Semiannual Report April 30, 1999
O P P E N H E I M E R
Quest Capital
Value Fund, Inc.
[photo of calculator]
[logo]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
5 An Interview
with Your Fund's
Managers
11 Financial
Statements
27 Officers and
Directors
28 Information and Services
Report highlights
- --------------------------------------------------------------------------------
o The market recovery that began late last year was extremely narrow, with
growth concentrated in technology companies and large-capitalization growth
stocks.
o We continue to seek good businesses with good management that is selling at a
modest valuation.
Cumulative Total Returns
For the 6-Month Period
Ended 4/30/99
<TABLE>
<CAPTION>
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
<S> <C>
13.40% 6.88%
- -----------------------------
<CAPTION>
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
<S> <C>
13.04% 8.04%
- -----------------------------
<CAPTION>
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
<S> <C>
13.03% 12.03%
- -----------------------------
</TABLE>
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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. Because the stock market can
be volatile, the Fund's performance may be subject to substantial short-term
changes. For updates on the Fund's performance, please contact your financial
advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com. The Fund's investment advisor is OppenheimerFunds,
Inc., and its Sub-advisor is OpCap Advisors (the Fund's advisor until 2/28/97).
The Fund commenced operations on 2/13/87 as a closed-end investment company,
formerly named Quest for Value Dual Purpose Fund, Inc., with a dual purpose
structure and two classes of shares, Income shares and Capital shares. Under the
prior dual purpose structure, Capital shares were entitled to all gains and
losses on all Fund assets and no expenses were allocated to such shares; the
Income shares bore all of the Fund's operating expenses. On 1/31/97, the Fund
redeemed its Income shares, which are no longer outstanding, and its dual
purpose structure terminated. On 3/3/97, the Fund converted from a closed-end
fund to an open-end fund, and its outstanding Capital shares were designated as
Class A shares now bearing their allocable share of the Fund's expenses.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A return includes the current 5.75% maximum initial sales charge. Class
B return includes the applicable contingent deferred sales charge of 5%. Class C
return includes the contingent deferred sales charge of 1%. Class A shares are
subject to an annual 0.25% asset-based sales charge while Class B and C shares
are subject to an annual 0.75% asset-based sales charge. An explanation of the
different performance calculations is in the Fund's prospectus.
2 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
[photo Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer
Quest Capital Value
Fund, Inc.
Dear shareholder,
- --------------------------------------------------------------------------------
According to popular belief, the last six months have been particularly
favorable for the financial markets.
The truth of the matter is that it's been a long, uphill struggle for the
diversified investor. That's because the stock market's dramatic rise reflects
the performance of the Dow Jones Industrial Average, which has been fueled by
only a small number of large-capitalization growth stocks and technology
companies. In the bond market this year, while many corporate and foreign bonds
have provided relatively attractive returns, the first quarter of 1999 was the
worst quarter in history for U.S. Treasury securities.(1)
Recently, though, signs of change have been emerging that confirm the
importance of a well-diversified portfolio. While investors focusing on
large-cap growth and technology stocks may have achieved superior short-term
returns, they may have also dramatically increased their exposure to potential
risks. If recent economic and market trends persist, previously out-of-favor
stocks may continue to rise.
Specifically, U.S. economic growth has continued to surpass most analysts'
expectations and the breadth of the market's positive performance has begun to
widen. This has raised concerns that inflationary pressures may re-emerge. In
fact, the Federal Reserve Board recently indicated its readiness to raise
short-term interest rates as an inflation-fighting measure. Looking outside of
the United States, many foreign economies also appear to be on the mend. The
impact of these changes, as it applies to your fund, is discussed more fully
inside by your portfolio manager.
(over, please)
1. Foreign investing entails higher expenses and risks, such as foreign currency
fluctuations, economic and political instability, and differences in accounting
standards.
3 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
You may also have wondered about the impact of the Year 2000 problem on your
investments. While we cannot predict the final outcome, we are pleased that many
companies and governments appear to be making progress toward avoiding a major
disruption. For our part, OppenheimerFunds is in the advanced stages of our Y2K
project, and we have successfully participated in industry-wide tests.
Meanwhile, we intend to maintain the disciplined investment approach that
has been helping Oppenheimer funds shareholders for more than 40 years as they
pursue their financial goals. Our longstanding experience has taught us that
while investment fads come and go, prudent diversification remains key to
successful investing. In fact, it is an essential part of what makes
OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
May 21, 1999
4 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
[photo of Portfolio Management Team]
Portfolio Management
Team (l to r)
Bradley Holmes
Jeff Whittington(1)
(Co-Portfolio Manager)
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed during the past six months?
The six-month period that ended April 30, 1999 got off to a rocky start, due to
continuing problems in economies worldwide. The market recovery that began in
November was extremely narrow in scope, with growth concentrated in the largest
companies in the technology sector and the "blue chips" of the Dow Jones
Industrial Average. In this environment, there were few new opportunities among
mid-sized issuers, but shareholders of Oppenheimer Quest Capital Value Fund,
Inc. benefited from our long-term holdings.
As value investors, how do you find "new opportunities"?
What we look for is a good business that is out of favor with, or misunderstood
by the market. We identify these companies in terms of their profitability,
growth and stability--and how management maximizes the value of the company's
assets. Profitability is critical because it generates free cash flow, which can
be used by management to build shareholder value--either by buying back stock,
paying down debt, investing in growth projects or paying dividends. Obviously,
the quality of management is very important. Uncovering this kind of information
calls for painstaking research, but we know what we're looking for. It's how we
bring value to shareholders.
1. Effective February 26, 1999, Alan Gutmann and Louis Goldstein joined the Fund
as Co-Portfolio Managers.
5 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
Avg Annual Total Returns
For the Periods Ended 3/31/99(2)
<TABLE>
<CAPTION>
Class A
1 year 5 year 10 year
- -----------------------
<S> <C> <C>
5.64% 16.22% 16.70%
- -----------------------
<CAPTION>
Class B
Since
1 year 5 year Inception
- -------------------------
<S> <C> <C>
6.37% N/A 17.51%
- -------------------------
<CAPTION>
Class C
Since
1 year 5 year Inception
- -------------------------
<S> <C> <C>
10.39% N/A 18.64%
- -------------------------
</TABLE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
The reasons we remain invested in a company are the same as the reasons we buy
it in the first place; because it's a good business with good management that is
selling at a modest valuation. As soon as one or more of those three factors
ceases to be true, we look to sell. Fortunately the most common reason we'll
sell a position is that the stock is no longer modestly valued. It's moved up to
an appropriate valuation and the market opportunity or inefficiency that we
originally observed has been rectified.
Did any of your holdings exceed your expectations?
We had a number of issues that did well. The top performers in the Fund during
this six-month period were Tricon Global Restaurants, Inc. and MCI WorldCom,
Inc. MCI WorldCom, Inc. is a holding of some years and a good example of how a
company can create ongoing significant value. Their management has consistently
boosted returns by investing the company's free cash flow, until the money is
needed for other purposes.
TCI Ventures, which recently changed its name to AT&T-Liberty Media Group
has performed very well--up approximately 300% in the last 18 months. Because
Fund guidelines limit the percentage that can be invested in any single holding,
we trimmed our position in Liberty, but it continues to be a large position in
the portfolio.
6 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
Were there any stocks that disappointed you?
Yes, but we continue to view them as value holdings. For example, XL Capital
Ltd. declined in the most recent quarter, but over the last five years they have
outperformed the market. For the past twelve months the pricing of
Property/Liability insurance, which is their core business, has been depressed
on an industry-wide basis. However, there are signs that this situation may be
easing.
Cardinal Health, Inc. which we acquired through its acquisition of
Allegiance Corp., also declined in the last quarter. Cardinal is a manufacturer
of medical, surgical and laboratory products and a wholesale distributor of
pharmaceuticals and related products. In our opinion, the merger with Allegiance
will ultimately benefit shareholders by creating a larger and more competitive
supplier to the healthcare industry.
2. Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
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. 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% (1-year) and 3%
(since inception). Class C returns include the applicable contingent deferred
sales charge of 1%. Additional information on charges and expenses is in the
Fund's prospectus. Class A shares are subject to an annual 0.25% asset-based
sales charge while Class B and C shares are subject to an annual 0.75%
asset-based sales charge.
7 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
Have you made any significant changes in the portfolio over the last 6 months?
Major new positions included Keebler Foods Co., a cookie and cracker
manufacturer and Household International, Inc., a consumer finance company that
recently acquired Beneficial Finance. Household is starting to show improved
revenue as a result of integrating that acquisition, selling off unprofitable
lines and restructuring their generic credit card business. As a result, they
recently announced a $2 billion share repurchase.
What is your outlook for the next 6 months?
As value investors we will continue to seek out undervalued companies and hold
them, on the premise that the market rewards the patient investor. Although we
are heartened by the recent broadening of the market as investors moved into
more industry sectors, we are not unduly influenced by market conditions or
investment trends. In fact, with our focus on valuation, it is unlikely that
this Fund will acquire a technology "high flyer."
3. Portfolio is subject to change. Percentages are as of April 30, 1999,
and are based on total market value of investments.
8 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
[tabular representation of pie chart]
Asset Allocation(3)
Stocks 88.0%
Cash Equivalents 12.0
But shareholders have good reason to be pleased about owning companies such as
MCI WorldCom, Inc., Cardinal Health, Inc. and AT&T-Liberty Media Group. Our
ability to identify companies such as these is the result of our commitment to
independent research and disciplined investment strategies. It's part of what
makes OppenheimerFunds The Right Way to Invest.
<TABLE>
<CAPTION>
Top 10 Stock Holdings(3)
- ---------------------------------------------------------
<S> <C>
MCI WorldCom, Inc. 14.3%
- ---------------------------------------------------------
H&R Block, Inc. 8.0
- ---------------------------------------------------------
XL Capital Ltd. 7.7
- ---------------------------------------------------------
Cardinal Health, Inc. 7.2
- ---------------------------------------------------------
Tricon Global Restaurants, Inc. 6.0
- ---------------------------------------------------------
AT&T-Liberty Media Group 5.8
- ---------------------------------------------------------
Household International, Inc. 5.2
- ---------------------------------------------------------
Canadian Pacific Ltd. 4.7
- ---------------------------------------------------------
Countrywide Credit Industries, Inc. 4.3
- ---------------------------------------------------------
PanCanadian Petroleum Ltd. 4.0
- ---------------------------------------------------------
<CAPTION>
Top 5 Industries(3)
- ---------------------------------------------------------
<S> <C>
Telecommunications: Long Distance 14.3%
- ---------------------------------------------------------
Insurance 11.6
- ---------------------------------------------------------
Diversified Financial 9.5
- ---------------------------------------------------------
Consumer Services 8.0
- ---------------------------------------------------------
Healthcare/Supplies & Services 7.3
- ---------------------------------------------------------
</TABLE>
9 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
Financials
- --------------------------------------------------------------------------------
10 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
==================================================================================
Common Stocks--88.2%
- ----------------------------------------------------------------------------------
Communication Services--14.3%
- ----------------------------------------------------------------------------------
Telecommunications: Long Distance--14.3%
MCI WorldCom, Inc.(1) 500,000 $41,093,750
- ----------------------------------------------------------------------------------
Consumer Cyclicals--13.4%
- ----------------------------------------------------------------------------------
Consumer Services--8.0%
H&R Block, Inc. 475,000 22,859,375
- ----------------------------------------------------------------------------------
Retail: General--3.8%
Fred Meyer, Inc.(1) 200,000 10,825,000
- ----------------------------------------------------------------------------------
Retail: Specialty--1.6%
Boyds Collection Ltd. (The)(1) 260,000 4,550,000
- ----------------------------------------------------------------------------------
Consumer Staples--15.7%
- ----------------------------------------------------------------------------------
Broadcasting--5.8%
AT&T-Liberty Media Group, Series A(1) 260,000 16,607,500
- ----------------------------------------------------------------------------------
Entertainment--6.0%
Tricon Global Restaurants, Inc.(1) 270,000 17,381,250
- ----------------------------------------------------------------------------------
Food--3.9%
Keebler Foods Co.(1) 346,500 11,131,312
- ----------------------------------------------------------------------------------
Energy--4.0%
- ----------------------------------------------------------------------------------
Oil: International--4.0%
PanCanadian Petroleum Ltd.(1) 840,700 11,516,778
</TABLE>
11 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- ----------------------------------------------------------------------------------
Financial--21.1%
- ----------------------------------------------------------------------------------
Diversified Financial--9.5%
Countrywide Credit Industries, Inc. 275,000 $ 12,460,938
- ----------------------------------------------------------------------------------
Household International, Inc. 295,000 14,842,188
------------
27,303,126
- ----------------------------------------------------------------------------------
Insurance--11.6%
ACE Ltd. 375,000 11,343,750
- ----------------------------------------------------------------------------------
XL Capital Ltd. 363,870 22,082,361
------------
33,426,111
- ----------------------------------------------------------------------------------
Healthcare--10.4%
- ----------------------------------------------------------------------------------
Healthcare/Drugs--3.1%
AmeriSource Health Corp., Cl. A(1) 318,400 8,815,700
- ----------------------------------------------------------------------------------
Healthcare/Supplies & Services--7.3%
Cardinal Health, Inc. 348,288 20,831,976
- ----------------------------------------------------------------------------------
Transportation--4.7%
- ----------------------------------------------------------------------------------
Railroads & Truckers--4.7%
Canadian Pacific Ltd. 600,000 13,575,000
- ----------------------------------------------------------------------------------
Utilities--4.6%
- ----------------------------------------------------------------------------------
Electric Utilities--4.6%
Calpine Corp.(1) 225,000 9,590,625
- ----------------------------------------------------------------------------------
Niagara Mohawk Holdings, Inc.(1) 265,000 3,544,375
------------
13,135,000
------------
Total Common Stocks (Cost $154,802,156) 253,051,878
</TABLE>
12 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
=================================================================================
Short-Term Notes--12.0%(2)
- ---------------------------------------------------------------------------------
American Express Credit Corp., 4.79%, 5/12/99 $ 9,160,000 $ 9,146,705
- ---------------------------------------------------------------------------------
Ford Motor Credit Co., 4.82%, 5/5/99 11,416,000 11,409,886
- ---------------------------------------------------------------------------------
General Electric Capital Corp., 4.89%, 5/19/99 14,000,000 13,966,540
------------
Total Short-Term Notes (Cost $34,523,131) 34,523,131
- ---------------------------------------------------------------------------------
Total Investments, at Value (Cost $189,325,287) 100.2% 287,575,009
- ---------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.2) (641,629)
----------- ------------
Net Assets 100.0% $286,933,380
=========== ============
</TABLE>
1. Non-income producing security.
2. 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.
13 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
====================================================================================
Assets
Investments, at value (cost $189,325,287)--see accompanying statement $287,575,009
- ------------------------------------------------------------------------------------
Cash 106,216
- ------------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 368,539
Interest and dividends 160,103
Other 13,010
------------
Total assets 288,222,877
====================================================================================
Liabilities
Payables and other liabilities:
Shares of capital stock redeemed 623,693
Redemption of Income Certificates 498,320
Distribution and service plan fees 60,164
Transfer and shareholder servicing agent fees 24,944
Directors' compensation--Note 1 17,018
Custodian fees 1,976
Other 63,382
------------
Total liabilities 1,289,497
====================================================================================
Net Assets $286,933,380
============
====================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 816
- ------------------------------------------------------------------------------------
Additional paid-in capital 160,402,775
- ------------------------------------------------------------------------------------
Undistributed net investment income 47,174
- ------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 28,232,893
- ------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 98,249,722
------------
Net assets $286,933,380
============
</TABLE>
14 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
<TABLE>
======================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $267,289,307 and 7,595,606 shares of capital stock outstanding) $35.19
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $37.34
- --------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $15,279,143 and 440,741 shares of capital stock
outstanding) $34.67
- --------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $4,364,930 and 125,826 shares of capital stock
outstanding) $34.69
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===================================================================================
Investment Income
Interest $ 1,518,604
- -----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $31,130) 621,409
-----------
Total income 2,140,013
===================================================================================
Expenses
Management fees--Note 4 1,411,106
- -----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 664,945
Class B 62,682
Class C 18,527
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 143,973
- -----------------------------------------------------------------------------------
Shareholder reports 50,549
- -----------------------------------------------------------------------------------
Registration and filing fees:
Class A 14,065
Class B 5,941
Class C 1,699
- -----------------------------------------------------------------------------------
Directors' compensation--Note 1 18,543
- -----------------------------------------------------------------------------------
Legal, auditing and other professional fees 11,065
- -----------------------------------------------------------------------------------
Custodian fees and expenses 4,725
- -----------------------------------------------------------------------------------
Other 18,237
-----------
Total expenses 2,426,057
Less reimbursement of expenses by OppenheimerFunds, Inc.--Note 4 (341,587)
Less expenses paid indirectly--Note 4 (908)
-----------
Net expenses 2,083,562
===================================================================================
Net Investment Income 56,451
===================================================================================
Realized and Unrealized Gain
Net realized gain on investments 28,242,844
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 6,969,069
-----------
Net realized and unrealized gain 35,211,913
===================================================================================
Net Increase in Net Assets Resulting from Operations $35,268,364
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
=========================================================================================
<S> <C> <C>
Operations
Net investment income $ 56,451 $ 327,290
- -----------------------------------------------------------------------------------------
Net realized gain 28,242,844 8,958,278
- -----------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 6,969,069 27,834,805
------------ -------------
Net increase in net assets resulting from operations 35,268,364 37,120,373
=========================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (316,582) (1,033,878)
Class B -- (2,195)
Class C -- (816)
- -----------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (8,499,667) (111,344,042)
Class B (348,968) (438,272)
Class C (104,618) (247,999)
=========================================================================================
Capital Stock Transactions
Net increase (decrease) in net assets resulting from
capital stock transactions--Note 2:
Class A (19,996,363) (5,120,973)
Class B 4,659,868 8,589,646
Class C 1,068,591 2,372,167
=========================================================================================
Net Assets
Total increase (decrease) 11,730,625 (70,105,989)
- -----------------------------------------------------------------------------------------
Beginning of period 275,202,755 345,308,744
------------ -------------
End of period (including undistributed net investment
income of $47,174 and $307,305, respectively) $286,933,380 $ 275,202,755
============ =============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------
Six Months
Ended April 30, Year Ended October 31,
1999 (Unaudited) 1998 1997(2)
===================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $32.11 $41.63 $37.25
- ---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .02 .05 .44
Net realized and unrealized gain (loss) 4.15 4.28 3.93
Provision/reduction for corporate income taxes
on net realized long-term capital gain -- -- .01
------ ------ ------
Total income (loss) from investment operations 4.17 4.33 4.38
- ---------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.13) --
Distributions from net realized gain (1.05) (13.72) --
Distributions from net realized short-term gain -- -- --
------ ------ ------
Total dividends and distributions to shareholders (1.09) (13.85)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $35.19 $32.11 $41.63
====== ====== ======
Market value, end of period N/A N/A N/A
====== ====== ======
===================================================================================================
Total Return, at Net Asset Value(4) 13.40% 13.28% 11.76%
===================================================================================================
Total Return, at Market Value(5) N/A N/A N/A
===================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $267,289 $262,669 $343,329
- ---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $268,209 $280,821 $434,401
- ---------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.10%(6) 0.13% 1.28%(6)(7)
Expenses, before voluntary assumption or
reimbursement by the Manager(8) 1.68%(6) 1.67% 1.54%(6)(7)
Expenses, net of voluntary assumption or
reimbursement by the Manager 1.44%(6) 1.29% 1.11%(6)(7)
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 30% 30% 34%
</TABLE>
1. For the period from March 3, 1997 (inception of offering of shares) to
October 31, 1997.
2. For the ten months ended October 31, 1997 for Class A shares (formerly
Capital Shares). On February 28, 1997, OppenheimerFunds, Inc. became the
investment advisor to the Fund and on March 3, 1997, the Fund was converted from
a closed-end fund to an open-end fund, and Capital Shares were redesignated as
Class A shares. The Fund changed its fiscal year end from December 31 to October
31.
3. Total returns of Class A shares (formerly, the Capital Shares) at net asset
value for periods prior to March 3, 1997, the date the Fund converted to an
open-end fund, are not audited and have not been restated to reflect the fees
and expenses (without giving effect to fee waivers) to which the Fund became
subject on March 3, 1997. Had such a restatement been made, total returns
(unaudited) at net asset value for each of the years ended December 31, 1996,
1995, 1994 and 1993, would have been 18.25%, 34.20%, (3.11)% and 7.32%,
respectively.
18 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Class B
- -------------------------------------------------------------- -----------------------------------------
Six Months
Year Ended December 31, Ended April 30, Year Ended October 31,
1996 1995 1994 1993 1999 (Unaudited) 1998 1997(1)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$33.65 $25.79 $27.09 $26.29 $31.71 $41.41 $37.04
- -------------------------------------------------------------------------------------------------------------------
-- -- -- -- (.04) (.06) .01
6.91 9.46 (.38) 2.45 4.05 4.15 4.36
(3.31) (1.57) (.53) (1.43) -- -- --
------ ------ ------ ------ ------ ------ ------
3.60 7.89 (.91) 1.02 4.01 4.09 4.37
- -------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.07) --
-- -- -- -- (1.05) (13.72) --
-- (.03) (.39) (.22) -- -- --
------ ------ ------ ------ ------ ------ ------
-- (.03) (.39) (.22) (1.05) (13.79) --
- -------------------------------------------------------------------------------------------------------------------
$37.25 $33.65 $25.79 $27.09 $34.67 $31.71 $41.41
====== ====== ====== ====== ====== ====== ======
$36.13 $31.88 $23.00 $23.75 N/A N/A N/A
====== ====== ====== ====== ====== ====== ======
===================================================================================================================
20.46%(3) 36.68%(3) (1.29)%(3) 9.34%(3) 13.04% 12.54% 11.80%
===================================================================================================================
23.63% 45.58% 0.89% 10.50% N/A N/A N/A
===================================================================================================================
$879,934 $815,179 $673,742 $696,803 $15,279 $9,562 $1,208
- -------------------------------------------------------------------------------------------------------------------
$883,395 N/A N/A N/A $12,672 $4,586 $552
- -------------------------------------------------------------------------------------------------------------------
2.82% 3.20% 3.47% 3.29% (0.58)%(6) (0.57)% 0.07%(6)
0.72% 0.73% 0.74% 0.74% 2.32%(6) 2.24% 2.14%(6)
N/A N/A N/A N/A 2.13%(6) 2.01% 1.86%(6)
- -------------------------------------------------------------------------------------------------------------------
74% 72% 45% 51% 30% 30% 34%
</TABLE>
4. Assumes a $1,000 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.
5. 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).
6. Annualized.
19 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
------------------------------------------
Six Months
Ended April 30, Year Ended October 31,
1999 (Unaudited) 1998 1997(1)
=================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $31.73 $41.42 $37.04
- -------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.04) (.13) .01
Net realized and unrealized gain (loss) 4.05 4.21 4.37
Provision/reduction for corporate income taxes
on net realized long-term capital gain -- -- --
------ ------ ------
Total income (loss) from investment operations 4.01 4.08 4.38
- -------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.05) --
Distributions from net realized gain (1.05) (13.72) --
Distributions from net realized short-term gain -- -- --
------ ------
Total dividends and distributions to shareholders (1.05) (13.77) --
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $34.69 $31.73 $41.42
====== ====== ======
Market value, end of period N/A N/A N/A
====== ====== ======
=================================================================================================
Total Return, at Net Asset Value(4) 13.03% 12.49% 11.82%
=================================================================================================
Total Return, at Market Value(5) N/A N/A N/A
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,365 $2,972 $773
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,744 $1,582 $372
- -------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (0.58)%(6) (0.58)% 0.06%(6)
Expenses, before voluntary assumption or
reimbursement by the Manager(8) 2.31%(6) 2.23% 2.13%(6)
Expenses, net of voluntary assumption or
reimbursement by the Manager 2.12%(6) 2.01% 1.85%(6)
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 30% 30% 34%
</TABLE>
7. Due to the change from the Fund's dual purpose structure and conversion from
a closed-end to an open-end fund, the ratios for Class A shares are not
necessarily comparable to those of prior periods.
8. The expense ratio reflects the effect of gross expenses paid indirectly by
the Fund.
9. 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 April 30, 1999, were $77,679,396 and $79,642,921, respectively.
See accompanying Notes to Financial Statements.
20 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Quest Capital Value Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company. The Fund's investment objective is to seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Manager has entered into a sub-advisory agreement with OpCap
Advisors. The Fund offers Class A, Class B 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 distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. 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.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
21 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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.
- --------------------------------------------------------------------------------
Directors' Compensation. The Fund has adopted a nonfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the six months
ended April 30, 1999, a provision of $11,146 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $16,963 as of
April 30, 1999.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
22 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
================================================================================
2. Capital Stock
The Fund has authorized one billion shares of $.0001 par value capital stock.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended April 30, 1999 Year Ended October 31, 1998
------------------------------- ---------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 630,698 $ 21,642,817 945,259 $ 29,059,913
Dividends and
distributions reinvested 144,001 4,515,863 1,567,868 46,330,517
Redeemed (1,359,980) (46,155,043) (2,579,261) (80,511,403)
---------- ------------ ---------- ------------
Net decrease (585,281) $(19,996,363) (66,134) $ (5,120,973)
========== ============ ========== ============
- --------------------------------------------------------------------------------------------
Class B:
Sold 165,438 $ 5,580,790 356,498 $ 11,089,979
Dividends and
distributions reinvested 10,931 338,536 13,702 402,300
Redeemed (37,203) (1,259,458) (97,788) (2,902,633)
---------- ------------ ---------- ------------
Net increase 139,166 $ 4,659,868 272,412 $ 8,589,646
========== ============ ========== ============
- --------------------------------------------------------------------------------------------
Class C:
Sold 58,179 $ 1,959,888 85,612 $ 2,722,308
Dividends and
distributions reinvested 3,017 93,519 5,959 175,123
Redeemed (29,036) (984,816) (16,559) (525,264)
---------- ------------ ---------- ------------
Net increase 32,160 $ 1,068,591 75,012 $ 2,372,167
========== ============ ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
As of April 30, 1999, net unrealized appreciation on investments of $98,249,722
was composed of gross appreciation of $102,845,212, and gross depreciation of
$4,595,490.
23 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
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 of the Fund, 0.90% of the next $400 million and 0.85% of
average daily net assets in excess of $800 million. Pursuant to the Agreement,
until February 28, 1999, the Manager will waive the following portion of the
advisory fee: 0.15% of the first $200 million of average annual net assets,
0.40% of the next $200 million, 0.30% of the next $400 million and 0.25% of
average annual net assets over $800 million. For the six months ended April 30,
1999, the waiver amounted to $208,335. The Fund's management fee for the six
months ended April 30, 1999 was 1.00% of the average annual net assets for each
class of shares before the waiver by the Manager.
The Manager pays OpCap Advisors (the Sub-Advisor) based on the
fee schedule set forth in the Prospectus. For the six months ended April 30,
1999, the Manager paid $481,124 to the Sub-Advisor.
For the six months ended April 30, 1999, commissions (sales
charges paid by investors) on sales of Class A shares totaled $148,808, of which
$41,048 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 A,
Class B and Class C shares totaled $34,787, $160,024 and $13,038, respectively.
The amount paid to an affiliated broker/dealer for Class B shares was $10,266.
During the six months ended April 30, 1999, OFDI received contingent deferred
sales charges of $1,076, $17,009 and $3,148 upon redemption of Class A, Class B
and Class C shares as reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund and other Oppenheimer
funds. The Fund pays OFS an annual maintenance fee of $18.00 for each Fund
shareholder account and reimburses OFS for its out-of-pocket expenses. During
the six months ended April 30, 1999, the Fund paid OFS $141,109.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on cash balances maintained by the Fund.
24 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
================================================================================
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. Each fee is 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. The Distributor has voluntarily agreed to waive 0.15% of the
distribution fee payable under the plan until February 28, 1999. For the six
months ended April 30, 1999, the waiver amounted to $133,252. During the six
months ended April 30, 1999, OFDI paid $2,870 to an affiliated broker/dealer as
compensation for Class A personal service and maintenance expenses and retained
$75,856 as compensation for Class A sales commissions and service fee advances,
as well as financing costs.
The Fund has adopted Distribution and Service Plans for Class B
and Class C shares to compensate OFDI for its 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 and Class C shares
for its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and Class C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the six months
ended April 30, 1999, OFDI retained $58,256 and $14,384, respectively, as
compensation for Class B and Class C sales commissions and service fee advances,
as well as financing costs. 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. As of
April 30, 1999, OFDI had incurred excess distribution and servicing costs of
$509,001 for Class B and $40,420 for Class C.
25 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months
ended April 30, 1999.
26 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Quest Capital Value Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===================================================================================
Officers and Directors Bridget A. Macaskill, Chairman of the Board of Directors
and President
Paul Y. Clinton, Director
Thomas W. Courtney, Director
Robert G. Galli, Director
Lacy B. Herrmann, Director
George Loft, Director
Robert C. Doll, Jr., Vice President
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
===================================================================================
Investment Advisor OppenheimerFunds, Inc.
===================================================================================
Sub-Advisor OpCap Advisors
===================================================================================
Distributor OppenheimerFunds Distributor, Inc.
===================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
===================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
===================================================================================
Independent Accountants PricewaterhouseCoopers 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 of 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,
are not insured by the FDIC or any other agency, and
involve investment risks, including the possible loss of
the principal amount invested.
</TABLE>
27 Oppenheimer Quest Capital Value Fund, Inc.
<PAGE>
Information and Services
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Internet
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www.oppenheimerfunds.com
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OppenheimerFunds(R)
Distributor, Inc.
RS0835.001.0499 June 29, 1999
