officers (referred to in this document as the "Code") has been adopted by each of the investment companies for which OppenheimerFunds, Inc. or one of its subsidiaries or affiliates (referred to collectively in this document as "OFI") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), and by OFI to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to OFI's and each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers is attached as EXHIBIT A. 1 1. PURPOSE OF THE CODE This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the U.S. Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of this Code to the Code Administrator identified below; and o accountability for adherence to this Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, ____________________ 1 The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by OFI and the Funds under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. at the minimum, the following: (1) the duty at all times in performing any responsibilities as a Fund financial officer, controller, accountant or principal executive officer to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that a Fund's financial statements and reports to its shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Funds' business and affairs in an honest and ethical manner. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. It is acknowledged that, as a result of the contractual relationship between each Fund and OFI, of which the Covered Officers are also officers or employees, and subject to OFI's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on OFI and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and OFI and is consistent with the expectations of the Board of Trustees/Directors of the performance by the Covered Officers of their duties as officers of the Funds. 1. PROHIBITIONS The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest in personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund, including the investment intentions of a Fund, or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall intentionally for any reason take any action or fail to take any action in connection with his or her official acts on behalf of a Fund that causes the Fund to violate applicable laws, rules and regulations. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) use his or her personal influence or personal relationships to influence any business decision, investment decisions, or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund or its shareholders; (vi) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vii) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees/Directors or the officers of the Fund or its investment adviser in connection with financial reporting matters; (viii) fail to notify the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; (ix) retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of this Code; or (x) fails to acknowledge or certify compliance with this Code if requested to do so. 3. REPORTS OF CONFLICTS OF INTERESTS If a Covered Officer becomes aware of a conflict of interest under this Code or, to the Covered Officer's reasonable belief, the appearance of one, he or she must immediately report the matter to the Code's Administrator. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to the OFI's Chief Executive Officer. Upon receipt of a report of a conflict, the Code Administrator will take prompt steps to determine whether a conflict of interest exists. If the Code Administrator determines that an actual conflict of interest exists, the Code Administrator will take steps to resolve the conflict. If the Code Administrator determines that the appearance of a conflict exists, the Code Administrator will take appropriate steps to remedy such appearance. If the Code Administrator determines that no conflict or appearance of a conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the Fund's Board of Trustees/Directors. 4. WAIVERS Any Covered Officer requesting a waiver of any of the provisions of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon, which shall be binding. The Code Administrator may in reviewing such request, consult at his discretion with legal counsel to OFI or to the Fund. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider whether the proposed waiver: (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to grant a waiver, the Code Administrator in his or her discretion may refer the matter to the appropriate Fund's Board of Trustees/Directors. 5. REPORTING REQUIREMENTS (a) Each Covered Officer shall, upon becoming subject to this Code, be provided with a copy of this Code and shall affirm in writing that he or she has received, read, understands and shall adhere to this Code. (b) At least annually, all Covered Officers shall be provided with a copy of this Code and shall certify that they have read and understand this Code and recognize that they are subject thereto. (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser. (d) The Code Administrator shall submit a quarterly report to the Board of Trustees/Directors of each Fund containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; (iv) interpretations issued under the Code by the Code Administrator; and (v) any other significant information arising under the Code including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Code Administrator or his or her designee as provided by applicable SEC rules. 2 6. ANNUAL RENEWAL At least annually, the Board of Trustees/Directors of each Fund shall review the Code and determine whether any amendments (including any amendments that may be recommended by OFI or the Fund's legal counsel) are necessary or desirable, and shall consider whether to renew and/or amend the Code. 7. SANCTIONS Any violation of this Code of Ethics shall be subject to the imposition of such sanctions by OFI as may be deemed appropriate under the circumstances to achieve the purposes of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of OFI. 8. ADMINISTRATION AND CONSTRUCTION (a) The administration of this Code of Ethics shall be the responsibility of OFI's General Counsel or his designee as the "Code Administrator" of this Code, acting under the terms of this Code and the oversight of the Trustees/Directors of the Funds. (b) The duties of such Code Administrator will include: (i) Continuous maintenance of a current list of the names of all Covered Officers; (ii) Furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) Maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; ____________________ 2 An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the General Counsel, the Code Administrator, an executive officer of the Fund or OFI. (iv) Issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) Conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations, to the Chief Executive Officer of OFI and to the Trustees/Directors of the affected Fund(s) or any committee appointed by them to deal with such information; and (vi) Periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. (c) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with legal counsel, who may include legal counsel to the applicable Funds, and such other persons as the Administrator shall deem necessary or desirable. The Code Administrator shall be protected from any liability hereunder or under any applicable law, rule or regulation, for decisions made in good faith based upon his or her reasonable judgment. 9. REQUIRED RECORDS The Administrator shall maintain and cause to be maintained in an easily accessible place, the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of OFI in which the applicable event or report occurred): (a) A copy of any Code which has been in effect during the period; (b) A record of any violation of any such Code and of any action taken as a result of such violation, during the period; (c) A copy of each annual report pursuant to the Code made by a Covered Officer during the period; (d) A copy of each report made by the Code Administrator pursuant to this Code during the period; (e) A list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (f) A record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; and (g) A record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision. 10. AMENDMENTS AND MODIFICATIONS Other than non-substantive or administrative changes, this Code may not be amended or modified unless approved or ratified by the Board of Trustees/Directors of each Fund. 11. CONFIDENTIALITY. This Code is identified for the internal use of the Funds and OFI. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees/Directors of the affected Fund(s) and their counsel, the independent auditors of the affected Funds and/or OFI, and to OFI, except as such disclosure may be required pursuant to applicable judicial or regulatory process. Dated as of: June 25, 2003, as revised July 31, 2006 Adopted by Board I of the Oppenheimer Funds June 13, 2003, revisions approved August 10, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board II of the Oppenheimer/Centennial Funds June 24, 2003, revisions approved August 30, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board III of the Oppenheimer Funds June 9, 2003, revisions approved July 31, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Robert G. Zack, Secretary Adopted by the Boards of Directors of OppenheimerFunds, Inc. and its subsidiaries and affiliates that act as investment adviser to the Oppenheimer or Centennial funds June 1, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Senior Vice President and General Counsel Exhibit A Positions Covered by this Code of Ethics for Senior Officers EACH OPPENHEIMER OR CENTENNIAL FUND Principal Executive Officer Principal Financial Officer Treasurer Assistant Treasurer PERSONNEL OF OFI WHO BY VIRTUE OF THEIR JOBS PERFORM CRITICAL FINANCIAL AND ACCOUNTING FUNCTIONS FOR OFI ON BEHALF OF A FUND, INCLUDING: Chief Financial Officer Treasurer Senior Vice President/Fund Accounting Vice President/Fund Accounting EX-99.CERT 3 ra835_35960cert302.txt RA835_35960CERT302 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, John V. Murphy, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Quest Capital Value Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 12, 2006 /s/ John V. Murphy ____________________________ John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Quest Capital Value Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 12, 2006 /s/ Brian W. Wixted ____________________________ Brian W. Wixted Principal Financial Officer EX-99.906CERT 4 ra835_35960cert906.txt RA835_35960CERT906 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 John V. Murphy, Principal Executive Officer, and Brian W. Wixted, Principal Financial Officer, of Oppenheimer Quest Capital Value Fund, Inc. (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended October 31, 2006 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Principal Financial Officer Oppenheimer Quest Capital Value Oppenheimer Quest Capital Value Fund, Inc. Fund, Inc. /s/ John V. Murphy /s/ Brian W. Wixted ____________________________ ____________________________ John V. Murphy Brian W. Wixted Date: December 12, 2006 Date: December 12, 2006 -----END PRIVACY-ENHANCED MESSAGE-----