-----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, ULexDfIUichP0EjJXCxnDD4kwxSlZaR473R0geV7u4aruHU0+ff3Z4Vsi0Zr+GKR 2bIlg4dmejq5ere6YS3wXQ== 0000950133-97-003189.txt : 19970912 0000950133-97-003189.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950133-97-003189 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER QUEST CAPITAL VALUE FUND INC CENTRAL INDEX KEY: 0000799029 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132527171 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04797 FILM NUMBER: 97676838 BUSINESS ADDRESS: STREET 1: OPPENHEIMER TWR STREET 2: ONE WORLD FINANCIAL CTR CITY: NEW YORK STATE: NY ZIP: 10281-1098 BUSINESS PHONE: 2126677333 MAIL ADDRESS: STREET 1: OPPENHEIMER TOWER STREET 2: ONE WORLD FINANCIAL CENTER CITY: NEW YORK STATE: NY ZIP: 10281-1098 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 N-30D 1 OPPENHEIMER QUEST CAPITAL VALUE FUND SEMI ANNUAL 1 SEMIANNUAL REPORT JUNE 30, 1997 OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 REPORT HIGHLIGHTS - -------------------------------------------------------------------------------- - - FROM CLOSED-END TO OPEN-END: On March 3, 1997, the Fund converted from a closed-end fund to become an open-end fund.(1) - - THE GOAL OF THE FUND is to seek capital appreciation. We employ a "bottom-up" stock selection process to seek strong companies that we believe are undervalued in the market. - - WE ARE ABLE TO GAIN MORE INSIGHT into each company's background by limiting the number of individual holdings in the portfolio. CONTENTS 3 President's Letter 4 Fund Performance 6 An Interview with the Fund's Managers 10 Statement of Investments 12 Statement of Assets & Liabilities 14 Statement of Operations 15 Statements of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 25 Officers & Directors 28 Information & Services TOTAL RETURNS - ------------------------------- For the Period Ended 6/30/97(2) CLASS A 6 months 1 year 3.92% 6.85% - ------------------------------- CLASS B Since Inception 4.13% - ------------------------------- CLASS C Since Inception 4.16% - ------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. The Fund's investment adviser is OppenheimerFunds, Inc., and its Sub-adviser is OpCap Advisors (formerly Quest for Value Advisors, the Fund's adviser until 2/28/97). 1. 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 and now bear their allocable share of the Fund's expenses. 2. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. Class A share 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). Class B and C shares were first available on 3/3/97. 2 Oppenheimer Quest Capital Value Fund, Inc. 3 [PHOTO] BRIDGET A. MACASKILL President Oppenheimer Quest Capital Value Fund, Inc. DEAR SHAREHOLDER, - -------------------------------------------------------------------------------- I'd like to welcome you to the premier issue of our newly redesigned shareholder reports. As you can see, we've changed the format to allow easier access to the information you need to monitor your investments. Some notable additions are "at-a-glance" report highlights and charts that let you quickly assess how your Fund has performed. On the following pages, your portfolio team discuss their current investment thinking, your Fund's strategies, and performance. Before these commentaries, I'd like to share a few global observations. As we consider the world's financial markets over the past six months, some global trends emerge. For example, inflation has hit its lowest level in three decades worldwide, which has helped spur many bullish financial markets. The United States has been a beneficiary of this low-inflation environment, as well as of a strong dollar, robust corporate earnings and a healthy economy. However, many financial analysts are now concerned that the United States has reached a point in the business cycle where earnings could decline because companies are unable to further reduce costs. On the other hand, a wave of corporate restructuring throughout Europe has resulted in some exciting changes and opportunities. Because a similar restructuring took place in the United States ten years ago, European companies have been able to enjoy the benefit of hindsight by following our footsteps. Latin America, too, has begun to shift its economies more toward the U.S. capitalist model and has reported positive earnings growth along the way. With major changes occurring in today's economies around the globe, it's more important than ever to maintain a diversified portfolio across different countries and market sectors. Now is the time to speak to your financial advisor to ensure that your assets are allocated properly, so you have the opportunity to benefit from investments in both domestic and international funds. It's important to remember that investing abroad can involve greater risk and expenses--including political and economic uncertainties--and should be undertaken with a long-term approach in mind. To keep in touch with our views on the markets, visit our website, WWW.OPPENHEIMERFUNDS.COM, where you can access your account information and fund performance data, 24 hours a day. The site also features prospectuses, timely market updates and insightful commentaries. Our new shareholder reports and presence on the Internet are just two examples of our commitment to keeping you well informed. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. We look forward to helping you reach your investment goals in the future. Sincerely, /s/ BRIDGET A. MACASKILL Bridget A. Macaskill July 22, 1997 3 Oppenheimer Quest Capital Value Fund, Inc. 4 PERFORMANCE update - --------------------------------------------------------------------------------
AVG. ANNUAL TOTAL RETURNS - ------------------------------- For the Period Ended 6/30/97(1) CLASS A Since 1 year 5 year Inception 0.70% 12.09% 14.71% - ------------------------------- CLASS B Since 1 year 5 year Inception N/A N/A (0.87)% - ------------------------------- CLASS C Since 1 year 5 year Inception N/A N/A 3.16% - -------------------------------
The Fund's investment strategy is to limit the number of stocks in our portfolio (usually around 20), a move that allows us to gain more insight on each individual holding. On the other hand, this maneuver can place the Fund in a vulnerable position, particularly when two or more holdings significantly decline. Unfortunately, during the past six months some of our stocks underperformed, which has hurt the Fund's overall returns. GROWTH OF $10,000 Over ten years (without sales charge)(2)
Oppenheimer Quest Capital S&P 500 Value Fund Inc. Class A shares Index 10,000 10,000 6/30/87 10,688 10,660 9/30/87 8,000 8,259 12/31/87 9,255 8,729 3/31/88 9,666 9,310 6/30/88 10,216 9,342 9/30/88 10,781 9,630 12/31/88 12,531 10,313 3/31/89 13,957 11,223 6/30/89 15,482 12,425 9/30/89 16,252 12,682 12/31/89 15,238 12,300 3/31/90 16,212 13,074 6/30/90 13,743 11,277 9/30/90 15,066 12,288 12/31/90 17,880 14,073 3/31/91 17,521 14,041 6/30/91 18,852 14,791 9/30/91 20,856 16,032 12/31/91 22,228 15,627 3/31/92 23,358 15,924 6/30/92 25,024 16,426 9/30/92 24,931 17,253 12/31/92 26,220 18,006 3/31/93 26,571 18,094 6/30/93 26,667 18,561 9/30/93 26,665 18,992 12/31/93 26,133 18,271 3/31/94 26,459 18,348 6/30/94 26,886 19,246 9/30/94 25,756 19,243 12/31/94 28,868 21,116 3/31/95 32,038 23,132 6/30/95 35,206 24,970 9/30/95 34,573 26,473 12/31/95 37,724 27,894 3/31/96 39,561 29,146 6/30/96 38,206 30,047 9/30/96 40,861 32,552 12/31/96 38,306 33,424 3/31/97 40,239 33,758 6/30/97 42,270 39,645
1. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Class A share 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). Average annual total returns for Class A shares includes the current 5.75% maximum initial sales charge. Class B and C shares were first offered for sale on 3/3/97. Class B returns include the applicable contingent deferred sales charge of 5% (since inception). Class C returns include the contingent deferred sales charge of 1%. Additional information on charges and expenses is in the Fund's prospectus. Class B and C shares are subject to an annual 0.75% asset-based sales charge and Class A shares are subject to an annual 0.25% asset-based sales charge (the Fund's distributor has voluntarily agreed to waive 0.15% of this fee until 2/28/99). 4 Oppenheimer Quest Capital Value Fund, Inc. 5 Portfolio REVIEW - ------------------------------------------------------------------------------- Oppenheimer Quest Capital Value Fund, Inc. is for investors looking for capital appreciation while managing risk. WHAT WE LOOK FOR - - Good businesses identified through FUNDAMENTAL ANALYSIS. - - MANAGEMENT motivated to work for shareholders. - - Securities that can be purchased at a REASONABLE PRICE. - - Companies with HIGH RETURN ON CAPITAL vs. high growth.
TOP TEN STOCK HOLDINGS(3) ............................................................................... Security Capital Group, Inc. 10.8% Progressive Corp. 6.1% ............................................................................... UCAR International, Inc. 6.4 Canadian Pacific Ltd. (New) 6.1 ............................................................................... Triton Energy Ltd. 6.3 LucasVarity plc, ADR 6.1 ............................................................................... EXEL Ltd. 6.3 ACE Ltd. 6.1 ............................................................................... WorldCom, Inc. 6.2 Mid Ocean Ltd. 6.0 ...............................................................................
2. Results of a hypothetical investment in Class A shares on June 30, 1987. The S&P 500 is a broad-based unmanaged stock index including daily reinvestment of dividends, and cannot be purchased directly by investors. 3. Holdings are subject to change. Percentages are based on total market value of stock holdings as of June 30, 1997. 5 Oppenheimer Quest Capital Value Fund, Inc. 6 An INTERVIEW with your Fund's managers - -------------------------------------------------------------------------------- "We're a long-term investor, and have a great deal of CONFIDENCE..." HOW HAS THE FUND PERFORMED DURING THE PAST SIX MONTHS? Oppenheimer Quest Capital Value Fund, Inc., hasn't performed as well as we would have liked, due largely to underperformance by several of our large holdings. And since we only hold about 20 stocks, underperformance by just a few of them can significantly affect the Fund's performance. The Fund's cumulative total return, before sales charges, for Class A shares was 3.92% for the six-month period ended June 30, 1997.(1) WHICH INVESTMENTS DIDN'T PERFORM AS WELL AS EXPECTED? Two gas and oil companies showed disappointing returns during the period. Triton Energy, our third largest holding, has been particularly volatile this year, as have all oil and gas exploration companies--the first quarter was the weakest for this industry since the early '80s. Triton, a worldwide exploration firm, was hit especially hard because a contract involving a major project in Malaysia/Thailand failed to materialize. However, we have a lot of confidence in the management and still believe Triton has real long-term value. Another holding which negatively affected the Fund was LucasVarity, a British electrical-equipment conglomerate. LucasVarity is currently in the final stages of a merger, which caused the stock's price to fall. We remain confident that the combined company will be able to increase profit margins. 1. Includes changes in net asset value per share without deducting any sales charges. Such performance is not annualized and would have been lower if sales charges were taken into account. 6 Oppenheimer Quest Capital Value Fund, Inc. 7 [PHOTO] PORTFOLIO MANAGEMENT TEAM (L TO R) Colin Glinsman Jeff Whittington (Fund Manager) DID ANY INVESTMENTS EXCEED EXPECTATIONS DURING THE PERIOD? ACE Ltd. and EXEL Ltd., two insurance carriers that are among the Fund's largest holdings, were both strong performers for the Fund. In addition, UCAR International, a basic materials firm, was also among the Fund's top ten holdings. UCAR was able to generate large amounts of free cash flow, which management wisely allocated to paying down debt, and recently announced a share-repurchase program.(2) WHAT DO YOU LOOK FOR WHEN EVALUATING POTENTIAL INVESTMENTS? In this Fund, we take a "bottom-up" approach to stock selection, which means we begin by identifying individual companies, rather than targeting specific industries or sectors. Regardless of the businesses they're in, we look for good, solid companies that we believe are reasonably valued and may deliver a high return on capital based on their above-average growth prospects. WorldCom, Inc., our fifth largest holding, clearly demonstrates the qualities we look for. First, the company has a strong competitive advantage. Through strategic acquisitions, WorldCom has become one of the world's premier telecommunications companies. They deliver telephone and Internet services to the business market, which tends to be more stable than the consumer market. Second, WorldCom has a very strong management team, dedicated to growing the company and improving stock prices for shareholders. In our opinion, the company 2. The Fund's portfolio is subject to change. 7 Oppenheimer Quest Capital Value Fund, Inc. 8 An INTERVIEW with your Fund's managers - -------------------------------------------------------------------------------- "...in the FUNDAMENTALS of the companies we own." could very well have high revenue growth for the next three to five years. Third, because of its strong characteristics, we believe the company's stock is modestly valued. WHAT ARE YOUR PLANS FOR THE FUND DURING THE NEXT YEAR OR SO? We will most likely continue to stay fully invested in a limited number of stocks, probably around 20. By limiting the number of stocks in the portfolio, we are able to gain more insight into each individual holding. However, we are looking very closely at those holdings that underperformed. Where possible, we plan to reduce or sell our holdings there, and replace them with stocks of companies we feel offer more favorable returns going forward. WHAT'S YOUR OUTLOOK FOR THE FUND OVER THE COMING PERIOD? As always, we're looking to produce above-average returns over time. But again, because we only hold a limited number of stocks in this portfolio, the Fund can be more susceptible to declines in any one of those holdings, which can hurt overall performance. Generally speaking though, we are a long-term investor and have a great deal of confidence in the fundamentals of the companies we own. Our objective is to maintain a portfolio of quality firms, with the best managements and the cheapest prices. Especially now, when volatility in the market may be increasing, we believe this approach will serve the Fund's shareholders well, particularly over the long term. 8 Oppenheimer Quest Capital Value Fund, Inc. 9 FINANCIALS 9 Oppenheimer Quest Capital Value Fund, Inc. 10 STATEMENT OF INVESTMENTS June 30, 1997 (Unaudited)
FACE MARKET VALUE AMOUNT SEE NOTE 1 ================================================================================== CORPORATE BONDS AND NOTES--6.7% - ---------------------------------------------------------------------------------- Security Capital Group, Inc.: 12% Cv. Sub. Debs., 6/30/14(1) $18,442,152 $ 22,192,069 12% Cv. Sub. Debs. Interest Shares, 6/30/14(1) 1,308,987 1,308,988 ----------- Total Corporate Bonds and Notes (Cost $18,852,847) 23,501,057 SHARES ================================================================================== COMMON STOCKS--81.1% - ---------------------------------------------------------------------------------- BASIC MATERIALS--5.2% - ---------------------------------------------------------------------------------- UCAR International, Inc.(2) 400,000 18,300,000 - ---------------------------------------------------------------------------------- CONSUMER CYCLICALS--14.4% - ---------------------------------------------------------------------------------- Budget Group, Inc., Cl. A(2) 200,000 6,900,000 - ---------------------------------------------------------------------------------- Security Capital Group, Inc.(1)(2) 24,346 30,644,100 - ---------------------------------------------------------------------------------- Trump Hotels & Casino Resorts, Inc.(2)(3) 1,200,000 12,900,000 ----------- 50,444,100 - ---------------------------------------------------------------------------------- ENERGY--7.9% - ---------------------------------------------------------------------------------- Chesapeake Energy Corp. 1,000,000 9,812,500 - ---------------------------------------------------------------------------------- Triton Energy Ltd.(2) 390,000 17,866,875 ----------- 27,679,375 - ---------------------------------------------------------------------------------- FINANCIAL--24.3% - ---------------------------------------------------------------------------------- ACE Ltd. 234,000 17,286,750 - ---------------------------------------------------------------------------------- Countrywide Credit Industries, Inc. 500,000 15,593,750 - ---------------------------------------------------------------------------------- EXEL Ltd. 338,700 17,866,425 - ---------------------------------------------------------------------------------- Mid Ocean Ltd. 325,000 17,042,187 - ---------------------------------------------------------------------------------- Progressive Corp. 200,000 17,400,000 ----------- 85,189,112 - ---------------------------------------------------------------------------------- INDUSTRIAL--14.4% - ---------------------------------------------------------------------------------- Canadian Pacific Ltd. (New) 609,000 17,318,438 - ---------------------------------------------------------------------------------- H & R Block, Inc. 500,000 16,125,000 - ---------------------------------------------------------------------------------- LucasVarity plc, ADR 500,000 17,312,500 ----------- 50,755,938 - ---------------------------------------------------------------------------------- TECHNOLOGY--14.9% - ---------------------------------------------------------------------------------- Electronic Arts, Inc.(2) 451,700 15,188,413 - ---------------------------------------------------------------------------------- EMC Corp.(2) 100,000 3,900,000 - ---------------------------------------------------------------------------------- Tele-Communications, Inc. (New), TCI Group, Series A(2) 1,060,000 15,767,500 - ---------------------------------------------------------------------------------- WorldCom, Inc. 550,000 17,600,000 ----------- 52,455,913 ----------- Total Common Stocks (Cost $241,954,800) 284,824,438
10 Oppenheimer Quest Capital Value Fund, Inc. 11
FACE MARKET VALUE AMOUNT SEE NOTE 1 =================================================================================== SHORT-TERM NOTES--8.5% - ----------------------------------------------------------------------------------- Coca-Cola Enterprises, Inc., 5.52%, 7/17/97(4) $ 2,578,000 $ 2,571,675 - ----------------------------------------------------------------------------------- Goldman Sachs Group, L.P., 6.15%, 7/1/97(4) 15,100,000 15,100,000 - ----------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., 6.22%, 7/1/97(4) 12,000,000 12,000,000 ----------- Total Short-Term Notes (Cost $29,671,675) 29,671,675 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $290,479,322) 96.3% 337,997,170 - ----------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 3.7 13,120,915 ----------- ------------ NET ASSETS 100.0% $351,118,085 =========== ============
1. Identifies issues considered to be illiquid or restricted--See Note 5 of Notes to Financial Statements. 2. Non-income producing security. 3. Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended June 30, 1997. The aggregate fair value of all securities of affiliated companies as of June 30, 1997 amounted to $12,900,000. Transactions during the period in which the issuer was an affiliate are as follows:
BALANCE BALANCE DECEMBER 31, 1996 GROSS ADDITIONS GROSS REDUCTIONS JUNE 30, 1997 SHARES SHARES SHARES SHARES - --------------------------------------------------------------------------------------------------------------------------- Trump Hotels & Casino Resorts, Inc. 1,200,000 -- -- 1,200,000
4. Short-term notes are generally traded on a discount basis; the interest rate is the discount rate received by the Fund at the time of purchase. See accompanying Notes to Financial Statements. 11 Oppenheimer Quest Capital Value Fund, Inc. 12 STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 (Unaudited) ================================================================================== ASSETS Investments, at value--see accompanying statement: Unaffiliated companies (cost $266,807,174) $ 325,097,170 Affiliated companies (cost $23,672,148) 12,900,000 - ---------------------------------------------------------------------------------- Cash 1,007,084 - ---------------------------------------------------------------------------------- Receivables: Investments sold 12,084,391 Interest and dividends 1,873,965 Shares of capital stock sold 189,713 - ---------------------------------------------------------------------------------- Other 431,204 ------------- Total assets 353,583,527 ================================================================================== LIABILITIES Payables and other liabilities: Shares of capital stock redeemed 1,344,352 Redemption of income certificates 728,073 Distribution and service plan fees 217,404 Shareholder reports 58,245 Transfer and shareholder servicing agent fees 31,787 Directors' fees 7,765 Other 77,816 ------------- Total liabilities 2,465,442 ================================================================================== NET ASSETS $ 351,118,085 ============= ================================================================================== COMPOSITION OF NET ASSETS Par value of shares of capital stock $ 90,710 - ---------------------------------------------------------------------------------- Additional paid-in capital 197,568,401 - ---------------------------------------------------------------------------------- Undistributed net investment income 2,941,538 - ---------------------------------------------------------------------------------- Accumulated net realized gain on investment transactions 102,999,588 - ---------------------------------------------------------------------------------- Net unrealized appreciation on investments 47,517,848 ------------- Net assets $ 351,118,085 =============
12 Oppenheimer Quest Capital Value Fund, Inc. 13 ===================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $350,281,352 and 9,049,314 shares of capital stock outstanding) $38.71 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $41.07 - ------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (less applicable contingent deferred sales charge) and offering price per share (based on net assets of $509,122 and 13,199 shares of capital stock outstanding) $38.57 - ------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (less applicable contingent deferred sales charge) and offering price per share (based on net assets of $327,611 and 8,491 shares of capital stock outstanding) $38.58
See accompanying Notes to Financial Statements. 13 Oppenheimer Quest Capital Value Fund, Inc. 14 STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1997 (Unaudited) ================================================================================== INVESTMENT INCOME Interest $ 4,101,282 - ---------------------------------------------------------------------------------- Dividends 2,435,305 ------------ Total income 6,536,587 ================================================================================== EXPENSES Management fees--Note 4 2,110,542 - ---------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 626,736 Class B 890 Class C 662 - ---------------------------------------------------------------------------------- Shareholder reports 164,256 - ---------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 69,861 - ---------------------------------------------------------------------------------- Custodian fees and expenses 39,501 - ---------------------------------------------------------------------------------- Legal and auditing fees 39,023 - ---------------------------------------------------------------------------------- Directors' fees and expenses 21,582 - ---------------------------------------------------------------------------------- Registration and filing fees: Class A 4,564 Class B 114 Class C 78 - ---------------------------------------------------------------------------------- Other 49,034 ------------ Total expenses 3,126,843 Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 (517,561) ------------ Net expenses 2,609,282 ================================================================================== NET INVESTMENT INCOME 3,927,305 ================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on: Investments 102,897,782 Reduction of 1996 income taxes on capital gains 101,806 ------------ Net realized gain 102,999,588 - ---------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on investments (97,368,121) ------------ Net realized and unrealized gain 5,631,467 ================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,558,772 ============
See accompanying Notes to Financial Statements. 14 Oppenheimer Quest Capital Value Fund, Inc. 15 STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1997 DECEMBER 31, (UNAUDITED) 1996 ============================================================================================ OPERATIONS Net investment income $ 3,927,305 $ 24,888,014 - -------------------------------------------------------------------------------------------- Net realized gain 102,897,782 173,198,410 - -------------------------------------------------------------------------------------------- Provision/reduction of income taxes on capital gains 101,806 (59,569,499) - -------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation (97,368,121) (48,825,541) ------------ ------------ Net increase in net assets resulting from operations 9,558,772 89,691,384 ============================================================================================ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income--Income shares (1,463,750) (24,935,959) ============================================================================================ CAPITAL STOCK TRANSACTIONS Net increase (decrease) in net assets resulting from capital stock transactions--Note 2: Class A (328,842,031) -- Class B 472,177 -- Class C 308,669 -- Redemption of income shares (208,849,903) -- ============================================================================================ NET ASSETS Total increase (decrease) (528,816,066) 64,755,425 - -------------------------------------------------------------------------------------------- Beginning of period 879,934,151 815,178,726 ------------- ------------ End of period (including undistributed net investment income of $2,941,538 and $469,962, respectively) $ 351,118,085 $879,934,151 ============= ============
See accompanying Notes to Financial Statements. 15 Oppenheimer Quest Capital Value Fund, Inc. 16
FINANCIAL HIGHLIGHTS CLASS A ---------------------------------------------------- SIX MONTHS ENDED JUNE 30, 1997 YEAR ENDED DECEMBER 31, (UNAUDITED)(2) 1996 1995 ======================================================================================================== PER SHARE OPERATING DATA: Income Shares: Net asset value, beginning of period $11.63 $11.63 $11.63 - -------------------------------------------------------------------------------------------------------- Income from investment operations .05 1.38 1.39 Dividends from net investment income (.08) (1.38) (1.39) ------------ ------------ ------------ Net asset value, end of period $11.60 $11.63 $11.63 ============ ============ ============ Market value, end of period N/A $11.50 $12.00 ============ ============ ============ ======================================================================================================== TOTAL RETURN, AT MARKET VALUE(3) N/A 7.80% 10.90% ======================================================================================================== PER SHARE OPERATING DATA: Capital Shares: Net asset value, beginning of period $37.25 $33.65 $25.79 - -------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Income from investment operations .14 -- -- Net realized and unrealized gain (loss) 1.31 6.91 9.46 Provision/reduction for corporate income taxes on net realized long-term capital gain .01 (3.31) (1.57) - -------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations 1.46 3.60 7.89 - -------------------------------------------------------------------------------------------------------- Distributions from net realized short-term gain -- -- (.03) - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $38.71 $37.25 $33.65 ============ ============ ============ Market value, end of period N/A $36.13 $31.88 ============ ============ ============ ======================================================================================================== TOTAL RETURN, AT MARKET VALUE(4) N/A 23.63% 45.58% ======================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(6) 3.92% 20.46%(5) 36.68%(5) ======================================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $350,281 $879,934 $815,179 - -------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $489,195 $883,395 N/A - -------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 1.62%(7)(8) 2.82% 3.20% Expenses, before voluntary assumption by the Manager 1.49%(7)(8) 0.72%(9) 0.73% Expenses, net of voluntary assumption by the Manager 1.07%(7)(8) N/A N/A - -------------------------------------------------------------------------------------------------------- Portfolio turnover rate(10) 12.9% 74% 72% Average brokerage commission rate(11) $0.0574 $0.05 --
16 Oppenheimer Quest Capital Value Fund, Inc. 17
CLASS B CLASS C - --------------------------------- ---------- ------------ PERIOD PERIOD ENDED ENDED JUNE 30, JUNE 30, 1997 1997 1994 1993 1992 UNAUDITED(1) UNAUDITED(1) ================================================================== $11.61 $11.61 $11.60 N/A N/A - ------------------------------------------------------------------ 1.36 1.30 1.35 N/A N/A (1.34) (1.30) (1.34) N/A N/A ------ ------ ------ ------ ------ $11.63 $11.61 $11.61 N/A N/A ====== ====== ====== ====== ====== $12.13 $13.25 $13.00 N/A N/A ====== ====== ====== ====== ====== ================================================================== 1.80% 12.30% 7.40% N/A N/A ================================================================== $27.09 $26.29 $22.59 $37.04 $37.04 - ------------------------------------------------------------------ -- -- -- .05 0.06 (0.38) 2.45 6.09 1.48 1.48 (.53) (1.43) (1.10) -- -- - ------------------------------------------------------------------ (.91) 1.02 4.99 1.53 1.54 - ------------------------------------------------------------------ (.39) (.22) (1.29) -- -- - ------------------------------------------------------------------ $25.79 $27.09 $26.29 $38.57 $38.58 ====== ====== ====== ====== ====== $23.00 $23.75 $23.00 N/A N/A ====== ====== ====== ====== ====== ================================================================== 0.89% 10.50% 44.60% N/A N/A ================================================================== (1.29)%(5) 9.34%(5) 27.26%(5) 4.13% 4.16% ================================================================== $673,742 $696,803 $682,374 $509 $328 - ------------------------------------------------------------------ N/A N/A N/A $275 $204 - ------------------------------------------------------------------ 3.47% 3.29% 3.61% 0.75%(8) 0.80%(8) 0.74% 0.74% 0.74% 2.20%(8) 2.16%(8) N/A N/A N/A 1.93%(8) 1.89%(8) - ------------------------------------------------------------------ 45% 51% 45% 12.9% 12.9% -- -- -- $0.0574 $0.0574
17 Oppenheimer Quest Capital Value Fund, Inc. 18 FINANCIAL HIGHLIGHTS (Continued) - -------------------------------------------------------------------------------- 1. For the period from March 3, 1997 (inception of offering) to June 30, 1997. 2. For the period from January 1, 1997 to January 31, 1997 for Income Shares and for the six months ended June 30, 1997 for Capital Shares (Class A shares). On February 28, 1997, OppenheimerFunds, Inc. became the investment adviser to the Fund. 3. Change in market price assuming reinvestment of dividends on payable date (at market). 4. Change in market price assuming reinvestment of short-term capital gains distributions, if any, at payable date and federal taxes paid on long-term capital gains on year end (both at market). 5. The historical total return performance of the Class A shares (formerly, the Capital Shares) have been restated to reflect an adjustment for expenses. Unaudited pro forma total returns at net asset value for the six months ended June 30, 1997, and for each of the years ended December 31, 1996, 1995, 1994, 1993 and 1992 are 3.59%, 18.25%, 34.20%, (3.11)%, 7.32% and 24.88%, respectively. 6. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Prior to March 3, 1997, the Fund operated as a closed-end investment company and total return was calculated based on market value. 7. Due to the change from the Fund's dual purpose structure, the ratios for Class A shares are not necessarily comparable to those of prior periods. 8. Annualized. 9. The expense ratio reflects the effect of gross expenses paid indirectly by the Fund. 10. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended June 30, 1997 were $42,278,628 and $168,039,018, respectively. 11. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for the period, divided by the total number of related shares purchased and sold. See accompanying Notes to Financial Statements. 18 Oppenheimer Quest Capital Value Fund, Inc. 19 NOTES TO FINANCIAL STATEMENTS (Unaudited) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Quest Capital Value Fund, Inc. (the Fund), formerly named Quest for Value Dual Purpose Fund, Inc. was initially registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end, "dual-purpose" management investment company. Under the Fund's dual purpose structure, the Capital Shares were entitled to all gains and losses of the assets of the Fund and no expenses were allocated to such shares; the Income Shares were entitled to receive all of the Fund's income and bore all of the operating expenses of the Fund. The Income Shares were redeemed by the Fund on January 31, 1997 and the Fund's dual purpose structure terminated. On December 20, 1996, shareholders approved the conversion of the Capital Shares of the Fund to an open-end Fund. The Capital Shares of the Fund became Class A shares and now bear their allocable share of the Fund's expenses. Effective March 3, 1997, the Fund began operating as an open-end Fund. The Fund's investment objective is to seek capital appreciation. It is the intention of the Fund to continue to invest in equity securities of companies believed by the Manager to be undervalued. On February 28, 1997 the Fund entered into an investment advisory agreement with OppenheimerFunds, Inc. (the Manager) and the Manager has entered into a sub-advisory agreement with OpCap Advisors (the former Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes A, B and C 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. - ------------------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Directors. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Directors to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. 19 Oppenheimer Quest Capital Value Fund, Inc. 20 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The Fund changed the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Amounts have been reclassified to reflect an increase in paid-in capital of $316,862,372. Accumulated net realized gain on investments was decreased by the same amount. - -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Interest income is accrued on a daily basis. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. 20 Oppenheimer Quest Capital Value Fund, Inc. 21 ================================================================================ 2. CAPITAL STOCK The Fund has authorized one billion shares of $.01 par value capital stock. Transactions in shares of capital stock for the period March 3, 1997 to June 30, 1997 were as follows:
PERIOD ENDED JUNE 30, 1997 -------------------------- SHARES AMOUNT - ------------------------------------------------------------------------------------- Class A: Sold 323,121 $ 10,250,882 Redeemed (9,278,109) (339,092,913) ---------- ------------- Net decrease (8,954,988) $(328,842,031) ========== ============= - ------------------------------------------------------------------------------------- Class B: Sold 13,419 $ 480,103 Redeemed (220) (7,926) ---------- ------------- Net increase 13,199 $ 472,177 ========== ============= - ------------------------------------------------------------------------------------- Class C: Sold 8,547 $ 310,843 Redeemed (56) (2,174) ---------- ------------- Net increase 8,491 $ 308,669 ========== =============
=============================================================================== 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At June 30, 1997, net unrealized appreciation on investments of $47,517,848 was composed of gross appreciation of $77,001,607, and gross depreciation of $29,483,759. =============================================================================== 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 1.00% of the first $400 million of average daily net assets, 0.90% of the next $400 million of average daily net assets and 0.85% of average daily net assets over $800 million. Pursuant to the Agreement, for a period of two years from the date thereof, the manager will waive the following portion of the advisory fee: 0.15% of the first $205 million of average daily net assets, 0.40% of the next $200 million, 0.30% of the next $400 million and 0.25% of average daily net assets over $800 million. Prior to February 28, 1997, management fees were paid to the former Manager at an annual rate of 0.75% on the first $200 million and 0.50% on net assets in excess of $200 million. 21 Oppenheimer Quest Capital Value Fund, Inc. 22 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) Effective February 28, 1997, the Manager pays OpCap Advisors (the Sub-Adviser) based on the fee schedule set forth in the Prospectus. For the period ended June 30, 1997, the Manager paid $366,007 to the Sub-Adviser. On February 13, 1997 PIMCO Advisors L.P., signed a definitive agreement with Oppenheimer Group, Inc. and its subsidiary Oppenheimer Financial Corp. for PIMCO Advisors L.P. and its affiliate, Thomson Advisory Group, Inc., to acquire the one-third managing general partner interest in Oppenheimer Capital (the parent of OpCap Advisors) and the 1.0% general interest in Oppenheimer Capital L.P. For the six months ended June 30, 1997, commissions (sales charges paid by investors) on sales of Class A shares totaled $77,345, of which $22,220 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $18,472 and $3,099, respectively. Effective March 3, 1997, OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and for other registered investment companies. The Fund pays OFS an annual maintenance fee of $14.85 for each Fund shareholder account and reimburses OFS for its out-of-pocket expenses. During the six months ended June 30, 1997, the Fund paid OFS $17,382 . The Fund has adopted a Distribution and Service Plan for Class A shares to compensate OFDI for a portion of its costs incurred in connection with the personal service and maintenance of shareholder accounts that hold Class A shares. Under the Plan, the Fund pays an annual asset-based sales charge to OFDI of 0.25% per year on Class A shares. The Fund also pays a service fee to OFDI of 0.25% per year. Both fees are computed on the average annual net assets of Class A shares of the Fund, determined as of the close of each regular business day. OFDI uses all of the service fee and the asset-based sales charge to compensate brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. For the first two years after the effective date of the Plan, the Distributor has voluntarily agreed to waive 0.15% of the distribution fee payable under the plan. 22 Oppenheimer Quest Capital Value Fund, Inc. 23 =============================================================================== The Fund has adopted Distribution and Service Plans for Class B and C shares to compensate OFDI for its services and costs in distributing Class B and Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares, as compensation for sales commissions paid from its own resources at the time of sale and associated financing costs. OFDI also receives a service fee of 0.25% per year as compensation for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other financial institutions. Both fees are computed on the average annual net assets of Class B and Class C shares, determined as of the close of each regular business day. If either Plan is terminated by the Fund, the Board of Directors may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. At June 30, 1997, OFDI had incurred unreimbursed expenses of $22,179 for Class B and $5,535 for Class C. =============================================================================== 5. ILLIQUID AND RESTRICTED SECURITIES At June 30, 1997, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Directors as reflecting fair value. A security may be considered illiquid if it lacks a readily-available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limit. The aggregate value of illiquid or restricted securities subject to this limitation at June 30, 1997 was $54,145,157, which represents 15.42% of the Fund's net assets. Information concerning restricted securities is as follows:
VALUATION PER UNIT AS OF SECURITY ACQUISITION DATES COST PER UNIT JUNE 30, 1997 - -------------------------------------------------------------------------------------------------------- BONDS Security Capital Group, Inc.: 12% Cv. Sub. Debs., 6/30/14 6/16/94 94.25% 120.33% 12% Cv. Sub. Debs. Interest Shares, 6/30/14 1/1/95-12/31/96 100.00 100.00 STOCKS Security Capital Group, Inc. 12/21/91-8/1/94 $698.72 $1,258.69
23 Oppenheimer Quest Capital Value Fund, Inc. 24 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) =============================================================================== 6. SHAREHOLDER MEETING On May 19, 1997, a special shareholder meeting was held at which the proposed changes to certain of the Fund's fundamental investment policies, including changes to the investment objective were approved (Proposal No. 1) and the Subadvisory Agreement between OppenheimerFunds, Inc. and OpCap Advisors was approved (Proposal No. 2) as described in the Fund's proxy statement for that meeting. The following is a report of the votes cast:
BROKER PROPOSAL FOR AGAINST WITHHELD/ABSTAIN NON-VOTES TOTAL - ------------------------------------------------------------------------------------------------- Proposal No. 1 5,333,081.606 387,728.558 492,181.397 4,689,389 6,212,991.561 Proposal No. 2 5,193,678.421 344,416.743 674,896.397 4,689,389 6,212,991.561
24 Oppenheimer Quest Capital Value Fund, Inc. 25 OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. =============================================================================== OFFICERS AND DIRECTORS Bridget A. Macaskill, Chairman of the Board of Directors and President Paul Y. Clinton, Director Thomas W. Courtney, Director Lacy B. Herrmann, Director George Loft, Director Robert C. Doll, Jr., Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary ================================================================================ INVESTMENT ADVISER OppenheimerFunds, Inc. =============================================================================== SUB-ADVISER OpCap Advisors =============================================================================== DISTRIBUTOR OppenheimerFunds Distributor, Inc. =============================================================================== TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services =============================================================================== CUSTODIAN OF PORTFOLIO SECURITIES State Street Bank and Trust Company =============================================================================== INDEPENDENT ACCOUNTANTS Price Waterhouse LLP =============================================================================== LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein The financial statements included herein have been taken from the records of the Fund without examination by the independent accountants. This is a copy of a report to shareholders of Oppenheimer Quest Capital Value Fund, Inc. This report must be preceded or accompanied by a Prospectus of Oppenheimer Quest Capital Value Fund, Inc. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 25 Oppenheimer Quest Capital Value Fund, Inc. 26 OppenheimerFunds Family =========================================================================================== REAL ASSET FUNDS - ------------------------------------------------------------------------------------------- Real Asset Fund Gold & Special Minerals Fund =========================================================================================== STOCK FUNDS - ------------------------------------------------------------------------------------------- Developing Markets Fund Quest Small Cap Value Fund Global Fund Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund International Growth Fund Quest Capital Value Fund Disciplined Value Fund Discovery Fund Growth Fund Quest Value Fund =========================================================================================== STOCK & BOND FUNDS - ------------------------------------------------------------------------------------------- Main Street Income & Quest Growth & Income Disciplined Allocation Fund Growth Fund Value Fund Multiple Strategies Fund(2) Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth Total Return Fund Equity Income Fund =========================================================================================== BOND FUNDS - ------------------------------------------------------------------------------------------- International Bond Fund Champion Income Fund U.S. Government Trust High Yield Fund Strategic Income Fund Limited-Term Government Fund Bond Fund =========================================================================================== MUNICIPAL FUNDS - ------------------------------------------------------------------------------------------- California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund =========================================================================================== MONEY MARKET FUNDS(4) - ------------------------------------------------------------------------------------------- Money Market Fund Cash Reserves =========================================================================================== LIFESPAN - ------------------------------------------------------------------------------------------- Growth Fund Balanced Fund Income Fund
1. On 12/18/96, the Fund's name was changed from "Target Fund." 2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund." 3. Available only to investors in certain states. 4. An investment in money market funds is neither insured nor guaranteed by the U.S. government and there can be no assurance that a money market fund will be able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved. 26 Oppenheimer Quest Capital Value Fund, Inc. 27 INFORMATION and services - -------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today, or visit us at our website at www.oppenheimerfunds.com - --we're here to help. INTERNET 24-hr access to account information WWW.OPPENHEIMERFUNDS.COM GENERAL INFORMATION Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-525-7048 ACCOUNT TRANSACTIONS Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-852-8457 PHONELINK 24-hr automated information and automated transactions 1-800-533-3310 TELECOMMUNICATION DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-2pm ET 1-800-843-4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 [OPPENHEIMERFUNDS LOGO] RS0835.001.0697 August 30, 1997 -----END PRIVACY-ENHANCED MESSAGE-----