-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDRsndeCNytnSuU31CPjokEK/4u0d2XtyN8sLa4AD7eHRKvuRrsDAzvwu5RaQWuu /v0CtifQ7gUDPi0xQS7MAg== 0000950130-98-005255.txt : 19981106 0000950130-98-005255.hdr.sgml : 19981106 ACCESSION NUMBER: 0000950130-98-005255 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER CAPITAL APPRECIATION FUND CENTRAL INDEX KEY: 0000319767 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133054122 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03105 FILM NUMBER: 98738037 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CTR SUITE 3400 CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 2 WORLD TRADE CENTER 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND INC DATE OF NAME CHANGE: 19870616 N-30D 1 CAPITAL APPRECIATION FUND ANNUAL REPORT ---------------------------------- Annual Report August 31, 1998 ---------------------------------- O P P E N H E I M E R Capital Appreciation Fund [GRAPHIC] [LOGO] OPPENHEIMERFUNDS(R) THE RIGHT WAY TO INVEST CONTENTS 3 President's Letter 4 An Interview with Your Fund's Manager 8 Fund Performance - ----------------------------------------- 13 Financial Statements 34 Independent Auditors' Report - ----------------------------------------- 35 Federal Income Tax Information 36 Officers and Trustees 40 Information and Services Report HIGHLIGHTS - ----------------- . DURING THE FISCAL YEAR ENDED AUGUST 31, 1998, THE FUND SUCCESSFULLY navigated the ups and downs in several industries, particularly technology. . WE AVOIDED MANY OF THE EFFECTS OF THE ASIAN ECONOMIC CRISES by focusing on domestic, U.S. companies with earnings believed to be predictable and with reasonable valuations. - ---------------------------- Avg Annual Total Returns - ---------------------------- For the 1-Year Period Ended 8/31/98 CLASS A Without With Sales Chg./1/ Sales Chg./2/ - ---------------------------- (4.06)% (9.58)% - ---------------------------- CLASS B Without With Sales Chg./1/ Sales Chg./2/ - ---------------------------- (4.86)% (9.04)% - ---------------------------- CLASS C Without With Sales Chg./1/ Sales Chg./2/ - ---------------------------- (4.84)% (5.68)% - ---------------------------- CLASS Y Without With Sales Chg./1/ Sales Chg./2/ - ---------------------------- (7.45)% (7.45)% - ---------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL SHORT- TERM CHANGES. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1-800-525-7048 OR VISIT OUR WEBSITE, WWW.OPPENHEIMERFUNDS.COM. 1. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. Class Y shares commenced operations on November 3, 1997. Class Y performance is for a period less than one year, and has not been annualized. 2. Class A return includes the current maximum initial sales charge of 5.75%. Class B return includes the applicable contingent deferred sales charge of 5%. Class C return includes the contingent deferred sales charge of 1%. An explanation of the different performance calculations is in the Fund's prospectus. Class Y shares are not available for sale to individual shareholders. Class B and C shares are subject to a 0.75% annual asset-based sales charge. 2 Oppenheimer Capital Appreciation Fund [PICTURE APPEARS HERE] BRIDGET A. MACASKILL President Oppenheimer Capital Appreciation Fund Dear SHAREHOLDER, - ------------------ The performance of the financial markets over the past several months could be viewed as "A Tale of Two Markets." Until mid-July, the excitement surrounding the stock market's continued ascent to new record highs overshadowed the favorable economic environment that existed for bonds: low inflation and declining interest rates. However, since that time, stocks have declined sharply amid heightened volatility. Yet, the bond market remains poised to benefit from the same positive economic conditions that existed earlier in the year. Why have stocks faltered lately? The financial crises in Asia and Russia have negatively affected the earnings of some large U.S. corporations and have contributed to a slowdown in U.S. economic growth. Although slower economic growth has been negative for stocks, it should not adversely impact bonds. That's because slower economic growth generally means fewer inflationary pressures and less likelihood that interest rates will rise. What should you do during this period of relative uncertainty? If you have well-defined, long-term financial goals and an investment strategy designed to achieve them, we encourage you to stay the course. However, if you feel your financial plan is out-of-date or incomplete, now is the time to make improvements. The best way to cope with short-term volatility is to adhere to a long-term plan that contains proven strategies, such as diversification among various financial markets, geographic regions, investment styles and individual securities. A long-term plan will give you the focus and perspective you need to put short-term volatility in its proper context. As longstanding advocates of financial planning, we have been encouraged by our shareholders' rational responses to the latest market events. Many of you tell us that you have a long-term strategy in place, which includes diversifying your investment portfolio among a number of different asset classes in accordance with your tolerance for risk. At OppenheimerFunds, our portfolio management teams include seasoned professionals who have encountered extreme market volatility in the past, giving them the perspective required to address risks and take advantage of opportunities in turbulent markets. In our view, having a well-defined set of financial goals, a disciplined long-term strategy and the help of experienced investment professionals are all fundamental parts of The Right Way to Invest. Sincerely, /s/ Bridget A. Macaskill Bridget A. Macaskill September 22, 1998 3 Oppenheimer Capital Appreciation Fund "We found ATTRACTIVE INVESTMENT OPPORTUNITIES among industries such as specialty retailing, travel, grocery chains, drug companies and consumer finance." An INTERVIEW with your Fund's manager - ------------------------------------- HOW HAS THE FUND PERFORMED DURING THE 12-MONTH PERIOD ENDED AUGUST 31, 1998? Oppenheimer Capital Appreciation Fund achieved relatively good results during its fiscal year ended August 31, 1998 despite a sharp drop in the prices of some of the Fund's technology holdings during the last two months of 1997. The Fund continued to provide competitive performance relative to its peers in the capital appreciation category, ranking in the top half of funds as measured by Lipper Analytical Services for the one-year period ended September 30, 1998./1/ WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? While we always select stocks based on their individual merit, we are also guided by our view of the outlook for specific industries. This year, we successfully anticipated gains and losses in several industries, to the Fund's benefit. For example, late in 1997, we reduced our holdings in technology stocks that we believed were vulnerable to the ongoing downturn in Asian markets. And, the prices of many of these stocks did fall before the beginning of 1998. We took advantage of the sell-off by adding to our positions in fast-growing technology companies such as software giant Microsoft Corp. and Cisco Systems, Inc., a leading computer network equipment provider. When the technology sector rebounded strongly during 1998, these stocks were among the first to rise, sharply boosting the Fund's performance. WHAT OTHER INVESTMENTS CONTRIBUTED TO THE FUND'S SUCCESS? Although the Asian economic crisis showed no signs of abating during the year, domestic consumer spending remained strong. To help insulate the Fund from the effects of Asia while taking advantage of the strong domestic economy, we looked toward stable, well-known domestic 4 Oppenheimer Capital Appreciation Fund [PICTURE APPEARS HERE] PORTFOLIO MANAGEMENT TEAM (L TO R) Bob Doll Jane Putnam (Portfolio Manager) growth companies, where we believed earnings were predictable and valuations were reasonable. We found a number of attractive opportunities for investments among companies providing consumers with the products and services they want, including retailers, cruise lines, grocery stores, drug companies and consumer finance companies. In fact, some of our holdings among specialty retailers did so well that we sold or reduced our holdings because the stock price rose higher than we believed was warranted by the company's underlying value. Another strong-performing, consumer-related holding was Carnival Corp. With consumers willing to spend money on vacations and with a limited supply of cabin space aboard cruise ships, Carnival was in a position to avoid discounting and maintain profit margins. Despite a highly publicized fire aboard one ship, earnings rose and the stock performed well. The Fund also held large positions in selected grocery stores, such as Safeway Inc., drug companies, such as Pfizer Inc., and consumer finance companies, such as Travelers Group Inc. Since consumer spending drove the U.S. economy throughout the year, the Fund benefited from the domestic and consumer orientation of these companies. We also benefited from a careful, company-by- company investment selection process, choosing some of the best-performing stocks within these industries. 1. Source: Lipper Analytical Services, Inc., 9/30/98. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions of the Fund's Class A shares reinvested. The Fund's Class A shares were ranked 95 out of 238 (1-year), 14 out of 95 (5-year) and 23 out of 55 (10-year) among capital appreciation funds for the periods ended 9/30/98. 5 Oppenheimer Capital Appreciation Fund - --------------------------------- Avg Annual Total Returns - --------------------------------- For the Periods Ended 9/30/982 CLASS A 1 year 5 year 10 year - --------------------------------- (9.63)% 15.63% 14.36% - --------------------------------- CLASS B Since 1 year 5 year Inception - --------------------------------- (9.07)% N/A 16.02% - --------------------------------- CLASS C Since 1 year 5 year Inception - --------------------------------- (5.74)% N/A 16.36% - --------------------------------- CLASS Y Since 1 year 5 year Inception - --------------------------------- N/A N/A (3.21)% - --------------------------------- An INTERVIEW with your Fund's manager - -------------------------------------- DID ANY INVESTMENTS DISAPPOINT? Performance did lag in certain sectors. Oil service companies suffered when oil prices declined due to heavy supply. Despite strong earnings, stock prices of companies like Halliburton Co. fell, although their business remained on track. We believe oil service companies will eventually recover and have chosen to hold our position in many of these stocks. Among technology stocks, certain specific areas suffered as a result of events in Asia and have yet to recover. In particular, the stocks of disk drive manufacturers remain depressed because an oversupply of product has slowed sales. We believe that as excess inventory is used up, this group will show significant gains. WHAT OTHER AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING? With the market experiencing considerable volatility, we are looking for opportunities to put the Fund's cash to work by purchasing well-known domestic growth companies at attractive prices. We are focusing on businesses where we believe earnings are predictable and valuations are reasonable. For example, major car rental companies are selling at relatively low multiples of earnings. These are domestic companies that aren't affected by volatility in offshore markets. With demand for these services rising as more people travel, we see attractive investment opportunities among the industry's key players. 2. Total returns include changes in share price and reinvestment of dividends and capital gains distributions on a hypothetical investment for the periods shown. Class A returns include the current maximum initial sales charge of 5.75%. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 3% (since inception on 11/1/95). Class C returns include the contingent deferred sales charge of 1% for the one-year period. An explanation of the different performance calculations is in the Fund's prospectus. Class Y shares are not available for sale to individual shareholders. Class B and C shares are subject to a 0.75% annual asset-based sales charge. 6 Oppenheimer Capital Appreciation Fund PORTFOLIO ALLOCATION/3/ PIE CHART APPEARS HERE . Stocks 89.4% = Cash Equivalents 10.3 Bonds 0.3 WHAT IS YOUR OUTLOOK FOR THE FUTURE? In the coming months, we expect the domestic economy to remain strong, though profit growth in some industries may be hurt by continued weakness in international markets, particularly Asia. Accordingly, we remain cautiously positioned for growth, with a significant percentage of the Fund's assets in cash as a buffer against volatility. Our cash holdings also position us to take advantage of emerging investment opportunities. In this uncertain environment, we believe that our disciplined approach and emphasis on individual stock selection should serve investors well...continuing to make Oppenheimer Capital Appreciation Fund part of The Right Way to Invest. TOP FIVE INDUSTRIES/3/ - ------------------------------------------------------------------------------- Computer Software/Services 9.5% - ------------------------------------------------------------------------------- Diversified Financial 6.5 - ------------------------------------------------------------------------------- Telecommunications/Technology 6.2 - ------------------------------------------------------------------------------- Leisure & Entertainment 5.7 - ------------------------------------------------------------------------------- Computer Hardware 5.3 - ------------------------------------------------------------------------------- TOP 10 STOCK HOLDINGS/3/ - ------------------------------------------------------------------------------- Microsoft Corp. 3.3% Carnival Corp., Cl. A 1.7% - ------------------------------------------------------------------------------- Pfizer, Inc. 2.0 Avon Products, Inc. 1.7 - ------------------------------------------------------------------------------- CVS Corp. 2.0 Cisco Systems, Inc. 1.6 - ------------------------------------------------------------------------------- Travelers Group, Inc. 1.8 Tellabs, Inc. 1.6 - ------------------------------------------------------------------------------- Safeway, Inc. 1.8 EMC Corp. 1.4 - ------------------------------------------------------------------------------- 3. Portfolio is subject to change. Percentages are as of August 31, 1998 and are based on total market value of investments. 7 Oppenheimer Capital Appreciation Fund FUND PERFORMANCE HOW HAS THE FUND PERFORMED? Below is a discussion by the Manager of the Fund's performance during its fiscal year ended August 31, 1998, followed by a graphical comparison of the Fund's performance to an appropriate broad-based market index. . MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the past fiscal year, the Fund's performance was supported by low rates of U.S. inflation and strong levels of consumer spending and confidence. However, weakness in Asian economies introduced greater volatility into the stock market. We focused on companies that we found fairly valued relative to their earnings growth and price. Among technology stocks, we took advantage of temporary price weakness to establish and increase holdings among fast-growing computer software, hardware and telecommunications companies. Among consumer-oriented sectors, we sought reliable earnings at a fair price. Our holdings among consumer cyclicals and non-cyclicals included specialty retailers, grocery and drug stores, cruise lines and pharmaceutical companies. We also maintained major holdings among diversified financial companies. The Fund reduced its cash position during the past fiscal year as it found investment opportunities that met its objectives. However, at the end of the fiscal year we continued to maintain significant cash reserves as a buffer against volatility and a resource with which to capitalize on future investment opportunities. The Fund's portfolio and our management strategies are subject to change. 8 Oppenheimer Capital Appreciation Fund . 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, 1998: 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. The Fund's performance reflects the deduction of the 5.75% maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B and Class C 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 indices shown. 9 Oppenheimer Capital Appreciation Fund FUND PERFORMANCE Class A Shares COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Capital Appreciation Fund (Class A) and S&P 500 [THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS] Oppenheimer Capital Appreciation Fund Class A S&P 500 12/31/87 9,425 10,000 12/31/88 12,477 11,656 12/31/89 14,763 15,343 12/31/90 14,446 14,866 12/31/91 20,418 19,386 12/31/92 22,514 20,861 12/31/93 23,398 22,958 12/31/94 23,505 23,261 12/31/95 31,697 31,991 8/31/96 35,589 34,375 8/31/97 50,010 48,339 8/31/98 47,978 52,256 8/31/99 AVERAGE ANNUAL RETURN OF CLASS A SHARES OF THE FUND AT 8/31/98(2) 1 Year -9.58% 5 Year 15.05% 10 Year 14.39% Class B Shares COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Capital Appreciation Fund (Class B) and S&P 500 [THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS] Oppenheimer Capital Appreciation Fund Class B S&P 500 11/1/95 10,000 10,000 12/31/95 10,167 10,640 8/31/96 11,352 11,432 8/31/97 15,813 16,077 8/31/98 14,744 17,379 8/31/99 AVERAGE ANNUAL RETURN OF CLASS A SHARES OF THE FUND AT 8/31/98/3/ 1 Year -9.04% Life 14.69% The returns and the ending account values in the graphs show change in share value and include reinvestment of all dividends and capital gains distributions. The performance information for the S&P 500 Index in Class B begins on 10/31/95. 1. The Fund's fiscal year has changed from 12/31 to 8/31. 2. The inception date of the Fund's Class A shares was 1/22/81. The average annual total return is shown net of the applicable 5.75% maximum initial sales charge. 3. Class B shares of the Fund were first publicly offered on 11/1/95. The average annual total return is shown net of the applicable 5% contingent deferred sales charge respectively, for the 1-year and the life of the class. The ending account value in the graph is net of the applicable 3% contingent deferred sales charge. 10 Oppenheimer Capital Appreciation Fund CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Capital Appreciation Fund (Class C) and S&P 500 [The following table was originally a line graph in the printed materials.] Oppenheimer Capital Appreciation Fund Class C S&P 500 12/1/93 10,000 10,000 12/31/93 10,117 10,121 12/31/94 10,066 10,254 12/31/95 13,443 14,103 8/31/96 15,010 15,154 8/31/97 20,917 21,310 8/31/98 19,904 23,036 8/31/99 AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 8/31/98/4/ 1 Year -5.68% Life 15.59% CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Capital Appreciation Fund (Class Y) and S&P 500 [The following table was originally a line graph in the printed materials.] Oppenheimer Capital Appreciation Fund Class Y S&P 500 11/3/97 10,000 10,000 8/31/98 9,256 10,603 AVERAGE ANNUAL TOTAL RETURN OF CLASS Y SHARES OF THE FUND AT 8/31/98/5/ Life -7.45% The returns and the ending account values in the graphs show change in share value and include reinvestment of all dividends and capital gains distributions. The performance information for the S&P 500 Index in Class C begins on 11/30/93 and in Class Y begins on 10/31/97. 4. Class C shares of the Fund were first publicly offered on 12/1/93. The average annual total return is shown net of the applicable 1% contingent deferred sales charge for the 1-year period. 5. Class Y shares of the Fund, first publicly offered on 11/3/97, are offered at net asset value without sales charges to certain institutional investors. Past performance is not predictive of future performance. Graphs are not drawn to the same scale. 11 Oppenheimer Capital Appreciation Fund FINANCIALS 12 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments August 31, 1998 - --------------------------------------------------------------------------------
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================= COMMON STOCKS--91.4% - ------------------------------------------------------------------------------------------------- BASIC MATERIALS--2.2% - ------------------------------------------------------------------------------------------------- CHEMICALS--2.2% Crompton & Knowles Corp. 350,000 $ 5,118,750 - ------------------------------------------------------------------------------------------------- Dexter Corp. 136,100 3,368,475 - ------------------------------------------------------------------------------------------------- Ferro Corp. 246,400 4,974,200 - ------------------------------------------------------------------------------------------------- Morton International, Inc. 346,100 7,700,725 - ------------------------------------------------------------------------------------------------- PPG Industries, Inc. 316,200 16,066,912 ---------- 37,229,062 - ------------------------------------------------------------------------------------------------- CONSUMER CYCLICALS--23.0% - ------------------------------------------------------------------------------------------------- AUTOS & HOUSING--4.6% Arvin Industries, Inc. 144,900 5,469,975 - ------------------------------------------------------------------------------------------------- Budget Group, Inc., Cl. A(1) 940,000 15,980,000 - ------------------------------------------------------------------------------------------------- Centex Corp. 502,000 17,758,250 - ------------------------------------------------------------------------------------------------- Hertz Corp., Cl. A 230,000 8,682,500 - ------------------------------------------------------------------------------------------------- Pulte Corp. 300,000 8,662,500 - ------------------------------------------------------------------------------------------------- Republic Industries, Inc.(1) 650,000 11,496,875 - ------------------------------------------------------------------------------------------------- Toll Brothers, Inc.(1) 380,000 9,713,750 ---------- 77,763,850 - ------------------------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--5.9% Callaway Golf Co. 500,000 4,968,750 - ------------------------------------------------------------------------------------------------- Carnival Corp. 990,000 28,586,250 - ------------------------------------------------------------------------------------------------- CKE Restaurants, Inc. 360,000 11,160,000 - ------------------------------------------------------------------------------------------------- Delta Air Lines, Inc. 120,000 12,240,000 - ------------------------------------------------------------------------------------------------- Harrah's Entertainment, Inc.(1) 372,000 5,370,750 - ------------------------------------------------------------------------------------------------- Premier Parks, Inc.(1) 500,000 8,125,000 - ------------------------------------------------------------------------------------------------- Royal Caribbean Cruises Ltd. 370,000 8,972,500 - ------------------------------------------------------------------------------------------------- Time Warner, Inc. 240,000 19,290,000 ---------- 98,713,250
13 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Statement of Investments (Continued) - --------------------------------------------------------------------------------
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------- MEDIA--4.0% Belo (A.H.) Corp., Cl. A 275,200 $ 5,091,200 - ------------------------------------------------------------------------------------------------- CBS Corp. 500,000 13,000,000 - ------------------------------------------------------------------------------------------------- New York Times Co., Cl. A 568,200 16,477,800 - ------------------------------------------------------------------------------------------------- Omnicom Group, Inc. 450,000 21,431,250 - ------------------------------------------------------------------------------------------------- Young & Rubicam, Inc.(1) 350,000 10,696,875 ---------- 66,697,125 - ------------------------------------------------------------------------------------------------- RETAIL: GENERAL--5.1% CVS Corp. 940,000 34,192,500 - ------------------------------------------------------------------------------------------------- Dayton Hudson Corp. 155,000 5,580,000 - ------------------------------------------------------------------------------------------------- Federated Department Stores, Inc.(1) 170,000 7,405,625 - ------------------------------------------------------------------------------------------------- Jones Apparel Group, Inc.(1) 576,800 11,175,500 - ------------------------------------------------------------------------------------------------- Tommy Hilfiger Corp.(1) 390,000 18,232,500 - ------------------------------------------------------------------------------------------------- WestPoint Stevens, Inc.(1) 305,000 9,035,625 ---------- 85,621,750 - ------------------------------------------------------------------------------------------------- RETAIL: SPECIALTY--3.4% Barnes & Noble, Inc.(1) 360,200 9,747,912 - ------------------------------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 300,500 9,766,250 - ------------------------------------------------------------------------------------------------- Fred Meyer, Inc.(1) 550,000 21,621,875 - ------------------------------------------------------------------------------------------------- Intimate Brands, Inc., Cl. A 120,000 2,220,000 - ------------------------------------------------------------------------------------------------- Nine West Group, Inc.(1) 415,100 6,615,656 - ------------------------------------------------------------------------------------------------- Tiffany & Co. 85,000 3,160,937 - ------------------------------------------------------------------------------------------------- TJX Cos., Inc. 200,000 4,462,500 ---------- 57,595,130 - ------------------------------------------------------------------------------------------------- CONSUMER NON-CYCLICALS--14.3% - ------------------------------------------------------------------------------------------------- FOOD--4.1% - ------------------------------------------------------------------------------------------------- Keebler Foods Co.(1) 475,000 12,260,937 - ------------------------------------------------------------------------------------------------- Kroger Co.(1) 300,000 13,500,000 - ------------------------------------------------------------------------------------------------- McCormick & Co., Inc., Non-Vtg. 260,100 7,559,156 - ------------------------------------------------------------------------------------------------- Richfood Holdings, Inc. 270,800 5,568,325 - ------------------------------------------------------------------------------------------------- Safeway, Inc(1) 765,000 30,121,875 ---------- 69,010,293
14 Oppenheimer Capital Appreciation Fund
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------- HEALTHCARE/DRUGS--3.7% Lilly (Eli) & Co. 120,000 $ 7,860,000 - ------------------------------------------------------------------------------------------------- Pfizer, Inc. 370,000 34,410,000 - ------------------------------------------------------------------------------------------------- Schering-Plough Corp. 235,000 20,210,000 ---------- 62,480,000 - ------------------------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES--4.1% Baxter International, Inc. 230,000 12,247,500 - ------------------------------------------------------------------------------------------------- Becton, Dickinson & Co. 320,000 10,660,000 - ------------------------------------------------------------------------------------------------- First Health Group Corp.(1) 417,200 8,422,225 - ------------------------------------------------------------------------------------------------- HEALTHSOUTH Corp.(1) 260,000 4,923,750 - ------------------------------------------------------------------------------------------------- Lincare Holdings, Inc.(1) 300,000 10,181,250 - ------------------------------------------------------------------------------------------------- Medtronic, Inc. 180,000 9,247,500 - ------------------------------------------------------------------------------------------------- Minimed, Inc.(1) 113,100 5,768,100 - ------------------------------------------------------------------------------------------------- Total Renal Care Holdings, Inc.(1) 432,936 8,225,784 ---------- 69,676,109 - ------------------------------------------------------------------------------------------------- HOUSEHOLD GOODS--1.7% Avon Products, Inc. 452,600 28,457,225 - ------------------------------------------------------------------------------------------------- TOBACCO--0.7% - ------------------------------------------------------------------------------------------------- Philip Morris Cos., Inc. 174,000 7,231,875 - ------------------------------------------------------------------------------------------------- RJR Nabisco Holdings Corp. 195,000 4,229,062 ---------- 11,460,937 - ------------------------------------------------------------------------------------------------- ENERGY--2.5% ENERGY SERVICES & PRODUCERS--1.2% - ------------------------------------------------------------------------------------------------- BJ Services Co.(1) 170,000 2,146,250 - ------------------------------------------------------------------------------------------------- Coflexip SA, Sponsored ADR 145,200 4,555,650 - ------------------------------------------------------------------------------------------------- Global Industries Ltd.(1) 166,900 1,564,687 - ------------------------------------------------------------------------------------------------- Halliburton Co. 353,200 9,381,875 - ------------------------------------------------------------------------------------------------- Varco International, Inc.(1) 419,800 2,991,075 ---------- 20,639,537 - ------------------------------------------------------------------------------------------------- OIL-INTEGRATED--1.3% Mobil Corp. 80,000 5,530,000 - ------------------------------------------------------------------------------------------------- Texaco, Inc. 90,000 5,000,625 - ------------------------------------------------------------------------------------------------- Total SA, Sponsored ADR 220,000 10,573,750 ---------- 21,104,375
15 Oppenheimer Capital Appreciation Fund
- --------------------------------------------------------------------------------------------------- Statement of Investments (Continued) - --------------------------------------------------------------------------------------------------- Market Value Shares See Note 1 - ---------------------------------------------------------------------------------------------------- Financial--14.7% - ---------------------------------------------------------------------------------------------------- Banks--4.4% - ---------------------------------------------------------------------------------------------------- Banc One Corp. 390,371 $ 14,834,098 - ---------------------------------------------------------------------------------------------------- BankBoston Corp. 200,000 7,137,500 - ---------------------------------------------------------------------------------------------------- Credito Italiano SpA 3,225,000 15,497,245 - ---------------------------------------------------------------------------------------------------- Fleet Financial Group, Inc. 174,900 11,466,881 - ---------------------------------------------------------------------------------------------------- NationsBank Corp. 85,500 4,873,500 - ---------------------------------------------------------------------------------------------------- Skandinaviska Enskilda Banken Group 695,000 8,721,523 - ---------------------------------------------------------------------------------------------------- Star Banc Corp. 50,000 2,743,750 - ---------------------------------------------------------------------------------------------------- State Street Corp. 100,000 5,206,250 - ---------------------------------------------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 228,600 3,429,000 ----------------- 73,909,747 - ---------------------------------------------------------------------------------------------------- Diversified Financial--6.6% Associates First Capital Corp., Cl. A 215,000 12,711,875 - ---------------------------------------------------------------------------------------------------- CMAC Investment Corp. 154,400 5,944,400 - ---------------------------------------------------------------------------------------------------- Fannie Mae 112,000 6,363,000 - ---------------------------------------------------------------------------------------------------- Finova Group, Inc. 200,200 8,933,925 - ---------------------------------------------------------------------------------------------------- Franklin Resources, Inc. 224,000 7,224,000 - ---------------------------------------------------------------------------------------------------- Freddie Mac 220,000 8,690,000 - ---------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 185,000 12,210,000 - ---------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 145,250 8,433,578 - ---------------------------------------------------------------------------------------------------- Price (T. Rowe) Associates, Inc. 216,800 6,598,850 - ---------------------------------------------------------------------------------------------------- Schwab (Charles) Corp. 150,000 4,481,250 - ---------------------------------------------------------------------------------------------------- Travelers Group, Inc. 682,500 30,285,937 ----------------- 111,876,815 - ---------------------------------------------------------------------------------------------------- Insurance--3.1% Conseco, Inc. 500,000 13,812,500 - ---------------------------------------------------------------------------------------------------- Equitable Cos., Inc. 280,000 16,012,500 - ---------------------------------------------------------------------------------------------------- SunAmerica, Inc. 365,000 22,607,188 -------------------- 52,432,188
16 Oppenheimer Capital Appreciation Fund
Market Value Shares See Note 1 - ---------------------------------------------------------------------------------------------------- Real Estate Investment Trusts--0.6% Boston Properties, Inc. 341,400 $ 9,751,237 - ---------------------------------------------------------------------------------------------------- Industrial--6.3% - ---------------------------------------------------------------------------------------------------- Electrical Equipment--0.5% Emerson Electric Co. 155,000 8,835,000 - ---------------------------------------------------------------------------------------------------- Industrial Materials--2.0% Owens-Illinois, Inc.(1) 178,300 5,560,731 - ---------------------------------------------------------------------------------------------------- Rayonier, Inc. 157,700 6,150,300 - ---------------------------------------------------------------------------------------------------- Southdown, Inc. 211,900 8,952,775 - ---------------------------------------------------------------------------------------------------- USG Corp. 301,000 12,943,000 ----------------- 33,606,806 - ---------------------------------------------------------------------------------------------------- Industrial Services--0.4% AccuStaff, Inc.(1) 500,000 6,250,000 - ---------------------------------------------------------------------------------------------------- Manufacturing--2.6% American Standard Cos., Inc.(1) 205,300 8,032,363 - ---------------------------------------------------------------------------------------------------- Cooper Industries, Inc. 115,000 4,894,688 - ---------------------------------------------------------------------------------------------------- Herman Miller, Inc. 398,400 8,167,200 - ---------------------------------------------------------------------------------------------------- Illinois Tool Works, Inc. 180,000 8,718,750 - ---------------------------------------------------------------------------------------------------- Tyco International Ltd. 250,000 13,875,000 ----------------- 43,688,001 - ---------------------------------------------------------------------------------------------------- Transportation--0.8% Kansas City Southern Industries, Inc. 405,000 13,314,375 - ---------------------------------------------------------------------------------------------------- Technology--24.0% - ---------------------------------------------------------------------------------------------------- Computer Hardware--5.4% Compaq Computer Corp. 590,000 16,483,125 - ---------------------------------------------------------------------------------------------------- Dell Computer Corp.(1) 95,000 9,500,000 - ---------------------------------------------------------------------------------------------------- EMC Corp.(1) 525,000 23,723,438 - ---------------------------------------------------------------------------------------------------- Gateway 2000, Inc.(1) 285,000 13,484,063 - ---------------------------------------------------------------------------------------------------- Seagate Technology, Inc.(1) 527,000 9,222,500 - ---------------------------------------------------------------------------------------------------- Sun Microsystems, Inc.(1) 340,000 13,472,500 - ---------------------------------------------------------------------------------------------------- Western Digital Corp.(1) 540,000 4,455,000 ----------------- 90,340,626
17 Oppenheimer Capital Appreciation Fund
- ---------------------------------------------------------------------------------------------------- Statement of Investments (Continued) ---------------------------------------------------------------------------------------------------- Market Value Shares See Note 1 - ---------------------------------------------------------------------------------------------------- Computer Software/Services--9.7% BMC Software, Inc.(1) 451,200 $ 19,091,400 - ---------------------------------------------------------------------------------------------------- Cambridge Technology Partners, Inc.(1) 396,700 12,892,750 - ---------------------------------------------------------------------------------------------------- Computer Associates International, Inc. 132,500 3,577,500 - ---------------------------------------------------------------------------------------------------- Computer Sciences Corp.(1) 150,000 8,484,375 - ---------------------------------------------------------------------------------------------------- Gartner Group, Inc., Cl. A(1) 190,000 4,393,750 - ---------------------------------------------------------------------------------------------------- HBO & Co. 640,000 13,600,000 - ---------------------------------------------------------------------------------------------------- Microsoft Corp.(1) 590,000 56,603,125 - ---------------------------------------------------------------------------------------------------- Network Associates, Inc.(1) 355,650 11,469,713 - ---------------------------------------------------------------------------------------------------- Peoplesoft, Inc.(1) 401,200 11,283,750 - ---------------------------------------------------------------------------------------------------- PLATINUM Technology, Inc.(1) 448,000 8,400,000 - ---------------------------------------------------------------------------------------------------- Sungard Data Systems, Inc.(1) 434,500 13,768,219 ----------------- 163,564,582 - ---------------------------------------------------------------------------------------------------- Electronics--2.6% Applied Materials, Inc.(1) 250,000 6,140,625 - ---------------------------------------------------------------------------------------------------- LSI Logic Corp.(1) 220,000 2,695,000 - ---------------------------------------------------------------------------------------------------- Novellus Systems, Inc.(1) 340,000 9,052,500 - ---------------------------------------------------------------------------------------------------- Texas Instruments, Inc. 160,000 7,630,000 - ---------------------------------------------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 705,600 19,139,400 ----------------- 44,657,525 - ---------------------------------------------------------------------------------------------------- Telecommunications: Technology--6.3% Alcatel Alsthom, Sponsored ADR 340,000 10,263,750 - ---------------------------------------------------------------------------------------------------- CIENA Corp.(1) 307,000 8,634,375 - ---------------------------------------------------------------------------------------------------- Cisco Systems, Inc.(1) 330,000 27,018,750 - ---------------------------------------------------------------------------------------------------- General Instrument Corp.(1) 850,000 16,893,750 - ---------------------------------------------------------------------------------------------------- Newbridge Networks Corp.(1) 154,600 2,869,763 - ---------------------------------------------------------------------------------------------------- Premisys Communications, Inc.(1) 650,000 5,525,000 - ---------------------------------------------------------------------------------------------------- Tellabs, Inc.(1) 636,700 26,900,575 - ---------------------------------------------------------------------------------------------------- Uniphase Corp.(1) 205,000 8,187,188 ----------------- 106,293,151
18 Oppenheimer Capital Appreciation Fund
- ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- MARKET VALUE SHARES SEE NOTE 1 - ---------------------------------------------------------------------------------------------------- UTILITIES--4.4% - ---------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.3% Consolidated Edison Co. of New York, Inc. 200,000 $ 9,462,500 - ---------------------------------------------------------------------------------------------------- Montana Power Co. 40,000 1,560,000 - ---------------------------------------------------------------------------------------------------- New Century Energies, Inc. 85,100 3,925,238 - ---------------------------------------------------------------------------------------------------- Pinnacle West Capital Corp. 160,000 6,910,000 ------------- 21,857,738 - ---------------------------------------------------------------------------------------------------- TELEPHONE UTILITIES--3.1% Qwest Communications International, Inc.(1) 400,000 10,000,000 - ---------------------------------------------------------------------------------------------------- SBC Communications, Inc. 300,000 11,400,000 - ---------------------------------------------------------------------------------------------------- Telecomunicacoes Brasileiras SA, Sponsored ADR 140,000 9,896,250 WorldCom, Inc. 500,000 20,468,750 ------------- 51,765,000 ------------- Total Common Stocks (Cost $1,478,908,663) 1,538,591,434 FACE AMOUNT ==================================================================================================== U.S. GOVERNMENT OBLIGATIONS--0.3% - ---------------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 6.375%, 8/15/27 (Cost $4,813,282) $ 5,000,000 5,695,315 ==================================================================================================== SHORT-TERM NOTES--3.0% - ---------------------------------------------------------------------------------------------------- CIT Group Holdings, Inc., 5.55%, 9/1/98 (Cost $50,000,000)/(2)/ 50,000,000 50,000,000 ==================================================================================================== REPURCHASE AGREEMENTS--7.5% - ---------------------------------------------------------------------------------------------------- Repurchase agreement with J.P. Morgan Securities, Inc., 5.75%, dated 8/31/98, to be repurchased at $126,420,189 on 9/1/98, collateralized by U.S. Treasury Bonds, 7.50%--13.25%, 11/15/09--2/15/19, with a value of $117,545,327, and U.S. Treasury Nts., 6.375%, 7/15/99, with a value of $11,787,331 (Cost $126,400,000) 126,400,000 126,400,000 - ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $1,660,121,945) 102.2% 1,720,686,749 - ---------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (2.2) (36,521,006) ----------- -------------- NET ASSETS 100.0% $1,684,165,743 =========== ==============
1. Non-income producing security. 2. Short-term notes are generally traded on a discount basis; the interest rate is the discount rate received by the Fund at the time of purchase. See accompanying Notes to Financial Statements. 19 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1998 - --------------------------------------------------------------------------------
==================================================================================================== ASSETS Investments, at value (cost $1,660,121,945)--see accompanying statement $1,720,686,749 - ---------------------------------------------------------------------------------------------------- Cash 5,956,296 - ---------------------------------------------------------------------------------------------------- Receivables: Investments sold 8,165,498 Shares of beneficial interest sold 5,563,854 Interest and dividends 1,089,792 - ---------------------------------------------------------------------------------------------------- Other 11,639 -------------- Total assets 1,741,473,828 ==================================================================================================== LIABILITIES Payables and other liabilities: Investments purchased 45,010,329 Shares of beneficial interest redeemed 11,135,613 Distribution and service plan fees 567,240 Trustees' fees--Note 1 202,831 Other 392,072 -------------- Total liabilities 57,308,085 ==================================================================================================== NET ASSETS $1,684,165,743 ============== ==================================================================================================== COMPOSITION OF NET ASSETS Paid-in capital $1,479,932,369 - ---------------------------------------------------------------------------------------------------- Undistributed net investment income 4,304,905 - ---------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 139,363,404 - ---------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign curriencies 60,565,065 -------------- Net assets $1,684,165,743 ==============
20 Oppenheimer Capital Appreciation Fund ==================================================================================================== ==================================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $1,233,958,174 and 37,929,006 shares of beneficial interest outstanding) $32.53 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $34.51 - ---------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $193,637,500 and 6,078,904 shares of beneficial interest outstanding) $31.85 - ---------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $76,057,993 and 2,409,218 shares of beneficial interest outstanding) $31.57 - ---------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $180,512,076 and 5,543,214 shares of beneficial interest outstanding) $32.56
See accompanying Notes to Financial Statements. 21 Oppenheimer Capital Appreciation Fund
- ----------------------------------------------------------------------------------------------------------------- Statement of Operations For the Year Ended August 31, 1998 - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 15,140,262 ------------------------------------------------------------------------------------------------------------ Dividends (net of foreign withholding taxes of $40,363) 9,256,460 --------------- Total income 24,396,722 ------------------------------------------------------------------------------------------------------------ EXPENSES Management fees--Note 4 10,762,586 ------------------------------------------------------------------------------------------------------------ Distribution and service plan fees--Note 4: Class A 2,383,135 Class B 1,325,211 Class C 614,429 ------------------------------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees--Note 4: Class A 1,699,540 Class B 164,924 Class C 76,719 Class Y 4,343 ------------------------------------------------------------------------------------------------------------ Shareholder reports 286,421 ------------------------------------------------------------------------------------------------------------ Registration and filing fees 215,670 ------------------------------------------------------------------------------------------------------------ Custodian fees and expenses 67,164 ------------------------------------------------------------------------------------------------------------ Legal, auditing and other professional fees 59,197 ------------------------------------------------------------------------------------------------------------ Other 161,520 --------------- Total expenses 17,820,859 ============================================================================================================ NET INVESTMENT INCOME 6,575,863 ============================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 171,238,470 Foreign currency transactions (413,879) --------------- Net realized gain 170,824,591 ------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on: Investments (311,795,736) Translation of assets and liabilities denominated in foreign currencies (154,805) --------------- Net change (311,950,541) --------------- Net realized and unrealized loss (141,125,950) ============================================================================================================ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (134,550,087) ===============
See accompanying Notes to Financial Statements. 22 Oppenheimer Capital Appreciation Fund
- ----------------------------------------------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - ----------------------------------------------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, 1998 1997 ======================================================================================================================= OPERATIONS Net investment income $ 6,575,863 $ 5,060,610 - ----------------------------------------------------------------------------------------------------------------------- Net realized gain 170,824,591 151,802,275 - ----------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation (311,950,541) 184,592,120 --------------- ------------ Net increase (decrease) in net assets resulting from operations (134,550,087) 341,455,005 ======================================================================================================================= DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (4,817,561) (4,636,803) Class B (22,645) (28,642) Class Y (355,999) -- - ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (143,987,822) (94,222,488) Class B (9,888,962) (1,584,506) Class C (5,546,656) (1,485,205) Class Y (7,627,140) -- ======================================================================================================================= BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions--Note 2: Class A 274,408,889 162,027,172 Class B 178,884,590 41,048,636 Class C 54,452,106 20,849,794 Class Y 215,487,626 -- ======================================================================================================================= NET ASSETS Total increase 416,436,339 463,422,963 - ----------------------------------------------------------------------------------------------------------------------- Beginning of period 1,267,729,404 804,306,441 ------------- ------------ End of period (including undistributed net investment income of $4,304,905 and $3,088,925, respectively) $1,684,165,743 $1,267,729,404 ============== ============
See accompanying Notes to Financial Statements. 23 Oppenheimer Capital Appreciation Fund
- --------------------------------------------------------------------------------------------------------------- Financial Highlights - --------------------------------------------------------------------------------------------------------------- CLASS A CLASS B ----------------------------------------------------------------- YEAR ENDED YEAR ENDED AUGUST 31, DEC. 31, 1998 1997 1996(4) 1995 =============================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $38.63 $30.81 $27.44 $22.63 - --------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .17 .18 .11 .24 Net realized and unrealized gain (loss) (1.55) 11.36 3.26 7.61 ------ ------ ----- ----- Total income (loss) from investment operations (1.38) 11.54 3.37 7.85 - --------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.15) (.17) -- (.24) Distributions from net realized gain (4.57) (3.55) -- (2.80) ----- ----- ----- ----- Total dividends and distributions to shareholders (4.72) (3.72) -- (3.04) - --------------------------------------------------------------------------------------------------------------- Net asset value, end of period $32.53 $38.63 $30.81 $27.44 ===== ===== ===== ===== - --------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE/(6)/ (4.06)% 40.52% 12.28% 34.85% - --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,233,958 $1,179,362 $788,504 $758,439 - ------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $1,352,628 $985,813 $789,903 $538,210 - ------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: Net investment income (loss) 0.48% 0.53% 0.55%/(7)/ 1.08% Expenses 1.00% 1.01% 1.09%/(7)/ 1.03% - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate/(8)/ 60.1% 66.0% 45.2% 71.9%
1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. For the period from December 1, 1993 (inception of offering) to December 31, 1993. 3. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 4. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. 5. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 24 Oppenheimer Capital Appreciation Fund
- ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ CLASS B CLASS C - ----------------------- ----------------------------------------------------- --------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, YEAR ENDED AUGUST 31, DEC. 31, YEAR ENDED AUGUST 31, 1994 1993 1998 1997 1996(4) 1995(5) 1998 1997 =============================================================================================================================== $ 25.72 $ 25.25 $ 38.07 $ 30.56 $ 27.37 $ 29.77 $ 37.76 $ 30.27 - ------------------------------------------------------------------------------------------------------------------------------- .20 .13 (.02) .07 -- (.14) (.03) .01 (.11) .86 (1.62) 11.05 3.19 .78 (1.59) 11.03 ------- -------- -------- ------- ------- ------- ------- ------- .09 .99 (1.64) 11.12 3.19 .64 (1.62) 11.04 - ------------------------------------------------------------------------------------------------------------------------------- (.20) (.12) (.01) (.06) -- (.24) -- -- (2.98) (.40) (4.57) (3.55) -- (2.80) (4.57) (3.55) ------- -------- -------- ------- ------- ------- ------- ------- (3.18) (.52) (4.58) (3.61) -- (3.04) (4.57) (3.55) - ------------------------------------------------------------------------------------------------------------------------------- $ 22.63 $ 25.72 $ 31.85 $ 38.07 $ 30.56 $ 27.37 $ 31.57 $ 37.76 ======= ======== ======== ======= ======= ======= ======= ======= - ------------------------------------------------------------------------------------------------------------------------------- 0.46% 3.93% (4.86)% 39.30% 11.65% 1.67% (4.84)% 39.35% - ------------------------------------------------------------------------------------------------------------------------------- $301,698 $368,806 $193,638 $52,220 $ 5,448 $ 2,751 $76,058 $36,148 - ------------------------------------------------------------------------------------------------------------------------------- $325,003 $383,875 $132,908 $23,678 $ 4,285 $ 661 $61,503 $19,508 - ------------------------------------------------------------------------------------------------------------------------------- 0.72% 0.47% (0.37)% (0.33)% (0.25)%/(7)/ (0.54)%/(7)/ (0.36)% (0.32)% 1.16% 1.07% 1.81% 1.86% 1.94%/(7)/ 2.62%/(7)/ 1.82% 1.85% - ------------------------------------------------------------------------------------------------------------------------------- 34.7% 22.9% 60.1% 66.0% 45.2% 71.9% 60.1% 66.0%
6. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 7. Annualized. 8. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended August 31, 1998 were $1,455,085,952 and $827,241,700, respectively. 25 Oppenheimer Capital Appreciation Fund Financial Highlights (Continued)
CLASS C (CONTINUED) CLASS Y ------------------------------------------------------- ------------ YEAR PERIOD ENDED ENDED AUGUST 31, YEAR ENDED DECEMBER 31, AUG. 31, 1996(4) 1995 1994(3) 1993(2) 1998(1) ================================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $ 27.11 $ 22.50 $ 25.72 $ 25.92 $ 40.15 - --------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.03) .09 -- (.01) .30 Net realized and unrealized gain (loss) 3.19 7.43 (.15) .31 (3.11) ------- ------- ------- ------- ------- Total income (loss) from investment operations 3.16 7.52 (.15) .30 (2.81) - --------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income -- (.11) (.09) (.10) (.21) Distributions from net realized gain -- (2.80) (2.98) (.40) (4.57) ------- ------- ------- ------- ------- Total dividends and distributions to shareholders -- (2.91) (3.07) (.50) (4.78) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 30.27 $27.11 $ 22.50 $ 25.72 $ 32.56 ======= ======= ======= ======= ======= ================================================================================================================================= Total Return, at Net Asset Value(6) 11.66% 33.56% (0.50)% 1.17% (7.45)% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $10,355 $7,237 $ 1,066 $ 8 $180,512 - --------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 9,053 $3,792 $ 467 $ 6 $139,050 - --------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income (loss) (0.30)%(7) 0.19% (0.02)% (0.07)%(7) 0.75%(7) Expenses 1.93%(7) 1.90% 2.18% 2.18%(7) 0.69%(7) - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(8) 45.2% 71.9% 34.7% 22.9% 60.1%
1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. For the period from December 1, 1993 (inception of offering) to December 31, 1993. 3. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 4. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. 5. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 6. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 7. Annualized. 8. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended August 31, 1998 were $1,455,085,952 and $827,241,700, respectively. See accompanying Notes to Financial Statements. 26 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 a diversified, open-end management investment company. The Fund's investment objective is to seek capital appreciation. The Fund's investment advisor is Oppenheimer Funds, Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes A, B and C have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non- money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency exchange contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. 27 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (continued) - -------------------------------------------------------------------------------- ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. - -------------------------------------------------------------------------------- TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended August 31, 1998, a provision of $47,291 was made for the Fund's projected benefit obligations and payments of $9,051 were made to retired trustees, resulting in an accumulated liability of $192,975 at August 31, 1998. The Board of Trustees has adopted a deferred compensation plan for independent Trustees that enables Trustees to elect to defer receipt of all or a portion of annual fees they are entitled to receive from the Fund. Under the plan, the compensation deferred is periodically adjusted as though an equivalent amount had been invested for the Trustee in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds. Deferral of Trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net income per share. 28 Oppenheimer Capital Appreciation Fund ================================================================================ DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The Fund 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, 1998, amounts have been reclassified to reflect a decrease in undistributed net investment income of $163,678, a decrease in paid-in capital of $558,636, and an increase in accumulated realized gain on investments of $722,314. - -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex- dividend date. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 29 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Continued) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1998(1) YEAR ENDED AUGUST 31, 1997 ----------------------------- --------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------- Class A: Sold 13,360,963 $ 517,903,302 8,550,231 $ 291,467,633 Dividends and distributions reinvested 4,096,261 139,027,036 3,066,971 94,554,716 (10,058,269) (382,521,449) (6,683,422) (223,995,177) ----------- ------------- ---------- ------------- Net increase 7,398,955 $ 274,408,889 4,933,780 $ 162,027,172 =========== ============= ========== ============= - -------------------------------------------------------------------------------------------------- Class B: Sold 5,675,971 $ 216,655,405 1,757,393 $ 59,666,544 Dividends and distributions reinvested 287,140 9,596,214 51,555 1,576,025 Redeemed (1,256,002) (47,367,029) (615,428) (20,193,933) ----------- ------------- ---------- ------------- Net increase 4,707,109 $ 178,884,590 1,193,520 $ 41,048,636 =========== ============= ========== ============= - -------------------------------------------------------------------------------------------------- Class C: Sold 1,858,420 $ 70,478,018 776,983 $ 26,196,322 Dividends and distributions reinvested 163,665 5,420,589 45,592 1,381,908 Redeemed (570,252) (21,446,501) (207,324) (6,728,436) ----------- ------------- ---------- ------------- Net increase 1,451,833 $ 54,452,106 615,251 $ 20,849,794 =========== ============= ========== ============= - -------------------------------------------------------------------------------------------------- Class Y: Sold 5,790,579 $ 225,327,981 -- $ -- Dividends and distributions reinvested 235,557 7,983,016 -- -- Redeemed (482,922) (17,823,371) -- -- ----------- ------------- ---------- ------------- Net increase 5,543,214 $ 215,487,626 -- $ -- =========== ============= ========== =============
1. For the year ended August 31, 1998 for Class A, B and C shares and for the period November 3, 1997 (inception of offering) to August 31, 1998 for Class Y shares. 30 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At August 31, 1998, net unrealized appreciation on investments of $60,564,804 was composed of gross appreciation of $305,887,720, and gross depreciation of $245,322,916. - -------------------------------------------------------------------------------- 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.75% of the first $200 million of average annual net assets, 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, and 0.58% of average annual net assets in excess of $1.5 billion. For the year ended August 31, 1998, commissions (sales charges paid by investors) on sales of Class A shares totaled $4,755,096, of which $1,345,699 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $5,767,387 and $479,256, respectively, of which $455,679 and $13,386, respectively, was paid to an affiliated broker/dealer. During the year ended August 31, 1998, OFDI received contingent deferred sales charges of $263,911 and $25,640, respectively, upon redemption of Class B and Class C shares as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. Oppenheimer Funds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and other Oppenheimer funds. OFS's total costs of providing such services are allocated ratably to these funds. The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a portion of its costs incurred in connection with the personal service and maintenance of shareholder accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the year ended August 31, 1998, OFDI paid $127,482 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 31 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Notes to Financial Statements (Continued) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The Fund has adopted Distribution and Service Plans for Class B shares to compensate OFDI for its costs in distributing Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year for its services rendered in distributing Class B shares. OFDI also receives a service fee of 0.25% per year to compensate dealers for providing personal services for accounts that hold Class B shares. Each fee is computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the year ended August 31, 1998, OFDI paid $6,009 to an affiliated broker/dealer as compensation for Class B personal service and maintenance expenses and retained $1,204,792 as compensation for Class B sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. As of August 31, 1998, OFDI had incurred excess distribution and servicing costs of $6,976,703 for Class B. The Fund has adopted a Distribution and Service Plan for Class C shares to reimburse OFDI for its costs in distributing Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year for its services rendered in distributing Class C shares. OFDI also receives a service fee of 0.25% per year to reimburse dealers for providing personal services for accounts that hold Class C shares. Each fee is computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the year ended August 31, 1998, OFDI paid $5,178 to an affiliated broker/dealer as reimbursement for Class C personal service and maintenance expenses and retained $406,166 as reimbursement for Class C sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for certain expenses incurred before the Plan was terminated. As of August 31, 1998, OFDI had incurred excess distribution and servicing costs of $788,984 for Class C. 32 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Fund's Statement of Operations. Risks include the potential inability of the counter party to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. - -------------------------------------------------------------------------------- 6. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.0575% per annum. The Fund had no borrowings outstanding during the year ended August 31, 1998. 33 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Independent Auditors' Report - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Board of Trustees and Shareholders of Oppenheimer Capital Appreciation Fund: We have audited the accompanying statements of investments and assets and liabilities of Oppenheimer Capital Appreciation Fund as of August 31, 1998, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the two-year period then ended, the eight-month period ended August 31, 1996, and for each of the years in the three-year period ended December 31, 1995. 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 generally accepted auditing standards. 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 and financial highlights. Our procedures included confirmation of securities owned as of August 31, 1998, by correspondence with the custodian and brokers; and where replies were not received from brokers we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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, 1998, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the two-year period then ended, the eight- month period ended August 31, 1996, and for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Denver, Colorado September 22, 1998 34 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- Federal Income Tax Information (Unaudited) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 1999, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1998. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Distributions of $4.7262, $4.5856, $4.5748 and $4.7883 per share were paid to Class A, Class B, Class C and Class Y shareholders, respectively, on December 16, 1997, of which, for each class of shares, $1.7911 was designated as a capital gain distribution in the "28% Rate Group" and $1.6017 was designated as a capital gain distribution in the "20% Rate Group" 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. Dividends paid by the Fund during the year ended August 31, 1998, which are not designated as capital gain distributions should be multiplied by 16.52% to arrive at the net amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 35 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Robert C. Doll, Jr., Vice President Jane Putnam, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary - -------------------------------------------------------------------------------- INVESTMENT ADVISOR OppenheimerFunds, Inc. - -------------------------------------------------------------------------------- DISTRIBUTOR OppenheimerFunds Distributor, Inc. - -------------------------------------------------------------------------------- TRANSFER AND SHAREHOLDER OppenheimerFunds Services SERVICING AGENT - -------------------------------------------------------------------------------- CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS KPMG Peat Marwick LLP - -------------------------------------------------------------------------------- LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein This is a copy of a report to shareholders of Oppenheimer Capital Appreciation Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Capital Appreciation Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 36 Oppenheimer Capital Appreciation Fund - -------------------------------------------------------------------------------- OPPENHEIMERFUNDS FAMILY - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- REAL ASSET FUNDS - ------------------------------------------------------------------------------------------- Real Asset Fund Gold & Special Minerals Fund - ------------------------------------------------------------------------------------------- GLOBAL STOCK FUNDS - ------------------------------------------------------------------------------------------- Developing Markets Fund International Growth Fund Quest Global Value Fund International Small Global Fund Global Growth & Income Fund Company Fund - ------------------------------------------------------------------------------------------- STOCK FUNDS - ------------------------------------------------------------------------------------------- Enterprise Fund MidCap Fund Growth Fund Discovery Fund Capital Appreciation Fund Disciplined Value Fund Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund - ------------------------------------------------------------------------------------------- STOCK & BOND FUNDS - ------------------------------------------------------------------------------------------- Main Street Income & Total Return Fund Disciplined Allocation Fund Growth Fund Quest Balanced Multiple Strategies Fund Quest Opportunity Value Fund/1/ Convertible Securities Fund/2/ Value Fund Equity Income Fund - ------------------------------------------------------------------------------------------- TAXABLE BOND FUNDS - ------------------------------------------------------------------------------------------- International Bond Fund Champion Income Fund U.S. Government Trust World Bond Fund Strategic Income Fund Limited-Term Government Fund High Yield Fund Bond Fund - ------------------------------------------------------------------------------------------- MUNICIPAL BOND FUNDS - ------------------------------------------------------------------------------------------- California Municipal Fund/3/ Pennsylvania Municipal Fund/3/ Rochester Division: Florida Municipal Fund/3/ Municipal Bond Fund Rochester Fund Municipals New Jersey Municipal Fund/3 Insured Municipal Fund Limited Term New York New York Municipal Fund/3/ Intermediate Municipal Fund Municipal Fund - ------------------------------------------------------------------------------------------- MONEY MARKET FUNDS/4/ - ------------------------------------------------------------------------------------------- Money Market Fund Cash Reserves
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value Fund." 2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth." 3. Available only to investors in certain states. 4. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved. 37 Oppenheimer Capital Appreciation Fund This page intentionally left blank INTENTIONALLY LEFT BLANK INFORMATION and services --------------------------------------------- INTERNET As an Oppenheimer fund shareholder, you have 24-hr access to account some special privileges. Whether it's information. Online automatic investment plans, informative transactions now available newsletters and hotlines, or ready account - -------------------------- WWW.OPPENHEIMERFUNDS.COM access, you can benefit from services - -------------------------- designed to make investing simple. And when you need help, our Customer GENERAL INFORMATION Service Representatives are only a toll-free MonFri 8:30am9pm ET phone call away. They can provide information Sat 10am4pm ET about your account and handle administrative - -------------------------- 1-800-525-7048 requests. You can reach them at our General - -------------------------- Information number. When you want to make a transaction, you can do it easily by calling our toll-free ACCOUNT TRANSACTIONS Telephone Transactions number or by visiting Mon-Fri 8:30am-8pm ET our website. And, by enrolling in AccountLink, a convenient service that - -------------------------- 1-800-852-8457 "links" your Oppenheimer funds accounts and - -------------------------- your bank checking or savings account, you can use the Telephone Transactions number or website to make investments. For added convenience, you can get PHONELINK automated information with OppenheimerFunds 24-hr automated information PhoneLink service, available 24 hours a day, and automated transactions 7 days a week. PhoneLink gives you access to a variety of fund, account, and market - -------------------------- 1-800-533-3310 information. Of course, you can always speak - -------------------------- with a Customer Service Representative during the General Information hours shown at the TELECOMMUNICATION DEVICE left. for the Deaf (TDD) Mon-Fri 8:30am-2pm ET You can count on us whenever you need assistance. That's why the International - -------------------------- 1-800-843-4461 Customer Service Association, an independent, - -------------------------- nonprofit organization made up of over 3,200 OPPENHEIMER FUNDS customer service management professionals INFORMATION HOTLINE from around the country, honored the 24 hours a day, timely and Oppenheimer funds' transfer agent, insightful messages on the OppenheimerFunds Services, with their Award economy and issues that of Excellence in 1993. affect your investments So call us today, or visit us at our - -------------------------- 1-800-835-3104 website at www.oppenheimerfunds.com--we're - -------------------------- here to help. [LOGO] Oppenheimer Funds(R) Distributor, Inc. RA0320.001.0898 October 30, 1998 -----END PRIVACY-ENHANCED MESSAGE-----