-----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, UPxswUdhhF8k0MAKvVWPaCfW/Qs0XkYK/aNOkB54wCiYxkUXkURm/TKiPjH40LgK CmyJrXgGKYhZlAlIiy6TYw== 0000950133-98-001738.txt : 19980508 0000950133-98-001738.hdr.sgml : 19980508 ACCESSION NUMBER: 0000950133-98-001738 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980507 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: SEC FILE NUMBER: 811-03105 FILM NUMBER: 98612027 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 S-ANNUAL RPT 1 SEMIANNUAL REPORT FEBRUARY 28, 1998 OPPENHEIMER CAPITAL APPRECIATION FUND [PHOTO] [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 CONTENTS 3 President's Letter 4 Fund Performance 6 An Interview with the Fund's Manager 10 Statement of Investments 16 Statement of Assets and Liabilities 18 Statement of Operations 19 Statements of Changes in Net Assets 20 Financial Highlights 24 Notes to Financial Statements 30 Officers and Trustees 32 Information and Services REPORT HIGHLIGHTS - ------------------------------------------------------------------------------ - - FINANCIAL AND CONSUMER CYCLICAL STOCKS led the Fund's performance during the last six months. Within those sectors, the strongest returns were from consumer finance companies, as well as selected grocery, department and drug stores. - - TECHNOLOGY STOCKS, in which the Fund is traditionally an aggressive investor, performed weakly during the period, primarily over concerns of slower demand in Asia. However, many of these stocks are already beginning to bounce back. - - THE FUND IS CURRENTLY TAKING A TWO-PRONGED APPROACH to stock selection. On one hand, we are trying to take advantage of the corrections that occurred in many sectors; on the other, we are gravitating toward more stable, well-known domestic growth companies. CUMULATIVE TOTAL RETURNS For the 6-Month Period Ended 2/28/98
CLASS A Without With Sales Chg.(1) Sales Chg.(2) 10.89% 4.51%
CLASS B Without With Sales Chg.(1) Sales Chg.(2) 10.41% 5.55%
CLASS C Without With Sales Chg.(1) Sales Chg.(2) 10.41% 9.44%
CLASS Y Without With Sales Chg.(1) Sales Chg.(2) 6.80% 6.80%
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. 1. Includes changes 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. 2. 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%. Class C returns include 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 an annual 0.25% service fee and 0.75% asset-based sales charge, and Class A shares are subject to an annual 0.25% service fee. 2 Oppenheimer Capital Appreciation Fund 3 [PHOTO] BRIDGET A. MACASKILL President Oppenheimer Capital Appreciation Fund DEAR SHAREHOLDER, - ------------------------------------------------------------------------------ These have been very positive times for many American investors. The U.S. economy has continued to grow at a moderate pace, unemployment has fallen to its lowest level in 30 years and inflation has also fallen to a record low. In fact, long-term interest rates have fallen to their lowest level since the government began issuing 30-year Treasury bonds in 1977. What benefits does this provide to the average American? First, when unemployment levels are low, many individuals tend to feel a greater sense of job security and can command higher wages because there are fewer unemployed workers vying for their jobs. Second, many homeowners are opting to refinance their existing home mortgage loans and take advantage of lower financing rates. And third, because wages are increasing faster than the rate of inflation, a paycheck may stretch farther and investors, as consumers, are able to enjoy a higher level of disposable income. This extra income can be put to use in many ways, including allocating more money to investment opportunities. Some industry analysts have tempered such positive news by suggesting that if the rate of inflation falls any lower, it might actually trigger a period of deflation, where we see the prices of American goods and services decline. While lower prices may sound like positive news, in reality it isn't: When prices fall too low, it erodes the value of those goods to the producer. That is, when economic conditions force a decrease in the price of goods, companies have to sell more of those items in order to make the same amount of profit, which translates into greater difficulties for corporations seeking to improve their bottom lines. At OppenheimerFunds, we do not believe we will see a period of deflation in the United States. The fundamental factors that have driven the U.S. market still appear to be in place: an economy that's in its eighth year of expansion with moderate growth, low unemployment, virtually no inflation and low interest rates. However, because of economic uncertainties in other parts of the world, particularly Asia, we expect to see slower growth for stocks in 1998 and a year in which double-digit returns from the equity markets are unlikely. It's also possible that we may see investors favor the fixed, more secure interest payments offered from the bond markets. In closing, we'd like to reassure you that as professional money managers, we continue to keep a watchful eye on these situations and are closely monitoring your fund's investments. In times like these, your financial advisor can be of invaluable assistance to you in helping review your financial plan and guide your investments accordingly. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. We look forward to helping you reach your investment goals in the future. /s/ BRIDGET A. MACASKILL Bridget A. Macaskill March 20, 1998 3 Oppenheimer Capital Appreciation Fund 4 AVG ANNUAL TOTAL RETURNS For the Periods Ended 3/31/98(1)
CLASS A 1 year 5 year 10 year 36.68% 19.36% 17.00%
CLASS B Since 1 year 5 year Inception 38.80% N/A 27.12%
CLASS C Since 1 year 5 year Inception 42.82% N/A 22.41%
CLASS Y Since 1 year 5 year Inception N/A N/A 11.20%
CUMULATIVE TOTAL RETURN For the Period Ended 3/31/98(1)
CLASS A 5 year 142.27% $24,227(3)
PERFORMANCE UPDATE - ------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund's Class A shares performed well, providing a cumulative total return, without sales charges, of 10.89% for the six months ended February 28, 1998. In addition, the Fund's Class A shares were ranked in the top half of all capital appreciation funds by Lipper Analytical Services for the one-year period ended March 31, 1998.(2)
GROWTH OF $10,000 Over five years(3) (without sales charges) Oppenheimer Capital Appreciation Fund Class A shares S&P 500 Index $ 10000 $ 10000 9956.32 10048.69 10186.67 10308.33 10421.47 10547.34 10150 10147.36 9870.42 10190.07 10445.78 10688.35 10468.92 10686.67 11412.64 11727.18 12754.21 12846.74 13869.09 13867.57 14117.52 14702.49 15131.05 15491.66 15907.95 16186.86 17065.49 16687.14 18064.10 18078.17 17723.87 18562.85 20589.52 21803.54 23299.36 23436.81 22819.31 24109.74 25709.51 27472.76
1. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Class A returns include the current maximum initial sales charge of 5.75%. Class A shares were first publicly offered on 1/22/81. The Fund's maximum sales charge for Class A shares was higher prior to 4/1/91, so actual performance may have been lower prior to 4/1/91. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 3% (since inception on 11/1/95). Class C returns for the 1-year period include the contingent deferred sales charge of 1%. Class C shares have an inception date of 12/1/93. Class Y shares were first publicly offered on 11/3/97 and are not available for sale to individual shareholders. An explanation of the different performance calculations is in the Fund's prospectus. Class B and C shares are subject to an annual 0.25% service fee and 0.75% asset-based sales charge, and Class A shares are subject to an annual 0.25% service fee. 4 Oppenheimer Capital Appreciation Fund 5
PORTFOLIO ALLOCATION(4) - - Stocks 81.3% - - Cash Equivalents 18.4 - - Bonds 0.3
PORTFOLIO REVIEW - ------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund is for investors looking for growth over the long term from a diverse portfolio of stocks. WHAT WE LOOK FOR - - Companies with ABOVE-AVERAGE GROWTH POTENTIAL. - - Companies with increasing EARNINGS MOMENTUM. - - Companies that have a history of positive earnings, as well as the potential for POSITIVE EARNINGS SURPRISES. - - Stocks that have LOW VALUATIONS relative to their future growth prospects.
TOP 10 STOCK HOLDINGS(4) .............................................................................. Microsoft Corp. 2.8% Banc One Corp. 1.6% .............................................................................. Travelers Group, Inc. 2.3 Safeway, Inc. 1.6 .............................................................................. CVS Corp. 1.8 Centex Corp. 1.1 .............................................................................. Tellabs, Inc. 1.6 Schering Plough Corp. 1.1 .............................................................................. Pfizer, Inc. 1.6 EMC Corp. 1.1 ..............................................................................
TOP 5 INDUSTRIES(4) .............................................................................. Diversified Financial 8.7% Retail: General 5.5% .............................................................................. Computer Software/ Healthcare/Supplies Services 8.6 & Services 5.2 .............................................................................. Computer Hardware 5.9 ..............................................................................
2. Source: Lipper Analytical Services, Inc., 3/31/98. 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 94 of 232 (1-year), 19 of 86 (5-year) and 16 of 55 (10-year) among capital appreciation funds for the periods ended March 31, 1998. 3. Results of a hypothetical $10,000 investment in Class A shares on March 31, 1993. The S&P 500 is a broad-based unmanaged stock index including daily reinvestment of dividends, and cannot be purchased directly by investors. Past performance does not guarantee future results. 4. Portfolio holdings and allocations are subject to change. Percentages are as of February 28, 1998 and are based on total market value of investments. 5 Oppenheimer Capital Appreciation Fund 6 "THE FUND HELD LARGE POSITIONS IN FINANCIAL AND CONSUMER CYCLICAL SECTORS-- BOTH OF WHICH SHOWED SOLID GROWTH." AN INTERVIEW WITH YOUR FUND'S MANAGER - ------------------------------------------------------------------------------ HOW HAS THE FUND PERFORMED DURING THE LAST SIX MONTHS? Oppenheimer Capital Appreciation Fund's Class A shares delivered a cumulative total return, without sales charges, of 10.89% for the six-month period ended February 28, 1998.(1) We achieved these results despite a significant cash position and a sharp correction in some of the Fund's technology holdings. The Fund also continued to provide competitive performance relative to its peers, ranking in the top half of capital appreciation funds as measured by Lipper Analytical Services for the one-year period ended March 31, 1998.(2) WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? While we select stocks based on their individual merit, many of the stocks we held during the period were in industry sectors that outperformed the overall market. For example, the Fund held large positions in the financial and consumer cyclical sectors, both of which showed solid growth. Within those sectors, we emphasized investments in market segments that reported solid returns: in the financial sector, consumer finance companies, such as Travelers Group; in the consumer cyclical sector, selected grocery, department and drug stores, such as CVS. 1. Includes changes 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. 2. Source: Lipper Analytical Services, Inc., 3/31/98. 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 94 of 232 (1-year), 19 of 86 (5-year) and 16 of 55 (10-year) among capital appreciation funds for the periods ended March 31, 1998. 6 Oppenheimer Capital Appreciation Fund 7 [PHOTO] PORTFOLIO MANAGEMENT TEAM (L TO R) Bob Doll Jane Putnam (Portfolio Manager) DID ANY INVESTMENTS PERFORM DISAPPOINTINGLY? Performance lagged in certain sectors. Oil service companies have suffered because of declining oil prices and an unusually mild winter due to the effects of El Nino. Despite strong earnings, many of these companies have traded significantly off their highs of 1997. However, we believe this is a temporary, rather than a long-term problem. While oil prices may fluctuate on a day-to-day basis, when companies prepare their budgets to replace their oil reserves for the coming year, short-term oil price changes shouldn't significantly affect long-term planning. Technology, in which we are traditionally an aggressive investor, also performed weakly during the past six months over concerns of slower demand in Asia. In particular, disk drive and semiconductor manufacturers held down performance. However, many of these stocks are already beginning to bounce back. After reducing the Fund's exposure to technology, we started to find attractive buying opportunities within the sector once again in companies like Compaq Computer, the world's leading PC maker. Compaq is positioned to further expand its market share with its recent acquisition of Digital Computer. 7 Oppenheimer Capital Appreciation Fund 8 "IN THE COMING MONTHS, UNSETTLED CONDITIONS IN THE GLOBAL ECONOMY MAY WELL DAMPEN GROWTH." AN INTERVIEW WITH YOUR FUND'S MANAGER - ------------------------------------------------------------------------------ WHAT OTHER AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING? With growth in the economy expected to slow and many sectors of the market so highly valued, we are taking a two-pronged approach to stock selection. On the one hand, we are seeking to take advantage of the corrections that occurred in many sectors. PC disk drive manufacturers, for example, offer opportunities to put some of the Fund's cash to work in good companies with depressed stocks. On the other hand, we are also gravitating toward more stable, well-known domestic growth companies, where we believe earnings are predictable and valuations are reasonable. These holdings can position the Fund to participate in market growth while offering some protection against volatility. Our investment in CVS, a major holding of the Fund, is one example of this defensive strategy. As a U.S. drug store chain, CVS is insulated from volatility in offshore markets. It has been very successful in laying out its stores to generate high-margin impulse sales. It is also building market share, having recently acquired Revco, a similar, but less successful firm. We believe that CVS's management ability and sales strategy will enable the company to realize much higher per-store returns as it transforms its newly acquired stores. Safeway is another such example. Like CVS, this major, domestic supermarket chain is pursuing a program of aggressive acquisitions, applying their excellent management and best practices to the poorly performing competitors they have acquired. 8 Oppenheimer Capital Appreciation Fund 9 WHY DOES THE FUND'S CASH POSITION REMAIN RELATIVELY HIGH? We are dedicated to building Oppenheimer Capital Appreciation Fund one company and one stock at a time. When a stock reaches our target price, we sell it. We continually look for new investments that fit our strict criteria for above-average growth potential and low valuations relative to growth prospects. However, such investments are in short supply in today's high valuation environment. As a result we have developed a cash cushion that protects the Fund during periods of market volatility, and provides the liquidity we need to take advantage of attractive buying opportunities as they develop. As corrections occur, we will seek investments that put the Fund's money to work in a manner consistent with our strategy. WHAT IS YOUR OUTLOOK FOR THE FUTURE? In the coming months, unsettled conditions in certain sectors of the global economy may well dampen growth and reduce corporate profits. In such an 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. 9 Oppenheimer Capital Appreciation Fund 10 STATEMENT OF INVESTMENTS February 28, 1998 (Unaudited)
MARKET VALUE SHARES SEE NOTE 1 ============================================================================================= COMMON STOCKS--80.8% - --------------------------------------------------------------------------------------------- BASIC MATERIALS--2.5% - --------------------------------------------------------------------------------------------- CHEMICALS--2.5% Crompton & Knowles Corp. 300,000 $ 9,037,500 - --------------------------------------------------------------------------------------------- Dexter Corp. 136,100 5,529,062 - --------------------------------------------------------------------------------------------- Ferro Corp. 260,000 7,003,750 - --------------------------------------------------------------------------------------------- Morton International, Inc. 346,100 11,442,931 - --------------------------------------------------------------------------------------------- Praxair, Inc. 190,400 9,103,500 ------------------ 42,116,743 - --------------------------------------------------------------------------------------------- CONSUMER CYCLICALS--15.3% - --------------------------------------------------------------------------------------------- AUTOS & HOUSING--3.4% Arvin Industries, Inc. 159,900 6,336,037 - --------------------------------------------------------------------------------------------- Autoliv, Inc. 37,280 1,151,020 - --------------------------------------------------------------------------------------------- Centex Corp. 251,000 18,338,687 - --------------------------------------------------------------------------------------------- Pulte Corp. 150,000 6,825,000 - --------------------------------------------------------------------------------------------- Republic Industries, Inc.(1) 550,000 12,993,750 - --------------------------------------------------------------------------------------------- Toll Brothers, Inc.(1) 340,000 10,200,000 ------------------ 55,844,494 - --------------------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--2.3% Callaway Golf Co. 360,400 11,622,900 - --------------------------------------------------------------------------------------------- Carnival Corp., Cl. A 300,000 17,662,500 - --------------------------------------------------------------------------------------------- Northwest Airlines Corp., Cl. A(1) 159,600 9,396,450 ------------------ 38,681,850 - --------------------------------------------------------------------------------------------- MEDIA--1.8% Belo (A.H.) Corp., Cl. A 137,600 7,533,600 - --------------------------------------------------------------------------------------------- Chancellor Media Corp.(1) 246,000 11,008,500 - --------------------------------------------------------------------------------------------- New York Times Co. 174,100 11,392,669 ------------------ 29,934,769 - --------------------------------------------------------------------------------------------- RETAIL: GENERAL--5.5% CVS Corp. 410,000 30,365,625 - --------------------------------------------------------------------------------------------- Dayton Hudson Corp. 65,000 5,025,312 - --------------------------------------------------------------------------------------------- Federated Department Stores, Inc.(1) 170,000 7,968,750 - --------------------------------------------------------------------------------------------- Jones Apparel Group, Inc.(1) 253,400 13,937,000 - --------------------------------------------------------------------------------------------- Kellwood Co. 140,000 4,541,250 - --------------------------------------------------------------------------------------------- Tommy Hilfiger Corp.(1) 300,000 16,068,750 - --------------------------------------------------------------------------------------------- WestPoint Stevens, Inc.(1) 235,300 12,559,137 ------------------ 90,465,824
10 Oppenheimer Capital Appreciation Fund 11
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------- RETAIL: SPECIALTY--2.3% Bed Bath & Beyond, Inc.(1) 98,000 $ 4,232,375 - --------------------------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 160,500 8,947,875 - --------------------------------------------------------------------------------------------- Gap, Inc. 138,000 6,166,875 - --------------------------------------------------------------------------------------------- Intimate Brands, Inc., Cl. A 240,000 6,510,000 - --------------------------------------------------------------------------------------------- Ross Stores, Inc. 57,000 2,244,375 - --------------------------------------------------------------------------------------------- Tiffany & Co. 135,100 6,349,700 - --------------------------------------------------------------------------------------------- TJX Cos., Inc. 100,000 3,862,500 ------------------ 38,313,700 - --------------------------------------------------------------------------------------------- CONSUMER NON-CYCLICALS--13.1% - --------------------------------------------------------------------------------------------- FOOD--3.8% JP Foodservice, Inc.(1) 140,900 4,658,506 - --------------------------------------------------------------------------------------------- Keebler Foods Co.(1) 200,000 6,275,000 - --------------------------------------------------------------------------------------------- Kroger Co.(1) 290,000 12,252,500 - --------------------------------------------------------------------------------------------- McCormick & Co., Inc., Non-Vtg. 233,100 6,687,056 - --------------------------------------------------------------------------------------------- Richfood Holdings, Inc. 250,800 7,132,125 - --------------------------------------------------------------------------------------------- Safeway, Inc.(1) 750,000 26,156,250 ------------------ 63,161,437 - --------------------------------------------------------------------------------------------- HEALTHCARE/DRUGS--3.3% Lilly (Eli) & Co. 144,000 9,477,000 - --------------------------------------------------------------------------------------------- Pfizer, Inc. 300,000 26,550,000 - --------------------------------------------------------------------------------------------- Schering-Plough Corp. 235,000 17,874,687 ------------------ 53,901,687 - --------------------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES--5.1% Becton, Dickinson & Co. 140,000 8,907,500 - --------------------------------------------------------------------------------------------- First Health Group Corp.(1) 188,600 9,394,637 - --------------------------------------------------------------------------------------------- HEALTHSOUTH Corp.(1) 260,000 7,020,000 - --------------------------------------------------------------------------------------------- Lincare Holdings, Inc.(1) 229,800 14,915,456 - --------------------------------------------------------------------------------------------- Medtronic, Inc. 125,000 6,640,625 - --------------------------------------------------------------------------------------------- Minimed, Inc.(1) 98,100 4,120,200 - --------------------------------------------------------------------------------------------- Oxford Health Plans, Inc.(1) 188,900 3,246,719 - --------------------------------------------------------------------------------------------- Total Renal Care Holdings, Inc.(1) 322,936 10,394,502 - --------------------------------------------------------------------------------------------- VISX, Inc.(1) 125,200 2,942,200 - --------------------------------------------------------------------------------------------- WellPoint Health Networks, Inc.(1) 298,000 17,414,375 ------------------ 84,996,214 - --------------------------------------------------------------------------------------------- TOBACCO--0.9% Philip Morris Cos., Inc. 184,000 7,992,500 - --------------------------------------------------------------------------------------------- RJR Nabisco Holdings Corp. 195,000 6,739,687 ------------------ 14,732,187
11 Oppenheimer Capital Appreciation Fund 12 STATEMENT OF INVESTMENTS (Unaudited)(Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------- ENERGY--4.8% - --------------------------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS--3.0% BJ Services Co.(1) 170,000 $ 5,843,750 - --------------------------------------------------------------------------------------------- ENSCO International, Inc. 270,000 7,863,750 - --------------------------------------------------------------------------------------------- Global Marine, Inc.(1) 252,000 5,843,250 - --------------------------------------------------------------------------------------------- Halliburton Co. 283,200 13,168,800 - --------------------------------------------------------------------------------------------- Nabors Industries, Inc.(1) 120,000 2,745,000 - --------------------------------------------------------------------------------------------- Smith International, Inc. 75,000 3,993,750 - --------------------------------------------------------------------------------------------- Varco International, Inc.(1) 419,800 10,442,525 ------------------ 49,900,825 - --------------------------------------------------------------------------------------------- OIL-INTEGRATED--1.8% Camco International, Inc. 206,300 12,068,550 - --------------------------------------------------------------------------------------------- Mobil Corp. 80,000 5,795,000 - --------------------------------------------------------------------------------------------- Texaco, Inc. 90,000 5,023,125 - --------------------------------------------------------------------------------------------- USX-Marathon Group 190,000 6,566,875 ------------------ 29,453,550 - --------------------------------------------------------------------------------------------- FINANCIAL--17.0% - --------------------------------------------------------------------------------------------- BANKS--5.0% Banc One Corp. 465,371 26,293,490 - --------------------------------------------------------------------------------------------- BankBoston Corp. 113,000 11,264,687 - --------------------------------------------------------------------------------------------- Credito Italiano(1) 3,925,000 15,068,734 - --------------------------------------------------------------------------------------------- Fleet Financial Group, Inc. 59,900 4,720,869 - --------------------------------------------------------------------------------------------- NationsBank Corp. 85,500 5,856,750 - --------------------------------------------------------------------------------------------- Societe Generale 24,400 3,678,464 - --------------------------------------------------------------------------------------------- Star Banc Corp. 134,500 7,918,687 - --------------------------------------------------------------------------------------------- State Street Corp. 128,800 7,961,450 ------------------ 82,763,131 - --------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL--8.6% Associates First Capital Corp., Cl. A 155,000 12,400,000 - --------------------------------------------------------------------------------------------- CMAC Investment Corp. 158,200 10,599,400 - --------------------------------------------------------------------------------------------- Fannie Mae 112,000 7,147,000 - --------------------------------------------------------------------------------------------- Finova Group, Inc. 200,200 11,011,000 - --------------------------------------------------------------------------------------------- Franklin Resources, Inc. 224,000 11,424,000 - --------------------------------------------------------------------------------------------- Freddie Mac 220,000 10,395,000 - --------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 120,000 8,587,500 - --------------------------------------------------------------------------------------------- MGIC Investment Corp. 171,800 12,659,513 - --------------------------------------------------------------------------------------------- Morgan Stanley, Dean Witter, Discover & Co. 115,250 8,031,484 - --------------------------------------------------------------------------------------------- Price (T. Rowe) Associates, Inc. 120,900 8,024,738
12 Oppenheimer Capital Appreciation Fund 13
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL (CONTINUED) Schwab (Charles) Corp. 150,000 $ 5,662,500 - --------------------------------------------------------------------------------------------- Travelers Group, Inc. 667,500 37,213,125 ------------------ 143,155,260 - --------------------------------------------------------------------------------------------- INSURANCE--3.4% Allstate Corp. 70,000 6,527,500 - --------------------------------------------------------------------------------------------- Conseco, Inc. 312,000 14,644,500 - --------------------------------------------------------------------------------------------- Equitable Cos., Inc. 215,000 11,247,188 - --------------------------------------------------------------------------------------------- Executive Risk, Inc. 115,000 7,841,563 - --------------------------------------------------------------------------------------------- SunAmerica, Inc. 365,000 16,539,063 ------------------ 56,799,814 - --------------------------------------------------------------------------------------------- INDUSTRIAL--6.4% - --------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.6% Emerson Electric Co. 155,000 9,890,938 - --------------------------------------------------------------------------------------------- INDUSTRIAL MATERIALS--1.1% Rayonier, Inc. 157,700 6,682,538 - --------------------------------------------------------------------------------------------- Southdown, Inc. 167,300 10,707,200 ------------------ 17,389,738 - --------------------------------------------------------------------------------------------- INDUSTRIAL SERVICES--1.1% Cendant Corp.(1) 345,000 12,937,500 - --------------------------------------------------------------------------------------------- Corrections Corp. of America(1) 140,000 5,355,000 ------------------ 18,292,500 - --------------------------------------------------------------------------------------------- MANUFACTURING--2.0% AGCO Corp. 135,300 3,805,313 - --------------------------------------------------------------------------------------------- American Standard Cos., Inc.(1) 185,300 8,245,850 - --------------------------------------------------------------------------------------------- Cooper Industries, Inc. 115,000 6,454,375 - --------------------------------------------------------------------------------------------- Illinois Tool Works, Inc. 150,000 8,990,625 - --------------------------------------------------------------------------------------------- Sealed Air Corp.(1) 67,000 4,509,938 - --------------------------------------------------------------------------------------------- Steelcase, Inc., Cl. A(1) 12,000 432,750 ------------------ 32,438,851 - --------------------------------------------------------------------------------------------- TRANSPORTATION--1.6% Canadian Pacific Ltd. (New) 400,000 11,425,000 - --------------------------------------------------------------------------------------------- Kansas City Southern Industries, Inc. 405,000 15,060,938 ------------------ 26,485,938
13 Oppenheimer Capital Appreciation Fund 14 STATEMENT OF INVESTMENTS (Unaudited)(Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------- TECHNOLOGY--20.0% - --------------------------------------------------------------------------------------------- COMPUTER HARDWARE--5.9% Adaptec, Inc.(1) 621,900 $ 16,441,481 - --------------------------------------------------------------------------------------------- Cabletron Systems, Inc.(1) 412,000 6,386,000 - --------------------------------------------------------------------------------------------- Compaq Computer Corp. 530,000 16,993,125 - --------------------------------------------------------------------------------------------- EMC Corp.(1) 465,000 17,786,250 - --------------------------------------------------------------------------------------------- Gateway 2000, Inc.(1) 255,600 11,246,400 - --------------------------------------------------------------------------------------------- International Business Machines Corp. 75,000 7,832,813 - --------------------------------------------------------------------------------------------- Seagate Technology, Inc.(1) 467,000 11,353,938 - --------------------------------------------------------------------------------------------- Western Digital Corp.(1) 540,000 9,855,000 ------------------ 97,895,007 - --------------------------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES--8.5% BMC Software, Inc.(1) 225,600 17,258,400 - --------------------------------------------------------------------------------------------- Computer Associates International, Inc. 132,500 6,244,063 - --------------------------------------------------------------------------------------------- First Data Corp. 345,040 11,731,360 - --------------------------------------------------------------------------------------------- Gartner Group, Inc., Cl. A(1) 190,000 7,576,250 - --------------------------------------------------------------------------------------------- HBO & Co. 300,000 16,237,500 - --------------------------------------------------------------------------------------------- Microsoft Corp.(1) 547,600 46,409,100 - --------------------------------------------------------------------------------------------- Network Associates, Inc.(1) 212,100 13,706,963 - --------------------------------------------------------------------------------------------- Peoplesoft, Inc.(1) 271,200 12,119,250 - --------------------------------------------------------------------------------------------- Sungard Data Systems, Inc..(1) 296,700 10,143,431 ------------------ 141,426,317 - --------------------------------------------------------------------------------------------- ELECTRONICS--2.7% Analog Devices, Inc.(1) 103,333 3,332,489 - --------------------------------------------------------------------------------------------- LSI Logic Corp.(1) 220,000 5,211,250 - --------------------------------------------------------------------------------------------- Sanmina Corp.(1) 140,000 11,156,250 - --------------------------------------------------------------------------------------------- Teradyne, Inc.(1) 120,000 5,662,500 - --------------------------------------------------------------------------------------------- Texas Instruments, Inc. 205,000 11,864,375 - --------------------------------------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 152,800 7,759,375 ------------------ 44,986,239 - --------------------------------------------------------------------------------------------- TELECOMMUNICATIONS-TECHNOLOGY--2.9% Ascend Communications, Inc.(1) 74,100 2,774,119 - --------------------------------------------------------------------------------------------- Cisco Systems, Inc.(1) 190,000 12,516,250 - --------------------------------------------------------------------------------------------- Newbridge Networks Corp.(1) 154,000 3,619,000 - --------------------------------------------------------------------------------------------- Pairgain Technologies, Inc.(1) 135,000 2,716,875 - --------------------------------------------------------------------------------------------- Tellabs, Inc.(1) 445,200 26,878,950 ------------------ 48,505,194
14 Oppenheimer Capital Appreciation Fund 15
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------------------- UTILITIES--1.7% - --------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--0.1% Endesa SA, Sponsored ADR 80,000 $ 1,780,000 - --------------------------------------------------------------------------------------------- TELEPHONE UTILITIES--1.6% LCI International, Inc.(1) 340,000 11,220,000 - --------------------------------------------------------------------------------------------- WorldCom, Inc.(1) 420,000 16,038,750 ------------------ 27,258,750 ------------------ Total Common Stocks (Cost $913,366,686) 1,340,570,957
FACE AMOUNT ============================================================================================= U.S. GOVERNMENT OBLIGATIONS--0.3% - --------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 6.375%, 8/15/27 (Cost $4,810,033) $ 5,000,000 5,300,005 ============================================================================================= SHORT-TERM NOTES--6.0%(2) - --------------------------------------------------------------------------------------------- American Express Credit Corp., 5.53%, 3/26/98 50,000,000 49,807,986 - --------------------------------------------------------------------------------------------- Morgan (J.P.) & Co., Inc., 5.48%, 3/16/98 50,000,000 49,885,729 ----------------- Total Short-Term Notes (Cost $99,693,715) 99,693,715 ============================================================================================= REPURCHASE AGREEMENTS--12.2% - --------------------------------------------------------------------------------------------- Repurchase agreement with J.P. Morgan Securities, Inc., 5.63%, dated 2/27/98, to be repurchased at $202,795,100 on 3/2/98, collateralized by U.S. Treasury Bonds, 7.25%-12.50%, 11/15/08-5/15/16, with a value of $188,784,899, and U.S. Treasury Nts., 6.75%, 4/30/00, with a value of $18,913,560 (Cost $202,700,000) 202,700,000 202,700,000 - --------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $1,220,570,434) 99.3% 1,648,264,677 - --------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.7 11,251,610 ------------ ----------------- NET ASSETS 100.0)% $1,659,516,287 ============ =================
1. Non-income producing security. 2. Short-term notes are generally traded on a discount basis; the interest rate is the discount rate received by the Fund at the time of purchase. See accompanying Notes to Financial Statements. 15 Oppenheimer Capital Appreciation Fund 16 STATEMENT OF ASSETS AND LIABILITIES February 28, 1998 (Unaudited) ====================================================================================================== ASSETS Investments, at value (including repurchase agreements of $202,700,000) (cost $1,220,570,434)--see accompanying statement $1,648,264,677 - ------------------------------------------------------------------------------------------------------ Receivables: Investments sold 16,632,829 Shares of beneficial interest sold 7,617,028 Interest and dividends 894,894 - ------------------------------------------------------------------------------------------------------ Other 19,365 ---------------- Total assets 1,673,428,793 ====================================================================================================== LIABILITIES Bank overdraft 499,419 - ------------------------------------------------------------------------------------------------------ Payables and other liabilities: Investments purchased 11,376,395 Shares of beneficial interest redeemed 1,195,543 Distribution and service plan fees 406,706 Trustees' fees--Note 1 186,631 Transfer and shareholder servicing agent fees 123,878 Other 123,934 ---------------- Total liabilities 13,912,506 ====================================================================================================== NET ASSETS $1,659,516,287 ================ ====================================================================================================== COMPOSITION OF NET ASSETS Paid-in capital $1,170,768,261 - ------------------------------------------------------------------------------------------------------ Undistributed net investment income 1,359,612 - ------------------------------------------------------------------------------------------------------ Accumulated net realized gain on investments and foreign currency transactions 59,694,171 - ------------------------------------------------------------------------------------------------------ Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 427,694,243 ---------------- Net assets $1,659,516,287 ================
16 Oppenheimer Capital Appreciation Fund 17 ====================================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $1,360,927,359 and 36,196,086 shares of beneficial interest outstanding) $37.60 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $39.89 - ------------------------------------------------------------------------------------------------------ Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $121,091,019 and 3,276,058 shares of beneficial interest outstanding) $36.96 - ------------------------------------------------------------------------------------------------------ Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $58,360,201 and 1,593,106 shares of beneficial interest outstanding) $36.63 - ------------------------------------------------------------------------------------------------------ Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $119,137,708 and 3,170,705 shares of beneficial interest outstanding) $37.57
See accompanying Notes to Financial Statements. 17 Oppenheimer Capital Appreciation Fund 18 STATEMENT OF OPERATIONS For the Six Months Ended February 28, 1998 (Unaudited) ====================================================================================================== INVESTMENT INCOME Interest $ 7,419,372 - ------------------------------------------------------------------------------------------------------ Dividends (net of foreign withholding taxes of $12,582) 3,578,468 -------------- Total income 10,997,840 ====================================================================================================== EXPENSES Management fees--Note 4 4,586,441 - ------------------------------------------------------------------------------------------------------ Distribution and service plan fees--Note 4: Class A 1,059,805 Class B 397,365 Class C 225,977 - ------------------------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees--Note 4: Class A 797,492 Class B 51,604 Class C 29,425 Class Y 7,070 - ------------------------------------------------------------------------------------------------------ Registration and filing fees 110,392 - ------------------------------------------------------------------------------------------------------ Shareholder reports 97,495 - ------------------------------------------------------------------------------------------------------ Trustees' fees and expenses--Note 1 65,529 - ------------------------------------------------------------------------------------------------------ Custodian fees and expenses 36,459 - ------------------------------------------------------------------------------------------------------ Legal and auditing fees 35,722 - ------------------------------------------------------------------------------------------------------ Other 32,310 -------------- Total expenses 7,533,086 ====================================================================================================== NET INVESTMENT INCOME 3,464,754 ====================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 92,073,637 Foreign currency transactions (196,066) -------------- Net realized gain 91,877,571 - ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on: Investments 55,187,073 Translation of assets and liabilities denominated in foreign currencies (8,436) -------------- Net change 55,178,637 -------------- Net realized and unrealized gain 147,056,208 ====================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $150,520,962 ==============
See accompanying Notes to Financial Statements. 18 Oppenheimer Capital Appreciation Fund 19 STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, 1998 YEAR ENDED (UNAUDITED) AUGUST 31, 1997 ============================================================================================================= OPERATIONS Net investment income $ 3,464,754 $ 5,060,610 - ------------------------------------------------------------------------------------------------------------- Net realized gain 91,877,571 151,802,275 - ------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 55,178,637 184,592,120 -------------- -------------- Net increase in net assets resulting from operations 150,520,962 341,455,005 ============================================================================================================= DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (4,816,550) (4,636,803) Class B (23,637) (28,642) Class Y (353,880) -- - ------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (143,989,214) (94,222,488) Class B (9,885,848) (1,584,506) Class C (5,546,281) (1,485,205) Class Y (7,629,136) -- ============================================================================================================= BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions--Note 2: Class A 201,329,815 162,027,172 Class B 69,648,370 41,048,636 Class C 22,946,918 20,849,794 Class Y 119,585,364 -- ============================================================================================================= NET ASSETS Total increase 391,786,883 463,422,963 - ------------------------------------------------------------------------------------------------------------- Beginning of period 1,267,729,404 804,306,441 -------------- -------------- End of period (including undistributed net investment income of $1,359,612 and $3,088,925, respectively) $1,659,516,287 $1,267,729,404 ============== ==============
See accompanying Notes to Financial Statements. 19 Oppenheimer Capital Appreciation Fund 20 FINANCIAL HIGHLIGHTS
CLASS A ------------------------------------------------------------------------------ SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, YEAR ENDED AUGUST 31, DEC. 31, 1998 (UNAUDITED) 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) .09 .18 .11 .24 Net realized and unrealized gain (loss) 3.60 11.36 3.26 7.61 ---------- ---------- -------- -------- Total income (loss) from investment operations 3.69 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 $37.60 $38.63 $30.81 $27.44 ========== ========== ======== ======== ========================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(7) 10.89% 40.52% 12.28% 34.85% ========================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,360,927 $1,179,362 $788,504 $758,439 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,232,677 $ 985,813 $789,903 $538,210 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income (loss) 0.56%(8) 0.53% 0.55%(8) 1.08% Expenses 1.02%(8) 1.01% 1.09%(8) 1.03% - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(9) 34.1% 66.0% 45.2% 71.9% Average brokerage commission rate(10) $0.0529 $0.0625 $0.0595 $0.0578
1. For the period from November 3, 1997 (inception of offering) to February 28, 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. Less than $0.005 per share. 7. 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. 20 Oppenheimer Capital Appreciation Fund 21
CLASS B - --------------------------------------- ------------------------------------------------------ SIX MONTHS PERIOD ENDED ENDED FEBRUARY 28, YEAR ENDED AUGUST 31, DEC. 31, 1994 1993 1992 1998 (UNAUDITED) 1997 1996(4) 1995(5) ================================================================================================ $25.72 $25.25 $23.76 $38.07 $30.56 $27.37 $29.77 - ------------------------------------------------------------------------------------------------ .20 .13 .16 .02 .07 --(6) (.14) (.11) .86 2.28 3.45 11.05 3.19 .78 ----------- -------- -------- -------- ------- ------- ------- .09 .99 2.44 3.47 11.12 3.19 .64 - ------------------------------------------------------------------------------------------------ (.20) (.12) (.17) (.01) (.06) -- (.24) (2.98) (.40) (.78) (4.57) (3.55) -- (2.80) ----------- -------- -------- -------- ------- ------- ------- (3.18) (.52) (.95) (4.58) (3.61) -- (3.04) - ------------------------------------------------------------------------------------------------ $22.63 $25.72 $25.25 $36.96 $38.07 $30.56 $27.37 =========== ======== ======== ======== ======= ======= ======= ================================================================================================ 0.46% 3.93% 10.27% 10.41% 39.30% 11.65% 1.67% ================================================================================================ $301,698 $368,806 $401,256 $121,091 $52,220 $5,448 $2,751 - ------------------------------------------------------------------------------------------------ $325,003 $383,875 $362,295 $ 80,508 $23,678 $4,285 $ 661 - ------------------------------------------------------------------------------------------------ 0.72% 0.47% 0.69% (0.24)%(8) (0.33)% (0.25)%(8) (0.54)%(8) 1.16% 1.07% 1.09% 1.84%(8) 1.86% 1.94%(8) 2.62%(8) - ------------------------------------------------------------------------------------------------ 34.7% 22.9% 42.3% 34.1% 66.0% 45.2% 71.9% -- -- -- $0.0529 $0.0625 $0.0595 $0.0578
8. Annualized. 9. 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, 1998 were $533,900,609 and $392,724,190, respectively. 10. 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. Generally, non-U.S. commissions are lower than U.S. commissions when expressed as cents per share but higher when expressed as a percentage of transactions because of the lower per-share prices of many non-U.S. securities. 21 Oppenheimer Capital Appreciation Fund 22 FINANCIAL HIGHLIGHTS (Continued)
CLASS C --------------------------------------------------- SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED AUGUST 31, 1998 (UNAUDITED) 1997 1996(4) =============================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $37.76 $30.27 $27.11 - ----------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .01 .01 (.03) Net realized and unrealized gain (loss) 3.43 11.03 3.19 ------- ------- -------- Total income (loss) from investment operations 3.44 11.04 3.16 - ----------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income -- -- -- Distributions from net realized gain (4.57) (3.55) -- ------- ------- -------- Total dividends and distributions to shareholders (4.57) (3.55) -- - ----------------------------------------------------------------------------------------------- Net asset value, end of period $36.63 $37.76 $30.27 ======= ======= ======== =============================================================================================== TOTAL RETURN, AT NET ASSET VALUE(7) 10.41% 39.35% 11.66% =============================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $58,360 $36,148 $10,355 - ----------------------------------------------------------------------------------------------- Average net assets (in thousands) $45,722 $19,508 $ 9,053 - ----------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income (loss) (0.26)%(8) (0.32)% (0.30)%(8) Expenses 1.84%(8) 1.85% 1.93%(8) - ----------------------------------------------------------------------------------------------- Portfolio turnover rate(9) 34.1% 66.0% 45.2% Average brokerage commission rate(10) $0.0529 $0.0625 $0.0595
1. For the period from November 3, 1997 (inception of offering) to February 28, 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. Less than $0.005 per share. 7. 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. 22 Oppenheimer Capital Appreciation Fund 23
CLASS Y - --------------------------------------------------------- ------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, FEBRUARY 28, 1995 1994(3) 1993(2) 1998 (UNAUDITED)(1) ================================================================================ $22.50 $25.72 $25.92 $40.15 - -------------------------------------------------------------------------------- .09 -- (.01) .16 7.43 (.15) .31 2.04 ------- ------- ------- -------- 7.52 (.15) .30 2.20 - -------------------------------------------------------------------------------- (.11) (.09) (.10) (.21) (2.80) (2.98) (.40) (4.57) ------- ------- ------- ------- (2.91) (3.07) (.50) (4.78) - -------------------------------------------------------------------------------- $27.11 $22.50 $25.72 $37.57 ======= ======= ======= ======== ================================================================================ 33.56% (0.50)% 2.11% 6.80% ================================================================================ $7,237 $1,066 $8 $119,138 - -------------------------------------------------------------------------------- $3,792 $ 467 $6 $ 69,155 - -------------------------------------------------------------------------------- 0.19% (0.02)% (0.07)%(8) 0.94%(8) 1.90% 2.18% 2.18%(8) 0.76%(8) - -------------------------------------------------------------------------------- 71.9% 34.7% 22.9% 34.1% $0.0578 -- -- $0.0529
8. Annualized. 9. 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, 1998 were $533,900,609 and $392,724,190, respectively. 10. 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. Generally, non-U.S. commissions are lower than U.S. commissions when expressed as cents per share but higher when expressed as a percentage of transactions because of the lower per-share prices of many non-U.S. securities. See accompanying Notes to Financial Statements. 23 Oppenheimer Capital Appreciation Fund 24 NOTES TO FINANCIAL STATEMENTS (Unaudited) ============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Capital Appreciation Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to seek capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares are sold with a front-end sales charge. 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. 24 Oppenheimer Capital Appreciation Fund 25 ============================================================================== 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, 1998, a provision of $29,595 was made for the Fund's projected benefit obligations, and payments of $9,052 were made to retired trustees, resulting in an accumulated liability of $175,278 at February 28, 1998. - ------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------ 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. 25 Oppenheimer Capital Appreciation Fund 26 NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) ============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 FEBRUARY 28, 1998(1) YEAR ENDED AUGUST 31, 1997 ------------------------------- ------------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------ Class A: Sold 6,471,310 $ 244,331,600 8,550,231 $ 291,467,633 Dividends and distributions reinvested 4,096,352 139,030,192 3,066,971 94,554,716 Redeemed (4,901,627) (182,031,977) (6,683,422) (223,995,177) ---------- ------------- ---------- ------------- Net increase 5,666,035 $ 201,329,815 4,933,780 $ 162,027,172 ========== ============= ========== ============= - ------------------------------------------------------------------------------------------------------------------ Class B: Sold 2,091,675 $ 77,665,193 1,757,393 $ 59,666,544 Dividends and distributions reinvested 287,046 9,593,092 51,555 1,576,025 Redeemed (474,458) (17,609,915) (615,428) (20,193,933) ---------- ------------- ---------- ------------- Net increase 1,904,263 $ 69,648,370 1,193,520 $ 41,048,636 ========== ============= ========== ============= - ------------------------------------------------------------------------------------------------------------------ Class C: Sold 661,722 $ 24,489,339 776,983 $ 26,196,322 Dividends and distributions reinvested 163,654 5,420,214 45,592 1,381,908 Redeemed (189,655) (6,962,635) (207,324) (6,728,436) ---------- ------------- ---------- ------------- Net increase 635,721 $ 22,946,918 615,251 $ 20,849,794 ========== ============= ========== ============= - ------------------------------------------------------------------------------------------------------------------ Class Y: Sold 2,956,625 $ 112,370,098 -- $ -- Dividends and distributions reinvested 235,557 7,983,016 -- -- Redeemed (21,477) (767,750) -- -- ---------- ------------- ---------- ------------- Net increase 3,170,705 $ 119,585,364 -- $ -- ========== ============= ========== =============
1. For the six months ended February 28, 1998 for Class A, B and C shares and for the period November 3, 1997 (inception of offering) to February 28, 1998 for Class Y shares. 26 Oppenheimer Capital Appreciation Fund 27 ============================================================================== 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At February 28, 1998, net unrealized appreciation on investments of $427,694,243 was composed of gross appreciation of $456,414,870, and gross depreciation of $28,720,627. ============================================================================== 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 six months ended February 28, 1998, commissions (sales charges paid by investors) on sales of Class A shares totaled $1,753,903, of which $488,646 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 $1,992,377 and $168,692, respectively, of which $138,146 and $2,297, respectively, was paid to an affiliated broker/dealer for Class B and Class C. During the six months ended February 28, 1998, OFDI received contingent deferred sales charges of $75,986 and $11,359, 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 shareholder accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the six months ended February 28, 1998, OFDI paid $53,187 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 27 Oppenheimer Capital Appreciation Fund 28 NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) ============================================================================== 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The Fund has adopted a Distribution and Service Plan for Class B shares to compensate OFDI for its costs in distributing Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class B shares for its services rendered in distributing Class B shares. OFDI also receives a service fee of 0.25% per year to compensate dealers for providing personal services for accounts that hold Class B shares. Each fee is computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the six months ended February 28, 1998, OFDI paid $1,350 to an affiliated broker/dealer as compensation for Class B personal service and maintenance expenses and retained $360,706 as compensation for Class B sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. As of February 28, 1998, OFDI had incurred excess distribution and servicing costs of $3,207,271 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 on Class C shares for its services rendered in distributing Class C shares. OFDI also receives a service fee of 0.25% per year to reimburse dealers for providing personal services for accounts that hold Class C shares. Each fee is computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the six months ended February 28, 1998, OFDI paid $2,213 to an affiliated broker/dealer as reimbursement for Class C personal service and maintenance expenses and retained $143,989 as reimbursement for Class C sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. As of February 28, 1998, OFDI had incurred excess distribution and servicing costs of $461,117 for Class C. 28 Oppenheimer Capital Appreciation Fund 29 ============================================================================== 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statements of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Fund's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. ============================================================================== 6. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.0575% per annum. The Fund had no borrowings outstanding during the six months ended February 28, 1998. 29 Oppenheimer Capital Appreciation Fund 30 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 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 The financial statements included herein have been taken from the records of the Fund without examination of the independent auditors. This is a copy of a report to shareholders of Oppenheimer Capital Appreciation Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Capital Appreciation Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
30 Oppenheimer Capital Appreciation Fund 31 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 Growth &Income Multiple Strategies Fund Quest Opportunity Value Fund Convertible Securities Fund(1) 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(2) Pennsylvania Municipal Fund(2) Rochester Division: Florida Municipal Fund(2) Municipal Bond Fund Rochester Fund Municipals New Jersey Municipal Fund(2) Insured Municipal Fund Limited Term New York New York Municipal Fund(2) Intermediate Municipal Fund Municipal Fund =================================================================================================== MONEY MARKET FUNDS(3) - --------------------------------------------------------------------------------------------------- Money Market Fund Cash Reserves Fund
1. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth." 2. Available only to investors in certain states. 3. 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 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. 31 Oppenheimer Capital Appreciation Fund 32 INTERNET 24-hr access to account information. Online transactions now available WWW.OPPENHEIMERFUNDS.COM GENERAL INFORMATION Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-525-7048 ACCOUNT TRANSACTIONS Mon-Fri 8:30am-8pm ET 1-800-852-8457 PHONELINK 24-hr automated information and automated transactions 1-800-533-3310 TELECOMMUNICATION DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-2pm ET 1-800-843-4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 INFORMATION AND SERVICES - ------------------------------------------------------------------------------ As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number or by visiting our website. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number or website to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need 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, or visit us at our website at www.oppenheimerfunds.com--we're here to help. [OPPENHEIMERFUNDS LOGO] RS0320.001.0298 April 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----