-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OKbxxAMzaIcVIvJ9lBo8egVF4WyRgdEEi6kf0vux1M5U6s5y4uDIODgVU78Dqirt L840ZH9Ayu4VumtjUFZQMw== 0000891092-99-000238.txt : 19990505 0000891092-99-000238.hdr.sgml : 19990505 ACCESSION NUMBER: 0000891092-99-000238 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER CAPITAL APPRECIATION FUND CENTRAL INDEX KEY: 0000319767 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133054122 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03105 FILM NUMBER: 99610203 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CTR SUITE 3400 CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 2 WORLD TRADE CENTER 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND INC DATE OF NAME CHANGE: 19870616 N-30D 1 SEMIANNUAL REPORT ----------------------------------- Semiannual Report February 28, 1999 ----------------------------------- O P P E N H E I M E R Capital Appreciation Fund [GRAPHIC OMITTED] [LOGO] OppenheimerFunds(R) THE RIGHT WAY TO INVEST Contents 3 President's Letter 4 An Interview with Your Fund's Manager 9 Financial Statements 31 Officers and Trustees 32 Information and Services Report highlights - -------------------------------------------------------------------------------- o Performance suffered during the broad market pullback of September and October 1998, but quickly rebounded as evidence mounted that the U.S. economy remained strong. o We took advantage of the market's downturn to increase our holdings of high-growth technology and consumer cyclical stocks. Cumulative Total Returns For the 6-Month Period Ended 2/28/99 Class A Without With Sales Chg.(1) Sales Chg.(2) - ---------------------------- 35.53% 27.74% - ---------------------------- Class B Without With Sales Chg.(1) Sales Chg.(2) - ---------------------------- 35.00% 30.00% - ---------------------------- Class C Without With Sales Chg.(1) Sales Chg.(2) - ---------------------------- 34.96% 33.96% - ---------------------------- Class Y Without With Sales Chg.(1) Sales Chg.(2) - ---------------------------- 35.75% 35.75% - ---------------------------- 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. 1. Includes changes in net asset value per share without deducting any sales charges. 2. Class A return includes the current maximum initial sales charge of 5.75%. Class B return includes the applicable contingent deferred sales charge of 5%. Class C return includes the contingent deferred sales charge of 1%. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. 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 Capital Appreciation Fund [PHOTO OMITTED] Bridget A. Macaskill President Oppenheimer Capital Appreciation Fund Dear shareholder, - -------------------------------------------------------------------------------- Contrary to what many analysts had expected, the U.S. economy appears to have picked up steam over the past few months. The fourth quarter of 1998 posted the fastest rate of economic growth in two years, and early indications suggest that the first quarter of 1999 may follow suit. With respect to the U.S. bond market, stronger-than-expected economic growth has triggered concerns that the Federal Reserve may raise key interest rates to forestall an acceleration of inflation. As a result, yields of longer-term taxable bonds have risen from their October 1998 lows, when investors had bid up prices during the global "flight to quality." At the same time, tax exempt bond prices and yields have remained relatively stable. In the U.S. stock market, it might appear at first glance that prices are rising as rapidly as the economy is growing. However, a closer look reveals that, with the exception of large-cap growth companies and the technology industry, most stock prices remained relatively flat. What's more, the disparity in valuations between large companies, which have led the market's advance, and smaller ones, which have lagged, has become historically wide. What do these observations mean for your investments? In our view, actively managed portfolios that are closely monitored by expert money managers are likely to provide better returns than passive index investing in 1999. That's because selectivity is expected to be more critical to performance than it has been over the past few years. In a potentially overvalued stock market and rising interest-rate environment, the ability to identify the most promising securities could become paramount. Even though many equity investors may be tempted to jump aboard the technology bandwagon, we suggest a more prudent course: broad diversification beyond any single asset class, industry, capitalization range or geographic region. We believe that the risks of this investment environment require consideration of a broad range of investments and markets, including bonds. That way, if one market experiences setbacks, one or more of the others may help cushion the effects on your overall portfolio. No matter what the financial markets have in store, we resolve to continue working with your financial advisor to keep you apprised of potential risks and opportunities. Providing you with the market information, professionally managed investments and other resources you need to achieve your financial goals is an important part of our enduring commitment to you as The Right Way to Invest. Sincerely, /s/Bridget A. Macaskill Bridget A. Macaskill March 19, 1999 3 Oppenheimer Capital Appreciation Fund - -------------------------------------------------- "Our goal is to identify the specific companies that we believe are the most likely to succeed, and to invest in them at a reasonable price." An interview with your Fund's manager - -------------------------------------------------------------------------------- How did Oppenheimer Capital Appreciation Fund perform during the six-month period that ended February 28, 1999? The Fund performed reasonably well, considering that the last six months were among the most challenging and volatile periods in recent market history. The Fund's Class A shares have an overall 4-star rating (****) from Morningstar for the combined 3-, 5- and 10-year periods ended March 31, 1999, among 2,947 (3-year), 1,810 (5-year) and 743 (10-year) domestic equity funds.(1) What made the period so challenging? During the second half of 1998, widespread economic difficulties in emerging markets throughout the world sparked fears of a global economic slowdown. Signs began to appear that U.S. corporate profit growth was suffering as a result of weakening global demand for a wide range of products. As investors grew increasingly concerned about the impact of these developments on the U.S. economy, they sought to avoid risk by shift- ing assets to the safest possible instruments: cash and U.S. Treasury bonds. As a result, most equities suffered. Then, on October 15th, the Federal Reserve Board (the Fed) stepped in with a surprise cut in government lending rates. By signaling the Fed's willingness to act decisively in attempting to avoid a recession in the United States, the move bolstered investor confidence. As a result, equities began to rise as quickly as they had fallen. By early 1999, most sectors had recovered the ground they'd lost and in many cases had climbed to new highs. (1) Source: Morningstar, Inc., 3/31/99. Morningstar rates mutual funds in broad investment classes, based on risk-adjusted returns after considering sales charges and expenses. Return and risk are measured as performance above and below 90-day U.S. Treasury bill returns, respectively. Current star ratings are based on the weighted average of 3-, 5- and 10-year (if applicable) ratings for a fund or class and are subject to change monthly. Top 10%: 5 stars. Next 22.5%: 4 stars. Middle 35%: 3 stars. Next 22.5%: 2 stars. Bottom 10%: 1 star. The Fund's Class A shares were rated 4 stars (3-year), 4 stars (5-year) and 4 stars (10-year) weighted 20%/30%/50%, respectively. 4 Oppenheimer Capital Appreciation Fund [PHOTO OMITTED] Portfolio Management Team (l to r) Bob Doll Jane Putnam (Portfolio Manager) How did you manage the Fund in light of these events? Despite the market's decline in September and early October, we continued to believe that the companies we had selected, especially those among the technology and consumer cyclical sectors, offered excellent potential for growth. The company and market fundamentals on which our investments were based remained largely unchanged. Accordingly, we viewed falling prices as an opportunity to increase selected holdings at bargain prices. During September and early October, we put much of the Fund's cash to work purchasing attractive technology companies that were experiencing sharp corrections, such as Cisco Systems, Inc. and Tellabs, Inc. We also increased our holdings of consumer cyclicals, such as CVS Corp., on a company-by-company, investment-by-investment basis. As a result, when market sentiment turned abruptly positive in mid-October and these sectors rallied, the Fund gained sharply. Did any investments disappoint during the recovery? Some of our holdings in the financial services sector failed to rebound as sharply as we expected due to lingering investor concerns about loans and other financial exposures to emerging markets. However, many of these companies have little or no overseas exposure. Others, such as Citigroup, Inc., have already dealt with overseas losses and are poised for better earnings this year. Nevertheless, in the wake of the 1998 market correction, investors seemed to regard all financial services companies with suspicion. We believe these companies continue to represent quality investments at a reasonable price. 5 Oppenheimer Capital Appreciation Fund Avg Annual Total Returns For the Periods Ended 3/31/99(2) Class A 1 year 5 year 10 year - -------------------------------- 10.97% 22.96% 17.03% - -------------------------------- Class B Since 1 year 5 year Inception - -------------------------------- 11.82% N/A 24.10% - -------------------------------- Class C Since 1 year 5 year Inception - -------------------------------- 15.81% 23.35% 21.34% - -------------------------------- Class Y Since 1 year 5 year Inception - -------------------------------- 18.14% N/A 21.34% - -------------------------------- An interview with your Fund's manager - -------------------------------------------------------------------------------- Although oil service company stocks comprise less than 3% of the Fund's holdings, their continued poor performance was another disappointment for us. Still, we remain focused on the long-term potential of these companies, and believe the energy sector will recover. What is your outlook for the future? Going forward, we plan to adhere to our fundamental approach of seeking growth at the right price. Although the U.S. economy's growth may be slowed by the impact of events throughout the world, most indications point to continuing low inflation and healthy consumer spending. As a result, we see opportunities for strong economic growth. We continue to believe companies offering technologies that improve productivity and enhance communications will help drive the economy's future expansion. Likewise, we believe companies that cater to consumers' growing wealth and financial companies that help meet the world's increasing need for investment and retirement products hold potential for success. We also remain committed to our strategy of holding significant defensive positions in companies that we believe are likely to perform well even in a slowing economy because they offer the potential for high rates of exceptionally reliable earnings growth. (2) Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Class A returns include the current maximum initial sales charge of 5.75%. Class A shares were first publicly offered on 1/22/81. The Fund's maximum sales charge for Class A shares was higher prior to 4/1/91, so actual performance may have been lower prior to 4/1/91. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 3% (since inception on 11/1/95). Class C returns include the contingent deferred sales charge of 1% for the one-year period. Class C shares have an inception date of 12/1/93. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. Class B and C shares are subject to a 0.75% annual asset-based sales charge. An explanation of the different performance calculations is in the Fund's prospectus. 6 Oppenheimer Capital Appreciation Fund Portfolio Allocation(3) [The following information was depicted as a pie chart in the printed material] Stocks 90.7% Cash Equivalents 9.3% Our goal is to identify the specific companies that we believe are the most likely to succeed, and to invest in them at a reasonable price. In today's volatile economic environment, we believe our disciplined approach and emphasis on individual stock selection should serve investors well. That's why Oppenheimer Capital Appreciation Fund continues to be part of The Right Way to Invest. Top 5 Industries(3) - -------------------------------------------------------------------------------- Computer Software/Services 10.0% - -------------------------------------------------------------------------------- Computer Hardware 7.9 - -------------------------------------------------------------------------------- Electronics 6.9 - -------------------------------------------------------------------------------- Diversified Financial 6.5 - -------------------------------------------------------------------------------- Healthcare/Drugs 4.8 - -------------------------------------------------------------------------------- Top 10 Stock Holdings(3) - -------------------------------------------------------------------------------- Microsoft Corp. 3.6% - -------------------------------------------------------------------------------- Cisco Systems, Inc. 2.4 - -------------------------------------------------------------------------------- Pfizer, Inc. 2.3 - -------------------------------------------------------------------------------- EMC Corp. 2.1 - -------------------------------------------------------------------------------- Carnival Corp. 1.9 - -------------------------------------------------------------------------------- CVS Corp. 1.8 - -------------------------------------------------------------------------------- Citigroup, Inc. 1.7 - -------------------------------------------------------------------------------- Safeway, Inc. 1.7 - -------------------------------------------------------------------------------- Nokia Corp. 1.7 - -------------------------------------------------------------------------------- Vitesse Semiconductor Corp. 1.6 - -------------------------------------------------------------------------------- (3) Portfolio is subject to change. Percentages are as of February 28, 1999, and are based on total market value of investments. 7 Oppenheimer Capital Appreciation Fund Financials - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] 8 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments February 28, 1999 (Unaudited) - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Common Stocks--91.2% - -------------------------------------------------------------------------------- Basic Materials--1.5% - -------------------------------------------------------------------------------- Chemicals--1.2% Crompton & Knowles Corp.(1) 350,000 $ 6,475,000 - -------------------------------------------------------------------------------- Lafarge Corp. 280,300 8,934,562 - -------------------------------------------------------------------------------- PPG Industries, Inc. 316,200 16,462,162 ----------- 31,871,724 - -------------------------------------------------------------------------------- Paper--0.3% Rayonier, Inc. 157,700 6,455,844 - -------------------------------------------------------------------------------- Capital Goods--3.9% - -------------------------------------------------------------------------------- Electrical Equipment--1.3% Emerson Electric Co. 140,000 8,041,250 - -------------------------------------------------------------------------------- Sanmina Corp.(1) 471,500 24,635,875 ----------- 32,677,125 - -------------------------------------------------------------------------------- Industrial Services--0.8% Coflexip SA, Sponsored ADR(1) 145,200 4,174,500 - -------------------------------------------------------------------------------- Southdown, Inc. 340,000 16,043,750 ----------- 20,218,250 - -------------------------------------------------------------------------------- Manufacturing--1.8% American Standard Cos., Inc.(1) 75,100 2,520,544 - -------------------------------------------------------------------------------- Herman Miller, Inc. 360,000 6,120,000 - -------------------------------------------------------------------------------- Illinois Tool Works, Inc. 160,000 11,000,000 - -------------------------------------------------------------------------------- Navistar International Corp.(1) 200,000 8,600,000 - -------------------------------------------------------------------------------- Tyco International Ltd. (New) 250,575 18,652,177 ----------- 46,892,721 - -------------------------------------------------------------------------------- Consumer Cyclicals--15.7% Autos & Housing--3.7% - -------------------------------------------------------------------------------- Arvin Industries, Inc. 244,900 8,877,625 - -------------------------------------------------------------------------------- Centex Corp. 502,000 18,479,875 - -------------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 323,700 14,566,500 - -------------------------------------------------------------------------------- Gentex Corp.(1) 658,900 14,289,894 - -------------------------------------------------------------------------------- Pulte Corp. 300,000 7,218,750 - -------------------------------------------------------------------------------- Toll Brothers, Inc.(1) 509,600 10,000,900 - -------------------------------------------------------------------------------- USG Corp. 440,000 22,055,000 ----------- 95,488,544 9 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited)(Continued) - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Leisure & Entertainment--3.0% Callaway Golf Co. 370,000 $ 4,023,750 - -------------------------------------------------------------------------------- Carnival Corp. 1,130,000 50,285,000 - -------------------------------------------------------------------------------- Harley-Davidson, Inc. 225,000 13,007,812 - -------------------------------------------------------------------------------- Harrah's Entertainment, Inc.(1) 412,000 6,875,250 - -------------------------------------------------------------------------------- Travel Services International, Inc.(1) 119,400 1,820,850 ------------ 76,012,662 - -------------------------------------------------------------------------------- Media--2.9% CBS Corp.(1) 650,000 23,968,750 - -------------------------------------------------------------------------------- Chancellor Media Corp.(1) 500,000 21,875,000 - -------------------------------------------------------------------------------- Infinity Broadcasting Corp., Cl. A(1) 609,600 14,478,000 - -------------------------------------------------------------------------------- New York Times Co., Cl. A 330,000 10,230,000 - -------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc., Cl. A(1) 308,700 4,572,619 ------------ 75,124,369 - -------------------------------------------------------------------------------- Retail: General--4.8% Dayton Hudson Corp. 150,000 9,384,375 - -------------------------------------------------------------------------------- Fred Meyer, Inc.(1) 570,000 36,622,500 - -------------------------------------------------------------------------------- Jones Apparel Group, Inc.(1) 660,000 18,438,750 - -------------------------------------------------------------------------------- K Mart Corp.(1) 622,700 10,897,250 - -------------------------------------------------------------------------------- Nordstrom, Inc. 470,000 18,917,500 - -------------------------------------------------------------------------------- Tommy Hilfiger Corp.(1) 420,000 29,006,250 ------------ 123,266,625 - -------------------------------------------------------------------------------- Retail: Specialty--1.3% Barnes & Noble, Inc.(1) 250,000 7,390,625 - -------------------------------------------------------------------------------- CSK Auto Corp.(1) 139,400 4,783,162 - -------------------------------------------------------------------------------- Intimate Brands, Inc., Cl. A 120,000 4,717,500 - -------------------------------------------------------------------------------- Nine West Group, Inc.(1) 130,800 2,934,825 - -------------------------------------------------------------------------------- Republic Industries, Inc.(1) 650,000 7,962,500 - -------------------------------------------------------------------------------- TJX Cos., Inc. 200,000 5,712,500 ------------ 33,501,112 - -------------------------------------------------------------------------------- Consumer Staples--11.9% - -------------------------------------------------------------------------------- Consumer Services--2.6% Budget Group, Inc., Cl. A(1) 967,000 11,301,812 - -------------------------------------------------------------------------------- Hertz Corp., Cl. A 250,000 9,953,125 - -------------------------------------------------------------------------------- Omnicom Group, Inc. 490,000 32,462,500 - -------------------------------------------------------------------------------- Young & Rubicam, Inc.(1) 350,000 13,212,500 ------------ 66,929,937 10 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Entertainment--2.9% CKE Restaurants, Inc. 436,230 $11,587,359 - -------------------------------------------------------------------------------- Royal Caribbean Cruises Ltd. 715,000 23,595,000 - -------------------------------------------------------------------------------- Time Warner, Inc. 620,000 39,990,000 ----------- 75,172,359 - -------------------------------------------------------------------------------- Food--1.3% Del Monte Foods Co.(1) 619,400 8,478,037 - -------------------------------------------------------------------------------- IBP, Inc. 280,000 6,300,000 - -------------------------------------------------------------------------------- Keebler Foods Co.(1) 480,000 18,720,000 ----------- 33,498,037 - -------------------------------------------------------------------------------- Food & Drug Retailers--3.6% CVS Corp. 890,000 47,170,000 - -------------------------------------------------------------------------------- Safeway, Inc(1) 765,000 44,178,750 ----------- 91,348,750 - -------------------------------------------------------------------------------- Household Goods--1.5% Avon Products, Inc. 942,000 39,210,750 - -------------------------------------------------------------------------------- Energy--2.0% - -------------------------------------------------------------------------------- Energy Services & Producers--0.8% BJ Services Co.(1) 170,000 2,390,625 - -------------------------------------------------------------------------------- Global Industries Ltd.(1) 166,900 844,931 - -------------------------------------------------------------------------------- Halliburton Co. 433,200 12,237,900 - -------------------------------------------------------------------------------- Varco International, Inc.(1) 589,800 4,570,950 ----------- 20,044,406 - -------------------------------------------------------------------------------- Oil: Domestic--0.8% Mobil Corp. 190,000 15,805,625 - -------------------------------------------------------------------------------- Texaco, Inc. 90,000 4,190,625 ----------- 19,996,250 - -------------------------------------------------------------------------------- Oil: International--0.4% - -------------------------------------------------------------------------------- Total SA, Sponsored ADR(1) 220,000 11,357,500 - -------------------------------------------------------------------------------- Financial--13.4% - -------------------------------------------------------------------------------- Banks--2.9% BankBoston Corp. 200,000 8,087,500 - -------------------------------------------------------------------------------- Chase Manhattan Corp. (New) 340,000 27,072,500 - -------------------------------------------------------------------------------- Fleet Financial Group, Inc. 430,000 18,463,125 - -------------------------------------------------------------------------------- Skandinaviska Enskilda Banken Group(1) 695,000 7,743,865 - -------------------------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 453,600 6,123,600 - -------------------------------------------------------------------------------- Unicredito Italiano SpA(1) 1,135,000 5,967,874 ----------- 73,458,464 11 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited)(Continued) - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Diversified Financial--6.5% Associates First Capital Corp., Cl. A 525,000 $ 21,328,125 - -------------------------------------------------------------------------------- Citigroup, Inc. 752,500 44,209,375 - -------------------------------------------------------------------------------- Fannie Mae 112,000 7,840,000 - -------------------------------------------------------------------------------- Finova Group, Inc. 200,200 10,172,663 - -------------------------------------------------------------------------------- Franklin Resources, Inc. 224,000 7,126,000 - -------------------------------------------------------------------------------- Freddie Mac 220,000 12,952,500 - -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 185,000 14,198,750 - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 255,000 23,077,500 - -------------------------------------------------------------------------------- Price (T. Rowe) Associates, Inc. 236,800 7,296,400 - -------------------------------------------------------------------------------- Schwab (Charles) Corp. 250,000 18,640,625 ------------ 166,841,938 - -------------------------------------------------------------------------------- Insurance--3.4% Allstate Corp. 300,000 11,250,000 - -------------------------------------------------------------------------------- American International Group, Inc. 252,075 28,720,795 - -------------------------------------------------------------------------------- Conseco, Inc. 600,000 17,962,500 - -------------------------------------------------------------------------------- Equitable Cos., Inc. 438,000 29,592,375 ------------ 87,525,670 - -------------------------------------------------------------------------------- Real Estate Investment Trusts--0.6% Boston Properties, Inc. 441,000 14,249,813 - -------------------------------------------------------------------------------- Healthcare--8.5% - -------------------------------------------------------------------------------- Healthcare/Drugs--4.8% Elan Corp. plc, ADR(1) 360,000 27,607,500 - -------------------------------------------------------------------------------- Lilly (Eli) & Co. 100,000 9,468,750 - -------------------------------------------------------------------------------- Pfizer, Inc. 460,000 60,691,250 - -------------------------------------------------------------------------------- Schering-Plough Corp. 470,000 26,290,625 ------------ 124,058,125 - -------------------------------------------------------------------------------- Healthcare/Supplies & Services--3.7% Baxter International, Inc. 340,000 23,927,500 - -------------------------------------------------------------------------------- Cardinal Health, Inc. 220,800 15,939,000 - -------------------------------------------------------------------------------- HEALTHSOUTH Corp.(1) 450,000 5,231,250 - -------------------------------------------------------------------------------- McKesson HBOC, Inc. 309,000 21,012,000 - -------------------------------------------------------------------------------- Medtronic, Inc. 170,000 12,006,250 - -------------------------------------------------------------------------------- Safeskin Corp.(1) 600,000 13,950,000 - -------------------------------------------------------------------------------- Total Renal Care Holdings, Inc.(1) 432,936 3,842,307 ------------ 95,908,307 12 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Technology--29.0% - -------------------------------------------------------------------------------- Computer Hardware--7.9% Cisco Systems, Inc.(1) 640,000 $ 62,600,000 - -------------------------------------------------------------------------------- Compaq Computer Corp. 490,000 17,272,500 - -------------------------------------------------------------------------------- Data General Corp.(1) 610,000 8,425,625 - -------------------------------------------------------------------------------- EMC Corp.(1) 525,000 53,746,875 - -------------------------------------------------------------------------------- Gateway 2000, Inc.(1) 300,000 21,806,250 - -------------------------------------------------------------------------------- Lexmark International Group, Inc., Cl. A(1) 58,400 6,026,150 - -------------------------------------------------------------------------------- Seagate Technology, Inc.(1) 602,000 17,420,375 - -------------------------------------------------------------------------------- Sun Microsystems, Inc.(1) 170,000 16,543,125 ------------ 203,840,900 - -------------------------------------------------------------------------------- Computer Software/Services--10.1% BMC Software, Inc.(1) 550,000 22,481,250 - -------------------------------------------------------------------------------- Cambridge Technology Partners, Inc(1) 160,000 4,020,000 - -------------------------------------------------------------------------------- ICG Communications, Inc.(1) 200,000 3,762,500 - -------------------------------------------------------------------------------- Microsoft Corp.(1) 625,000 93,828,125 - -------------------------------------------------------------------------------- Network Associates, Inc.(1) 160,000 7,520,000 - -------------------------------------------------------------------------------- Novell, Inc.(1) 1,611,700 31,226,688 - -------------------------------------------------------------------------------- Oracle Corp.(1) 500,000 27,937,500 - -------------------------------------------------------------------------------- Peoplesoft, Inc.(1) 674,200 12,725,525 - -------------------------------------------------------------------------------- PLATINUM technology International, Inc.(1) 448,000 5,936,000 - -------------------------------------------------------------------------------- Saville Systems Ireland plc, Sponsored ADR(1) 324,000 6,459,750 - -------------------------------------------------------------------------------- Sungard Data Systems, Inc.(1) 404,500 16,028,313 - -------------------------------------------------------------------------------- Unisys Corp.(1) 420,000 12,521,250 - -------------------------------------------------------------------------------- Veritas Software Corp.(1) 215,000 15,265,000 ------------ 259,711,901 - -------------------------------------------------------------------------------- Communications Equipment--4.0% Alcatel SA, Sponsored ADR(1) 460,000 9,976,250 - -------------------------------------------------------------------------------- CIENA Corp.(1) 437,000 12,181,375 - -------------------------------------------------------------------------------- General Instrument Corp.(1) 900,000 26,325,000 - -------------------------------------------------------------------------------- Premisys Communications, Inc.(1) 620,000 5,115,000 - -------------------------------------------------------------------------------- QUALCOMM, Inc.(1) 160,000 11,680,000 - -------------------------------------------------------------------------------- Tellabs, Inc.(1) 470,700 37,685,419 ------------ 102,963,044 13 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments (Unaudited)(Continued) - -------------------------------------------------------------------------------- Market Value Shares See Note 1 ================================================================================ Electronics--7.0% Applied Materials, Inc.(1) 70,000 $ 3,893,750 - -------------------------------------------------------------------------------- LSI Logic Corp.(1) 220,000 5,706,250 - -------------------------------------------------------------------------------- Micron Technology, Inc.(1) 340,000 19,592,500 - -------------------------------------------------------------------------------- Motorola, Inc. 260,000 18,265,000 - -------------------------------------------------------------------------------- National Semiconductor Corp.(1) 845,000 8,872,500 - -------------------------------------------------------------------------------- Nokia Oyj, A Shares, Sponsored ADR(1) 320,000 43,400,000 - -------------------------------------------------------------------------------- Novellus Systems, Inc.(1) 300,000 17,718,750 - -------------------------------------------------------------------------------- Uniphase Corp.(1) 240,000 21,150,000 - -------------------------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 880,900 40,466,344 -------------- 179,065,094 - -------------------------------------------------------------------------------- Telecommunications--3.4% - -------------------------------------------------------------------------------- Telephone Utilities--1.1% Embratel Participacoes SA, ADR(1) 240,000 3,270,000 - -------------------------------------------------------------------------------- SBC Communications, Inc. 270,000 14,276,250 - -------------------------------------------------------------------------------- Telesp Celular Participacoes SA, ADR(1) 330,000 6,930,000 - -------------------------------------------------------------------------------- Telesp Participacoes SA, ADR(1) 300,000 4,950,000 -------------- 29,426,250 - -------------------------------------------------------------------------------- Telecommunications/Technology--2.3% MCI WorldCom, Inc.(1) 480,000 39,600,000 - -------------------------------------------------------------------------------- MetroNet Communications Corp., Cl. B, Non-Vtg.(1) 51,500 2,262,781 - -------------------------------------------------------------------------------- Nextel Communications, Inc., Cl. A(1) 180,000 5,411,250 - -------------------------------------------------------------------------------- Qwest Communications International, Inc.(1) 200,000 12,287,500 -------------- 59,561,531 - -------------------------------------------------------------------------------- Transportation--1.1% - -------------------------------------------------------------------------------- Railroads & Truckers--1.1% Kansas City Southern Industries, Inc. 600,000 28,050,000 - -------------------------------------------------------------------------------- Utilities--0.8% - -------------------------------------------------------------------------------- Gas Utilities--0.8% Williams Cos., Inc. (The) 570,000 21,090,000 -------------- Total Common Stocks (Cost $1,748,036,639) 2,344,818,002 14 Oppenheimer Capital Appreciation Fund - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Face Market Value Amount See Note 1 ============================================================================== Short-Term Notes--3.9%(2) - ------------------------------------------------------------------------------ General Electric Capital Corp., 4.82%, 3/3/99 $ 50,000,000 $ 49,986,611 - ------------------------------------------------------------------------------ General Motors Acceptance Corp., 4.85%, 3/31/99 50,000,000 49,797,917 ------------- Total Short-Term Notes (Cost $99,784,528) 99,784,528 - ------------------------------------------------------------------------------ Repurchase Agreements--5.5% - ------------------------------------------------------------------------------ Repurchase agreement with Zion First National Bank, 4.74%, dated 2/26/99, to be repurchased at $141,355,814 on 3/1/99, collateralized by U.S. Treasury Nts., 7%, 4/15/99-7/15/06, with a value of $15,294,594, U.S. Treasury Bonds, 7.125%-10.625%, 8/15/15-2/15/23, with a value of $129,636,599 (Cost $141,300,000) 141,300,000 141,300,000 - ------------------------------------------------------------------------------ Total Investments, at Value (Cost $1,989,121,167) 100.6% 2,585,902,530 - ------------------------------------------------------------------------------ Liabilities in Excess of Other Assets (0.6) (15,285,639) ----------- -------------- Net Assets 100.0% $2,570,616,891 =========== ============== (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. 15 Openheimer Capital Appreciation Fund - ------------------------------------------------------------------------------- Statement of Assets and Liabilities February 28, 1999 (Unaudited) - ------------------------------------------------------------------------------- =============================================================================== Assets Investments, at value (cost $1,989,121,167)--see accompanying statement $2,585,902,530 - ------------------------------------------------------------------------------- Receivables and other assets: Investments sold 12,703,057 Shares of beneficial interest sold 8,144,637 Interest and dividends 1,815,060 Other 190,204 -------------- Total assets 2,608,755,488 - ------------------------------------------------------------------------------- Liabilities Bank overdraft 470,744 - -------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 33,426,259 Shares of beneficial interest redeemed 3,213,088 Distribution and service plan fees 655,293 Trustees' compensation--Note 1 202,002 Other 171,211 -------------- Total liabilities 38,138,597 - ------------------------------------------------------------------------------- Net Assets $2,570,616,891 ============== - ------------------------------------------------------------------------------- Composition of Net Assets Paid-in capital $1,891,152,817 - ------------------------------------------------------------------------------- Overdistributed net investment income (1,390,259) - ------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 84,073,031 Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 596,781,302 -------------- Net assets $2,570,616,891 ============== 16 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $1,777,627,592 and 43,213,803 shares of beneficial interest outstanding) $41.14 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $43.65 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $356,864,185 and 8,889,042 shares of beneficial interest outstanding) $40.15 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $124,191,832 and 3,123,588 shares of beneficial interest outstanding) $39.76 - -------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $311,933,282 and 7,583,456 shares of beneficial interest outstanding) $41.13 See accompanying Notes to Financial Statements. 17 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Operations For the Six Months Ended February 28, 1999 (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ Investment Income Dividends (net of foreign withholding taxes of $31,910) $ 6,480,606 - ------------------------------------------------------------------------------- Interest 4,524,612 ------------- Total income 11,005,218 - ------------------------------------------------------------------------------- Expenses Management fees--Note 4 6,769,504 - ------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 1,409,628 Class B 1,355,171 Class C 497,699 - ------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4: Class A 1,284,565 Class B 226,356 Class C 83,078 Class Y 13,703 - ------------------------------------------------------------------------------- Shareholder reports 263,678 - ------------------------------------------------------------------------------- Registration and filing fees 110,891 - ------------------------------------------------------------------------------- Custodian fees and expenses 60,958 - ------------------------------------------------------------------------------- Trustees' compensation--Note 1 40,531 - ------------------------------------------------------------------------------- Legal, auditing and other professional fees 27,407 - ------------------------------------------------------------------------------- Other 72,391 ------------- Total expenses 12,215,560 Less expenses paid indirectly--Note 4 (39,733) ------------- Net expenses 12,175,827 - ------------------------------------------------------------------------------- Net Investment Loss (1,170,609) - ------------------------------------------------------------------------------- Realized and Unrealized Gain Net realized gain on: Investments 84,935,051 Foreign currency transactions 346,657 ------------- Net realized gain 85,281,708 - ------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 537,023,417 Translation of assets and liabilities denominated in foreign currencies (807,180) ------------- Net change 536,216,237 Net realized and unrealized gain 621,497,945 - ------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations $ 620,327,336 ============= See accompanying Notes to Financial Statements. 18 Openheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Changes in Net Assets - -------------------------------------------------------------------------------- Six Months Ended February 28, 1999 Year Ended (Unaudited) August 31, 1998 ================================================================================ Operations Net investment income (loss) $ (1,170,609) $ 6,575,863 - -------------------------------------------------------------------------------- Net realized gain 85,281,708 170,824,591 Net change in unrealized appreciation or depreciation 536,216,237 (311,950,541) -------------- -------------- Net increase (decrease) in net assets resulting from operations 620,327,336 (134,550,087) - -------------------------------------------------------------------------------- Dividends and Distributions to Shareholders Dividends from net investment income: Class A (3,434,787) (4,817,561) Class B -- (22,645) Class C -- (355,999) Class Y (1,089,768) -- - -------------------------------------------------------------------------------- Distributions from net realized gain: Class A (101,496,110) (143,987,822) Class B (17,981,898) (9,888,962) Class C (6,603,983) (5,546,656) Class Y (14,490,090) (7,627,140) - -------------------------------------------------------------------------------- Beneficial Interest Transactions Net increase in net assets resulting from beneficial interest transactions--Note 2: Class A 194,631,018 274,408,889 Class B 105,615,696 178,884,590 Class C 26,765,736 54,452,106 Class Y 84,207,998 215,487,626 - -------------------------------------------------------------------------------- Net Assets Total increase 886,451,148 416,436,339 - -------------------------------------------------------------------------------- Beginning of period 1,684,165,743 1,267,729,404 -------------- -------------- End of period [including undistributed (overdistributed) net investment income of $(1,390,259) and $4,304,905, respectively] $2,570,616,891 $1,684,165,743 ============== ============== See accompanying Notes to Financial Statements. 19 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Financial Highlights - --------------------------------------------------------------------------------
Class A ---------------------------------------------------------------------------------- Six Months Ended February 28, 1999 Year Ended August 31, Year Ended December 31, (Unaudited) 1998 1997 1996(3) 1995 1994 ================================================================================================================================ Per Share Operating Data Net asset value, beginning of period $32.53 $38.63 $30.81 $27.44 $22.63 $25.72 - ------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (.01) .17 .18 .11 .24 .20 Net realized and unrealized gain (loss) 11.25 (1.55) 11.36 3.26 7.61 (.11) ------ ------ ------ ------ ------ ------ Total income (loss) from investment operations 11.24 (1.38) 11.54 3.37 7.85 .09 - ------------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Dividends from net investment income (.09) (.15) (.17) -- (.24) (.20) Distributions from net realized gain (2.54) (4.57) (3.55) -- (2.80) (2.98) ------ ------ ------ ------ ------ ------ Total dividends and distributions to shareholders (2.63) (4.72) (3.72) -- (3.04) (3.18) - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $41.14 $32.53 $38.63 $30.81 $27.44 $22.63 ====== ====== ====== ====== ====== ====== - ------------------------------------------------------------------------------------------------------------------------------ Total Return, at Net Asset Value(5) 35.53% (4.06)% 40.52% 12.28% 34.85% 0.46% - ------------------------------------------------------------------------------------------------------------------------------ Ratios/Supplemental Data Net assets, end of period (in thousands) $1,777,628 $1,233,958 $1,179,362 $788,504 $758,439 $301,698 - ------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $1,555,971 $1,352,628 $ 985,813 $789,903 $538,210 $325,003 Ratios to average net assets: Net investment income (loss) 0.00%(6) 0.48% 0.53% 0.55%(6) 1.08% 0.72% Expenses(7) 1.03%(6) 1.00% 1.01% 1.09%(6) 1.03% 1.16% - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate(8) 29% 60% 66% 45% 72% 35% Class B ------------------------------------------------------------- Six Months Ended Period February 28, Ended 1999 Year Ended August 31, Dec. 31, (Unaudited) 1998 1997 1996(3) 1995 =========================================================================================================== Per Share Operating Data Net asset value, beginning of period $31.85 $38.07 $30.56 $27.37 $29.77 - ----------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.08) (.02) .07 -- (.14) Net realized and unrealized gain (loss) 10.92 (1.62) 11.05 3.19 .78 ----- ----- ----- ---- --- Total income (loss) from investment operations 10.84 (1.64) 11.12 3.19 .64 - ----------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income -- (.01) (.06) -- (.24) Distributions from net realized gain (2.54) (4.57) (3.55) -- (2.80) ----- ----- ----- ---- --- Total dividends and distributions to shareholders (2.54) (4.58) (3.61) -- (3.04) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $40.15 $31.85 $38.07 $30.56 $27.37 ====== ====== ====== ====== ====== - ---------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value(5) 35.00% (4.86)% 39.30% 11.65% 1.67% - ---------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $356,864 $193,638 $52,220 $5,448 $2,751 - ---------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $274,182 $132,908 $23,678 $4,285 $ 661 Ratios to average net assets: Net investment income (loss) (0.82)%(6) (0.37)% (0.33)% (0.25)%(6) (0.54)%(6) Expenses(7) 1.85%(6) 1.81% 1.86% 1.94%(6) 2.62%(6) - ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate(8) 29% 60% 66% 45% 72%
1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 3. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. 4. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 5. 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. 6. Annualized. 7. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses paid indirectly by the Fund. Prior year expenses have not been adjusted. 8. 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 February 28, 1999, were $748,594,225 and $569,549,302, respectively. 20-21 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Financial Highlights (Continued) - --------------------------------------------------------------------------------
Class C ---------------------------------------------------------------------- Six Months Ended February 28, 1999 Year Ended August 31, Year Ended December 31, (Unaudited) 1998 1997 1996(3) 1995 1994(2) ==================================================================================================================== Per Share Operating Data Net asset value, beginning of period $31.57 $37.76 $30.27 $27.11 $22.50 $25.72 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.10) (.03) .01 (.03) .09 -- Net realized and unrealized gain (loss) 10.83 (1.59) 11.03 3.19 7.43 (.15) ----- ----- ----- ---- ---- ---- Total income (loss) from investment operations 10.73 (1.62) 11.04 3.16 7.52 (.15) - --------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income -- -- -- -- (.11) (.09) Distributions from net realized gain (2.54) (4.57) (3.55) -- (2.80) (2.98) ----- ----- ----- ----- ----- Total dividends and distributions to shareholders (2.54) (4.57) (3.55) -- (2.91) (3.07) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $39.76 $31.57 $37.76 $30.27 $27.11 $22.50 ====== ====== ====== ====== ====== ====== - --------------------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value(5) 34.96% (4.84)% 39.35% 11.66% 33.56% (0.50)% Ratios/Supplemental Data Net assets, end of period (in thousands) $124,192 $76,058 $36,148 $10,355 $7,237 $1,066 - -------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $100,631 $61,503 $19,508 $ 9,053 $3,792 $ 467 Ratios to average net assets: Net investment income (loss) (0.82)%(6) (0.36)% (0.32)% (0.30)%(6) 0.19% (0.02)% Expenses(7) 1.85%(6) 1.82% 1.85% 1.93%(6) 1.90% 2.18% - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(8) 29% 60% 66% 45% 72% 35%
Class Y ------------------------ Six Months Ended Period February 28, Ended 1998 August 31, Unaudited 1998(1) ======================================================================= Per Share Operating Data Net asset value, beginning of period $32.56 $40.15 - ----------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .07 .30 Net realized and unrealized gain (loss) 11.23 (3.11) ----- ----- Total income (loss) from investment operations 11.30 (2.81) - ----------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.19) (.21) Distributions from net realized gain (2.54) (4.57) ----- ----- Total dividends and distributions to shareholders (2.73) (4.78) - ----------------------------------------------------------------------- Net asset value, end of period $41.13 $32.56 ====== ====== - ----------------------------------------------------------------------- Total Return, at Net Asset Value(5) 35.75% (7.45)% Ratios/Supplemental Data Net assets, end of period (in thousands) $311,933 $180,512 - ------------------------------------------------------------------------ Average net assets (in thousands) $231,663 $139,050 Ratios to average net assets: Net investment income (loss) 0.33%(6) 0.75%(6) Expenses(7) 0.70%(6) 0.69%(6) - ------------------------------------------------------------------------ Portfolio turnover rate(8) 29% 60% 1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 3. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. 4. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 5. 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. 6. Annualized. 7. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses paid indirectly by the Fund. Prior year expenses have not been adjusted. 8. 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 February 28, 1999, were $748,594,225 and $569,549,302, respectively. See accompanying Notes to Financial Statements. 22-23 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financail Statements (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ 1. Significant Accounting Policies Oppenheimer Capital Appreciation Fund (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. It emphasizes investments in common stocks and other equity securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares are sold with a front-end sales charge, except for purchases greater than $1 million. Class A, Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes A, B and C have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. 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 Trustees. 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 Trustees 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. Forward foreign currency exchange contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. 24 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- Repurchase Agreements. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- Trustees' Compensation. The Fund has adopted a nonfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended February 28, 1999, a provision of $10,422 was made for the Fund's projected benefit obligations and payments of $13,954 were made to retired trustees, resulting in an accumulated liability of $189,443 as of February 28, 1999. 25 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited)(Continued) - -------------------------------------------------------------------------------- ================================================================================ 1. Significant Accounting Policies (continued) The Board of Trustees has adopted a deferred compensation plan for independent Trustees that enables Trustees to elect to defer receipt of all or a portion of annual fees 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 Trustee in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds. Deferral of Trustees' 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 income per share. - -------------------------------------------------------------------------------- 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 primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for 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. 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. 26 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows: Six Months Ended Year Ended February 28, 1999 August 31, 1998(1) ----------------------- --------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------- Class A: Sold 7,723,585 $ 294,620,218 13,360,963 $ 517,903,302 Dividends and distributions reinvested 2,761,674 101,077,226 4,096,261 139,027,036 Redeemed (5,200,462) (201,066,426) (10,058,269) (382,521,449) --------- ------------ ---------- ------------ Net increase 5,284,797 $ 194,631,018 7,398,955 $ 274,408,889 ========= ============= ========= ============= - -------------------------------------------------------------------------------- Class B: Sold 3,610,012 $ 136,793,423 5,675,971 $ 216,655,405 Dividends and distributions reinvested 488,455 17,476,903 287,140 9,596,214 Redeemed (1,288,329) (48,654,630) (1,256,002) (47,367,029) --------- ------------- --------- ------------- Net increase 2,810,138 $ 105,615,696 4,707,109 $ 178,884,590 ========= ============= ========= ============= - -------------------------------------------------------------------------------- Class C: Sold 1,198,025 $ 44,921,406 1,858,420 $ 70,478,018 Dividends and distributions reinvested 180,148 6,384,445 163,665 5,420,589 Redeemed (663,803) (24,540,115) (570,252) (21,446,501) --------- ------------- --------- ------------- Net increase 714,370 $ 26,765,736 1,451,833 $ 54,452,106 ========= ============= ========= ============= - -------------------------------------------------------------------------------- Class Y: Sold 2,182,441 $ 88,620,883 5,790,579 $ 225,327,981 Dividends and distributions reinvested 426,028 15,579,858 235,557 7,983,016 Redeemed (568,227) (19,992,743) (482,922) (17,823,371) --------- ------------- --------- ------------- Net increase 2,040,242 $ 84,207,998 5,543,214 $ 215,487,626 ========= ============= ========= ============= 1. For the year ended August 31, 1998, for Class A, B and C shares and for the period November 3, 1997 (inception of offering) to August 31, 1998, for Class Y shares. 27 Oppenhiemer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited)(Continued) - -------------------------------------------------------------------------------- ================================================================================ 3. Unrealized Gains and Losses on Investments As of February 28, 1999, net unrealized appreciation on investments of $596,781,363 was composed of gross appreciation of $767,252,773, and gross depreciation of $170,471,410. - -------------------------------------------------------------------------------- 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 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700 million, 0.58% of the next $1.0 billion and 0.56% of average annual net assets in excess of $2.5 billion. The Fund's management fee for the six months ended February 28, 1999, was 0.63% of average annual net assets for each class of shares. For the six months ended February 28, 1999, commissions (sales charges paid by investors) on sales of Class A shares totaled $2,228,950, of which $609,527 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales harges advanced to broker/dealers by OFDI on sales of the Fund's Class A, Class B and Class C shares totaled $439,101, $2,462,622 and $195,331, respectively. Amounts paid to an affiliated broker/dealer for Class B and Class C shares were $262,487 and $4,039, respectively. During the six months ended February 28, 1999, OFDI received contingent deferred sales charges of $7,240, $286,998 and $19,046, respectively, 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. OFS's total costs of providing such services are allocated ratably to these funds. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Fund. The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a portion of its costs incurred in connection with the personal service and maintenance of shareholder accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the six months ended February 28, 1999, OFDI paid $82,193 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 28 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ The Fund has adopted a Distribution and Service Plan for Class B shares to compensate OFDI for its costs in distributing Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year for its services rendered in distributing Class B 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 shares. Each fee is computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the six months ended February 28, 1999, OFDI paid $8,645 to an affiliated broker/dealer as compensation for Class B personal service and maintenance expenses and retained $1,201,943 as compensation for Class B sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees 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 February 28, 1999, OFDI had incurred excess distribution and servicing costs of $8,476,719 for Class B. The Fund has adopted a Distribution and Service Plan for Class C shares to reimburse OFDI for its costs in distributing Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year for its services rendered in distributing Class C shares. OFDI also receives a service fee of 0.25% per year to reimburse dealers for providing personal services for accounts that hold Class C shares. Each fee is computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the six months ended February 28, 1999, OFDI paid $3,451 to an affiliated broker/dealer as reimbursement for Class C personal service and maintenance expenses and retained $358,241 as reimbursement for Class C sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees 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 February 28, 1999, OFDI had incurred excess distribution and servicing costs of $813,011 for Class C. 29 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited)(Continued) - -------------------------------------------------------------------------------- ================================================================================ 5. Forward Contracts A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statements of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Fund's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. - -------------------------------------------------------------------------------- 6. 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 February 28, 1999. 30 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- ================================================================================ Officers and Trustees Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Robert C. Doll, Jr., Vice President Jane Putnam, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary ================================================================================ Investment Advisor OppenheimerFunds, Inc. ================================================================================ Distributor OppenheimerFunds Distributor, Inc. ================================================================================ Transfer and OppenheimerFunds Services Shareholder Servicing Agent ================================================================================ Custodian of The Bank of New York Portfolio Securities ================================================================================ Independent Auditors KPMG 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 auditors. This is a copy of a report to shareholders of Oppenheimer Capital Appreciation Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Capital Appreciation Fund. 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. 31 Oppenhiemer Capital Appreciation Fund Internet 24-hr access to account information. Online transactions now available - ------------------------------------------- www.oppenheimerfunds.com - ------------------------------------------- General Information Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET - ------------------------------------------- 1-800-525-7048 - ------------------------------------------- Account Transactions Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET - ------------------------------------------- 1-800-852-8457 - ------------------------------------------- PhoneLink 24-hr automated information and automated transactions - ------------------------------------------- 1-800-533-3310 - ------------------------------------------- Telecommunication Device for the Deaf (TDD) Mon-Fri 8:30am-6pm ET - ------------------------------------------- 1-800-843-4461 - ------------------------------------------- OppenheimerFunds Information Hotline 24 hours a day, timely and insightful messages on the economy and issues that affect your investments - ------------------------------------------- 1-800-835-3104 - ------------------------------------------- Information and services - -------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number or by visiting our website. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number or website to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assis- tance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today, or visit us at our website at www.oppenheimerfunds.com--we're here to help. [LOGO] OppenheimerFunds(R) Disributor, Inc. RS0320.001.0299 April 29, 1999 -----END PRIVACY-ENHANCED MESSAGE-----