-----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, R/kBCFjN+Anfr6XljqaGjg/Xu82Dtb4IIuJqLkIrMztXR56Dcj3Xfbm3tPHbyHJg 8ZCtA28NEQpYI2rfxIIbXA== 0000950133-97-001747.txt : 19970512 0000950133-97-001747.hdr.sgml : 19970512 ACCESSION NUMBER: 0000950133-97-001747 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970509 SROS: NASD 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: 1940 Act SEC FILE NUMBER: 811-03105 FILM NUMBER: 97599418 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 OPPENHEIMER CAPITAL APPRECIATION FUND 1 [PHOTO] OPPENHEIMER CAPITAL APPRECIATION FUND SEMIANNUAL REPORT FEBRUARY 28, 1997 "We have some IMPORTANT financial goals, so we want our investment to INCREASE in value over time." [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 NEWS OUTPERFORMED AVERAGE Cumulative Total Return for the 3-Year Period Ended 3/31/97: Oppenheimer Capital Appreciation Fund Class A (at net asset value)(2) 74.63% Lipper Capital Appreciation Average for 123 Capital Appreciation Funds for the 3-Year Period Ended 3/31/97(4) 47.31% THIS FUND IS FOR PEOPLE WHO WANT THE POTENTIAL FOR SOLID INVESTMENT GROWTH OVER THE LONG TERM. HOW YOUR FUND IS MANAGED Oppenheimer Capital Appreciation Fund seeks long-term growth by investing in the stocks of "growth-type" companies and cyclical industries that the Fund's investment managers believe have opportunities for capital growth. In today's stock market, the Fund's managers are targeting consumer and industrial companies with strong earnings momentum, as well as companies that have excellent growth prospects, especially in the technology sector, such as computer software and net-working. The Fund also invests in U.S.-based companies that are believed to have superior growth potential because their products or services are in high demand abroad.(1) PERFORMANCE Cumulative total returns for the six months ended 2/28/97 were 18.22% for Class A shares, 17.71% for Class B shares and 17.72% for Class C shares, without deducting sales charges.(2) Your Fund's average annual total returns for Class A shares for the 1-, 5- and 10-year periods ended 3/31/97 were 10.41%, 13.45% and 10.36%, respectively. For Class B shares, average annual total returns for the 1-year period ended 3/31/97 and since inception on 11/1/95 were 11.13% and 15.25%, respectively. For Class C shares, average annual total returns for the 1-year period ended 3/31/97 and since inception on 12/1/93 were 15.14% and 16.63%, respectively.(3) OUTLOOK "We're very optimistic about this year. We believe that 1997 will be a year that will place great importance on earnings growth." Jane Putnam, Portfolio Manager February 28, 1997 Total returns include change 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. For more complete information, please review the prospectus carefully before you invest. As of 12/18/96, the Fund's name was changed from "Target Fund." 1. The Fund's portfolio is subject to change. 2. Based on the change in net asset value per share without deducting any sales charges. Such performance is not annualized and would have been lower if sales charges were taken into account. 3. Class A returns include the current maximum initial sales charge of 5.75%. Class A shares were first publicly offered on 1/22/81. The Fund's maximum sales charge for Class A shares was higher during a portion of some of the periods shown, so that actual investment results would have been less. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 4% (since inception). Class C returns include the 1% contingent deferred sales charge for the 1-year result. An explanation of the different performance calculations is in the Fund's prospectus. Class B and Class C shares are subject to an annual 0.75% asset-based sales charge. 4. Source: Lipper Analytical Services, 3/31/97. The Lipper average is shown for comparative purposes only. Funds included in the index may have different investment policies and risks than the Fund. Oppenheimer Capital Appreciation Fund is characterized by Lipper as a capital appreciation fund. Lipper performance is based on total return and does not take sales charges into account. 2 Oppenheimer Capital Appreciation Fund 3 [PHOTO] Bridget A. Macaskill President Oppenheimer Capital Appreciation Fund DEAR SHAREHOLDER, As we advised you at year end, we don't expect 1997's stock market to report the record-breaking returns we saw last year. However, we do believe it may be a period in which investors can take advantage of some great buying opportunities created by lower stock valuations. Our optimism can be traced to solid economic fundamentals that should remain stable throughout the calendar year and the robust investing habits of aging baby boomers. First, the economy has been expanding slowly, but steadily. Interest rates have remained relatively low despite the Federal Reserve's recent increase in short-term rates. In turn, low interest rates translate into reduced borrowing rates for companies and individuals. Companies have taken advantage of the savings by using it to improve their technologies, thereby increasing their productivity and efficiency. By downsizing and implementing other cost-cutting strategies, companies in the United States should now be better equipped to compete globally. In addition, inflation has been at its lowest level in three decades. While it's true that an increase in interest rates often indicates an accelerating economy, the Federal Reserve has been quick to acknowledge that inflation and growth are under control. In fact, they've labeled the recent move as a "preemptive" act to keep inflation at these low levels and extend the economy's healthy growth cycle. Second, monthly cash flows into mutual funds have been higher, largely due to the savings pattern of the baby boomers. The first wave of this generation--those just turning 50--are beginning to direct more money toward their retirement. Concerned about proposed cutbacks in Social Security benefits, more and more individuals believe they will have to fund a large portion of their retirement themselves. And, as they gradually pay off their children's college expenses and reduce their mortgages, they are positioned to save more aggressively. For these reasons we remain confident about the opportunities available in the stock market this year. Of course, selectivity will be the key to allocating an effective portfolio. Therefore, it will be important to base choices on the individual merits of a company, such as strong management, fundamental business policies and long-term prospects for the future. And for investors, as always, maintaining a long-term time horizon is essential. Because, while short-term swings will certainly occur and past performance is no guarantee of future results, the market's long-term trend has been to move higher and higher. Your portfolio managers discuss the outlook for your Fund in light of these broad issues on the following pages. Thank you for your confidence in OppenheimerFunds. We look forward to helping you reach your investment goals in the future. /s/ BRIDGET A. MACASKILL Bridget A. Macaskill March 21, 1997 3 Oppenheimer Capital Appreciation Fund 4 Q + A [PHOTO] Q WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? AN INTERVIEW WITH YOUR FUND'S MANAGERS. HOW DID THE FUND PERFORM? Our performance has been strong. We attribute Oppenheimer Capital Appreciation Fund's success to having higher exposure to the market-leading sectors of technology and financial services and having more of a large-cap concentration as compared to most of our peers. During the period, many investors were seeking liquidity and established, more dependable earnings, two characteristics more likely to apply to large-cap companies. As a result of our strategic positioning, Oppenheimer Capital Appreciation Fund finished 36th out of 202 capital appreciation funds ranked by Lipper for the 1-year period ended 3/31/97.(1) WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? The largest contribution to the Fund's success was our emphasis in technology and financial services. Within the technology sector, computer hardware, telecommunication equipment, and semiconductors were the best performers. The Fund was able to benefit as corporations continue to strive to increase productivity--which largely depends on upgrading technology. By accelerating new products, and in the case of large-cap firms, using their financial flexibility to tap into opportunities outside their core businesses, these companies gained strength. Within the financial services sector our strongest performers were banks, bro-kerage and credit card companies, as well as consumer finance firms. These companies outperformed due to ongoing industry consolidations, restructuring that reduced costs as well as healthy revenue growth. Increased focus on savings, particularly for 1. Source: Lipper Analytical Services, 3/31/97. Oppenheimer Capital Appreciation Fund's Class A shares were ranked 19th out of 76 funds in its category for the 5-year period ended 3/31/97 and 26th out of 55 funds for the 10-year period ended 3/31/97. Oppenheimer Capital Appreciation Fund is characterized by Lipper as a capital appreciation fund. Lipper performance is based on total return and does not take sales charges into account. 4 Oppenheimer Capital Appreciation Fund 5 FACING PAGE Top left: Jane Putnam, Portfolio Manager Top right: Michael Levine, Member of Equity Investments Team Bottom: Jay Tracey, Member of Equity Investments Team THIS PAGE Top: John Doney, Member of Equity Investments Team Bottom: Robert Doll, Executive VP, Director of Equity Investments and Richard Rubinstein, Member of Equity Investments Team A TECHNOLOGY AND FINANCIAL SERVICES WERE LARGE CONTRIBUTORS TO THE FUND'S PERFORMANCE. retirement, has also helped fuel the industry. In addition, our investments in large grocery and drug store chains added to the Fund's positive performance. This is an area that has exhibited better-than-average growth over the past few years.(2) DID ANY INVESTMENTS NEGATIVELY IMPACT THE PORTFOLIO? A few of our larger retailers did not perform as well as we had expected during the second half of 1996. Inventories were well-managed, the consumer was in good financial shape and demand was strong. However, Christmas sales volume was somewhat disappointing and markdowns were higher than expected. During the period, the Fund had a slightly higher-than-average cash level. As the prices of some of our large-cap holdings reached what we felt were peak values, we sold or reduced our positions and took profits. We're comfortable with this higher cash level because we feel it will allow us to take advantage of buying opportunities if they arise in the coming months--as we expect they will. [PHOTO] WHAT AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING? We believe technology and financial services will continue to outperform throughout 1997 and plan to maintain our emphasis in those areas. However, we have trimmed our bank holdings slightly, preferring instead to add to our holdings in diversified financials and insurance companies. While retail as a whole has been disappointing, certain specialty retail stores have shown consistent, strong earnings growth over the period. As a result, we plan to build our position in this area over the coming period. WHAT IS YOUR OUTLOOK FOR THE FUND? We're very optimistic about this year. We believe that 1997 will be a year that will place great importance on earnings growth. That said, we maintain that the industries and companies best poised to outperform the market should be those that continue to post the highest earnings growth. And while we expect the coming year's market to return to a more "normal" pace, relative to the past few years, we remain confident that it will offer many opportunities that should benefit investors. [PHOTO] 2. The Fund's portfolio is subject to change. 5 Oppenheimer Capital Appreciation Fund 6 FINANCIALS CONTENTS STATEMENT OF INVESTMENTS 7 STATEMENT OF ASSETS AND LIABILITIES 13 STATEMENT OF OPERATIONS 14 STATEMENTS OF CHANGES IN NET ASSETS 15 FINANCIAL HIGHLIGHTS 16 NOTES TO FINANCIAL STATEMENTS 18
6 Oppenheimer Capital Appreciation Fund 7 STATEMENT OF INVESTMENTS February 28, 1997 (Unaudited)
FACE MARKET VALUE AMOUNT SEE NOTE 1 =========================================================================================================================== Convertible Corporate Bonds and Notes--0.2% - --------------------------------------------------------------------------------------------------------------------------- Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 (Cost $1,723,750)(1) $1,700,000 $ 2,567,000
SHARES =========================================================================================================================== COMMON STOCKS--82.3% - --------------------------------------------------------------------------------------------------------------------------- BASIC MATERIALS--3.1% - --------------------------------------------------------------------------------------------------------------------------- CHEMICALS--2.7% Dexter Corp. 75,000 2,212,500 ------------------------------------------------------------------------------------------------------------------- Du Pont (E.I.) De Nemours & Co. 75,000 8,043,750 ------------------------------------------------------------------------------------------------------------------- IMC Global, Inc. 90,000 3,138,750 ------------------------------------------------------------------------------------------------------------------- Morton International, Inc. 80,000 3,300,000 ------------------------------------------------------------------------------------------------------------------- Praxair, Inc. 180,400 8,771,950 ------------------------------------------------------------------------------------------------------------------- Terra Industries, Inc. 158,100 2,154,112 ----------- 27,621,062 - --------------------------------------------------------------------------------------------------------------------------- METALS--0.4% Oregon Steel Mills, Inc. 135,200 2,298,400 ------------------------------------------------------------------------------------------------------------------- USX-U.S. Steel Group, Inc. 50,000 1,568,750 ------------ 3,867,150 - --------------------------------------------------------------------------------------------------------------------------- CONSUMER CYCLICALS--13.5% - --------------------------------------------------------------------------------------------------------------------------- AUTOS & HOUSING--1.6% Arvin Industries, Inc. 129,900 3,052,650 ------------------------------------------------------------------------------------------------------------------- Champion Enterprises, Inc.(2) 196,000 3,797,500 ------------------------------------------------------------------------------------------------------------------- Pulte Corp. 150,000 5,118,750 ------------------------------------------------------------------------------------------------------------------- Toll Brothers, Inc.(2) 240,000 4,650,000 ------------ 16,618,900 - --------------------------------------------------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--2.2% AMR Corp.(2) 18,000 1,415,250 ------------------------------------------------------------------------------------------------------------------- Applebee's International, Inc. 82,500 2,083,125 ------------------------------------------------------------------------------------------------------------------- Callaway Golf Co. 160,800 5,125,500 ------------------------------------------------------------------------------------------------------------------- CKE Restaurants, Inc. 108,050 2,093,469 ------------------------------------------------------------------------------------------------------------------- Disney (Walt) Co. 64,000 4,752,000 ------------------------------------------------------------------------------------------------------------------- Gaylord Entertainment Co., Cl. A 100,000 2,025,000 ------------------------------------------------------------------------------------------------------------------- Wendy's International, Inc. 252,800 5,245,600 ------------ 22,739,944 - --------------------------------------------------------------------------------------------------------------------------- MEDIA--0.3% Evergreen Media Corp., Cl. A(2) 105,000 3,150,000 - --------------------------------------------------------------------------------------------------------------------------- RETAIL: GENERAL--4.0% Donna Karan International, Inc.(2) 200,000 2,400,000 ------------------------------------------------------------------------------------------------------------------- Federated Department Stores, Inc.(2) 155,000 5,386,250 ------------------------------------------------------------------------------------------------------------------- Fruit of the Loom, Inc., Cl. A(2) 110,000 4,496,250 ------------------------------------------------------------------------------------------------------------------- Jones Apparel Group, Inc.(2) 141,200 5,242,050 ------------------------------------------------------------------------------------------------------------------- Liz Claiborne, Inc. 65,000 2,632,500 ------------------------------------------------------------------------------------------------------------------- Nautica Enterprises, Inc.(2) 100,000 2,500,000 ------------------------------------------------------------------------------------------------------------------- Tommy Hilfiger Corp.(2) 209,000 11,416,625 ------------------------------------------------------------------------------------------------------------------- Wal-Mart Stores, Inc. 230,000 6,066,250 ----------- 40,139,925
7 Oppenheimer Capital Appreciation Fund 8 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------- RETAIL: SPECIALTY--5.4% American Pad & Paper Co.(2) 166,900 $ 3,421,450 ------------------------------------------------------------------------------------------------------------------- Ann Taylor Stores Corp.(2) 170,000 3,400,000 ------------------------------------------------------------------------------------------------------------------- Bed Bath & Beyond, Inc.(2) 200,000 5,200,000 ------------------------------------------------------------------------------------------------------------------- Brown Group, Inc. 105,000 1,706,250 ------------------------------------------------------------------------------------------------------------------- Claire's Stores, Inc. 155,000 2,189,375 ------------------------------------------------------------------------------------------------------------------- CUC International, Inc.(2) 92,500 2,208,437 ------------------------------------------------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 100,000 4,587,500 ------------------------------------------------------------------------------------------------------------------- Gap, Inc. (The) 205,000 6,765,000 ------------------------------------------------------------------------------------------------------------------- Home Depot, Inc. 20,000 1,090,000 ------------------------------------------------------------------------------------------------------------------- Nike, Inc., Cl. B 135,000 9,703,125 ------------------------------------------------------------------------------------------------------------------- Nine West Group, Inc.(2) 218,800 10,283,600 ------------------------------------------------------------------------------------------------------------------- Ross Stores, Inc. 20,000 960,000 ------------------------------------------------------------------------------------------------------------------- Tiffany & Co. 90,100 3,130,975 ------------- 54,645,712 - --------------------------------------------------------------------------------------------------------------------------- CONSUMER NON-CYCLICALS--12.9% - --------------------------------------------------------------------------------------------------------------------------- BEVERAGES--0.7% Coca-Cola Co. (The) 110,000 6,710,000 - --------------------------------------------------------------------------------------------------------------------------- EDUCATION--0.2% National Education Corp.(2) 145,000 1,866,875 - --------------------------------------------------------------------------------------------------------------------------- FOOD--2.4% JP Foodservice, Inc.(2) 94,900 2,692,787 ------------------------------------------------------------------------------------------------------------------- Kroger Co.(2) 115,000 6,095,000 ------------------------------------------------------------------------------------------------------------------- Richfood Holdings, Inc. 187,500 3,960,937 ------------------------------------------------------------------------------------------------------------------- Safeway, Inc.(2) 240,000 11,550,000 ------------- 24,298,724 - --------------------------------------------------------------------------------------------------------------------------- HEALTHCARE/DRUGS--3.5% Amgen, Inc.(2) 35,000 2,139,375 ------------------------------------------------------------------------------------------------------------------- Biogen, Inc.(2) 85,000 4,186,250 ------------------------------------------------------------------------------------------------------------------- Bristol-Myers Squibb Co. 60,000 7,830,000 ------------------------------------------------------------------------------------------------------------------- Johnson & Johnson 54,526 3,142,061 ------------------------------------------------------------------------------------------------------------------- Lilly (Eli) & Co. 55,000 4,805,625 ------------------------------------------------------------------------------------------------------------------- Pfizer, Inc. 150,000 13,743,750 ------------- 35,847,061 - --------------------------------------------------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES--5.1% Boston Scientific Corp.(2) 80,000 5,300,000 ------------------------------------------------------------------------------------------------------------------- Guidant Corp. 95,000 6,365,000 ------------------------------------------------------------------------------------------------------------------- Gulf South Medical Supply, Inc.(2) 130,000 2,746,250 ------------------------------------------------------------------------------------------------------------------- HealthCare COMPARE Corp.(2) 139,100 5,937,831 ------------------------------------------------------------------------------------------------------------------- HEALTHSOUTH Corp.(2) 115,000 4,628,750 ------------------------------------------------------------------------------------------------------------------- Henry Schein, Inc.(2) 99,500 2,686,500 ------------------------------------------------------------------------------------------------------------------- Medtronic, Inc. 70,000 4,532,500 ------------------------------------------------------------------------------------------------------------------- Nellcor Puritan Bennett, Inc.(2) 135,000 2,345,625 ------------------------------------------------------------------------------------------------------------------- Oxford Health Plans, Inc.(2) 115,000 6,411,250 ------------------------------------------------------------------------------------------------------------------- Renal Treatment Centers, Inc.(2) 171,500 4,459,000 ------------------------------------------------------------------------------------------------------------------- Sofamor Danek Group, Inc.(2) 80,000 3,170,000 ------------------------------------------------------------------------------------------------------------------- Ventana Medical Systems, Inc.(2) 46,000 828,000 ------------------------------------------------------------------------------------------------------------------- VISX, Inc.(2) 125,200 2,785,700 ------------- 52,196,406
8 Oppenheimer Capital Appreciation Fund 9
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------- HOUSEHOLD GOODS--0.3% Blyth Industries, Inc.(2) 108,200 $ 3,543,550 - --------------------------------------------------------------------------------------------------------------------------- TOBACCO--0.7% Philip Morris Cos., Inc. 30,000 4,053,750 ------------------------------------------------------------------------------------------------------------------- UST, Inc. 105,000 3,241,875 ------------ 7,295,625 - --------------------------------------------------------------------------------------------------------------------------- ENERGY--4.0% - --------------------------------------------------------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS--1.5% BJ Services Co.(2) 70,000 2,782,500 ------------------------------------------------------------------------------------------------------------------- Global Marine, Inc.(2) 155,000 2,886,875 ------------------------------------------------------------------------------------------------------------------- Smith International, Inc.(2) 45,000 1,828,125 ------------------------------------------------------------------------------------------------------------------- Tidewater, Inc. 80,000 3,440,000 ------------------------------------------------------------------------------------------------------------------- Transocean Offshore, Inc. 75,000 4,190,625 ------------ 15,128,125 - --------------------------------------------------------------------------------------------------------------------------- OIL-INTEGRATED--2.5% ENSCO International, Inc.(2) 80,000 3,470,000 ------------------------------------------------------------------------------------------------------------------- Mobil Corp. 40,000 4,910,000 ------------------------------------------------------------------------------------------------------------------- Phillips Petroleum Co. 130,000 5,378,750 ------------------------------------------------------------------------------------------------------------------- Unocal Corp. 135,000 5,214,375 ------------------------------------------------------------------------------------------------------------------- USX-Marathon Group 235,000 6,256,875 ------------ 25,230,000 - --------------------------------------------------------------------------------------------------------------------------- FINANCIAL--16.3% - --------------------------------------------------------------------------------------------------------------------------- BANKS--2.6% Bank of Boston Corp. 125,000 9,421,875 ------------------------------------------------------------------------------------------------------------------- BankAmerica Corp. 30,000 3,412,500 ------------------------------------------------------------------------------------------------------------------- Societe Generale 44,600 5,166,683 ------------------------------------------------------------------------------------------------------------------- SouthTrust Corp. 40,000 1,585,000 ------------------------------------------------------------------------------------------------------------------- State Street Boston Corp. 87,400 7,024,775 ------------ 26,610,833 - --------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL--10.6% Advanta Corp., Cl. A 65,000 2,689,375 ------------------------------------------------------------------------------------------------------------------- Alex Brown, Inc. 62,500 3,632,813 ------------------------------------------------------------------------------------------------------------------- Associates First Capital Corp., Cl. A 124,000 5,983,000 ------------------------------------------------------------------------------------------------------------------- Fannie Mae 100,000 4,000,000 ------------------------------------------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp. 240,000 7,140,000 ------------------------------------------------------------------------------------------------------------------- Finova Group, Inc. 75,000 5,728,125 ------------------------------------------------------------------------------------------------------------------- First USA, Inc. 350,000 17,018,750 ------------------------------------------------------------------------------------------------------------------- Franklin Resources, Inc. 90,000 5,265,000 ------------------------------------------------------------------------------------------------------------------- Green Tree Financial Corp. 400,000 15,000,000 ------------------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 10,000 960,000 ------------------------------------------------------------------------------------------------------------------- Morgan Stanley Group, Inc. 65,000 4,103,125 ------------------------------------------------------------------------------------------------------------------- Price (T. Rowe) Associates 140,200 6,186,325 ------------------------------------------------------------------------------------------------------------------- Salomon, Inc. 105,000 5,840,625 ------------------------------------------------------------------------------------------------------------------- Schwab (Charles) Corp. (New) 130,000 4,875,000 ------------------------------------------------------------------------------------------------------------------- Travelers Group, Inc. 350,000 18,768,750 ------------ 107,190,888
9 Oppenheimer Capital Appreciation Fund 10 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------- INSURANCE--3.1% Allstate Corp. 90,000 $ 5,703,750 ------------------------------------------------------------------------------------------------------------------- Equitable Cos., Inc. 240,000 7,530,000 ------------------------------------------------------------------------------------------------------------------- MGIC Investment Corp. 70,900 5,574,513 ------------------------------------------------------------------------------------------------------------------- SunAmerica, Inc. 270,000 12,386,250 ------------ 31,194,513 - --------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL--6.9% - --------------------------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--1.3% Emerson Electric Co. 85,000 8,415,000 ------------------------------------------------------------------------------------------------------------------- Honeywell, Inc. 73,700 5,241,913 ------------ 13,656,913 - --------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL MATERIALS--1.2% Centex Corp. 160,000 6,460,000 ------------------------------------------------------------------------------------------------------------------- Rayonier, Inc. 157,700 5,992,600 ------------ 12,452,600 - --------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL SERVICES--1.9% Corrections Corp. of America(2) 140,000 3,990,000 ------------------------------------------------------------------------------------------------------------------- Culligan Water Technologies, Inc.(2) 142,000 5,538,000 ------------------------------------------------------------------------------------------------------------------- Kent Electronics Corp.(2) 168,000 4,620,000 ------------------------------------------------------------------------------------------------------------------- Manpower, Inc. 85,000 3,208,750 ------------------------------------------------------------------------------------------------------------------- Patterson Dental Co.(2) 35,000 1,190,000 ------------------------------------------------------------------------------------------------------------------- U.S. Rentals, Inc.(2) 40,000 760,000 ------------ 19,306,750 - --------------------------------------------------------------------------------------------------------------------------- MANUFACTURING--0.7% AGCO Corp. 135,300 3,839,138 ------------------------------------------------------------------------------------------------------------------- U.S. Filter Corp.(2) 100,000 3,500,000 ------------ 7,339,138 - --------------------------------------------------------------------------------------------------------------------------- TRANSPORTATION--1.8% Burlington Northern Santa Fe Corp. 42,000 3,496,500 ------------------------------------------------------------------------------------------------------------------- Canadian Pacific Ltd. (New) 400,000 9,900,000 ------------------------------------------------------------------------------------------------------------------- Illinois Central Corp. 132,150 4,542,656 ------------ 17,939,156 - --------------------------------------------------------------------------------------------------------------------------- TECHNOLOGY--24.1% - --------------------------------------------------------------------------------------------------------------------------- AEROSPACE/DEFENSE--0.3% Goodrich (B.F.) Co. 84,000 3,412,500 - --------------------------------------------------------------------------------------------------------------------------- COMPUTER HARDWARE--6.5% Adaptec, Inc.(2) 141,900 5,401,069 ------------------------------------------------------------------------------------------------------------------- Cabletron Systems, Inc.(2) 187,000 5,610,000 ------------------------------------------------------------------------------------------------------------------- Cascade Communications Corp.(2) 263,000 8,120,125 ------------------------------------------------------------------------------------------------------------------- Compaq Computer Corp.(2) 91,000 7,211,750 ------------------------------------------------------------------------------------------------------------------- EMC Corp.(2) 345,000 12,420,000 ------------------------------------------------------------------------------------------------------------------- Gateway 2000, Inc.(2) 170,800 10,034,500 ------------------------------------------------------------------------------------------------------------------- Seagate Technology(2) 210,000 9,922,500 ------------------------------------------------------------------------------------------------------------------- Sun Microsystems, Inc.(2) 232,000 7,163,000 ------------ 65,882,944
10 Oppenheimer Capital Appreciation Fund 11
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------- COMPUTER SOFTWARE--7.9% Applix, Inc.(2) 50,000 $ 556,250 ------------------------------------------------------------------------------------------------------------------- BMC Software, Inc.(2) 185,600 7,946,000 ------------------------------------------------------------------------------------------------------------------- Computer Associates International, Inc. 75,000 3,262,500 ------------------------------------------------------------------------------------------------------------------- First Data Corp. 230,040 8,425,215 ------------------------------------------------------------------------------------------------------------------- HBO & Co. 140,000 8,067,500 ------------------------------------------------------------------------------------------------------------------- Microsoft Corp.(2) 280,000 27,300,000 ------------------------------------------------------------------------------------------------------------------- Oracle Corp.(2) 338,850 13,299,863 ------------------------------------------------------------------------------------------------------------------- PLATINUM Technology, Inc.(2) 180,000 2,677,500 ------------------------------------------------------------------------------------------------------------------- SAP AG, Preference 25,500 3,925,891 ------------------------------------------------------------------------------------------------------------------- Shiva Corp.(2) 155,000 2,576,875 ------------------------------------------------------------------------------------------------------------------- Structural Dynamics Research Corp.(2) 120,000 2,385,000 ------------ 80,422,594 - --------------------------------------------------------------------------------------------------------------------------- ELECTRONICS--4.2% Altera Corp.(2) 50,000 2,268,750 ------------------------------------------------------------------------------------------------------------------- Analog Devices, Inc.(2) 153,333 3,564,992 ------------------------------------------------------------------------------------------------------------------- Applied Materials, Inc.(2) 95,000 4,809,375 ------------------------------------------------------------------------------------------------------------------- Intel Corp. 115,000 16,315,625 ------------------------------------------------------------------------------------------------------------------- Novellus Systems, Inc.(2) 90,800 7,422,900 ------------------------------------------------------------------------------------------------------------------- SCI Systems, Inc.(2) 151,800 8,121,300 ------------ 42,502,942 - --------------------------------------------------------------------------------------------------------------------------- TELECOMMUNICATIONS-TECHNOLOGY--5.2% 3Com Corp.(2) 95,000 3,145,391 ------------------------------------------------------------------------------------------------------------------- Andrew Corp.(2) 85,000 4,675,000 ------------------------------------------------------------------------------------------------------------------- Ascend Communications, Inc.(2) 65,000 3,396,250 ------------------------------------------------------------------------------------------------------------------- Cisco Systems, Inc.(2) 260,000 14,462,500 ------------------------------------------------------------------------------------------------------------------- DSP Communications, Inc.(2) 160,000 1,870,000 ------------------------------------------------------------------------------------------------------------------- Hong Kong Telecommunications Ltd., Sponsored ADR 50,000 868,750 ------------------------------------------------------------------------------------------------------------------- Newbridge Networks Corp.(2) 180,000 5,737,500 ------------------------------------------------------------------------------------------------------------------- PictureTel Corp.(2) 85,000 1,338,750 ------------------------------------------------------------------------------------------------------------------- Tellabs, Inc.(2) 220,000 8,772,500 ------------------------------------------------------------------------------------------------------------------- WorldCom, Inc. 305,000 8,120,625 ------------ 52,387,266
11 Oppenheimer Capital Appreciation Fund 12 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------- UTILITIES--1.5% - --------------------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.1% Empresa Nacional de Electricidad SA, Sponsored ADR 45,000 $ 2,761,875 ------------------------------------------------------------------------------------------------------------------- PacifiCorp 135,000 2,784,375 ------------------------------------------------------------------------------------------------------------------- Pinnacle West Capital Corp. 175,000 5,468,750 ------------ 11,015,000 - --------------------------------------------------------------------------------------------------------------------------- TELEPHONE UTILITIES--0.4% Cincinnati Bell, Inc. 60,000 3,720,000 ------------ Total Common Stocks (Cost $571,469,980) 835,933,096 FACE AMOUNT - --------------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT--17.7% - --------------------------------------------------------------------------------------------------------------------------- Repurchase agreement with Zion First National Bank, 5.38%, dated 2/28/97, to be repurchased at $179,680,521 on 3/3/97, collateralized by U.S. Treasury Nts., 5.50%--7.50%, 5/15/98--8/15/04, with a value of $183,416,674 (Cost $179,600,000) $179,600,000 179,600,000 - --------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $752,793,730) 100.2% 1,018,100,096 - --------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (2,095,546) ------------ -------------- NET ASSETS 100.0% $1,016,004,550 ============ ==============
1. Identifies issues considered to be illiquid--See Note 5 of Notes to Financial Statements. 2. Non-income producing security. See accompanying Notes to Financial Statements. 12 Oppenheimer Capital Appreciation Fund 13 STATEMENT OF ASSETS AND LIABILITIES February 28, 1997 (Unaudited) =========================================================================================================================== ASSETS Investments, at value (including repurchase agreement of $179,600,000) (cost $752,793,730)--see accompanying statement $1,018,100,096 ------------------------------------------------------------------------------------------------------------------- Receivables: Investments sold 8,313,699 Interest and dividends 697,163 ------------------------------------------------------------------------------------------------------------------- Other 20,967 -------------- Total assets 1,027,131,925 =========================================================================================================================== LIABILITIES Bank overdraft 132,935 ------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on forward foreign currency exchange contracts--Note 6 1,141 ------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 6,778,855 Shares of beneficial interest redeemed 3,417,815 Distribution and service plan fees 273,212 Trustees' fees 209,676 Transfer and shareholder servicing agent fees 75,194 Other 238,547 -------------- Total liabilities 11,127,375 =========================================================================================================================== NET ASSETS $1,016,004,550 ============== =========================================================================================================================== COMPOSITION OF NET ASSETS Paid-in capital $696,855,900 ------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 566,290 ------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investment and foreign currency transactions 53,273,162 ------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 265,309,198 -------------- Net assets $1,016,004,550 ============== =========================================================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $978,077,216 and 30,090,147 shares of beneficial interest outstanding) $32.50 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $34.48 ------------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $20,722,648 and 644,240 shares of beneficial interest outstanding) $32.17 ------------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price and offering price per share (based on net assets of $17,204,686 and 539,279 shares of beneficial interest outstanding) $31.90
See accompanying Notes to Financial Statements. 13 Oppenheimer Capital Appreciation Fund 14 STATEMENT OF OPERATIONS For the Six Months Ended February 28, 1997 (Unaudited) =========================================================================================================================== INVESTMENT INCOME Interest $ 4,461,005 ------------------------------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $26,795) 3,001,730 ------------------------------------------------------------------------------------------------------------------- Total income 7,462,735 =========================================================================================================================== EXPENSES Management fees--Note 4 3,234,232 ------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 746,147 Class B 68,339 Class C 67,795 ------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 524,428 ------------------------------------------------------------------------------------------------------------------- Shareholder reports 187,888 ------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 26,092 ------------------------------------------------------------------------------------------------------------------- Legal and auditing fees 21,639 ------------------------------------------------------------------------------------------------------------------- Registration and filing fees: Class B 4,682 Class C 1,891 ------------------------------------------------------------------------------------------------------------------- Other 41,492 ------------ Total expenses 4,924,625 =========================================================================================================================== NET INVESTMENT INCOME 2,538,110 =========================================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 70,224,188 Foreign currency transactions (13,870) ------------ Net realized gain 70,210,318 ------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 77,695,355 Translation of assets and liabilities denominated in foreign currencies (309,643) ------------ Net change 77,385,712 ------------ Net realized and unrealized gain 147,596,030 =========================================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $150,134,140 ------------
See accompanying Notes to Financial Statements. 14 Oppenheimer Capital Appreciation Fund 15 STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED FEB. 28, 1997 AUGUST 31, DECEMBER 31, (UNAUDITED) 1996(1) 1995 =========================================================================================================================== OPERATIONS Net investment income $ 2,538,110 $ 2,862,338 $ 5,803,306 ------------------------------------------------------------------------------------------------------------------- Net realized gain 70,210,318 75,873,404 71,199,990 ------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 77,385,712 11,279,147 58,150,018 ------------- ------------- ------------- Net increase in net assets resulting from operations 150,134,140 90,014,889 135,153,314 =========================================================================================================================== DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (4,636,958) -- (5,896,377) Class B (28,622) -- (8,658) Class C -- -- (24,850) ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (94,225,656) -- (69,237,207) Class B (1,583,385) -- (100,605) Class C (1,485,118) -- (663,926) =========================================================================================================================== BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A 141,759,219 (58,800,845) 397,611,091 Class B 15,370,804 2,415,163 2,840,388 Class C 6,393,685 2,250,436 5,989,404 =========================================================================================================================== NET ASSETS Total increase 211,698,109 35,879,643 465,662,574 ------------------------------------------------------------------------------------------------------------------- Beginning of period 804,306,441 768,426,798 302,764,224 ------------- ------------- ------------- End of period [including undistributed (overdistributed) net investment income of $566,290, $2,693,760 and $(168,578), respectively] $1,016,004,550 $804,306,441 $768,426,798 ============= ============= =============
1. The Fund changed its fiscal year end from December 31 to August 31. See accompanying Notes to Financial Statements. 15 Oppenheimer Capital Appreciation Fund 16 FINANCIAL HIGHLIGHTS
CLASS A =================================================================== SIX MONTHS PERIOD ENDED ENDED FEB. 28, 1997 AUGUST 31, YEAR ENDED DECEMBER 31, (UNAUDITED) 1996(3) 1995 1994 ======================================================================================================================= PER SHARE OPERATING DATA: Net asset value, beginning of period $30.81 $27.44 $22.63 $25.72 - ----------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .09 .11 .24 .20 Net realized and unrealized gain (loss) 5.32 3.26 7.61 (.11) -------- -------- -------- -------- Total income (loss) from investment operations 5.41 3.37 7.85 .09 - ----------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.17) -- (.24) (.20) Distributions from net realized gain (3.55) -- (2.80) (2.98) -------- -------- -------- -------- Total dividends and distributions to shareholders (3.72) -- (3.04) (3.18) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $32.50 $30.81 $27.44 $22.63 ======== ======== ======== ======== ======================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(6) 18.22% 12.28% 34.85% 0.46% ======================================================================================================================= RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $978,077 $788,504 $758,439 $301,698 - ----------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $922,499 $789,903 $538,210 $325,003 - ----------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income (loss) 0.56%(7) 0.55%(7) 1.08% 0.72% Expenses 1.02%(7) 1.09%(7) 1.03% 1.16% - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(8) 34.9% 45.2% 71.9% 34.7% Average brokerage commission rate(9) $0.0622 $0.0595 $0.0578 --
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993. 2. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 3. The Fund changed its fiscal year end from December 31 to August 31. 4. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 5. Less than $0.005 per share. 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. 16 Oppenheimer Capital Appreciation Fund 17
CLASS B CLASS C ==================== =================================================================================================== SIX MONTHS PERIOD PERIOD SIX MONTHS PERIOD ENDED ENDED ENDED ENDED ENDED FEB. 28, 1997 AUGUST 31, DEC. 31, FEB. 28, 1997 AUGUST 31, YEAR ENDED DECEMBER 31, 1993 1992 (UNAUDITED) 1996(3) 1995(4) (UNAUDITED) 1996(3) 1995 1994(2) 1993(1) ============================================================================================================================ $25.25 $23.76 $30.56 $27.37 $29.77 $30.27 $27.11 $22.50 $25.72 $25.92 - ---------------------------------------------------------------------------------------------------------------------------- .13 .16 .05 --(5) (.14) -- (.03) .09 -- (.01) .86 2.28 5.17 3.19 .78 5.18 3.19 7.43 (.15) .31 - -------- -------- -------- ------- -------- ------- ------- ------- ------- ------- .99 2.44 5.22 3.19 .64 5.18 3.16 7.52 (.15) .30 - ---------------------------------------------------------------------------------------------------------------------------- (.12) (.17) (.06) -- (.24) -- -- (.11) (.09) (.10) (.40) (.78) (3.55) -- (2.80) (3.55) -- (2.80) (2.98) (.40) - -------- -------- -------- ------- -------- ------- ------- ------- ------- ------- (.52) (.95) (3.61) -- (3.04) (3.55) -- (2.91) (3.07) (.50) - ---------------------------------------------------------------------------------------------------------------------------- $25.72 $25.25 $32.17 $30.56 $27.37 $31.90 $30.27 $27.11 $22.50 $25.72 ======== ======== ======== ======= ======== ======= ======= ======= ======= ======= ============================================================================================================================ 3.93% 10.27% 17.71% 11.65% 1.67% 17.72% 11.66% 33.56% (0.50)% 2.11% ============================================================================================================================ $368,806 $401,256 $20,723 $5,448 $2,751 $17,205 $10,355 $7,237 $1,066 $8 - ---------------------------------------------------------------------------------------------------------------------------- $383,875 $362,295 $13,888 $4,285 $ 661 $13,738 $9,053 $3,792 $467 $6 - ---------------------------------------------------------------------------------------------------------------------------- 0.47% 0.69% (0.32)%(7) (0.25)%(7) (0.54)%(7) (0.29)%(7) ( 0.30)%(7) 0.19% (0.02)% (0.07)%(7) 1.07% 1.09% 1.92%(7) 1.94%(7) 2.62%(7) 1.88%(7) 1.93%(7) 1.90% 2.18% 2.18%(7) - ---------------------------------------------------------------------------------------------------------------------------- 22.9% 42.3% 34.9% 45.2% 71.9% 34.9% 45.2% 71.9% 34.7% 22.9% -- -- $0.0622 $0.0595 $0.0578 $0.0622 $0.0595 $0.0578 -- --
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 February 28, 1997 were $270,665,678 and $284,348,239, respectively. 9. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for the period, divided by the total number of related shares purchased and sold. See accompanying Notes to Financial Statements. 17 Oppenheimer Capital Appreciation Fund 18 NOTES TO FINANCIAL STATEMENTS (Unaudited) =============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Capital Appreciation Fund (the Fund), formerly named Oppenheimer Target 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, primarily through investment in equity securities. The Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. ----------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the 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. ----------------------------------------------------------------------- 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 securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. ----------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. ----------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class) and 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 six months ended February 28, 1997, a reduction of $33,207 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 $196,879 at February 28, 1997. 18 Oppenheimer Capital Appreciation Fund 19 =============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 their 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 year that the income or realized gain (loss) was recorded by the Fund. ----------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. =============================================================================== 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED FEBRUARY 28, 1997 AUGUST 31, 1996(2) DECEMBER 31, 1995(1) ---------------------------- ------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------------- Class A: Sold 4,101,930 $136,044,985 2,809,568 $ 83,949,691 3,305,271 $ 90,988,885 Dividends and distributions reinvested 3,067,096 94,558,539 -- -- 2,635,092 71,461,980 Issued in connection with the acquisition of Oppenheimer Time Fund--Note 7 -- -- -- -- 11,277,345 315,314,574 Redeemed (2,675,150) (88,844,305) (4,852,702) (142,750,536) (2,909,180) (80,154,348) ----------- ------------ ---------- ------------- ---------- ------------ Net increase (decrease) 4,493,876 $141,759,219 (2,043,134) $ (58,800,845) 14,308,528 $397,611,091 =========== ============ ========== ============= ========== ============ - -------------------------------------------------------------------------------------------------------------------------------- Class B: Sold 680,896 $ 22,268,701 358,325 $ 10,711,635 107,562 $ 3,071,314 Dividends and distributions reinvested 51,517 1,574,884 -- -- 3,988 107,888 Redeemed (266,448) (8,472,781) (280,568) (8,296,472) (11,032) (338,814) ----------- ------------ ---------- ------------- ---------- ------------ Net increase 465,965 $ 15,370,804 77,757 $ 2,415,163 100,518 $ 2,840,388 =========== ============ ========== ============= ========== ============ - -------------------------------------------------------------------------------------------------------------------------------- Class C: Sold 215,585 $ 7,043,906 152,465 $ 4,501,923 257,084 $ 7,022,376 Dividends and distributions reinvested 45,590 1,381,821 -- -- 22,545 604,205 Redeemed (64,030) (2,032,042) (77,259) (2,251,487) (60,076) (1,637,177) ----------- ------------ ---------- ------------- ---------- ------------ Net increase 197,145 $ 6,393,685 75,206 $ 2,250,436 219,553 $ 5,989,404 =========== ============ ========== ============= ========== ============
1. For the year ended December 31, 1995 for Class A and Class C shares and for the period from November 1, 1995 (inception of offering) to December 31, 1995 for Class B shares. 2. The Fund changed its fiscal year end from December 31 to August 31. =============================================================================== 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At February 28, 1997, net unrealized appreciation on investments of $265,306,366 was composed of gross appreciation of $292,532,707, and gross depreciation of $27,226,341. 19 Oppenheimer Capital Appreciation Fund 20 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) =============================================================================== 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.75% on the first $200 million of average annual net assets, 0.72% on the next $200 million, 0.69% on the next $200 million, 0.66% on the next $200 million and 0.60% in net assets in excess of $800 million. The Manager has voluntarily undertaken to waive a portion of its management fee, whereby the Fund shall pay an annual management fee of 0.58% of its net assets in excess of $1.5 billion. For the six months ended February 28, 1997, commissions (sales charges paid by investors) on sales of Class A shares totaled $702,690, of which $232,471 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $281,439 and $43,556, of which $20,246 was paid to an affiliated broker/dealer for Class B. During the six months ended February 28, 1997, OFDI received contingent deferred sales charges of $4,718 and $2,790, 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. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. 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 accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the six months ended February 28, 1997, OFDI paid $33,774 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. The Fund has adopted a compensation type Distribution and Service Plan for Class B shares to compensate OFDI for its services and 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 on 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. Both fees are computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the six months ended February 28, 1997, OFDI retained $60,042 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 certain expenses it incurred before the Plan was terminated. As of February 28, 1997, OFDI had incurred unreimbursed expenses of $312,060 for Class B. The Fund has adopted a reimbursement type Distribution and Service Plan for Class C shares to reimburse OFDI for its services and 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 on 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. Both fees are computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the six months ended February 28, 1997, OFDI paid $1,006 to an affiliated broker/dealer as reimbursement for Class B personal service and maintenance expenses and retained $27,749 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 it incurred before the Plan was terminated. As of February 28, 1997, OFDI had incurred unreimbursed expenses of $132,877 for Class C. 20 Oppenheimer Capital Appreciation Fund 21 =============================================================================== 5. ILLIQUID AND RESTRICTED SECURITIES At February 28, 1997, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed from time to time) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limit. The aggregate value of illiquid or restricted securities subject to this limitation at February 28, 1997 was $2,567,000, which represents 0.25% of the Fund's net assets. =============================================================================== 6. 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. Gains and losses on outstanding contracts (unrealized appreciation or depreciation on forward contracts) are 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 counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At February 28, 1997, outstanding forward contracts to purchase foreign currencies were as follows:
CONTRACT AMOUNT VALUATION AS OF UNREALIZED CONTRACTS TO PURCHASE EXPIRATION DATE (000S) FEBRUARY 28, 1997 DEPRECIATION - -------------------------------------------------------------------------------------------------------------------- French Franc (FRF) 3/27/97 2,865 FRF $504,667 $1,141
=============================================================================== 7. ACQUISITION OF OPPENHEIMER TIME FUND On June 23, 1995, the Fund acquired all of the net assets of Oppenheimer Time Fund, pursuant to an Agreement and Plan of Reorganization approved by the Oppenheimer Time Fund shareholders on June 20, 1995. The Fund issued 11,277,345 shares of beneficial interest (Class A), valued at $315,314,574 in exchange for the net assets, resulting in combined Class A net assets of $686,360,280 on June 23, 1995. The net assets acquired included net unrealized appreciation of $67,068,398. The exchange qualifies as a tax-free reorganization for federal income tax purposes. 21 Oppenheimer Capital Appreciation Fund 22 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 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 ADVISER OppenheimerFunds, Inc. ============================================================================== DISTRIBUTOR OppenheimerFunds Distributor, Inc. ============================================================================== TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services ============================================================================== CUSTODIAN OF PORTFOLIO SECURITIES The Bank of New York ============================================================================== INDEPENDENT AUDITORS KPMG Peat Marwick LLP ============================================================================== LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer Capital Appreciation Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Capital Appreciation Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 22 Oppenheimer Capital Appreciation Fund 23 OPPENHEIMERFUNDS FAMILY =============================================================================== OppenheimerFunds offers over 50 funds designed to fit virtually every investment goal. Whether you're investing for retirement, your children's education or tax-free income, we have the funds to help you seek your objective. When you invest with OppenheimerFunds, you can feel comfortable knowing that you are investing with a respected financial institution with over 35 years of experience in helping people just like you reach their financial goals. And you're investing with a leader in global, growth stock and flexible fixed-income investments--with over 3 million shareholder accounts and more than $60 billion under OppenheimerFunds' management and that of our affiliates. At OppenheimerFunds we don't charge a fee to exchange shares. And you can exchange shares easily by mail or by telephone.(1) For more information on Oppenheimer funds, please contact your financial adviser or call us at 1-800-525-7048 for a prospectus. You may also write us at the address SHOWN on the back cover. As always, please read the prospectus carefully before you invest. ==================================================================================================================================== STOCK FUNDS Developing Markets Fund Quest Capital Value Fund Global Emerging Growth Fund Growth Fund Enterprise Fund(2) Global Fund International Growth Fund Quest Global Value Fund Discovery Fund Disciplined Value Fund Quest Small Cap Value Fund Oppenheimer Fund Gold & Special Minerals Fund Value Stock Fund Capital Appreciation Fund(3) Quest Value Fund ==================================================================================================================================== STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund Quest Opportunity Value Fund Disciplined Allocation Fund Total Return Fund Multiple Strategies Fund(4) Quest Growth & Income Value Fund Strategic Income & Growth Fund Global Growth & Income Fund Bond Fund for Growth ==================================================================================================================================== BOND FUNDS International Bond Fund Bond Fund High Yield Fund U.S. Government Trust Champion Income Fund Limited-Term Government Fund Strategic Income Fund ==================================================================================================================================== MUNICIPAL FUNDS California Municipal Fund(5) Insured Municipal Fund Florida Municipal Fund(5) Intermediate Municipal Fund New Jersey Municipal Fund(5) New York Municipal Fund(5) Rochester Division Pennsylvania Municipal Fund5 Rochester Fund Municipals Municipal Bond Fund Limited Term New York Municipal Fund ==================================================================================================================================== MONEY MARKET FUNDS(6) Money Market Fund Cash Reserves ==================================================================================================================================== LIFESPAN Growth Fund Income Fund Balanced Fund
1. Exchange privileges are subject to change or termination. Shares may be exchanged only for shares of the same class of eligible funds. 2. Effective 4/1/96, the Fund is closed to new investors. 3. On 12/18/96, the Fund's name was changed from "Target Fund." 4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund." 5. Available only to investors in certain states. 6. An investment in money market funds is neither insured nor guaranteed by the U.S. government and there can be no assurance that a money market fund will be able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved. 23 Oppenheimer Capital Appreciation Fund 24 INFORMATION GENERAL INFORMATION Monday-Friday 8:30 a.m.-9 p.m. ET Saturday 10 a.m.-2 p.m. ET 1-800-525-7048 TELEPHONE TRANSACTIONS Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-852-8457 PHONELINK 24 hours a day, automated information and transactions 1-800-533-3310 TELECOMMUNICATIONS DEVICE for the Deaf (TDD) Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-843-4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 RS0320.001.0297 April 30, 1997 [PHOTO] CUSTOMER SERVICE REPRESENTATIVE OPPENHEIMERFUNDS SERVICES "HOW MAY I HELP YOU?" As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today--we're here to help. [OPPENHEIMERFUNDS LOGO] OppenheimerFunds Distributor, Inc. P.O. Box 5270 Denver, CO 80217-5270 - ---------------------------- Bulk Rate U.S. Postage PAID Permit No. 130 Torrington, CT - ---------------------------- -----END PRIVACY-ENHANCED MESSAGE-----