N-30D 1 ra0320_5778vef.txt CAPITAL APPRECIATION Oppenheimer Capital Appreciation Fund ANNUAL REPORT AUGUST 31, 2002 Fund Highlights Performance Update Investment Strategy Discussion Listing of Individual Investments "WHILE THE ECONOMIC RECOVERY HAS NO DOUBT OCCURRED IN FITS AND STARTS, WE CONTINUE TO BELIEVE THAT THE WORST OF THE DOWNTURN IS BEHIND US, AND LOOK FOR MODERATE GROWTH AND A COMMENSURATELY RESPONSIVE MARKET AHEAD." [LOGO OMITTED] OPPENHEIMER FUNDS(R) THE RIGHT WAY TO INVEST REPORT HIGHLIGHTS -------------------------------------------------------------------------------- CONTENTS 1 Letter to Shareholders 3 Interview with your Fund's Manager 7 Fund Performance 12 FINANCIAL STATEMENTS 33 INDEPENDENT AUDITORS' REPORT 34 Federal Income Tax Information 35 Trustees and Officers 40 Privacy Policy Notice FUND OBJECTIVE Oppenheimer Capital Appreciation Fund seeks capital appreciation. FUND HIGHLIGHT According to Lipper, Inc., a leading mutual fund tracking company, the Fund's Class A shares ranked 34 of 237, 28 of 169 and 8 of 48 of mid-cap core funds, respectively, for the three-, five- and ten-year periods ended August 31, 2002.(1) ------------------------------------ AVERAGE ANNUAL TOTAL RETURNS* For the 1-Year Period Ended 8/31/02 Without With Sales Chg. Sales Chg. ------------------------------------ Class A -23.48% -27.89% ------------------------------------ Class B -24.07 -27.77 ------------------------------------ Class C -24.01 -24.75 ------------------------------------ Class N -23.67 -24.41 ------------------------------------ Class Y -23.23 ------------------------------------ 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. *SEE NOTES ON PAGE 11 FOR FURTHER DETAILS. 1. Source: Lipper, Inc. Lipper rankings are based on total returns, but do not consider sales charges. The Fund's one year ranking for the period ended 8/31/02 was 168 of 422. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. LETTER TO SHAREHOLDERS -------------------------------------------------------------------------------- Dear Shareholder, As we near the end of 2002, global tensions and economic challenges that began in 2001 continue to impact events around the world and in the financial markets. When it comes to investing, words like trust, experience and consistency have never been more meaningful. Recently, accounting scandals and an overall lack of investor confidence in corporate America have weakened the stock market and caused the prices of many individual securities to drop sharply during the period. On the other hand, the overall bond market has provided some positive returns and stability, helping to provide investors with a safe haven from the equity markets. Not surprisingly, many investors are unsure what their next step should be and where they should turn to invest their money. Despite the continued challenges, there are signs of a moderate recovery in the U.S. economy. Rooted in a combination of low inflation and little pressure on the Federal Reserve Board to raise interest rates, business conditions are slowly improving, and we believe the prospects for long-term investors look bright. With that said, we expect the economy and markets to return to historical levels and not the exaggerated growth levels that typified the late 1990s and early 2000s. Now more than ever, investors can see on two levels the fundamental advantage of mutual funds: diversification. Investors can diversify their portfolios by investing among several types of funds to reduce short-term risks. The right asset allocation among equity and fixed-income funds can help cushion an investor's portfolio from tough market conditions. Secondly, mutual funds, while certainly not immune to volatility and declines in either the equity or fixed-income markets, offer clear-cut advantages over direct ownership of individual [GRAPHIC OMITTED] JOHN V. MURPHY President Oppenheimer Capital Appreciation Fund 1 OPPENHEIMER CAPITAL APPRECIATION FUND LETTER TO SHAREHOLDERS -------------------------------------------------------------------------------- securities. Because fund portfolios often contain a number of different investments, one security's poor performance usually does not have a dramatic effect on the fund as a whole. Your financial advisor is also an equally important player on your team of investment professionals. Even if you consult with your advisor on a regular basis, now may be a good time to make sure that your portfolio still reflects the right mix of investments to help you reach your long-term goals. We at OppenheimerFunds appreciate and thank you for your continued trust as we strive toward our ongoing goal of investment excellence. To us, this is not a phrase uttered lightly. It's a commitment to providing shareholders with world-class asset management, top-quality service and strong fund performance over time. In other words, it's what makes OppenheimerFunds THE RIGHT WAY TO INVEST. Sincerely, /S/ JOHN V. MURPHY John V. Murphy September 23, 2002 THESE GENERAL MARKET VIEWS REPRESENT OPINIONS OF OPPENHEIMERFUNDS, INC. AND ARE NOT INTENDED TO PREDICT PERFORMANCE OF THE SECURITIES MARKETS OR ANY PARTICULAR FUND. SPECIFIC INFORMATION THAT APPLIES TO YOUR FUND IS CONTAINED IN THE PAGES THAT FOLLOW. 2 OPPENHEIMER CAPITAL APPRECIATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGER -------------------------------------------------------------------------------- Q HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE DURING THE 12-MONTH PERIOD THAT ENDED AUGUST 31, 2002? A. We are somewhat disappointed with the Fund's performance, which has suffered along with the overall market. Though our thesis for a gradually improving economy has proved mostly accurate, the stock market has not responded in a typical recovery manner. While the economic recovery has no doubt occurred in fits and starts, we continue to believe that the worst of the downturn is behind us, and look for moderate growth and a commensurately responsive market ahead. We remain confident that our disciplined, growth-at-a-reasonable-price investment strategy will continue to deliver the long-term results our investors have come to expect. WHAT MADE THIS SUCH A DIFFICULT PERIOD? The market experienced a series of shocks that exacerbated the impact of an economic downturn that began in mid-2000. The terrorist attacks on the United States and subsequent war on terrorism raised a host of uncertainties regarding global political stability and international trade. Accounting irregularities surfaced at several well-known companies, causing some to file for bankruptcy and raising broader concerns regarding the integrity of corporate governance and reporting procedures. These developments resulted, we believe, in the stock market "disconnecting" from the generally improving economy. In addition, persistently weak levels of corporate capital spending continued (as corporate profits had not yet shown a sustainable turn) resulting in a slower pace of recovery than most forecast. Slower than expected growth further undermined investor confidence, creating high levels of volatility and driving stock prices lower in a wide range of industry sectors. Although growth-oriented areas, such as technology, were hardest hit by these conditions, certain traditionally defensive areas, such as cable operators and pharmaceutical companies, declined along with the rest of the market. PORTFOLIO MANAGER Jane Putnam 3 OPPENHEIMER CAPITAL APPRECIATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGER -------------------------------------------------------------------------------- HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS? Our investment strategy remained consistently focused on seeking individual stocks that offered attractive growth potential at a reasonable price. However, disappointing stock performance in a variety of industry areas undermined the Fund's returns during the period. We attribute some of this underperformance to our focus on companies we believe are true long-term growth companies, rather than companies that gained short term favor among growth investors for exhibiting short-term relative growth or short-term cyclical growth--for example, tobacco and timber stocks, respectively. In many other instances, the Fund suffered disappointments related to clearly identifiable industry-wide problems. For example, our media and advertising holdings, such as Clear Channel Communications, Inc. and Viacom, Inc., were hurt by a sharp downturn in advertising in the wake of September 11, 2001, while holdings of retail company stocks sagged during the second half of the period in response to weakening consumer spending. In other areas, stock prices fluctuated for less apparent reasons. For example, cable company holdings, such as Comcast Corp., declined despite strong fundamentals, as did some of the Fund's healthcare investments. On a more positive note, the Fund achieved above-average returns among financials, one of the market's better-performing groups. Strong performance from individual holdings, such as Bank of America Corp. and Freddie Mac, drove the Fund's performance in this key area. The performance of individual holdings bolstered performance in a variety of other areas as well. For example, despite declines among major pharmaceutical companies, the Fund benefited from its significant position in Johnson & Johnson, which bucked the industry trend. Similarly, despite sharp declines in the technology area, Microsoft Corp.--one of the Fund's largest holdings through most of the period--delivered much better-than-average performance. Such results illustrated the increasing importance of WE REMAIN CONFIDENT THAT OUR DISCIPLINED, GROWTH-AT-A-REASONABLE-PRICE INVESTMENT STRATEGY WILL CONTINUE TO DELIVER THE LONG-TERM RESULTS OUR INVESTORS HAVE COME TO EXPECT. 4 OPPENHEIMER CAPITAL APPRECIATION FUND good individual stock selections in a volatile market that lacked clear sector leadership. WHAT IS YOUR OUTLOOK OVER THE COMING MONTHS? Few diversified investment strategies have proved effective in today's challenging climate. However, we believe these challenges have produced a healthier long-term market environment by reducing the speculation associated with the technology bubble of the 1990's, and by leading to more conservative rules and practices regarding corporate accounting. These changes have set the stage for a potential return of investor confidence in response to gradually improving economic fundamentals. We are cautiously optimistic with regard to the market's near-to-mid-term prospects. Stock prices appear to fully reflect current uncertainties regarding the pace of recovery, accounting scandals and the war on terrorism. Corporate revenues and earnings are showing signs of mild increases, setting the stage of future increases in capital spending that are necessary to power a more vigorous recovery. In this environment, we believe that individual stock selections are likely to play a central role in determining overall investment performance. Accordingly, we remain as committed as ever to building the Fund's portfolio one stock and one investment at a time. In particular, we have found a relatively large number of attractive investment opportunities among technology, media, financial and other stocks we believe are particularly well positioned to benefit from an improving economy. We continue to balance these holdings with significant positions in reasonably priced stocks that we believe offer reasonably good prospects for earnings and revenue growth --------------------------------------- AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE For the Periods Ended 9/30/02(1) Class A 1-Year 5-Year 10-Year --------------------------------------- -25.48% -0.63% 9.76% Class B Since 1-Year 5-Year Inception --------------------------------------- -25.35% -0.50% 7.47% Class C Since 1-Year 5-Year Inception --------------------------------------- -22.24% -0.21% 9.13% Class N Since 1-Year 5-Year Inception --------------------------------------- -21.85% N/A -25.54% Class Y Since 1-Year 5-Year Inception --------------------------------------- -20.67% N/A 1.07% --------------------------------------- 1. See Notes on page 11 for further details. 5 OPPENHEIMER CAPITAL APPRECIATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGER -------------------------------------------------------------------------------- while providing a measure of protection from unexpected market downturns. We also strive to control risk by avoiding exposure to speculative stocks with high price/earnings ratios, and by maintaining a broadly diversified portfolio that is not overly concentrated in any individual stocks or industry sectors. Our disciplined approach to investment and risk control continue to make Oppenheimer Capital Appreciation Fund an important part of THE RIGHT WAY TO INVEST. SECTOR ALLOCATION(2) [GRAPHIC OMITTED] o Consumer Discretionary 28.1% Media 16.8 Hotels Restaurants & Leisure 3.9 Multiline Retail 3.6 Specialty Retail 1.5 Automobiles 0.8 Leisure Equipment & Products 0.6 Household Durables 0.5 Textiles & Apparel 0.3 Internet & Catalog Retail 0.1 o Information Technology 16.7 o Financials 16.7 o Health Care 10.7 o Consumer Staples 7.7 o Energy 7.3 o Industrials 6.5 o Materials 3.2 o Utilities 2.4 o Telecom- munications Services 0.7 TOP TEN COMMON STOCK HOLDINGS(3) -------------------------------------------------------------------------------- Microsoft Corp. 3.4% -------------------------------------------------------------------------------- Viacom, Inc., Cl. B 3.3 -------------------------------------------------------------------------------- Comcast Corp., Cl. A Special 2.9 -------------------------------------------------------------------------------- Anheuser-Busch Cos., Inc. 2.2 -------------------------------------------------------------------------------- Citigroup, Inc. 2.1 -------------------------------------------------------------------------------- McGraw-Hill Cos., Inc. (The) 2.0 -------------------------------------------------------------------------------- Pfizer, Inc. 1.8 -------------------------------------------------------------------------------- Exxon Mobil Corp. 1.8 -------------------------------------------------------------------------------- AOL Time Warner, Inc. 1.7 -------------------------------------------------------------------------------- PepsiCo, Inc. 1.5 TOP FIVE COMMON STOCK INDUSTRIES(3) -------------------------------------------------------------------------------- Media 14.8% -------------------------------------------------------------------------------- Diversified Financials 9.4 -------------------------------------------------------------------------------- Software 5.8 -------------------------------------------------------------------------------- Oil & Gas 4.9 -------------------------------------------------------------------------------- Semiconductor Equipment & Products 4.5 2. Portfolio is subject to change. Percentages are as of August 31, 2002, and are based on total market value of common stock holdings. 3. Portfolio is subject to change. Percentages are as of August 31, 2002, and are based on net assets. 6 OPPENHEIMER CAPITAL APPRECIATION FUND FUND PERFORMANCE -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION, BY OPPENHEIMERFUNDS, INC., OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2002, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the one-year period that ended August 31, 2002, Oppenheimer Capital Appreciation Fund suffered from weakness in the U.S. economy and markets, producing slightly weaker performance than its benchmark and the majority of its peers. We attribute the Fund's below-average performance to disappointing results from some of the industries in which we found the greatest number of attractive investment opportunities, including retail, cable and media and advertising. The Fund compensated for these setbacks in part with above-average performance among its financial sector holdings, and strong performance from a disparate group of individual stocks such as Microsoft Corp. and Johnson & Johnson. The Fund's portfolio and our management 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 August 31, 2002: in the case of Class A shares, performance is measured over a ten year period; in the case of Class B shares, from the inception of the Class on November 1, 1995, in the case of Class C shares, from the inception of the Class on December 1, 1993, and in the case of Class Y shares, from the inception of the Class on November 3, 1997. In the case of Class N shares, performance is measured from inception of the Class on March 1, 2001. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestment 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 effect 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 shown. 7 OPPENHEIMER CAPITAL APPRECIATION FUND FUND PERFORMANCE -------------------------------------------------------------------------------- CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: [GRAPHIC OMITTED] PLOT POINTS FOLLOW: Oppenheimer Capital S&P 500 Appreciation Fund Index (Class A) 12/31/1992 9,425 10,000 03/31/1993 9,399 10,436 06/30/1993 9,358 10,486 09/30/1993 9,574 10,757 12/31/1993 9,795 11,006 03/31/1994 9,540 10,589 06/30/1994 9,277 10,633 09/30/1994 9,818 11,152 12/31/1994 9,840 11,150 03/31/1995 10,727 12,235 06/30/1995 11,987 13,401 09/30/1995 13,035 14,465 12/31/1995 13,269 15,335 03/31/1996 14,221 16,158 06/30/1996 14,952 16,883 08/31/1996(1) 14,898 16,478 11/30/1996 17,229 19,235 02/28/1997 17,613 20,189 05/31/1997 18,957 21,770 08/31/1997 20,935 23,172 11/30/1997 21,385 24,718 02/28/1998 23,215 27,252 05/31/1998 23,906 28,443 08/31/1998 20,085 25,054 11/30/1998 24,308 30,572 02/28/1999 27,221 32,637 05/31/1999 28,763 34,425 08/31/1999 29,597 35,027 11/30/1999 32,845 36,959 02/29/2000 40,520 36,464 05/31/2000 39,723 38,029 08/31/2000 43,806 40,739 11/30/2000 36,127 35,398 02/28/2001 35,639 33,476 05/31/2001 36,526 34,018 08/31/2001 32,250 30,808 11/30/2001 32,093 31,074 02/28/2002 30,107 30,294 05/31/2002 29,296 29,311 08/31/2002 24,677 25,267 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES OF THE FUND AT 8/31/02(2) 1-YEAR -27.89% 5-YEAR 2.13% 10-YEAR 11.00% CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: [GRAPHIC OMITTED] PLOT POINTS FOLLOW: Oppenheimer Capital S&P 500 Appreciation Fund Index (Class B) 11/01/1995 10,000 10,000 12/31/1995 10,167 10,640 03/31/1996 10,873 11,211 06/30/1996 11,411 11,713 08/31/1996(1) 11,352 11,432 11/30/1996 13,098 13,345 02/28/1997 13,362 14,007 05/31/1997 14,347 15,104 08/31/1997 15,813 16,077 11/30/1997 16,120 17,149 02/28/1998 17,458 18,907 05/31/1998 17,945 19,734 08/31/1998 15,044 17,382 11/30/1998 18,171 21,211 02/28/1999 20,310 22,643 05/31/1999 21,418 23,884 08/31/1999 21,995 24,301 11/30/1999 24,362 25,642 02/29/2000 29,998 25,299 05/31/2000 29,350 26,385 08/31/2000 32,305 28,264 11/30/2000 26,589 24,559 02/28/2001 26,179 23,226 05/31/2001 26,782 23,602 08/31/2001 23,601 21,375 11/30/2001 23,455 21,559 02/28/2002 22,003 21,018 05/31/2002 21,411 20,336 08/31/2002 18,035 17,530 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES OF THE FUND AT 8/31/02(2) 1-YEAR -27.77% 5-YEAR 2.26% SINCE INCEPTION 9.01% 1. The Fund changed its fiscal year from 12/31 to 8/31. 2. See Notes on page 11 for further details. 8 OPPENHEIMER CAPITAL APPRECIATION FUND CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: [GRAPHIC OMITTED] PLOT POINTS FOLLOW: Oppenheimer Capital S&P 500 Appreciation Fund Index (Class C) 12/01/1993 10,000 10,000 12/31/1993 10,117 10,121 03/31/1994 9,825 9,738 06/30/1994 9,530 9,778 09/30/1994 10,061 10,256 12/31/1994 10,066 10,254 03/31/1995 10,942 11,251 06/30/1995 12,195 12,324 09/30/1995 13,233 13,302 12/31/1995 13,444 14,103 03/31/1996 14,381 14,859 06/30/1996 15,085 15,525 08/31/1996(1) 15,011 15,153 11/30/1996 17,322 17,689 02/28/1997 17,671 18,566 05/31/1997 18,978 20,020 08/31/1997 20,917 21,309 11/30/1997 21,322 22,731 02/28/1998 23,094 25,061 05/31/1998 23,737 26,157 08/31/1998 19,904 23,040 11/30/1998 24,040 28,114 02/28/1999 26,863 30,013 05/31/1999 28,329 31,658 08/31/1999 29,092 32,211 11/30/1999 32,220 33,988 02/29/2000 39,681 33,533 05/31/2000 38,829 34,972 08/31/2000 42,735 37,463 11/30/2000 35,168 32,552 02/28/2001 34,634 30,785 05/31/2001 35,426 31,283 08/31/2001 31,217 28,332 11/30/2001 31,007 28,576 02/28/2002 29,041 27,858 05/31/2002 28,195 26,955 08/31/2002 23,721 23,236 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES OF THE FUND AT 8/31/02(2) 1-YEAR -24.75% 5-YEAR 2.55% SINCE INCEPTION 10.38% CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: [GRAPHIC OMITTED] PLOT POINTS FOLLOW: Oppenheimer Capital S&P 500 Appreciation Fund Index (Class N) 03/01/2001 10,000 10,000 05/31/2001 10,206 10,162 08/31/2001 9,006 9,203 11/30/2001 8,956 9,283 02/28/2002 8,398 9,049 05/31/2002 8,164 8,756 08/31/2002 6,807 7,548 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES OF THE FUND AT 8/31/02(2) 1-YEAR -24.41% SINCE INCEPTION -22.61% 9 OPPENHEIMER CAPITAL APPRECIATION FUND FUND PERFORMANCE -------------------------------------------------------------------------------- CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: [GRAPHIC OMITTED] PLOT POINTS FOLLOW: Oppenheimer Capital S&P 500 Appreciation Fund Index (Class Y) 11/03/1997 10,000 10,000 11/30/1997 9,833 10,463 02/28/1998 10,680 11,535 05/31/1998 11,009 12,039 08/31/1998 9,255 10,605 11/30/1998 11,211 12,940 02/28/1999 12,564 13,815 05/31/1999 13,291 14,572 08/31/1999 13,688 14,826 11/30/1999 15,203 15,644 02/29/2000 18,778 15,435 05/31/2000 18,430 16,097 08/31/2000 20,347 17,244 11/30/2000 16,789 14,983 02/28/2001 16,579 14,170 05/31/2001 17,009 14,399 08/31/2001 15,034 13,041 11/30/2001 14,965 13,153 02/28/2002 14,053 12,823 05/31/2002 13,690 12,407 08/31/2002 11,541 10,695 AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 8/31/02(2) 1-YEAR -23.23% SINCE INCEPTION 3.01% 2. See Notes on page 11 for further details. THE PERFORMANCE INFORMATION FOR THE S&P 500 INDEX IN THE GRAPHS BEGINS ON 12/31/92 FOR CLASS A, 10/31/95 FOR CLASS B, 11/30/93 FOR CLASS C, 2/28/01 FOR CLASS N AND 10/31/97 FOR CLASS Y. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. GRAPHS ARE NOT DRAWN TO SAME SCALE. 10 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES -------------------------------------------------------------------------------- IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE CANNOT 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 OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATIONS, AND CURRENT PERFORMANCE MAY BE MORE OR LESS THAN THE RESULTS SHOWN. FOR UPDATES ON THE FUND'S PERFORMANCE, VISIT OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.CALL.OPP (1.800.225.5677) or visit the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM. Read the prospectus carefully before you invest or send money. CLASS A shares of the Fund were first publicly offered on 1/22/81. Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 11/1/95. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Class B shares convert to Class A shares 72 months after purchase. The Fund's returns after conversion are based on expenses of Class A shares. Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 12/1/93. Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% (since inception) if redeemed within the first 18 months. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Fund were first publicly offered on 11/3/97. Class Y shares are offered only to certain institutional investors under special agreements with the Distributor. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 11 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS August 31, 2002 -------------------------------------------------------------------- MARKET VALUE SHARES SEE NOTE 1 ==================================================================== COMMON STOCKS--88.4% -------------------------------------------------------------------- CONSUMER DISCRETIONARY--24.8% -------------------------------------------------------------------- AUTOMOBILES--0.7% Harley-Davidson, Inc. 841,400 $ 41,422,122 -------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--3.5% Brinker International, Inc.(1) 1,093,300 30,306,276 -------------------------------------------------------------------- Carnival Corp. 3,301,300 80,782,811 -------------------------------------------------------------------- Mandalay Resort Group(1) 294,600 8,867,460 -------------------------------------------------------------------- Royal Caribbean Cruises Ltd. 3,486,500 61,711,050 -------------------------------------------------------------------- Ruby Tuesday, Inc. 248,600 4,957,084 -------------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc. 335,200 8,641,456 ------------- 195,266,137 -------------------------------------------------------------------- HOUSEHOLD DURABLES--0.4% Ethan Allen Interiors, Inc. 713,460 24,243,371 -------------------------------------------------------------------- INTERNET & CATALOG RETAIL--0.1% ValueVision Media, Inc., Cl. A(1) 364,600 5,188,258 -------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS--0.5% Mattel, Inc. 1,452,000 28,212,360 -------------------------------------------------------------------- MEDIA--14.8% AOL Time Warner, Inc.(1) 7,477,800 94,594,170 -------------------------------------------------------------------- Cablevision Systems New York Group, Cl. A(1) 1,197,900 11,415,987 -------------------------------------------------------------------- Clear Channel Communications, Inc.(1) 2,044,000 69,863,920 -------------------------------------------------------------------- Comcast Corp., Cl. A Special(1) 6,816,750 162,443,152 -------------------------------------------------------------------- Fox Entertainment Group, Inc., A Shares(1) 928,200 20,726,706 -------------------------------------------------------------------- Hispanic Broadcasting Corp.(1) 979,000 18,943,650 -------------------------------------------------------------------- McGraw-Hill Cos., Inc. (The) 1,771,100 112,305,451 -------------------------------------------------------------------- New York Times Co., Cl. A 764,300 36,074,960 -------------------------------------------------------------------- News Corp. Ltd. (The), Sponsored ADR 2,610,600 56,127,900 MARKET VALUE SHARES SEE NOTE 1 ==================================================================== MEDIA Continued Omnicom Group, Inc. 809,200 $ 48,956,600 -------------------------------------------------------------------- Univision Communications, Inc., Cl. A(1) 816,700 19,029,110 -------------------------------------------------------------------- Viacom, Inc., Cl. B(1) 4,516,400 183,817,480 ------------- 834,299,086 -------------------------------------------------------------------- MULTILINE RETAIL--3.2% BJ's Wholesale Club, Inc.(1) 220,400 5,410,820 -------------------------------------------------------------------- Costco Wholesale Corp.(1) 1,216,700 40,649,947 -------------------------------------------------------------------- Kohl's Corp.(1) 665,200 46,377,744 -------------------------------------------------------------------- Sears Roebuck & Co. 690,200 31,411,002 -------------------------------------------------------------------- Target Corp. 1,670,300 57,124,260 ------------ 180,973,773 -------------------------------------------------------------------- SPECIALTY RETAIL--1.3% AutoNation, Inc.(1) 402,300 5,310,360 -------------------------------------------------------------------- Gap, Inc. (The) 2,291,800 26,882,814 -------------------------------------------------------------------- Limited Brands, Inc. 1,869,800 28,589,242 -------------------------------------------------------------------- Tiffany & Co. 597,200 14,810,560 ----------- 75,592,976 -------------------------------------------------------------------- TEXTILES & APPAREL--0.3% Nike, Inc., Cl. B 360,900 15,583,662 -------------------------------------------------------------------- CONSUMER STAPLES--6.8% -------------------------------------------------------------------- BEVERAGES--3.7% Anheuser-Busch Cos., Inc. 2,292,000 121,842,720 -------------------------------------------------------------------- PepsiCo, Inc. 2,136,000 84,478,800 ------------ 206,321,520 -------------------------------------------------------------------- FOOD & DRUG RETAILING--1.5% Kroger Co. (The)(1) 1,461,800 26,429,344 -------------------------------------------------------------------- Rite Aid Corp.(1) 591,500 1,242,150 -------------------------------------------------------------------- Safeway, Inc.(1) 1,468,400 37,914,088 -------------------------------------------------------------------- Sysco Corp. 666,900 18,913,284 ------------ 84,498,866 -------------------------------------------------------------------- FOOD PRODUCTS--1.4% Dean Foods Co.(1) 1,146,100 43,379,885 -------------------------------------------------------------------- General Mills, Inc. 840,900 35,393,481 ------------ 78,773,366 12 OPPENHEIMER CAPITAL APPRECIATION FUND MARKET VALUE SHARES SEE NOTE 1 ==================================================================== PERSONAL PRODUCTS--0.2% Estee Lauder Cos., Inc. (The), Cl. A 437,400 $ 13,100,130 -------------------------------------------------------------------- ENERGY--6.5% -------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--1.6% BJ Services Co.(1) 1,169,700 35,675,850 -------------------------------------------------------------------- Halliburton Co. 968,600 14,722,720 -------------------------------------------------------------------- Noble Corp.(1) 507,510 15,768,336 -------------------------------------------------------------------- Rowan Cos., Inc. 638,400 13,138,272 -------------------------------------------------------------------- Varco International, Inc.(1) 651,600 11,487,708 ------------ 90,792,886 -------------------------------------------------------------------- OIL & GAS--4.9% Amerada Hess Corp. 833,200 60,906,920 -------------------------------------------------------------------- Encana Corp. 1,145,510 33,616,312 Exxon Mobil Corp. 2,794,800 99,075,660 TotalFinaElf SA, Sponsored ADR 1,137,400 81,119,368 ------------ 274,718,260 -------------------------------------------------------------------- FINANCIALS--14.8% -------------------------------------------------------------------- BANKS--2.3% Bank of America Corp 748,400 52,447,872 -------------------------------------------------------------------- Bank One Corp. 1,925,400 78,845,130 ------------ 131,293,002 -------------------------------------------------------------------- DIVERSIFIED FINANCIALS--9.4% American Express Co. 1,511,900 54,519,114 -------------------------------------------------------------------- Citigroup, Inc. 3,629,800 118,875,950 -------------------------------------------------------------------- Countrywide Credit Industries, Inc. 621,800 32,638,282 -------------------------------------------------------------------- Fannie Mae 492,700 37,336,806 -------------------------------------------------------------------- Freddie Mac 1,269,500 81,374,950 -------------------------------------------------------------------- Goldman Sachs Group, Inc. (The) 393,600 30,425,280 -------------------------------------------------------------------- J.P. Morgan Chase & Co. 1,435,400 37,894,560 -------------------------------------------------------------------- Merrill Lynch & Co., Inc. 852,800 30,888,416 -------------------------------------------------------------------- Morgan Stanley 1,802,900 77,019,888 -------------------------------------------------------------------- Schwab (Charles) Corp. 3,132,600 28,757,268 ------------ 529,730,514 MARKET VALUE SHARES SEE NOTE 1 ==================================================================== INSURANCE--2.4% -------------------------------------------------------------------- American International Group, Inc. 1,299,900 $ 81,633,720 -------------------------------------------------------------------- Everest Re Group Ltd. 222,500 12,059,500 -------------------------------------------------------------------- St. Paul Cos., Inc. 451,000 13,719,420 -------------------------------------------------------------------- Travelers Property Casualty Corp., Cl. A(1) 156,856 2,465,776 -------------------------------------------------------------------- Travelers Property Casualty Corp., Cl. B(1) 322,266 5,249,713 -------------------------------------------------------------------- XL Capital Ltd., Cl. A 254,000 18,696,940 ------------- 133,825,069 -------------------------------------------------------------------- REAL ESTATE--0.7% Boston Properties, Inc. 292,200 11,068,536 -------------------------------------------------------------------- Host Marriott Corp. 2,795,600 28,347,384 ------------ 39,415,920 -------------------------------------------------------------------- HEALTH CARE--9.5% -------------------------------------------------------------------- BIOTECHNOLOGY--1.7% Amgen, Inc.(1) 437,400 19,696,122 -------------------------------------------------------------------- Genzyme Corp. (General Division)(1) 1,325,700 27,415,476 -------------------------------------------------------------------- IDEC Pharmaceuticals Corp.(1) 625,590 25,136,206 -------------------------------------------------------------------- Medimmune, Inc.(1) 106,800 2,741,556 -------------------------------------------------------------------- Serono SA, Sponsored ADR 1,346,100 18,912,705 ------------ 93,902,065 -------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.5% Applera Corp./ Applied Biosystems Group 1,596,500 31,626,665 -------------------------------------------------------------------- Medtronic, Inc. 677,100 27,882,978 -------------------------------------------------------------------- Stryker Corp. 429,800 24,227,826 ------------- 83,737,469 -------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--2.7% Anthem, Inc.(1) 309,800 19,551,478 -------------------------------------------------------------------- Apria Healthcare Group, Inc.(1) 270,400 6,240,832 -------------------------------------------------------------------- Caremark Rx, Inc.(1) 1,388,600 22,495,320 -------------------------------------------------------------------- Covance, Inc.(1) 1,124,300 21,946,336 -------------------------------------------------------------------- Humana, Inc.(1) 996,900 13,258,770 13 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS Continued -------------------------------------------------------------------------------- MARKET VALUE SHARES SEE NOTE 1 ==================================================================== HEALTH CARE PROVIDERS & SERVICES Continued -------------------------------------------------------------------- McKesson Corp. 1,042,900 $34,978,866 -------------------------------------------------------------------- Oxford Health Plans, Inc.(1) 593,400 24,062,370 -------------------------------------------------------------------- Quest Diagnostics, Inc.(1) 198,100 11,103,505 ------------ 153,637,477 -------------------------------------------------------------------- PHARMACEUTICALS--3.6% Abbott Laboratories 874,700 35,014,241 -------------------------------------------------------------------- Johnson & Johnson 970,800 52,724,148 -------------------------------------------------------------------- Perrigo Co.(1) 1,418,370 15,165,212 -------------------------------------------------------------------- Pfizer, Inc. 3,027,200 100,139,776 ------------ 203,043,377 -------------------------------------------------------------------- INDUSTRIALS--5.8% -------------------------------------------------------------------- AEROSPACE & DEFENSE--1.9% Boeing Co. 358,200 13,278,474 -------------------------------------------------------------------- Honeywell International, Inc. 1,767,600 52,939,620 -------------------------------------------------------------------- Northrop Grumman Corp. 350,900 43,090,520 ------------ 109,308,614 -------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--2.5% Automatic Data Processing, Inc. 619,100 23,383,407 -------------------------------------------------------------------- Concord EFS, Inc.(1) 1,754,040 35,799,956 -------------------------------------------------------------------- First Data Corp. 575,900 20,012,525 -------------------------------------------------------------------- Waste Management, Inc. 2,435,600 61,937,308 ------------ 141,133,196 -------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--0.3% Tyco International Ltd. 1,174,479 18,427,576 -------------------------------------------------------------------- MACHINERY--0.8% Dover Corp. 402,300 11,558,079 -------------------------------------------------------------------- Ingersoll-Rand Co., Cl. A 837,700 31,455,635 ------------ 43,013,714 -------------------------------------------------------------------- ROAD & RAIL--0.3% Canadian Pacific Ltd. 663,400 13,778,308 MARKET VALUE SHARES SEE NOTE 1 ==================================================================== INFORMATION TECHNOLOGY--14.8% -------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--2.9% Cisco Systems, Inc.(1) 3,972,500 $ 54,899,950 -------------------------------------------------------------------- Lucent Technologies, Inc.(1) 5,178,000 8,957,940 -------------------------------------------------------------------- Nokia Corp., Sponsored ADR, A Shares 6,058,300 80,514,807 -------------------------------------------------------------------- QUALCOMM, Inc.(1) 678,600 18,804,006 ------------ 163,176,703 -------------------------------------------------------------------- COMPUTERS & PERIPHERALS--0.0% Seagate Technology International, Inc. Escrow Shares(1,2) 1,000,000 -- -------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.4% Flextronics International Ltd.(1) 2,137,100 20,238,337 -------------------------------------------------------------------- Millipore Corp. 304,600 10,749,334 -------------------------------------------------------------------- Sanmina-SCI Corp.(1) 4,386,500 15,528,210 -------------------------------------------------------------------- Vishay Intertechnology, Inc.(1) 2,138,000 30,616,160 ------------ 77,132,041 -------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.2% Check Point Software Technologies Ltd.(1) 770,750 12,910,833 -------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.5% Analog Devices, Inc.(1) 510,600 12,305,460 -------------------------------------------------------------------- Atmel Corp.(1) 312,100 720,951 -------------------------------------------------------------------- Cypress Semiconductor Corp.(1) 2,364,000 24,892,920 -------------------------------------------------------------------- Intel Corp. 4,121,000 68,697,070 -------------------------------------------------------------------- International Rectifier Corp.(1) 1,078,100 23,459,456 -------------------------------------------------------------------- Micron Technology, Inc.(1) 2,045,600 35,286,600 -------------------------------------------------------------------- National Semiconductor Corp.(1) 1,183,500 18,924,165 -------------------------------------------------------------------- QLogic Corp.(1) 959,500 32,191,225 -------------------------------------------------------------------- RF Micro Devices, Inc.(1) 1,993,000 13,333,170 -------------------------------------------------------------------- Texas Instruments, Inc. 1,126,100 22,184,170 14 OPPENHEIMER CAPITAL APPRECIATION FUND MARKET VALUE SHARES SEE NOTE 1 ==================================================================== SEMICONDUCTOR EQUIPMENT & PRODUCTS Continued Vitesse Semiconductor Corp.(1) 2,028,000 $ 2,697,240 ------------ 254,692,427 -------------------------------------------------------------------- SOFTWARE--5.8% Cadence Design Systems, Inc.(1) 1,810,500 24,387,435 -------------------------------------------------------------------- Electronic Arts, Inc.(1) 946,930 59,902,792 -------------------------------------------------------------------- Microsoft Corp.(1) 3,880,300 190,445,124 -------------------------------------------------------------------- Peoplesoft, Inc.(1) 1,246,500 20,043,720 -------------------------------------------------------------------- Reynolds & Reynolds Co., Cl. A 117,200 2,912,420 -------------------------------------------------------------------- SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung), Sponsored ADR 850,500 16,372,125 -------------------------------------------------------------------- Veritas Software Corp.(1) 752,700 12,186,213 ------------ 326,249,829 -------------------------------------------------------------------- MATERIALS--2.8% -------------------------------------------------------------------- CHEMICALS--2.2% Air Products & Chemicals, Inc. 623,100 29,229,621 -------------------------------------------------------------------- International Flavors & Fragrances, Inc. 1,084,400 34,971,900 -------------------------------------------------------------------- PPG Industries, Inc. 198,100 11,147,087 -------------------------------------------------------------------- Praxair, Inc. 857,900 48,068,137 ----------- 123,416,745 -------------------------------------------------------------------- PAPER & FOREST PRODUCTS--0.6% International Paper Co. 970,800 36,550,620 -------------------------------------------------------------------- TELECOMMUNICATION SERVICES--0.6% -------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--0.1% Sprint Corp. (Fon Group) 437,400 5,073,840 -------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--0.5% Sprint Corp. (PCS Group)(1) 563,900 2,233,044 -------------------------------------------------------------------- Vodafone Group plc, Sponsored ADR 1,578,700 25,243,413 ----------- 27,476,457 MARKET VALUE SHARES SEE NOTE 1 ==================================================================== UTILITIES--2.0% -------------------------------------------------------------------- ELECTRIC UTILITIES--0.9% Duke Energy Corp. 1,856,500 $ 49,809,895 -------------------------------------------------------------------- GAS UTILITIES--1.1% El Paso Corp. 2,435,900 41,191,069 -------------------------------------------------------------------- Kinder Morgan Management LLC 635,900 20,355,159 ------------ 61,546,228 -------------------------------------------------------------------- WATER UTILITIES--0.0% Philadelphia Suburban Corp. 201,975 3,809,249 ------------ Total Common Stocks (Cost $6,539,672,072) 4,985,077,941 -------------------------------------------------------------------- OTHER SECURITIES--0.4% -------------------------------------------------------------------- Nasdaq-100 Unit Investment Trust(1) (Cost $26,132,356) 933,400 21,925,566 PRINCIPAL AMOUNT ================================================================================ SHORT-TERM NOTES--3.9% -------------------------------------------------------------------- Barton Capital Corp., 1.75%, 9/20/02 $30,000,000 29,972,291 -------------------------------------------------------------------- New Center Asset Trust: 2%, 9/13/02 25,000,000 24,985,500 2%, 9/16/02 25,000,000 24,981,667 2%, 10/10/02 30,000,000 29,942,475 -------------------------------------------------------------------- Old Line Funding Corp., 1.75%, 9/25/02 35,000,000 34,959,167 -------------------------------------------------------------------- Sheffield Receivables Corp.: 2%, 9/19/02 25,000,000 24,978,125 2%, 9/25/02 50,000,000 49,941,000 ------------ Total Short-Term Notes (Cost $219,760,225) 219,760,225 15 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS Continued ---------------------------------------------------------------------- PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ====================================================================== JOINT REPURCHASE AGREEMENTS--8.5% ---------------------------------------------------------------------- Undivided interest of 49.40% in joint repurchase agreement with PaineWebber, Inc., 1.85%, dated 8/30/02, to be repurchased at $969,046,152 on 9/3/02, collateralized by Federal National Mortgage Assn., 5.50%--6%, 1/1/32--5/1/32, with a value of $989,261,165 (Cost $478,618,000) $478,618,000 $ 478,618,000 ---------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $7,264,182,653) 101.2% 5,705,381,732 ---------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (1.2) (69,064,867) ---------------------- NET ASSETS 100.0% $5,636,316,865 ====================== FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF ASSETS AND LIABILITIES August 31, 2002 ---------------------------------------------------------------------------- ============================================================================ ASSETS ---------------------------------------------------------------------------- Investments, at value (cost $7,264,182,653) -- see accompanying statement $ 5,705,381,732 ---------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 18,361,605 Investments sold 7,971,498 Interest and dividends 5,091,612 Other 35,777 --------------- Total assets 5,736,842,224 ============================================================================ LIABILITIES ---------------------------------------------------------------------------- Bank overdraft 3,371,208 ---------------------------------------------------------------------------- Unrealized depreciation on foreign currency contracts 437 ---------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 82,270,723 Shares of beneficial interest redeemed 8,522,340 Transfer and shareholder servicing agent fees 2,407,796 Distribution and service plan fees 1,856,026 Trustees' compensation 890,621 Shareholder reports 763,370 Other 442,838 --------------- Total liabilities 100,525,359 ============================================================================ NET ASSETS $ 5,636,316,865 ---------------------------------------------------------------------------- ============================================================================ COMPOSITION OF NET ASSETS ---------------------------------------------------------------------------- Paid-in capital $ 7,541,100,541 ---------------------------------------------------------------------------- Accumulated net investment loss (858,396) ---------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (345,124,729) ---------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (1,558,800,551) --------------- NET ASSETS $ 5,636,316,865 =============== 17 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF ASSETS AND LIABILITIES Continued -------------------------------------------------------------------------------- ================================================================================ NET ASSET VALUE PER SHARE -------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $3,219,390,747 and 104,798,231 shares of beneficial interest outstanding) $30.72 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $32.59 -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $1,029,321,686 and 35,554,056 shares of beneficial interest outstanding) $28.95 -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $450,988,827 and 15,754,851 shares of beneficial interest outstanding) $28.63 -------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $72,178,153 and 2,358,575 shares of beneficial interest outstanding) $30.60 -------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $864,437,452 and 27,744,518 shares of beneficial interest outstanding) $31.16 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF OPERATIONS For the Year Ended August 31, 2002 -------------------------------------------------------------------------------- ================================================================================ INVESTMENT INCOME -------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $620,443) $ 46,807,925 -------------------------------------------------------------------------------- Interest 15,848,731 --------------- Total investment income 62,656,656 ================================================================================ EXPENSES -------------------------------------------------------------------------------- Management fees 34,456,425 -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 7,599,340 Class B 12,215,841 Class C 4,579,140 Class N 190,265 -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 10,642,784 Class B 4,112,807 Class C 1,576,970 Class N 118,011 Class Y 2,362,403 -------------------------------------------------------------------------------- Shareholder reports 2,596,951 -------------------------------------------------------------------------------- Trustees' compensation 349,369 -------------------------------------------------------------------------------- Custodian fees and expenses 119,785 -------------------------------------------------------------------------------- Other 665,078 ---------------- Total expenses 81,585,169 Less reduction to custodian expenses (13,476) Less voluntary waiver of transfer and shareholder servicing agent fees -- Classes A, B, C and N (243,040) ---------------- Net expenses 81,328,653 ================================================================================ NET INVESTMENT LOSS (18,671,997) ================================================================================ REALIZED AND UNREALIZED LOSS -------------------------------------------------------------------------------- Net realized loss on: Investments (329,805,868) Foreign currency transactions (266,185) ---------------- Net realized loss (330,072,053) -------------------------------------------------------------------------------- Net change in unrealized depreciation on: Investments (1,276,079,992) Translation of assets and liabilities denominated in foreign currencies (63,266) ---------------- Net change (1,276,143,258) ---------------- Net realized and unrealized loss (1,606,215,311) -------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,624,887,308) ================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, 2002 2001 ================================================================================ OPERATIONS -------------------------------------------------------------------------------- Net investment income (loss) $ (18,671,997) $ 8,427,191 -------------------------------------------------------------------------------- Net realized gain (loss) (330,072,053) 216,477,612 -------------------------------------------------------------------------------- Net change in unrealized depreciation (1,276,143,258) (2,129,854,386) --------------------------------- Net decrease in net assets resulting from operations (1,624,887,308) (1,904,949,583) ================================================================================ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS -------------------------------------------------------------------------------- Distributions from net realized gain: Class A (78,925,210) (315,580,814) Class B (32,881,006) (125,027,291) Class C (12,072,075) (38,476,846) Class N (448,693) -- Class Y (23,930,560) (110,054,951) ================================================================================ BENEFICIAL INTEREST TRANSACTIONS -------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 1,117,051,404 742,228,163 Class B 155,846,095 436,276,561 Class C 173,690,841 189,865,151 Class N 78,890,789 7,285,737 Class Y 178,600,006 143,938,999 ================================================================================ NET ASSETS -------------------------------------------------------------------------------- Total decrease (69,065,717) (974,494,874) -------------------------------------------------------------------------------- Beginning of period 5,705,382,582 6,679,877,456 -------------------------------- End of period [including accumulated net investment losses of $858,396 and $739,767, respectively] $5,636,316,865 $5,705,382,582 ================================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- CLASS A YEAR ENDED AUGUST 31, 2002 2001 2000 1999 1998 ===================================================================================================== PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 41.11 $ 62.12 $ 44.73 $ 32.53 $ 38.63 ----------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.09) .10 (.02) (.04) .17 Net realized and unrealized gain (loss) (9.31) (15.86) 20.63 14.87 (1.55) -------------------------------------------------------- Total from investment operations (9.40) (15.76) 20.61 14.83 (1.38) ----------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.09) (.15) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) ------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.63) (4.72) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $30.72 $41.11 $62.12 $44.73 $32.53 ======================================================== ===================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (23.48)% (26.38)% 48.01% 47.36% (4.06)% ===================================================================================================== RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $3,219,391 $3,055,197 $3,648,961 $2,071,317 $1,233,958 ----------------------------------------------------------------------------------------------------- Average net assets (in thousands) $3,204,793 $3,255,995 $2,898,088 $1,788,774 $1,352,628 ----------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income (loss) (0.15)% 0.28% 0.00% (0.05)% 0.48% Expenses 1.22% 1.03% 1.06% 1.04% 1.00%(3) ----------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 46% 44% 59% 60%
1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 OPPENHEIMER CAPITAL APPRECIATION FUND FINANCIAL HIGHLIGHTS Continued
CLASS B YEAR ENDED AUGUST 31, 2002 2001 2000 1999 1998 ===================================================================================================== PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 39.09 $ 59.80 $ 43.48 $ 31.85 $ 38.07 ----------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.26) (.07) (.20) (.21) (.02) Net realized and unrealized gain (loss) (8.89) (15.39) 19.74 14.38 (1.62) ----------------------------------------------------------- Total from investment operations (9.15) (15.46) 19.54 14.17 (1.64) ----------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- (.01) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) ----------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.54) (4.58) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $28.95 $39.09 $59.80 $43.48 $31.85 =========================================================== ===================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (24.07)% (26.95)% 46.88% 46.20% (4.86)% ----------------------------------------------------------------------------------------------------- ===================================================================================================== RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,029,322 $1,242,098 $1,333,387 $531,625 $193,638 ----------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,221,005 $1,265,753 $ 922,480 $372,157 $132,908 ----------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment loss (0.92)% (0.48)% (0.76)% (0.86)% (0.37)% Expenses 1.99% 1.80% 1.83% 1.84% 1.81%(3) ----------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 46% 44% 59% 60%
1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS C YEAR ENDED AUGUST 31, 2002 2001 2000 1999 1998 ===================================================================================================== PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 38.64 $ 59.19 $ 43.06 $ 31.57 $ 37.76 ----------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.11) (.01) (.18) (.23) (.03) Net realized and unrealized gain (loss) (8.91) (15.29) 19.53 14.26 (1.59) ----------------------------------------------------------- Total from investment operations (9.02) (15.30) 19.35 14.03 (1.62) ----------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- -- Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) ----------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.54) (4.57) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $28.63 $38.64 $59.19 $43.06 $31.57 =========================================================== ===================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (24.01)% (26.95)% 46.89% 46.16% (4.84)% ===================================================================================================== RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $450,989 $426,476 $402,442 $165,231 $76,058 ----------------------------------------------------------------------------------------------------- Average net assets (in thousands) $477,369 $400,009 $278,800 $126,443 $61,503 ----------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment loss (0.87)% (0.48)% (0.76)% (0.86)% (0.36)% Expenses 1.94% 1.80% 1.83% 1.85% 1.82%(3) ----------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 46% 44% 59% 60%
1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 OPPENHEIMER CAPITAL APPRECIATION FUND FINANCIAL HIGHLIGHTS Continued
CLASS N YEAR ENDED AUGUST 31, 2002 2001(1) ================================================================================ PER SHARE OPERATING DATA -------------------------------------------------------------------------------- Net asset value, beginning of period $ 41.05 $ 45.58 -------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.07)(2) (.01) Net realized and unrealized loss (9.39)(2) (4.52) -------------------------------------- Total from investment operations (9.46) (4.53) -------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- Distributions from net realized gain (.99) -- -------------------------------------- Total dividends and/or distributions to shareholders (.99) -- -------------------------------------------------------------------------------- Net asset value, end of period $30.60 $41.05 ====================================== ================================================================================ TOTAL RETURN, AT NET ASSET VALUE(3) (23.67)% (9.94)% -------------------------------------------------------------------------------- ================================================================================ RATIOS/SUPPLEMENTAL DATA -------------------------------------------------------------------------------- Net assets, end of period (in thousands) $72,178 $6,791 -------------------------------------------------------------------------------- Average net assets (in thousands) $38,232 $3,173 -------------------------------------------------------------------------------- Ratios to average net assets:(4) Net investment loss (0.37)% (0.11)% Expenses 1.46% 1.36% -------------------------------------------------------------------------------- Portfolio turnover rate 28% 46%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS Y YEAR ENDED AUGUST 31, 2002 2001 2000 1999 1998(1) ===================================================================================================== PER SHARE OPERATING DATA ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 41.55 $ 62.51 $ 44.81 $ 32.56 $ 40.15 ----------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .02(2) .27 .13 .13 .30 Net realized and unrealized gain (loss) (9.42)(2) (15.98) 20.79 14.85 (3.11) --------------------------------------------------------- Total from investment operations (9.40) (15.71) 20.92 14.98 (2.81) ----------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.19) (.21) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) --------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.73) (4.78) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $31.16 $41.55 $62.51 $44.81 $32.56 ========================================================= ===================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(3) (23.23)% (26.12)% 48.64% 47.90% (7.45)% ----------------------------------------------------------------------------------------------------- ===================================================================================================== RATIOS/SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $864,437 $ 974,820 $1,295,087 $420,455 $180,512 ----------------------------------------------------------------------------------------------------- Average net assets (in thousands) $968,867 $1,095,575 $ 855,270 $307,498 $139,050 ----------------------------------------------------------------------------------------------------- Ratios to average net assets:(4) Net investment income 0.17% 0.66% 0.45% 0.30% 0.75% Expenses 0.89% 0.66% 0.64% 0.68% 0.69%(5) ----------------------------------------------------------------------------------------------------- Portfolio turnover rate 28% 46% 44% 59% 60%
1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Assumes an 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 been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Capital Appreciation Fund (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 Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C and N 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. -------------------------------------------------------------------------------- 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 Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The 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 the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. The Fund, along with other affiliated funds of the Manager, may transfer uninvested cash balances into one or more joint repurchase 26 OPPENHEIMER CAPITAL APPRECIATION FUND -------------------------------------------------------------------------------- agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. -------------------------------------------------------------------------------- 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 capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. As of August 31, 2002, the Fund had available for federal income tax purposes an unused capital loss carryforward as follows: EXPIRING ---------------------- 2010 $61,636,235 As of August 31, 2002, the Fund had approximately $253,373,000 of post-October losses available to offset future capital gains, if any. Such losses, if unutilized, will expire in 2011. Additionally, the Fund had approximately $16,000 of post-October foreign currency losses which were deferred. -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded 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 year ended August 31, 2002, the Fund's projected benefit obligations were increased by $130,676 and payments of $12,047 were made to retired trustees, resulting in an accumulated liability of $858,431 as of August 31, 2002. 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 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 Trustees in shares of one or more Oppenheimer funds selected by the trustee. The amount paid to the Board of Trustees 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 investment income per share. 27 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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 primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. 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 August 31, 2002, amounts have been reclassified to reflect a decrease in paid-in capital of $18,803,288, a decrease in accumulated net investment loss of $18,553,368, and a decrease in accumulated net realized loss on investments of $249,920. Net assets of the Fund were unaffected by the reclassifications. The tax character of distributions paid during the years ended August 31, 2002 and August 31, 2001 was as follows: YEAR ENDED YEAR ENDED AUGUST 31, 2002 AUGUST 31, 2001 -------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ -- $354,477,278 Long-term capital gain 148,257,544 234,662,624 Return of capital -- -- ------------------------------ Total $148,257,544 $589,139,902 ============================== As of August 31, 2002, the components of distributable earnings on a tax basis were as follows: Accumulated net investment loss $ (858,396) Accumulated net realized loss (345,124,729) Net unrealized depreciation (1,558,800,551) --------------- Total $(1,904,783,676) =============== -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. 28 OPPENHEIMER CAPITAL APPRECIATION FUND -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. ================================================================================ 2. SHARES OF 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:
YEAR ENDED AUGUST 31, 2002 YEAR ENDED AUGUST 31, 2001(1) SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------- CLASS A Sold 53,070,823 $1,905,539,371 22,608,674 $1,080,716,997 Dividends and/or distributions reinvested 1,755,869 72,763,164 6,337,191 296,137,035 Redeemed (24,347,868) (861,251,131) (13,365,396) (634,625,869) ------------------------------------------------------------- Net increase 30,478,824 $1,117,051,404 15,580,469 $ 742,228,163 ============================================================= ---------------------------------------------------------------------------------------- CLASS B Sold 12,282,673 $ 436,416,730 12,135,550 $ 557,398,730 Dividends and/or distributions reinvested 786,310 30,886,268 2,633,268 117,655,350 Redeemed (9,289,206) (311,456,903) (5,291,430) (238,777,519) ------------------------------------------------------------- Net increase 3,779,777 $ 155,846,095 9,477,388 $ 436,276,561 ============================================================= ---------------------------------------------------------------------------------------- CLASS C Sold 8,394,929 $ 291,814,714 5,484,946 $247,461,141 Dividends and/or distributions reinvested 277,019 10,753,885 812,514 35,888,768 Redeemed (3,953,474) (128,877,758) (2,060,592) (93,484,758) ------------------------------------------------------------- Net increase 4,718,474 $ 173,690,841 4,236,868 $189,865,151 ============================================================= ---------------------------------------------------------------------------------------- CLASS N Sold 2,573,390 $ 92,009,980 178,524 $7,841,445 Dividends and/or distributions reinvested 10,848 448,566 -- -- Redeemed (391,091) (13,567,757) (13,096) (555,708) ------------------------------------------------------------- Net increase 2,193,147 $ 78,890,789 165,428 $7,285,737 ============================================================= ---------------------------------------------------------------------------------------- CLASS Y Sold 10,706,767 $ 404,655,100 7,131,501 $ 354,385,311 Dividends and/or distributions reinvested 557,609 23,369,417 2,298,717 108,246,627 Redeemed (6,979,040) (249,424,511) (6,689,239) (318,692,939) ------------------------------------------------------------- Net increase 4,285,336 $ 178,600,006 2,740,979 $ 143,938,999 =============================================================
1. For the year ended August 31, 2001, for Class A, B, C and Y shares and for the period from March 1, 2001 (inception of offering) to August 31, 2001, for Class N shares. 29 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- ================================================================================ 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 August 31, 2002, were $3,050,744,512 and $1,462,251,272, respectively. As of August 31, 2002, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $7,294,282,568 was composed of: Gross unrealized appreciation $ 192,603,506 Gross unrealized depreciation (1,781,504,342) --------------- Net unrealized depreciation $(1,588,900,836) =============== The difference between book-basis and tax-basis unrealized appreciation and depreciation, if applicable, is attributable primarily to the tax deferral of losses on wash sales, or return of capital dividends, and the realization for tax purposes of unrealized gain (loss) on certain futures contracts, investments in passive foreign investment companies, and forward foreign currency exchange contracts. ================================================================================ 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 0.75% of the first $200 million of average annual net assets, 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, 0.56% of the next $2.0 billion, 0.54% of the next $4.0 billion, and 0.52% of average annual net assets over $8.5 billion. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. Additionally, Class Y shares are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.25% of average net assets of Class Y shares and for all other classes, up to an annual rate of 0.35% of average net assets of each class. This undertaking may be amended or withdrawn at any time. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. 30 OPPENHEIMER CAPITAL APPRECIATION FUND 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.
AGGREGATE CLASS A CONCESSIONS CONCESSIONS CONCESSIONS CONCESSIONS FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C ON CLASS N SALES CHARGES SALES CHARGES SHARES SHARES SHARES SHARES ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY ADVANCED BY YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) --------------------------------------------------------------------------------------------------------- August 31, 2002 $11,107,427 $2,473,867 $2,999,939 $13,196,558 $2,463,444 $755,491
1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale. CLASS A CLASS B CLASS C CLASS N CONTINGENT CONTINGENT CONTINGENT CONTINGENT DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR ------------------------------------------------------------------------------- August 31, 2002 $93,365 $3,072,069 $152,225 $2,557 -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A Shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. For the year ended August 31, 2002, payments under the Class A Plan totaled $7,599,340, all of which were paid by the Distributor to recipients, and included $401,632 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares and the Fund pays the Distributor an annual asset-based sales charge of 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. Distribution fees paid to the Distributor for the year ended August 31, 2002, were as follows: DISTRIBUTOR'S DISTRIBUTOR'S AGGREGATE AGGREGATE UNREIMBURSED UNREIMBURSED EXPENSES AS % TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS ----------------------------------------------------------------------------- Class B Plan $12,215,841 $10,030,537 $30,841,033 3.00% Class C Plan 4,579,140 1,724,170 6,987,737 1.55 Class N Plan 190,265 185,925 1,268,502 1.76 31 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- ================================================================================ 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of August 31, 2002, the Fund had outstanding foreign currency contracts as follows: CONTRACT VALUATION EXPIRATION AMOUNT AS OF UNREALIZED CONTRACT DESCRIPTION DATE (000S) AUGUST 31, 2002 DEPRECIATION -------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Canadian Dollar (CAD) 9/3/02 851CAD $545,550 $437 ================================================================================ 6. ILLIQUID SECURITIES As of August 31, 2002, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. The aggregate value of illiquid securities subject to this limitation as of August 31, 2002, was zero. ================================================================================ 7. 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 within 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 August 31, 2002. 32 OPPENHEIMER CAPITAL APPRECIATION FUND INDEPENDENT AUDITORS' REPORT -------------------------------------------------------------------------------- ================================================================================ THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER CAPITAL APPRECIATION FUND: We have audited the accompanying statement of assets and liabilities of Oppenheimer Capital Appreciation Fund, including the statement of investments, as of August 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 August 31, 2002, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Capital Appreciation Fund as of August 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Denver, Colorado September 23, 2002 33 OPPENHEIMER CAPITAL APPRECIATION FUND FEDERAL INCOME TAX INFORMATION Unaudited -------------------------------------------------------------------------------- ================================================================================ In early 2003, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2002. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Distributions of $0.9928 per share were paid to Class A, Class B, Class C, Class N and Class Y shareholders, respectively, on December 6, 2001, 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). None of the dividends paid by the Fund during the year ended August 31, 2002 are 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. 34 OPPENHEIMER CAPITAL APPRECIATION FUND TRUSTEES AND OFFICERS --------------------------------------------------------------------------------
================================================================================ NAME, ADDRESS,(1) AGE, PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS / POSITION(S) HELD WITH FUND OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD BY TRUSTEE / AND LENGTH OF TIME SERVED (2) NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE INDEPENDENT TRUSTEES LEON LEVY, Chairman of the General Partner (since 1982) of Odyssey Partners, Board of Trustees L.P. (investment partnership) and Chairman of the Trustee (since 1981) Board (since 1981) of Avatar Holdings, Inc. (real Age: 76 estate development). Oversees 31 portfolios in the OppenheimerFunds complex. DONALD W. SPIRO, Chairman Emeritus (since January 1991) of the Vice Chairman of the Manager. Formerly a director (January 1969-August Board of Trustees, 1999) of the Manager. Oversees 31 portfolios in Trustee (since 1985) the OppenheimerFunds complex. Age: 76 ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Trustee (since 1993) Formerly Vice Chairman (October 1995-December Age: 69 1997) of OppenheimerFunds, Inc. (the "Manager"). Oversees 41 portfolios in the OppenheimerFunds complex. PHILLIP A. GRIFFITHS, The Director (since 1991) of the Institute for Trustee (since 1999) Advanced Study, Princeton, N.J., director (since Age: 63 2001) of GSI Lumonics and a member of the National Academy of Sciences (since 1979); formerly (in descending chronological order) a director of Bankers Trust Corporation, Provost and Professor of Mathematics at Duke University, a director of Research Triangle Institute, Raleigh, N.C., and a Professor of Mathematics at Harvard University. Oversees 31 portfolios in the OppenheimerFunds complex. BENJAMIN LIPSTEIN, Professor Emeritus of Marketing, Stern Graduate Trustee (since 1981) School of Business Administration, New York Age: 79 University. Oversees 31 portfolios in the OppenheimerFunds complex. JOEL W. MOTLEY, Director (January 2002-present), Columbia Equity Trustee (since Financial Corp. (privately-held financial October 15, 2002) adviser); Managing Director (January Age: 50 2002-present), Carmona Motley Inc. (privately-held financial adviser). Formerly he held the following positions: Managing Director (January 1998-December 2001), Carmona Motley Hoffman Inc. (privately-held financial adviser); Managing Director (January 1992-December 1997), Carmona Motley & Co. (privately-held financial adviser). Oversees 31 portfolios in the OppenheimerFunds complex. ELIZABETH B. MOYNIHAN, Author and architectural historian; a trustee of Trustee (since 1992) the Freer Gallery of Art and Arthur M. Sackler Age: 72 Gallery (Smithsonian Institute), Trustees Council of the National Building Museum; a member of the Trustees Council, Preservation League of New York State. Oversees 31 portfolios in the OppenheimerFunds complex. KENNETH A. RANDALL, A director of Dominion Resources, Inc. (electric Trustee (since 1981) utility holding company) and Prime Retail, Inc. Age: 75 (real estate investment trust); formerly a director of Dominion Energy, Inc. (electric power and oil & gas producer), President and Chief Executive Officer of The Conference Board, Inc. (international economic and business research) and a director of Lumbermens Mutual Casualty Company, American Motorists Insurance Company and American Manufacturers Mutual Insurance Company. Oversees 31 portfolios in the OppenheimerFunds complex.
1. The address of each Trustee is 6803 S. Tucson Way, Centennial, CO 80112-3924. 2. Each Trustee serves for an indefinite term, until his or her resignation, retirement, death or removal. 35 OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Continued --------------------------------------------------------------------------------------------------- EDWARD V. REGAN, President, Baruch College, CUNY; a director of Trustee (since 1993) RBAsset (real estate manager); a director of Age: 72 OffitBank; formerly Trustee, Financial Accounting Foundation (FASB and GASB), Senior Fellow of Jerome Levy Economics Institute, Bard College, Chairman of Municipal Assistance Corporation for the City of New York, New York State Comptroller and Trustee of New York State and Local Retirement Fund. Oversees 31 investment companies in the OppenheimerFunds complex. RUSSELL S. REYNOLDS, JR., Chairman (since 1993) of The Directorship Search Trustee (since 1989) Group, Inc. (corporate governance consulting and Age: 70 executive recruiting); a life trustee of International House (non-profit educational organization), and a trustee (since 1996) of the Greenwich Historical Society. Oversees 31 portfolios in the OppenheimerFunds complex. CLAYTON K. YEUTTER, Trustee (since 1991) Of Counsel (since 1993), Hogan & Hartson (a law Age: 71 firm). Other directorships: Caterpillar, Inc. (since 1993) and Weyerhaeuser Co. (since 1999). Oversees 31 portfolios in the OppenheimerFunds complex. =================================================================================================== INTERESTED TRUSTEE AND OFFICER JOHN V. MURPHY,(3,4) Chairman, Chief Executive Officer and director President and Trustee, (since June 2001) and President (since September Trustee (since October 2001) 2000) of the Manager; President and a director or Age: 53 trustee of other Oppenheimer funds; President and a director (since July 2001) of Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager); President and a director (since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a director of the investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager); Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director (since June 1995) of DBL Acquisition Corporation; formerly, Chief Operating Officer (September 2000-June 2001) of the Manager; President and trustee (November 1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 69 portfolios in the OppenheimerFunds complex.
3. The address of Mr. Murphy is 498 Seventh Avenue, New York, NY 10018. 4. Mr. Murphy serves for an indefinite term, until his resignation, death or removal. 36 OPPENHEIMER CAPITAL APPRECIATION FUND ================================================================================
OFFICERS(5,6) JANE PUTNAM, Vice President of the Manager (since October Vice President 1995); an officer of 2 portfolios in the (since 1995) OppenheimerFunds complex; before joining the Age: 41 Manager in May 1994, she was a portfolio manager and equity research analyst for Chemical Bank (June 1989-May 1994). BRIAN W. WIXTED, Senior Vice President and Treasurer (since March Treasurer, Principal 1999) of the Manager; Treasurer (since March 1999) Financial and Accounting of HarbourView Asset Management Corporation, Officer (since April 1999) Shareholder Services, Inc., Oppenheimer Real Asset Age: 42 Management Corporation, Shareholder Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000) (offshore fund management subsidiaries of the Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief Operating Officer (March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An officer of 85 portfolios in the OppenheimerFunds complex. PHILIP F. VOTTIERO, Vice President/Fund Accounting of the Manager Assistant Treasurer (since August 2002) (since March 2002); formerly Vice Age: 39 President/Corporate Accounting of the Manager (July 1999-March 2002) prior to which he was Chief Financial Officer at Sovlink Corporation (April 1996-June 1999). An officer of 72 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Senior Vice President (since May 1985) and General Secretary Counsel (since February 2002) of the Manager; (since November 2001) General Counsel and a director (since November Age: 54 2001) of OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Vice President and a director (since November 2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional Asset Management, Inc.; General Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director (since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (October 1997-November 2001). An officer of 85 portfolios in the OppenheimerFunds complex.
5. The address of each Officer is 498 Seventh Avenue, New York, NY 10018 except for Messrs. Masterson, Vottiero and Wixted and Ms. Ives, whose address is 6803 S. Tucson Way, Centennial, CO 80112-3924. 6. Each Officer serves for an annual term or until his or her resignation, death or removal. 37 OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Continued ---------------------------------------------------------------------------------------------------- KATHERINE P. FELD, Vice President and Senior Counsel (since July Assistant Secretary 1999) of the Manager; Vice President (since June (since November 2001) 1990) of OppenheimerFunds Distributor, Inc.; Age: 44 Director, Vice President and Secretary (since June 1999) of Centennial Asset Management Corporation; Vice President (since 1997) of Oppenheimer Real Asset Management, Inc.; formerly Vice President and Associate Counsel of the Manager (June 1990-July 1999). An officer of 85 portfolios in the OppenheimerFunds complex. KATHLEEN T. IVES, Vice President and Assistant Counsel (since June Assistant Secretary 1998) of the Manager; Vice President (since 1999) (since November 2001) of OppenheimerFunds Distributor, Inc.; Vice Age: 36 President and Assistant Secretary (since 1999) of Shareholder Services, Inc.; Assistant Secretary (since December 2001) of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc.; formerly Assistant Vice President and Assistant Counsel of the Manager (August 1997-June 1998); Assistant Counsel of the Manager (August 1994-August 1997). An officer of 85 portfolios in the OppenheimerFunds complex. DENIS R. MOLLEUR, Vice President and Senior Counsel of the Manager Assistant Secretary (since July 1999); formerly a Vice President and (since November 2001) Associate Counsel of the Manager (September Age: 44 1995-July 1999). An officer of 82 portfolios in the OppenheimerFunds complex. PHILIP T. MASTERSON, Vice President and Assistant Counsel of the Assistant Secretary Manager (since July 1998); formerly, an associate (since August 2002) with Davis, Graham, & Stubbs LLP (January Age:38 1997-June 1998). An officer of 72 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST. 38 OPPENHEIMER CAPITAL APPRECIATION FUND OPPENHEIMER CAPITAL APPRECIATION FUND -------------------------------------------------------------------------------- ================================================================================ INVESTMENT ADVISOR OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AND SHAREHOLDER OppenheimerFunds Services SERVICING AGENT ================================================================================ INDEPENDENT AUDITORS KPMG LLP ================================================================================ LEGAL COUNSEL Mayer Brown Rowe & Maw OPPENHEIMER FUNDS ARE DISTRIBUTED BY OPPENHEIMERFUNDS DISTRIBUTOR, INC., 498 SEVENTH AVENUE, NEW YORK, NY 10018. (C)Copyright 2002 OppenheimerFunds, Inc. All rights reserved. 39 OPPENHEIMER CAPITAL APPRECIATION FUND PRIVACY POLICY NOTICE -------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you are entitled to know how we protect your personal information and how we limit its disclosure. INFORMATION SOURCES We obtain nonpublic personal information about our shareholders from the following sources: o Applications or other forms o When you create a user ID and password for online account access o When you enroll in eDocs Direct o Your transactions with us, our affiliates or others o A software program on our website, often referred to as a "cookie," which indicates which parts of our site you've visited If you visit www.oppenheimerfunds.com and do not log on to the secure account information areas, we do not obtain any personal information about you. When you do log on to a secure area, we do obtain your user ID and password to identify you. We also use this information to provide you with products and services you have requested, to inform you about products and services that you may be interested in and to assist you in other ways. PROTECTION OF INFORMATION We do not disclose any nonpublic personal information (such as names on a customer list) about current or former customers to anyone, except as permitted by law. DISCLOSURE OF INFORMATION We send your financial advisor (as designated by you) copies of confirmations, account statements and other documents reporting activity in your fund accounts. We may also use details about you and your investments to help us, our financial service affiliates or firms that jointly market their financial products and services with ours, to better serve your investment needs or suggest financial services or educational material that may be of interest to you. RIGHT OF REFUSAL We will not disclose your personal information to unaffiliated third parties (except as permitted by law), unless we first offer you a reasonable opportunity to refuse or "opt out" of such disclosure. SECURITY In the coming months, an Internet browser that supports 128-bit encryption will be required to view the secure pages of www.oppenheimerfunds.com. These areas include: o Account access o Create a user ID and profile o User profile o eDocs Direct, our electronic document delivery service 40 OPPENHEIMER CAPITAL APPRECIATION FUND To find out if your Internet browser supports 128-bit encryption, or for instructions on how to upgrade your browser, visit the HELP section of www.oppenheimerfunds.com. EMAILS AND ENCRYPTION As a security measure, we do not include personal or account information in nonsecure emails, and we advise you not to send such information to us in nonsecure emails. Instead, you may take advantage of the secure features of our website to encrypt your email correspondence. To do this, you will need to use an Internet browser that supports 128-bit encryption. If you are not sure if your Internet browser supports 128-bit encryption, or need instructions on how to upgrade your browser, visit the HELP section of www.oppenheimerfunds.com for assistance. o All transactions, including redemptions, exchanges and purchases are secured by Secure Socket Layers (SSL) and encryption. SSL is used to establish a secure connection between your PC and OppenheimerFunds' server. It transmits information in an encrypted and scrambled format. o Encryption is achieved through an electronic scrambling technology that uses a "key" to code and then decode the data. Encryption acts like the cable converter box you may have on your television set. It scrambles data with secret code so that no one can make sense of it while it is being transmitted. When the data reaches its destination, the same software unscrambles the data. o You can exit the secure area by either closing your browser, or for added security, you can use the LOG OUT OF ACCOUNT AREA button before you close your browser. OTHER SECURITY MEASURES We maintain physical, electronic and procedural safeguards to protect your personal account information. Our employees and agents have access to that information only so that they may offer you products or provide services to you, for example, when responding to your account questions. HOW YOU CAN HELP You can also do your part to keep your account information private, and to prevent unauthorized transactions. If you obtain a user ID and password for your account, do not allow it to be used by anyone else. Also, take special precautions when accessing your account on a computer used by others. -------------------------------------------------------------------------------- This joint notice describes the privacy policies of Oppenheimer funds, OppenheimerFunds Distributor, Inc., the trustee of OppenheimerFunds Individual Retirement Accounts (IRAs) and the custodian of the OppenheimerFunds 403(b)(7) tax-sheltered custodial accounts. It applies to all Oppenheimer fund accounts you presently have, or may open in the future, using your Social Security number--whether or not you remain a shareholder of our funds. If you have any questions about these privacy policies, write to us at P.O. Box 5270, Denver, CO 80217-5270, email us by clicking on the CONTACT US section of our website at WWW.OPPENHEIMERFUNDS.COM or call us at 1.800.CALL OPP (1.800.225.5677). 41 OPPENHEIMER CAPITAL APPRECIATION FUND INFORMATION AND SERVICES -------------------------------------------------------------------------------- [GRAPHIC OMITTED] eDOCSDIRECT GET THIS REPORT ONLINE! You can quickly view, download and print this report at your convenience. It's EASY, FAST, CONVENIENT, and FREE! With OppenheimerFunds EDOCS DIRECT, you'll receive email notification when shareholder reports, prospectuses or prospectus supplements for your fund(s) become available online, instead of receiving them through the mail. You'll cut down on paper mail and help reduce fund expenses!! Sign up for EDOCS DIRECT today at WWW.OPPENHEIMERFUNDS.COM -------------------------------------------------------------------------------- INTERNET 24-hr access to account information and transactions(1) WWW.OPPENHEIMERFUNDS.COM -------------------------------------------------------------------------------- PHONELINK(1) and GENERAL INFORMATION 24-hr automated information and automated transactions Representatives also available Mon-Fri 8am-9pm ET Sat (January-April) 10am-4pm ET 1.800.CALL OPP (1.800.225.5677) -------------------------------------------------------------------------------- WRITTEN CORRESPONDENCE AND TRANSACTION REQUESTS OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 FOR OVERNIGHT DELIVERY OppenheimerFunds Services 10200 East Girard Avenue, Building D Denver, CO 80231 -------------------------------------------------------------------------------- TICKER SYMBOLS Class A: OPTFX Class B: OTGBX Class C: OTFCX Class N: OTCNX Class Y: OTCYX -------------------------------------------------------------------------------- 1. At times the website or PhoneLink may be inaccessible or their transaction features may be unavailable. [LOGO OMITTED] OPPENHEIMERFUNDS(R) DISTRIBUTOR, INC. RA0320.001.0802 October 30, 2002