[photo of mountains]
Annual Report October 31, 2000
Oppenheimer
Quest Capital Value Fund, Inc.
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
Investors appear to have a renewed appreciation for solid fundamentals and
realistic expectations.
We continued to employ our longstanding value discipline, analyzing stocks one
company at a time.
A more-defensive posture emphasizing mid-sized companies worked to the Fund's
benefit.
CONTENTS
1 President's Letter
3 An Interview
with Your Fund's
Manager
7 Fund Performance
11 Financial
Statements
26 Independent
Auditors' Report
27 Federal
Income Tax
Information
28 Officers and
Directors
Average Annual
Total Returns*
For the 1-Year Period
Ended 10/31/00
Class A
Without With
Sales Chg. Sales Chg.
------------------------
20.63% 13.69%
Class B
Without With
Sales Chg. Sales Chg.
------------------------
20.02% 15.07%
Class C
Without With
Sales Chg. Sales Chg.
------------------------
20.05% 19.05%
*See Notes on page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
[photo]
Bridget A. Macaskill
President
Oppenheimer
Quest Capital
Value Fund, Inc.
Dear Shareholder,
Over the past several decades, our investment teams have learned the importance
of avoiding complacency when it comes to navigating the financial markets--
especially when times are good. Right now, times appear particularly good. The
U.S. economy is in its tenth year of expansion. In the bond market, U.S.
Treasury issues have been performing favorably over the past year. In addition,
despite volatility in the second quarter, the stock market has been providing
attractive returns from a wide spectrum of industry sectors, capitalization
ranges and investment styles.
We have arrived at this juncture after months of monitoring the rapid pace of
global economic growth and its implications for inflation, as well as the
Federal Reserve Board's evolving monetary policy. At this point, economic
indicators suggest a dampening of short-term inflationary pressures. While
recent increases in oil prices are certainly taking their toll, we don't believe
this signals a return to 1970's-style inflation. Accordingly, if the Fed
continues in its diligence, the economy could maintain its healthy rate of
growth.
In the bond market, the achievement of a federal budget surplus has prompted
the Treasury to buy back many of its long-term securities. The resulting supply
shortage boosted these securities' returns, causing an inversion of the yield
curve--an unusual situation in which shorter term Treasuries yield more than
their longer term counterparts. Other bond sectors are offering many
opportunities in the form of attractive valuations.
Perhaps most important is that we have begun to see encouraging signs in the
stock market. Formerly high-flying Internet stocks have generally come down to
earth, and investors have begun to refocus on companies with strong business
fundamentals and justifiable valuations. Investors have also returned to
long-neglected, value-oriented companies.
1 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
PRESIDENT'S LETTER
What else do these various trends tell us? They tell us that the ability to
discriminate between long-term potential and short-lived fads has become more
critical than ever. Trying to generate good long-term performance requires
tracking the best companies through intensive research, combined with
hard-earned experience.
At OppenheimerFunds, our seasoned portfolio management teams fight
complacency by remaining constantly aware of the risks that face the economy and
financial markets. Virtually anything could affect the overall markets--a surge
in inflation, a decline in productivity, deteriorating corporate earnings, or
even the new Administration's proposals regarding tax reform, healthcare and
Social Security. However, by remaining vigilant in our quest for fundamentally
sound businesses, we believe we can find good investments that can weather
market volatility.
In this environment, we encourage you to consult your financial
advisor and to stay on track with your long-term financial plan. For our part,
we will continue to monitor the opportunities and risks ever present in the
financial markets. Thank you for your confidence in OppenheimerFunds, The Right
Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 21, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict or depict performance of the securities markets or any
particular fund. Specific discussion, as it applies to your Fund, is contained
in the pages that follow. Stocks and bonds have different types of investment
risks; stocks are subject to market volatility and bonds are subject to credit
and interest rate risks.
2 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
Q How did Oppenheimer Quest Capital Value Fund, Inc. perform during the 12
months that ended October 31, 2000?
A. In what has been characterized as a particularly volatile investment
environment, we are very pleased with the Fund's performance for the fiscal
year. Our strong results reflected a late-period resurgence in value stocks, as
investors sought more-reasonably priced alternatives to overheated technology
and telecommunications issues. We were especially encouraged by the change in
investor sentiment toward the end of the period as investors appeared to show a
renewed appreciation for solid fundamentals and realistic expectations. The Fund
achieved strong growth; Class A shares generated a 20.63% average annual total
return, without sales charge, for the period that ended October 31, 2000. In
addition, the Fund outperformed its benchmark for the same one-year time period;
the S&P 500 Index produced a 6.09% return.(1)
Why did investor sentiment change?
Essentially, investors became more selectively focused on attractive individual
companies within the broader universe of stocks. Earlier in the fiscal year,
this was not the case. In our view, the market had become so captivated by a
narrow group of richly priced "new economy" stocks that it lost sight of what
was generally considered reasonable valuation. When inflation concerns reemerged
in mid-March, a sign that the Federal Reserve Board would likely continue its
standing policy of raising interest rates to slow economic growth, investors
balked at the seemingly exorbitant prices they were paying for these high-growth
stocks--many without visible earnings or even the prospect of earnings. This
resulted in widespread selling, as investors seized the opportunity to lock in
their gains. Although a rebound soon followed, technology stocks experienced a
similar fate in July and again in September.
1. The Standard & Poor's (S&P) 500 Index is a broad-based index of equity
securities widely regarded as a general measure of the performance of the U.S.
equity securities market.
3 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
Meanwhile, reports of a slowing economy, commonly referred to as the soft
landing, signaled that inflation might be under control--and that additional
rate hikes might be unnecessary. Nevertheless, this good news was tempered by
skyrocketing oil prices, Mideast tensions and a series of corporate profit
warnings that rattled the markets towards the end of the reporting period. In
light of the ongoing volatility, investors understandably became more cautious.
As a result, many benefited from selective exposure to more-traditional sectors,
such as financial services and energy.
How was the Fund managed in this volatile environment?
As always, we continued to employ our longstanding value discipline, meaning we
analyze stocks one company at a time. However, rather than look for stocks that
are cheap or undervalued relative to the market, we look for businesses that are
selling for less than their fair market value--in other words, the price a
prudent buyer would pay for the entire business. Furthermore, we typically
emphasize growing companies with strong, shareholder-oriented management teams
that build value through share buybacks, strategic acquisitions or corporate
restructuring.
Although Oppenheimer Quest Capital Value Fund, Inc. has a portfolio with a
limited number of stocks, we took several steps beginning in January to position
it more defensively, all of which worked to the Fund's benefit. First, we
significantly reduced our technology exposure after some of our successful
large-cap telecommunications holdings began to show signs of fundamental
weakness. Then, we redeployed those assets in stocks of medium-sized companies,
an area we believed offered an overlooked combination of considerable
appreciation potential and attractive valuations. Finally, we increased the
number of holdings from 21 to 39, to achieve what we believe is a better balance
across a wider range of industries and businesses.
[callout]
"Our strong results reflected a resurgence in value stocks, as investors sought
more-reasonably priced alternatives to overvalued technology issues."
4 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
Which stocks contributed most to the Fund's performance?
With market leadership rotating away from the technology sector, financial
services stocks generally provided the strongest returns for the period.
Reinsurers Ace Ltd. and XL Capital Ltd. both benefited from ongoing signs of an
upturn in property-and-casualty insurance. Full-service mortgage lender
Countrywide Credit Industries, Inc. continued to broaden its market through
effective use of new technologies, amid recurring speculation that it would soon
be acquired and Canadian Pacific, Ltd. experienced solid returns from its energy
division. In contrast, disappointments included media companies Clear Channel
Communications, Inc. and Emmis Communications Corp., which struggled on concerns
that radio advertising revenues were decelerating.
Why did the Fund pay such a high capital gain during the period?
Because we took profits in a number of telecommunications holdings earlier in
the year, as previously mentioned, the Fund incurred substantial capital gains.
Typically, we try to offset a portion of these gains by selling other stocks at
a loss, either because they declined in value or failed to meet our
expectations. Given the Fund's strong performance, these were few and far
between. While we always keep an eye on the shareholder's best interest,
including tax considerations, our primary focus is to deliver solid long-term
performance. Thus, we did not want to sell stocks to offset capital gains if we
believed their sale would compromise that commitment.
Average Annual
Total Returns
For the Periods Ended 9/30/00(2)
Class A
1-Year 5-Year 10-Year
------------------------
16.29% 11.61% 16.73%
Class B Since
1-Year 5-Year Inception
------------------------
17.72% N/A 12.72%
Class C Since
1-Year 5-Year Inception
------------------------
21.71% N/A 13.23%
2. See notes on page 10 for further details.
5 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
What is your outlook for the future?
By and large, we are more optimistic than we were at the half-year period last
April. There finally appears to be a broadening of the market, as investors are
once again willing to acknowledge opportunities outside of the technology
spectrum. Even so, the days of rising tides lifting all boats are likely over.
Because of this, we will continue to seek out compelling value on a
company-by-company basis; in addition, we anticipate that a number of
opportunities will emerge among fundamentally sound businesses in what are
traditionally considered growth areas. Taking a high-quality yet flexible
approach to value investing is just one of many reasons why Oppenheimer Quest
Capital Value Fund, Inc. is an important part of The Right Way to Invest.
Sector Allocation(3)
[pie chart]
Financial 28.1%
Diversified
Financial 15.0
Insurance 13.1
Technology 15.8
Consumer
Staples 15.6
Capital Goods 11.3
Consumer
Cyclicals 8.7
Media 6.7
Transportation 6.6
Energy 2.5
Basic Materials 2.4
Communication
Services 1.4
Healthcare 0.9
Top Ten Common Stock Holdings(4)
-----------------------------------------------------------
Freddie Mac 5.8%
-----------------------------------------------------------
Parker-Hannifin Corp. 5.7
-----------------------------------------------------------
Clear Channel Communications, Inc. 5.3
-----------------------------------------------------------
XL Capital Ltd., CI. A 4.9
-----------------------------------------------------------
WPP Group plc, Sponsored ADR 4.9
-----------------------------------------------------------
ACE Ltd. 4.9
-----------------------------------------------------------
Countrywide Credit Industries, Inc. 4.9
-----------------------------------------------------------
Canadian Pacific Ltd. 4.6
-----------------------------------------------------------
McDonald's Corp. 4.1
-----------------------------------------------------------
APW Ltd. 3.9
Top Five Common Stock Industries(4)
-----------------------------------------------------------
Diversified Financial 14.1%
-----------------------------------------------------------
Insurance 12.3
-----------------------------------------------------------
Electronics 12.2
-----------------------------------------------------------
Manufacturing 10.6
-----------------------------------------------------------
Broadcasting 9.3
3. Portfolio is subject to change. Percentages are as of October 31, 2000, and
are based on total market value of common stock.
4. Portfolio is subject to change. Percentages are as of October 31, 2000, and
are based on net assets.
6 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc. of
the Fund's performance during its fiscal year ended October 31, 2000, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index.
Management's discussion of performance. During the fiscal year that ended
October 31, 2000, Oppenheimer Quest Capital Value Fund, Inc. outperformed the
broader U.S. market, as measured by the Standard & Poor's (S&P) 500 Index. Over
the course of the 12-month period, inflation concerns, rising oil prices and
numerous corporate profit warnings contributed to a highly volatile market. As
investors grew more cautious, market sentiment appeared to broaden beyond the
narrow group of high-flying, richly valued technology stocks that outperformed
in 1999 and early 2000. In their place, investors increasingly gravitated toward
fundamentally sound, reasonably valued companies in more traditional industries.
Against this backdrop, the Manager emphasized mid-sized companies with solid
growth rates and shareholder-oriented managements--businesses we believed had
been overlooked and undervalued by the market at large. Such companies proved
resilient in the face of market declines, while still offering significant
appreciation potential. The Fund's portfolio holdings, allocations and
strategies are subject to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until October 31, 2000. In the case of Class A shares (formerly
Capital Shares) performance is measured over a 10-year period, and in the case
of Class B and Class C, performance is measured from inception of those classes
on March 3, 1997. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charge on Class B and Class C shares, and reinvestments of all dividends and
capital gains distributions.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effects of
Fund business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the index.
7 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc. (Class A) S&P 500 Index
<S> <C> <C>
12/31/90 9425 10000
03/31/91 11187 11450
06/30/91 10959 11423
09/30/91 11795 12032
12/31/91 13079 13040
03/31/92 13941 12711
06/30/92 14654 12952
09/30/92 15697 13361
12/31/92 16333 14032
03/31/93 17172 14644
06/30/93 17409 14715
09/30/93 17467 15094
12/31/93 17528 15443
03/31/94 17183 14859
06/30/94 17397 14921
09/30/94 17679 15649
12/31/94 16984 15646
03/31/95 19013 17168
06/30/95 21099 18804
09/30/95 23186 20298
12/31/95 22793 21519
03/31/96 24868 22674
06/30/96 26081 23690
09/30/96 25186 24422
10/31/96 26213 25096
01/31/97 26621 28108
04/30/97 25135 28787
07/31/97 29080 34444
10/31/97 30025 33151
01/31/98 30517 35669
04/30/98 34786 40609
07/31/98 34669 41093
10/31/98 34012 40448
01/31/99 37999 47266
04/30/99 38569 49473
07/31/99 36706 49395
10/31/99 36892 50828
01/31/00 36620 52153
04/30/00 40826 54480
07/31/00 41567 53823
10/31/00 44503 53918
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 10/31/00(2)
1-Year 13.69% 5-Year 13.72% 10-Year 17.83%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc. (Class B) S&P 500 Index
<S> <C> <C>
03/03/97 10000 10000
04/30/97 9387 10162
07/31/97 10842 12158
10/31/97 11180 11702
01/31/98 11344 12591
04/30/98 12911 14335
07/31/98 12844 14506
10/31/98 12582 14278
01/31/99 14034 16685
04/30/99 14223 17464
07/31/99 13517 17436
10/31/99 13566 17942
01/31/00 13455 18410
04/30/00 14976 19231
07/31/00 15229 19000
10/31/00 16017 19033
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 10/31/00(2)
1-Year 15.07% Life 13.73%
1. The Fund changed its fiscal year-end from 12/31 to 10/31.
2. See page 10 for further details.
8 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc. (Class C) S&P 500 Index
<S> <C> <C>
03/03/97 10000 10000
04/30/97 9390 10162
07/31/97 10845 12158
10/31/97 11182 11702
01/31/98 11346 12591
04/30/98 12912 14335
07/31/98 12845 14506
10/31/98 12579 14278
01/31/99 14030 16685
04/30/99 14218 17464
07/31/99 13513 17436
10/31/99 13562 17942
01/31/00 13451 18410
04/30/00 14975 19231
07/31/00 15223 19000
10/31/00 16281 19033
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 10/31/00(2)
1-Year 19.05% Life 14.24%
The performance information for S&P 500 Index in the graphs begins on 12/31/90
for Class A and 2/28/97 for both Class B and Class C.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
NOTES
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 returns
at 10/31/00 include results for periods of exceptional market performance that
is not typical of historical results. You should not expect those growth rates
to continue. Because of ongoing market volatility, the Fund's performance has
been subject to substantial short-term fluctuations and current performance may
be less than the results shown. For quarterly updates on the Fund's performance,
please contact your financial advisor, call us at 1.800.525.7048 or visit our
website at 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.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
Class A shares of the Fund were first publicly offered on 2/13/87. Unless
otherwise noted, Class A shares total returns reflect the historical performance
of the Class A shares of the Fund (formerly Capital shares) as adjusted for the
fees and expenses of Class A shares in effect as of 3/3/97 (without giving
effect to any fee waivers). Average annual total returns for Class A shares
includes the current 5.75% maximum initial sales charge. Class A shares are
subject to an annual 0.20% asset-based sales charge. There is a voluntary waiver
of a portion of the Class A asset-based sales charge as described in the
Prospectus.
Class B shares of the Fund were first publicly offered on 3/3/97. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 3% (inception). Class B shares are subject to a
maximum annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 3/3/97. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS October 31, 2000
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
==================================================================================
<S> <C> <C>
Common Stocks--93.8%
----------------------------------------------------------------------------------
Basic Materials--2.2%
----------------------------------------------------------------------------------
Chemicals--2.2%
Cambrex Corp. 54,000 $ 2,156,625
----------------------------------------------------------------------------------
Du Pont (E.I.) de Nemours & Co. 52,000 2,359,500
-----------
4,516,125
----------------------------------------------------------------------------------
Capital Goods--10.6%
----------------------------------------------------------------------------------
Manufacturing--10.6%
Actuant Corp., Cl. A 313,000 1,134,625
----------------------------------------------------------------------------------
Avery-Dennison Corp. 67,000 3,383,500
----------------------------------------------------------------------------------
Parker-Hannifin Corp. 274,600 11,361,575
----------------------------------------------------------------------------------
Roper Industries, Inc. 105,000 3,675,000
----------------------------------------------------------------------------------
Textron, Inc. 32,000 1,614,000
-----------
21,168,700
----------------------------------------------------------------------------------
Communication Services--1.3%
----------------------------------------------------------------------------------
Telecommunications: Long Distance--1.3%
WorldCom, Inc.(1) 114,000 2,707,500
----------------------------------------------------------------------------------
Consumer Cyclicals--8.2%
----------------------------------------------------------------------------------
Leisure & Entertainment--2.3%
Mattel, Inc. 360,000 4,657,500
----------------------------------------------------------------------------------
Media--4.9%
WPP Group plc, Sponsored ADR 146,530 9,799,194
----------------------------------------------------------------------------------
Retail: Specialty--1.0%
Sherwin-Williams Co. 90,000 1,951,875
----------------------------------------------------------------------------------
Consumer Staples--14.6%
----------------------------------------------------------------------------------
Broadcasting--9.3%
AT&T Corp./Liberty Media Corp., Cl. A(1) 96,000 1,728,000
----------------------------------------------------------------------------------
Clear Channel Communications, Inc.(1) 175,414 10,535,803
----------------------------------------------------------------------------------
Emmis Communications Corp., Cl. A(1) 240,200 6,425,350
-----------
18,689,153
----------------------------------------------------------------------------------
Entertainment--4.1%
McDonald's Corp. 268,000 8,308,000
----------------------------------------------------------------------------------
Food & Drug Retailers--1.2%
Kroger Co.(1) 104,000 2,346,500
----------------------------------------------------------------------------------
Energy--2.3%
----------------------------------------------------------------------------------
Energy Services--2.3%
Anadarko Petroleum Corp. 72,000 4,611,600
11 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Financial--26.4%
----------------------------------------------------------------------------------
Diversified Financial--14.1%
Countrywide Credit Industries, Inc. 261,000 $ 9,771,187
----------------------------------------------------------------------------------
Freddie Mac 195,000 11,700,000
----------------------------------------------------------------------------------
Household International, Inc. 134,000 6,741,875
------------
28,213,062
----------------------------------------------------------------------------------
Insurance--12.3%
ACE Ltd. 249,000 9,773,250
----------------------------------------------------------------------------------
American General Corp. 28,000 2,254,000
----------------------------------------------------------------------------------
John Hancock Financial Services, Inc.(1) 87,000 2,751,375
----------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 127,800 9,824,625
------------
24,603,250
----------------------------------------------------------------------------------
Healthcare--0.9%
----------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.9%
Sybron Corp. of Delaware(1) 72,000 1,782,000
----------------------------------------------------------------------------------
Media--6.3%
----------------------------------------------------------------------------------
Diversified Media--6.3%
Lamar Advertising Co., Cl. A(1) 157,000 7,536,000
----------------------------------------------------------------------------------
Omnicom Group, Inc. 55,000 5,073,750
------------
12,609,750
----------------------------------------------------------------------------------
Technology--14.8%
----------------------------------------------------------------------------------
Computer Hardware--1.2%
Agilent Technologies, Inc.(1) 51,000 2,361,937
----------------------------------------------------------------------------------
Computer Software--1.4%
Sabre Holdings Corp. 85,000 2,842,188
----------------------------------------------------------------------------------
Electronics--12.2%
APW Ltd.(1) 171,000 7,898,063
----------------------------------------------------------------------------------
Arrow Electronics, Inc.(1) 184,000 5,888,000
----------------------------------------------------------------------------------
AVX Corp. 108,000 3,091,500
----------------------------------------------------------------------------------
Molex, Inc., Cl. A 44,500 1,749,406
----------------------------------------------------------------------------------
Solectron Corp.(1) 86,000 3,784,000
----------------------------------------------------------------------------------
Viasystems Group, Inc.(1) 143,000 2,028,813
------------
24,439,782
----------------------------------------------------------------------------------
Transportation--6.2%
----------------------------------------------------------------------------------
Air Transportation--1.6%
Continental Airlines, Inc., Cl. B(1) 62,000 3,255,000
----------------------------------------------------------------------------------
Railroads & Truckers--4.6%
Canadian Pacific Ltd. 314,000 9,164,875
------------
Total Common Stocks (Cost $149,946,126) 188,027,991
12 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
Principal Market Value
Amount See Note 1
==================================================================================
Short-Term Notes--6.6%
Federal Home Loan Bank, 6.45%, 11/1/00 $7,209,000 $ 7,209,000
----------------------------------------------------------------------------------
Ford Motor Credit Co., 6.49%, 11/14/00 6,000,000 5,985,938
------------
Total Short-Term Notes (Cost $13,194,938) 13,194,938
----------------------------------------------------------------------------------
Total Investments, at Value (Cost $163,141,064) 100.4% 201,222,929
----------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.4) (864,296)
---------------------------
Net Assets 100.0% $200,358,633
===========================
</TABLE>
Footnote to Statement of Investments
1. Non-income-producing security.
See accompanying Notes to Financial Statements.
13 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES October 31, 2000
<TABLE>
==================================================================================
<S> <C>
Assets
Investments, at value (cost $163,141,064)--
see accompanying statement $201,222,929
----------------------------------------------------------------------------------
Cash 24,660
----------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 518,457
Interest and dividends 16,958
Other 26,918
------------
Total assets 201,809,922
==================================================================================
Liabilities
Payables and other liabilities:
Shares of capital stock redeemed 1,256,342
Shareholder reports 57,797
Transfer and shareholder servicing agent fees 44,378
Distribution and service plan fees 39,453
Directors' compensation 28,435
Other 24,884
------------
Total liabilities 1,451,289
==================================================================================
Net Assets $200,358,633
============
==================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 597
----------------------------------------------------------------------------------
Additional paid-in capital 101,456,417
----------------------------------------------------------------------------------
Accumulated net investment loss (18,567)
----------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 60,838,321
----------------------------------------------------------------------------------
Net unrealized appreciation on investments 38,081,865
------------
Net Assets $200,358,633
============
==================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $177,876,185 and 5,286,654 shares of capital stock outstanding) $33.65
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $35.70
----------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $17,429,228 and 531,932 shares of capital stock outstanding $32.77
----------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $5,053,220 and 154,083 shares of capital stock outstanding) $32.80
</TABLE>
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
<TABLE>
==================================================================================
<S> <C>
Investment Income
Dividends (net of foreign withholding taxes of $21,349) $ 1,584,859
----------------------------------------------------------------------------------
Interest 435,457
-----------
Total income 2,020,316
==================================================================================
Expenses
Management fees 2,021,375
----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 834,724
Class B 157,215
Class C 49,706
----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 240,166
----------------------------------------------------------------------------------
Shareholder reports 86,942
----------------------------------------------------------------------------------
Legal, auditing and other professional fees 74,385
----------------------------------------------------------------------------------
Directors' compensation 11,551
----------------------------------------------------------------------------------
Custodian fees and expenses 9,135
----------------------------------------------------------------------------------
Other 135,144
-----------
Total expenses 3,620,343
Less expenses paid indirectly (8,323)
-----------
Net expenses 3,612,020
==================================================================================
Net Investment Loss (1,591,704)
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on investments 73,682,091
----------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (35,270,230)
-----------
Net realized and unrealized gain 38,411,861
==================================================================================
Net Increase in Net Assets Resulting from Operations $36,820,157
===========
</TABLE>
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended October 31, 2000 1999
==================================================================================
<S> <C> <C>
Operations
Net investment loss $ (1,591,704) $ (592,902)
----------------------------------------------------------------------------------
Net realized gain (loss) 73,682,091 40,777,725
----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (35,270,230) (17,928,558)
---------------------------
Net increase in net assets resulting from operations 36,820,157 22,256,265
==================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A -- (307,305)
----------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A -- (9,331)
----------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (37,317,626) (8,501,109)
Class B (2,675,129) (348,968)
Class C (822,951) (104,618)
==================================================================================
Capital Stock Transactions
Net increase (decrease) in net assets resulting from
capital stock transactions:
Class A (42,874,623) (50,247,046)
Class B 1,570,083 5,772,397
Class C 398,378 1,547,304
==================================================================================
Net Assets
Total decrease (44,901,711) (29,942,411)
----------------------------------------------------------------------------------
Beginning of period 245,260,344 275,202,755
---------------------------
End of period (including accumulated net investment
loss of $18,567 and $27,348, respectively) $200,358,633 $245,260,344
===========================
</TABLE>
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended
Oct. 31, Dec. 31,
Class A 2000 1999 1998 1997(1) 1996
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $33.66 $32.11 $41.63 $37.25 $33.65
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.25) (.06) .05 .44 --
Net realized and unrealized gain 6.08 2.70 4.28 3.93 6.91
Provision/reduction for corporate income taxes
on net realized long-term capital gain -- -- -- .01 (3.31)
---------------------------------------------------------------------
Total income from investment operations 5.83 2.64 4.33 4.38 3.60
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.04) (.13) -- --
Dividends in excess of net investment income -- --(2) -- -- --
Distributions from net realized gain (5.84) (1.05) (13.72) -- --
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (5.84) (1.09) (13.85) -- --
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.65 $33.66 $32.11 $41.63 $37.25
=====================================================================
Market value, end of period N/A N/A N/A N/A $36.13
=====================================================================
============================================================================================================================
Total Return, at Net Asset Value(3) 20.63% 8.47% 13.28% 11.76% 20.46%(4)
============================================================================================================================
Total Return, at Market Value(5) N/A N/A N/A N/A 23.63%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $177,876 $224,995 $262,669 $343,329 $879,934
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $181,216 $256,450 $280,821 $434,401 $883,395
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(6)
Net investment income (loss) (0.73)% (0.17)% 0.13% 1.28%(7) 2.82%
Expenses 1.73% 1.71% 1.67%(8) 1.54%(7,8) 0.72%(8)
Expenses, net of voluntary assumption
and/or reimbursement N/A 1.58% 1.29% 1.11%(7) N/A
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 77% 79% 30% 34% 74%
</TABLE>
1. 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 redesigned as
Class A shares. The Fund changed its fiscal year-end from December 31 to
October 31.
2. Less than $0.005 per share.
3. 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.
4. 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 the total return
(unaudited) at net asset value for the year ended December 31, 1996, would have
been 18.25%.
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 for periods of less than one full year.
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. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class B Year Ended October 31, 2000 1999 1998 1997(1)
=======================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $33.07 $31.71 $41.41 $37.04
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.34) (.19) (.06) .01
Net realized and unrealized gain 5.88 2.60 4.15 4.36
-------------------------------------------------
Total income from investment operations 5.54 2.41 4.09 4.37
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- (.07) --
Dividends in excess of net investment income -- --(2) -- --
Distributions from net realized gain (5.84) (1.05) (13.72) --
-------------------------------------------------
Total dividends and/or distributions
to shareholders (5.84) (1.05) (13.79) --
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.77 $33.07 $31.71 $41.41
=================================================
=======================================================================================================
Total Return, at Net Asset Value(3) 20.02% 7.83% 12.54% 11.80%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $17,429 $15,634 $9,562 $1,208
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $15,719 $14,112 $4,586 $ 552
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income (loss) (1.26)% (0.80)% (0.57)% 0.07%
Expenses 2.27% 2.27% 2.24%(5) 2.14%(5)
Expenses, net of voluntary assumption
and/or reimbursement -- 2.19% 2.01% 1.86%
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 77% 79% 30% 34%
</TABLE>
1. For the period from March 3, 1997 (inception of offering of shares) to
October 31, 1997.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Class C Year Ended October 31, 2000 1999 1998 1997(1)
=======================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $33.09 $31.73 $41.42 $37.04
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.38) (.17) (.13) .01
Net realized and unrealized gain 5.93 2.58 4.21 4.37
-------------------------------------------------
Total income from investment operations 5.55 2.41 4.08 4.38
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- (.05) --
Dividends in excess of net investment income -- --(2) -- --
Distributions from net realized gain (5.84) (1.05) (13.72) --
-------------------------------------------------
Total dividends and/or distributions
to shareholders (5.84) (1.05) (13.77) --
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.80 $33.09 $31.73 $41.42
=================================================
=======================================================================================================
Total Return, at Net Asset Value(3) 20.05% 7.82% 12.49% 11.82%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $5,053 $4,632 $2,972 $773
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,969 $4,117 $1,582 $372
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income (loss) (1.25)% (0.80)% (0.58)% 0.06%
Expenses 2.27% 2.26% 2.23%(5) 2.13%(5)
Expenses, net of voluntary assumption
and/or reimbursement -- 2.18% 2.01% 1.85%
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 77% 79% 30% 34%
</TABLE>
1. For the period from March 3, 1997 (inception of offering of shares) to
October 31, 1997.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Quest Capital Value Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager
has entered into a sub-advisory agreement with OpCap Advisors.
The Fund offers Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). 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.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Directors, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Directors. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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.
20 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
--------------------------------------------------------------------------------
Directors' Compensation. The Fund has adopted an unfunded retirement plan for
the Fund's independent Board of Directors. Benefits are based on years of
service and fees paid to each director during the years of service. During the
year ended October 31, 2000, a credit of $5,581 was made for the Fund's
projected benefit obligations and payments of $3,200 were made to retired
directors, resulting in an accumulated liability of $18,569 as of October 31,
2000.
The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors to elect to defer receipt of all or
a portion of annual compensation they are entitled to receive from the Fund.
Under the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Board of Directors in shares of one
or more Oppenheimer funds selected by the director. The amount paid to the Board
of Directors under the plan will be determined based upon the performance of the
selected funds. Deferral of directors' fees under the plan will not affect the
net assets of the Fund, and will not materially affect the Fund's assets,
liabilities or net investment income per share.
--------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 2000, amounts have been reclassified to reflect an
increase in paid-in capital of $11,194,006, a decrease in accumulated net
investment loss of $1,600,485, and a decrease in accumulated net realized gain
on investments of $12,794,491. This reclassification includes $11,241,306
distributed in connection with Fund share redemptions which increased paid-in
capital and reduced accumulated net realized gain. Net assets of the Fund were
unaffected by the reclassifications.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
21 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. 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.
================================================================================
2. Capital Stock
The Fund has authorized one billion shares of $.0001 par value capital stock of
each class. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended October 31, 2000 Year Ended October 31, 1999
Shares Amount Shares Amount
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 544,160 $ 16,741,974 894,668 $ 30,627,545
Dividends and/or
distributions reinvested 831,376 23,494,698 144,048 4,517,359
Redeemed (2,773,781) (83,111,295) (2,534,704) (85,391,950)
----------------------------------------------------------
Net decrease (1,398,245) $(42,874,623) (1,495,988) $(50,247,046)
==========================================================
----------------------------------------------------------------------------------------
Class B
Sold 182,060 $ 5,394,490 261,960 $ 8,822,662
Dividends and/or
distributions reinvested 93,859 2,595,206 10,930 338,535
Redeemed (216,700) (6,419,613) (101,752) (3,388,800)
----------------------------------------------------------
Net increase 59,219 $ 1,570,083 171,138 $ 5,772,397
==========================================================
----------------------------------------------------------------------------------------
Class C
Sold 115,356 $ 3,420,814 91,282 $ 3,067,730
Dividends and/or
distributions reinvested 27,874 771,286 3,016 93,518
Redeemed (129,103) (3,793,722) (48,008) (1,613,944)
----------------------------------------------------------
Net increase 14,127 $ 398,378 46,290 $ 1,547,304
==========================================================
</TABLE>
22 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2000, were
$153,972,357 and $235,207,895, respectively.
As of October 31, 2000, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $163,141,064 was:
Gross unrealized appreciation $42,312,524
Gross unrealized depreciation (4,230,659)
-----------
Net unrealized appreciation $38,081,865
===========
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 1.00% of
the first $400 million of average annual net assets of the Fund, 0.90% of the
next $400 million, and 0.85% of average annual net assets in excess of $800
million. The Fund's management fee for the year ended October 31, 2000, was an
annualized rate of 1.00%, before any waiver by the Manager if applicable.
--------------------------------------------------------------------------------
Sub-Advisor Fees. The Manager pays OpCap Advisors (the Sub-Advisor) based on the
fee schedule set forth in the Prospectus. For the year ended October 31, 2000,
the Manager paid $824,752 to the Sub-Advisor.
--------------------------------------------------------------------------------
Transfer Agent Fees. 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 for each Fund
shareholder account and reimburses OFS for its out-of-pocket expenses.
--------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
23 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Fees and Other Transactions with Affiliates Continued
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C
Sales Charges Sales Charges Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
October 31, 2000 $136,807 $27,299 $45,102 $118,961 $11,058
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
October 31, 2000 $1,045 $57,187 $2,015
</TABLE>
The Fund has adopted Distribution and Service Plans for Class A, Class B
and Class C shares under Rule 12b-1 of the Investment Company Act. Under those
plans the Fund pays the Distributor for all or a portion of its costs incurred
in connection with the distribution and/or servicing of the shares of the
particular class.
--------------------------------------------------------------------------------
Class A Distribution and Service Plan Fees. Under the plan the Fund pays an
asset-based sales charge to the Distributor at an annual rate of 0.20% of
average annual net assets of Class A shares of the Fund (the Board of Directors
can set this rate up to 0.25%). Effective January 1, 2000, the asset-based sales
charge rate for Class A shares has been voluntarily reduced from 0.25% to 0.20%
of average annual net assets representing Class A shares. The Fund also pays a
service fee to the Distributor of 0.25% of the average annual net assets of
Class A shares. The Distributor currently uses the fees it receives from the
Fund to pay brokers, dealers, banks and other financial institutions. The
Distributor makes payments to plan recipients quarterly at an annual rate not to
exceed 0.25% of the average annual net assets consisting of Class A shares of
the Fund. For the year ended October 31, 2000, payments under the Class A Plan
totaled $834,724, all of which was paid by the Distributor to recipients. That
included $5,569 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
24 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
--------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and asset-based sales charges from the Fund under
the plans. If any plan is terminated by the Fund, the Board of Directors may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carryforward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended October 31, 2000,
were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $157,215 $130,196 $513,822 2.95%
Class C Plan 49,706 16,025 59,165 1.17
</TABLE>
================================================================================
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 0.45%. 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 0.08%
per annum.
The Fund had no borrowings outstanding during the year ended or at October
31, 2000.
25 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Directors and Shareholders of
Oppenheimer Quest Capital Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Quest Capital Value Fund, Inc. as
of October 31, 2000, and the related statement of operations, the statement of
changes in net assets and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended October 31, 1999, and the financial
highlights for each of the years in the two-year period ended October 31, 1999,
the ten-month period ended October 31, 1997, and the year ended December 31,
1996, were audited by other auditors whose report dated November 19, 1999,
expressed an unqualified opinion on this information.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers; and where confirmations were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Quest Capital Value Fund, Inc., as of October 31, 2000, the results
of its operations, the changes in its net assets and the financial highlights
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2000
26 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2000. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $5.8397 per share were paid to Class A, Class B, and Class
C shareholders on December 10, 1999, all of which was designated as a "capital
gain distribution" for federal income tax purposes. Whether received in stock or
in cash, the capital gain distribution should be treated by shareholders as a
gain from the sale of capital assets held for more than one year (long-term
capital gains).
Dividends paid by the Fund during the fiscal year ended October 31, 2000,
which are not designated as capital gain distributions should be multiplied by
4.76% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
27 | 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
O. Leonard Darling, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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 Auditors KPMG LLP
====================================================================================================
Legal Counsel Mayer, Brown & Platt
For more complete information about Oppenheimer Quest Capital Value
Fund, Inc., please refer to the Prospectus. To obtain a copy, call
your financial advisor, or call OppenheimerFunds Distributor, Inc. at
1.800.525.7048, or visit the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.
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.
Oppenheimer funds are distributed by OppenheimerFunds Distributor,
Inc., Two World Trade Center, New York, NY 10048-0203.
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
</TABLE>
28 | OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to
help.
Internet
24-hr access to account information and transactions(1)
www.oppenheimerfunds.com
--------------------------------------------------------------
General Information
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
--------------------------------------------------------------
Telephone Transactions
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
--------------------------------------------------------------
PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
--------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 9am-6:30pm ET
1.800.843.4461
--------------------------------------------------------------
OppenheimerFunds Market Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
--------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
--------------------------------------------------------------
Ticker Symbol Class A: QCVAX Class B: QCVBX Class C: N/A
1. At times this website may be inaccessible or its transaction feature may be
unavailable.
[logo] OppenheimerFunds(R)
Distributor, Inc.
RA0835.001.1000 December 30, 2000
