-----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, Tuj9J/b2Arfh1SL7RI6bx2ajAFohahnm61QTuiVfa/gb0dVACBZtVDMnkZeaXb3m sYwhpGxaUEawLvSdkmRUDw== 0000950133-02-001682.txt : 20020430 0000950133-02-001682.hdr.sgml : 20020430 ACCESSION NUMBER: 0000950133-02-001682 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020228 FILED AS OF DATE: 20020429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER CAPITAL APPRECIATION FUND CENTRAL INDEX KEY: 0000319767 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: 02625057 BUSINESS ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 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 q76882n-30d.txt OPPENHEIMER CAPITAL APPRECIATION FUND FORM N-30D [PHOTO] SEMI-ANNUAL REPORT FEBRUARY 28, 2002 Oppenheimer CAPITAL APPRECIATION FUND [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST REPORT HIGHLIGHTS FUND OBJECTIVE Oppenheimer Capital Appreciation Fund seeks capital appreciation.
CONTENTS 1 Letter to Shareholders 3 An Interview with Your Fund's Manager 7 FINANCIAL STATEMENTS 31 Officers and Trustees
- -------------------------------------------- CUMULATIVE TOTAL RETURNS* For the 6-Month Period Ended 2/28/02 Without With Sales Chg. Sales Chg. - -------------------------------------------- Class A -6.65% -12.02% - -------------------------------------------- Class B -6.99 -11.53 - -------------------------------------------- Class C -6.97 -7.88 - -------------------------------------------- Class N -6.75 -7.66 - -------------------------------------------- Class Y -6.53 - --------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS* For the 1-Year Period Ended 2/28/02 Without With Sales Chg. Sales Chg. - -------------------------------------------- Class A -15.52% -20.38% - -------------------------------------------- Class B -16.15 -20.24 - -------------------------------------------- Class C -16.15 -16.97 - -------------------------------------------- Class N -16.02 -16.84 - -------------------------------------------- Class Y -15.23 - --------------------------------------------
SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. *SEE NOTES ON PAGE 6 FOR FURTHER DETAILS. LETTER TO SHAREHOLDERS [PHOTO] JOHN V. MURPHY PRESIDENT OPPENHEIMER CAPITAL APPRECIATION FUND DEAR SHAREHOLDER, 2001 marked a year of unprecedented volatility, uncertainty and change. At OppenheimerFunds, we understand that these are challenging times. To look ahead, we must learn to reflect on the unimaginable year that has just passed. For the first time in a decade, the United States economy slipped into a recession. Sharply reduced corporate capital spending and weakened consumer confidence contributed to an economic slowdown. A key factor to remember is that the recession is a natural part of the economic cycle and is following one of the longest periods of growth in U.S. history. In many ways, we are on the road to recovery. Apart from the monetary and fiscal stimuli the government and the Federal Reserve Bank have provided, the market has refocused on the importance of company fundamentals across all industries. The tragedy of September 11 brought great uncertainty to our lives. Yet "America is successful because of the hard work and creativity and enterprise of our people," declared President George W. Bush. "These were the strengths of our economy before September 11, and they are our strengths today." While the volatility of the economy is beyond anyone's control, there are steps you can take during these challenging times to help protect your investments. Most importantly, work closely with your financial advisor. Your advisor can help maintain balance in your portfolio, while ensuring your investments have a long-term purpose and address your goals. A strategy that manages risk and the potential for rewards across many sectors of the market is one of the best ways to diversify your portfolio. You should also maintain an appropriate level of awareness about your funds. Fund communications, including this report, can help you better understand the objectives, strategies and performance of your fund. To supplement these communications, we encourage you to use our website, www.oppenheimerfunds.com, for timely fund information. 1 OPPENHEIMER CAPITAL APPRECIATION FUND LETTER TO SHAREHOLDERS This year will be full of new challenges. At OppenheimerFunds we pledge to provide you with the seasoned expertise and management experience that should help pave the way for a brighter future. Our vision is clear and focused, we are well positioned for the future and we hold a commitment to you, our shareholders, that we shall keep your long-term interests always in mind. In the face of adversity, we stood strong and proud. And despite the challenges we faced, we came together as never before with a greater sense of strength and resolve. I thank you for your continued support and confidence. We hope that you can see the strength and spirit that has led and continues to lead us towards a bright future. And we look forward to sharing with you the strength, expertise and resolve that make OppenheimerFunds an integral part of The Right Way to Invest. Sincerely, /s/ JOHN V. MURPHY John V. Murphy March 21, 2002 THESE GENERAL MARKET VIEWS REPRESENT OPINIONS OF OPPENHEIMERFUNDS, INC. AND ARE NOT INTENDED TO PREDICT PERFORMANCE OF THE SECURITIES MARKETS OR ANY PARTICULAR FUND. SPECIFIC INFORMATION THAT APPLIES TO YOUR FUND IS CONTAINED IN THE PAGES THAT FOLLOW. 2 OPPENHEIMER CAPITAL APPRECIATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGER [PHOTO] PORTFOLIO MANAGEMENT TEAM: EDWARD AMBERGER JANE PUTNAM (PORTFOLIO MANAGER) HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE DURING THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 28, 2002? A. The Fund's performance slipped during the period as a result of high levels of market volatility resulting from economic and political turbulence. While we are disappointed with these results, we believe they represent short-term fluctuations rather than long-term trends. We remain confident that our disciplined, growth-at-a-reasonable-price investment strategy will continue to deliver the long-term results our investors have come to expect. WHAT MADE THIS SUCH A VOLATILE PERIOD? The past six months saw a continuation of the economic downturn that began in mid-2000. Weakness in several areas of the economy drove the United States into recession after nearly a decade of growth, and pushed the stock market into bear territory. In the past, defensive stocks have usually performed relatively well in similar environments. However, during the recent period, certain traditionally defensive areas, such as cable operators and pharmaceutical companies, declined along with the rest of the market. The September 11 events exacerbated the unfavorable climate for most stocks. While stock prices rebounded somewhat in the months that followed, most broad indices barely recovered the ground they lost in the immediate aftermath of the attacks. As 2002 began, many growth-oriented enterprises reported unclear prospects for near-term earnings and revenues. Accounting irregularities surfaced at a few well-known companies, causing them to file for bankruptcy and raising broader concerns regarding the integrity of corporate reporting procedures. On the brighter side, most growth-oriented stocks proved more resilient in the past six months than during the prior reporting period. Falling interest rates and improving economic indicators led many investors to anticipate a return to economic growth in 2002. Market strength broadened across multiple industry sectors, including certain areas of consumer cyclicals, consumer staples, select financials and defense-related enterprises. 3 OPPENHEIMER CAPITAL APPRECIATION FUND AN INTERVIEW WITH YOUR FUND'S MANAGER
- ------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE For the Periods Ended 3/31/02(2) Class A 1-Year 5-Year 10-Year - ------------------------------------------------- - -10.72% 12.37% 13.58% Class B Since 1-Year 5-Year Inception - ------------------------------------------------- - -10.58% 12.57% 13.97% Class C Since 1-Year 5-Year Inception - ------------------------------------------------- - -6.88% 12.82% 14.33% Class N Since 1-Year 5-Year Inception - ------------------------------------------------- - -6.45% N/A -11.64% Class Y Since 1-Year 5-Year Inception - ------------------------------------------------- - -4.96% N/A 9.28% - -------------------------------------------------
HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS? Our investment strategy remained consistently focused on seeking individual stocks that offered attractive growth potential at a reasonable price. However, disappointing stock performance in a variety of industry areas slightly undermined the Fund's returns during the period. In most instances, these disappointments were related to clearly identifiable industry-wide problems. For example, just as media and advertising companies were showing signs of recovery after 18 months of decline, the industry was hurt by a sharp downturn in advertising in the wake of September 11. Several of the Fund's investments, including AOL Time Warner, Inc. and Viacom, Inc., suffered as a result. In other areas, stock prices fluctuated for less apparent reasons. For example, cable company holdings, such as Comcast Corp., declined despite strong fundamentals, as did several of the Fund's pharmaceutical investments.(1) The Fund achieved better results in a variety of other areas. Among consumer cyclicals, our holdings of restaurant and retail stocks benefited from strong levels of consumer spending in spite of the weak economic climate. Consumer staples, particularly brewer Anheuser-Busch Cos., Inc., delivered strong performance on the basis of their attractive defensive characteristics.1 We also achieved above-average performance among financials, largely due to our decision to avoid most credit-card companies and other sub-prime lenders in favor of insurers and government agencies. Finally, the Fund benefited from its larger-than-average holdings in the defense area, a sector that benefited from America's response to the September 11 events. WHAT IS YOUR OUTLOOK OVER THE COMING MONTHS? We see reasonably good evidence to suggest that the economy may be experiencing the early stages of a recovery. A stronger-than-expected rise in the nation's fourth-quarter 2001 gross domestic product and positive earnings revisions from several companies indicates to us that a return to growth may be 1. The Fund's holdings and allocations are subject to change. 2. See Notes on page 6 for further details. 4 OPPENHEIMER CAPITAL APPRECIATION FUND SECTOR ALLOCATION(3) [PIECHART] - - Consumer Staples 20.9% - - Technology 17.9 - - Financial 16.4 - - Consumer Cyclicals 13.7 - - Healthcare 11.8 - - Capital Goods 6.7 - - Energy 6.4 - - Utilities 2.8 - - Basic Materials 2.3 - - Communication Services 0.8 - - Transportation 0.3
imminent. At the same time, uncertainties remain regarding the precise timing, strength and shape of such a recovery. Accordingly, we have taken advantage of recent weaknesses in attractive technology, media, financial and other stocks by adding to holdings and thereby positioning the Fund to benefit more strongly from an improving economy. At the same time, we have retained some exposure to defensive positions to cushion the effects of unexpected disappointments. Going forward, we remain rigorously committed to our fundamental approach of seeking growth at the right price. In today's volatile economic environment, we believe our disciplined approach and emphasis on selecting stocks one company at a time should serve investors well. That's why Oppenheimer Capital Appreciation Fund continues to be part of The Right Way to Invest.
TOP FIVE COMMON STOCK INDUSTRIES(4) - ---------------------------------------------------------- Diversified Financial 8.6% - ---------------------------------------------------------- Healthcare/Drugs 7.1 - ---------------------------------------------------------- Broadcasting 6.9 - ---------------------------------------------------------- Computer Software 6.3 - ---------------------------------------------------------- Electronics 5.0
TOP TEN COMMON STOCK HOLDINGS(4) - ---------------------------------------------------------- Microsoft Corp. 3.3% - ---------------------------------------------------------- Comcast Corp., Cl. A Special 3.3 - ---------------------------------------------------------- Viacom, Inc., Cl. B 2.9 - ---------------------------------------------------------- AOL Time Warner, Inc. 2.4 - ---------------------------------------------------------- Citigroup, Inc. 2.4 - ---------------------------------------------------------- Anheuser-Busch Cos., Inc. 1.7 - ---------------------------------------------------------- Nokia Corp., Sponsored ADR, A Shares 1.7 - ---------------------------------------------------------- Pfizer, Inc. 1.6 - ---------------------------------------------------------- Exxon Mobil Corp. 1.6 - ---------------------------------------------------------- Freddie Mac 1.5
3. Portfolio is subject to change. Percentages are as of February 28, 2002, and are based on total market value of common stock holdings. 4. Portfolio is subject to change. Percentages are as of February 28, 2002, and are based on net assets. 5 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES IN REVIEWING PERFORMANCE, PLEASE REMEMBER THAT PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATIONS, AND CURRENT PERFORMANCE MAY BE MORE OR LESS THAN THE RESULTS SHOWN. FOR UPDATES ON THE FUND'S PERFORMANCE, VISIT OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not reflect the deductions of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.525.7048 or visit the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM. Read the prospectus carefully before you invest or send money. CLASS A shares of the Fund were first publicly offered on 1/22/81. Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 11/1/95. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Class B shares convert to Class A shares 72 months after purchase, the "since inception" return for Class B uses Class A performance for the period after conversion. Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 12/1/93. Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. For this reason, the cumulative total return information shown in this report is not annualized. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% (since inception) if redeemed within the first 18 months. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Fund were first publicly offered on 11/3/97. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 6 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS FEBRUARY 28, 2002 / UNAUDITED
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ COMMON STOCKS--89.6% - -------------------------------------------------------------------------------------------------------------------------------- BASIC MATERIALS--2.1% - -------------------------------------------------------------------------------------------------------------------------------- CHEMICALS--1.5% Air Products & Chemicals, Inc. 570,000 $ 27,645,000 - -------------------------------------------------------------------------------------------------------------------------------- IMC Global, Inc. 425,600 5,660,480 - -------------------------------------------------------------------------------------------------------------------------------- International Flavors & Fragrances, Inc. 445,400 15,344,030 - -------------------------------------------------------------------------------------------------------------------------------- Mykrolis Corp.(1) 201,893 2,140,066 - -------------------------------------------------------------------------------------------------------------------------------- Praxair, Inc. 700,000 40,530,000 ---------------- 91,319,576 - -------------------------------------------------------------------------------------------------------------------------------- PAPER--0.6% International Paper Co. 849,100 37,148,125 - -------------------------------------------------------------------------------------------------------------------------------- CAPITAL GOODS--6.0% - -------------------------------------------------------------------------------------------------------------------------------- AEROSPACE/DEFENSE--1.2% Boeing Co. 265,300 12,193,188 - -------------------------------------------------------------------------------------------------------------------------------- Northrop Grumman Corp. 321,000 34,359,840 - -------------------------------------------------------------------------------------------------------------------------------- Raytheon Co. 674,000 26,077,060 ---------------- 72,630,088 - -------------------------------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.5% Vishay Intertechnology, Inc.(1) 1,701,900 30,140,649 - -------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL SERVICES--1.1% Philadelphia Suburban Corp. 197,875 4,594,657 - -------------------------------------------------------------------------------------------------------------------------------- Waste Management, Inc. 2,334,900 61,431,219 ---------------- 66,025,876 - -------------------------------------------------------------------------------------------------------------------------------- MANUFACTURING--3.2% Flextronics International Ltd.(1) 1,954,700 28,030,398 - -------------------------------------------------------------------------------------------------------------------------------- Honeywell International, Inc. 1,485,800 56,638,696 - -------------------------------------------------------------------------------------------------------------------------------- Mettler-Toledo International, Inc.(1) 559,650 27,115,042 - -------------------------------------------------------------------------------------------------------------------------------- Millipore Corp. 298,300 15,571,260 - -------------------------------------------------------------------------------------------------------------------------------- Sanmina-SCI Corp.(1) 3,920,000 39,788,000 - -------------------------------------------------------------------------------------------------------------------------------- Tyco International Ltd. 1,071,691 31,186,208 ---------------- 198,329,604 - -------------------------------------------------------------------------------------------------------------------------------- COMMUNICATION SERVICES--0.8% - -------------------------------------------------------------------------------------------------------------------------------- TELECOMMUNICATIONS: LONG DISTANCE--0.2% Sprint Corp. (Fon Group) 498,800 7,028,092 - -------------------------------------------------------------------------------------------------------------------------------- WorldCom, Inc./WorldCom Group(1) 613,500 4,613,520 ---------------- 11,641,612
7 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ TELECOMMUNICATIONS: WIRELESS--0.6% Sprint Corp. (PCS Group)(1) 933,900 $ 8,638,575 - -------------------------------------------------------------------------------------------------------------------------------- Vodafone Group plc, Sponsored ADR 1,404,300 26,681,700 ---------------- 35,320,275 - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER CYCLICALS--12.2% - -------------------------------------------------------------------------------------------------------------------------------- AUTOS & HOUSING--0.4% Ethan Allen Interiors, Inc. 652,760 26,456,363 - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER SERVICES--1.3% Omnicom Group, Inc. 837,300 78,321,042 - -------------------------------------------------------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--2.4% Carnival Corp. 2,960,900 80,802,961 - -------------------------------------------------------------------------------------------------------------------------------- Harley-Davidson, Inc. 753,400 38,619,284 - -------------------------------------------------------------------------------------------------------------------------------- Mattel, Inc. 1,261,500 23,905,425 - -------------------------------------------------------------------------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc. 180,000 6,480,000 ---------------- 149,807,670 - -------------------------------------------------------------------------------------------------------------------------------- MEDIA--4.9% AOL Time Warner, Inc.(1) 5,927,900 147,011,920 - -------------------------------------------------------------------------------------------------------------------------------- Kadant, Inc.(1) 223,096 2,900,248 - -------------------------------------------------------------------------------------------------------------------------------- McGraw-Hill Cos., Inc. (The) 1,350,000 88,830,000 - -------------------------------------------------------------------------------------------------------------------------------- News Corp. Ltd. (The), Sponsored ADR 2,440,900 62,438,222 ---------------- 301,180,390 - -------------------------------------------------------------------------------------------------------------------------------- RETAIL: GENERAL--1.2% Costco Wholesale Corp.(1) 1,200,000 49,512,000 - -------------------------------------------------------------------------------------------------------------------------------- Dollar Tree Stores, Inc.(1) 730,000 23,389,200 ---------------- 72,901,200 - -------------------------------------------------------------------------------------------------------------------------------- RETAIL: SPECIALTY--2.0% Gap, Inc. 1,800,000 21,546,000 - -------------------------------------------------------------------------------------------------------------------------------- Nike, Inc., Cl. B 416,600 24,521,076 - -------------------------------------------------------------------------------------------------------------------------------- Rite Aid Corp.(1) 1,020,000 3,406,800 - -------------------------------------------------------------------------------------------------------------------------------- Target Corp. 1,000,000 41,900,000 - -------------------------------------------------------------------------------------------------------------------------------- Tiffany & Co. 955,200 31,340,112 ---------------- 122,713,988 - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER STAPLES--18.7% - -------------------------------------------------------------------------------------------------------------------------------- BEVERAGES--3.4% Anheuser-Busch Cos., Inc. 2,058,900 104,695,065 - -------------------------------------------------------------------------------------------------------------------------------- Coca-Cola Enterprises, Inc. 1,239,500 21,604,485 - -------------------------------------------------------------------------------------------------------------------------------- PepsiCo, Inc. 1,645,000 83,072,500 ---------------- 209,372,050
8 OPPENHEIMER CAPITAL APPRECIATION FUND
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ BROADCASTING--6.9% Adelphia Communications Corp., Cl. A(1) 1,100,000 $ 24,145,000 - -------------------------------------------------------------------------------------------------------------------------------- Cablevision Systems Corp., Cl. A(1) 849,100 30,482,690 - -------------------------------------------------------------------------------------------------------------------------------- Clear Channel Communications, Inc.(1) 1,673,640 78,025,097 - -------------------------------------------------------------------------------------------------------------------------------- Comcast Corp., Cl. A Special(1) 6,000,050 203,221,694 - -------------------------------------------------------------------------------------------------------------------------------- Fox Entertainment Group, Inc., A Shares(1) 849,100 18,934,930 - -------------------------------------------------------------------------------------------------------------------------------- Hispanic Broadcasting Corp.(1) 1,167,425 30,434,770 - -------------------------------------------------------------------------------------------------------------------------------- Univision Communications, Inc., Cl. A(1) 729,200 30,072,208 - -------------------------------------------------------------------------------------------------------------------------------- ValueVision International, Inc., Cl. A(1) 323,900 5,992,150 --------------- 421,308,539 - -------------------------------------------------------------------------------------------------------------------------------- ENTERTAINMENT--4.8% Applebee's International, Inc. 620,000 22,369,600 - -------------------------------------------------------------------------------------------------------------------------------- Brinker International, Inc.(1) 955,200 32,801,568 - -------------------------------------------------------------------------------------------------------------------------------- Royal Caribbean Cruises Ltd. 2,865,400 52,952,592 - -------------------------------------------------------------------------------------------------------------------------------- Ruby Tuesday, Inc. 480,000 9,696,000 - -------------------------------------------------------------------------------------------------------------------------------- Viacom, Inc., Cl. B(1) 3,800,000 176,890,000 --------------- 294,709,760 - -------------------------------------------------------------------------------------------------------------------------------- FOOD--1.9% Dean Foods Co.(1) 592,200 42,442,974 - -------------------------------------------------------------------------------------------------------------------------------- Diageo plc, Sponsored ADR 437,600 21,131,704 - -------------------------------------------------------------------------------------------------------------------------------- General Mills, Inc. 769,100 35,555,493 - -------------------------------------------------------------------------------------------------------------------------------- Performance Food Group Co.(1) 56,400 2,103,156 - -------------------------------------------------------------------------------------------------------------------------------- Sysco Corp. 610,000 18,037,700 --------------- 119,271,027 - -------------------------------------------------------------------------------------------------------------------------------- FOOD & DRUG RETAILERS--1.5% Kroger Co. (The)(1) 1,337,200 29,618,980 - -------------------------------------------------------------------------------------------------------------------------------- Safeway, Inc.(1) 1,460,300 62,763,694 --------------- 92,382,674 - -------------------------------------------------------------------------------------------------------------------------------- HOUSEHOLD GOODS--0.2% Estee Lauder Cos., Inc. (The), Cl. A 374,600 11,687,520 - -------------------------------------------------------------------------------------------------------------------------------- ENERGY--5.7% - -------------------------------------------------------------------------------------------------------------------------------- ENERGY SERVICES--1.9% BJ Services Co.(1) 1,082,500 35,884,875 - -------------------------------------------------------------------------------------------------------------------------------- Halliburton Co. 912,700 15,023,042 - -------------------------------------------------------------------------------------------------------------------------------- Noble Drilling Corp.(1) 464,210 16,354,118 - -------------------------------------------------------------------------------------------------------------------------------- PanCanadian Energy Corp. 1,030,780 29,712,418 - -------------------------------------------------------------------------------------------------------------------------------- Rowan Cos., Inc.(1) 583,800 10,887,870 - -------------------------------------------------------------------------------------------------------------------------------- Varco International, Inc.(1) 636,700 10,187,200 --------------- 118,049,523
9 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ OIL: DOMESTIC--2.6% Amerada Hess Corp. 742,900 $ 51,460,683 - -------------------------------------------------------------------------------------------------------------------------------- Exxon Mobil Corp. 2,334,900 96,431,370 - -------------------------------------------------------------------------------------------------------------------------------- Suncor Energy, Inc. 301,770 10,064,030 --------------- 157,956,083 - -------------------------------------------------------------------------------------------------------------------------------- OIL: INTERNATIONAL--1.2% TotalFinaElf SA, Sponsored ADR 1,018,800 74,932,740 - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL--14.6% - -------------------------------------------------------------------------------------------------------------------------------- BANKS--2.4% Bank of America Corp. 827,800 52,937,810 - -------------------------------------------------------------------------------------------------------------------------------- Bank One Corp. 1,429,000 51,215,360 - -------------------------------------------------------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 1,287,300 37,653,525 - -------------------------------------------------------------------------------------------------------------------------------- TCF Financial Corp. 86,700 4,456,380 --------------- 146,263,075 - -------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL--8.6% Citigroup, Inc. 3,194,400 144,546,600 - -------------------------------------------------------------------------------------------------------------------------------- Concord EFS, Inc.(1) 1,168,540 35,091,256 - -------------------------------------------------------------------------------------------------------------------------------- Fannie Mae 742,900 58,131,925 - -------------------------------------------------------------------------------------------------------------------------------- Freddie Mac 1,400,900 89,293,366 - -------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The) 360,000 29,138,400 - -------------------------------------------------------------------------------------------------------------------------------- iShares Russell 2000 Index Fund 250,000 23,300,000 - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 1,649,000 80,998,880 - -------------------------------------------------------------------------------------------------------------------------------- Schwab (Charles) Corp. 2,865,400 37,364,816 - -------------------------------------------------------------------------------------------------------------------------------- USA Education, Inc. 356,200 33,037,550 --------------- 530,902,793 - -------------------------------------------------------------------------------------------------------------------------------- INSURANCE--2.6% American International Group, Inc. 1,050,700 77,720,279 - -------------------------------------------------------------------------------------------------------------------------------- Everest Re Group Ltd. 207,800 15,138,230 - -------------------------------------------------------------------------------------------------------------------------------- St. Paul Cos., Inc. 412,600 20,176,140 - -------------------------------------------------------------------------------------------------------------------------------- Willis Group Holdings Ltd.(1) 149,890 4,045,531 - -------------------------------------------------------------------------------------------------------------------------------- XL Capital Ltd., Cl. A 470,000 44,772,200 --------------- 161,852,380 - -------------------------------------------------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS--1.0% Boston Properties, Inc. 981,600 36,976,872 - -------------------------------------------------------------------------------------------------------------------------------- Host Marriott Corp. 2,456,800 26,533,440 --------------- 63,510,312
10 OPPENHEIMER CAPITAL APPRECIATION FUND
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ HEALTHCARE--10.7% - -------------------------------------------------------------------------------------------------------------------------------- HEALTHCARE/DRUGS--7.1% Abbott Laboratories 700,000 $ 39,585,000 - -------------------------------------------------------------------------------------------------------------------------------- Amgen, Inc.(1) 312,500 18,118,750 - -------------------------------------------------------------------------------------------------------------------------------- Anthem, Inc.(1) 291,200 16,918,720 - -------------------------------------------------------------------------------------------------------------------------------- Genzyme Corp. (General Division)(1) 1,294,700 57,458,786 - -------------------------------------------------------------------------------------------------------------------------------- GlaxoSmithKline plc, ADR 955,200 46,757,040 - -------------------------------------------------------------------------------------------------------------------------------- Humana, Inc.(1) 560,000 7,336,000 - -------------------------------------------------------------------------------------------------------------------------------- IDEC Pharmaceuticals Corp.(1) 478,090 30,033,614 - -------------------------------------------------------------------------------------------------------------------------------- Johnson & Johnson 1,300,000 79,170,000 - -------------------------------------------------------------------------------------------------------------------------------- Medimmune, Inc.(1) 104,600 4,312,658 - -------------------------------------------------------------------------------------------------------------------------------- Perrigo Co.(1) 1,297,370 14,517,570 - -------------------------------------------------------------------------------------------------------------------------------- Pfizer, Inc. 2,398,500 98,242,560 - -------------------------------------------------------------------------------------------------------------------------------- Serono SA, Sponsored ADR 1,107,400 20,763,750 ---------------- 433,214,448 - -------------------------------------------------------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES--3.6% Applera Corp./Applied Biosystems Group 1,484,300 33,545,180 - -------------------------------------------------------------------------------------------------------------------------------- Biomet, Inc. 200,000 6,112,000 - -------------------------------------------------------------------------------------------------------------------------------- Caremark Rx, Inc.(1) 1,100,000 19,195,000 - -------------------------------------------------------------------------------------------------------------------------------- Covance, Inc.(1) 1,028,300 18,252,325 - -------------------------------------------------------------------------------------------------------------------------------- HEALTHSOUTH Corp.(1) 800,000 9,528,000 - -------------------------------------------------------------------------------------------------------------------------------- McKesson Corp. 930,500 32,800,125 - -------------------------------------------------------------------------------------------------------------------------------- Medtronic, Inc. 600,000 26,724,000 - -------------------------------------------------------------------------------------------------------------------------------- Oxford Health Plans, Inc.(1) 600,000 21,810,000 - -------------------------------------------------------------------------------------------------------------------------------- PerkinElmer, Inc. 747,380 17,189,740 - -------------------------------------------------------------------------------------------------------------------------------- Quest Diagnostics, Inc.(1) 55,200 3,914,232 - -------------------------------------------------------------------------------------------------------------------------------- Stryker Corp. 485,300 29,845,950 ---------------- 218,916,552 - -------------------------------------------------------------------------------------------------------------------------------- TECHNOLOGY--16.1% - -------------------------------------------------------------------------------------------------------------------------------- COMPUTER HARDWARE--0.2% Adaptec, Inc.(1) 700,000 7,980,000 - -------------------------------------------------------------------------------------------------------------------------------- Seagate Technology International, Inc.(1,2) 1,000,000 -- - -------------------------------------------------------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd., ADR 125,000 2,031,250 - -------------------------------------------------------------------------------------------------------------------------------- 10,011,250 - -------------------------------------------------------------------------------------------------------------------------------- COMPUTER SERVICES--1.2% Affiliated Computer Services, Inc., Cl. A(1) 509,800 24,934,318 - -------------------------------------------------------------------------------------------------------------------------------- First Data Corp. 580,000 47,281,600 ---------------- 72,215,918
11 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ COMPUTER SOFTWARE--6.3% Cadence Design Systems, Inc.(1) 1,576,000 $ 33,332,400 - -------------------------------------------------------------------------------------------------------------------------------- Check Point Software Technologies Ltd.(1) 801,350 22,373,692 - -------------------------------------------------------------------------------------------------------------------------------- Electronic Arts, Inc.(1) 767,530 41,308,465 - -------------------------------------------------------------------------------------------------------------------------------- Microsoft Corp.(1) 3,500,000 204,190,000 - -------------------------------------------------------------------------------------------------------------------------------- Peoplesoft, Inc.(1) 1,130,000 32,849,100 - -------------------------------------------------------------------------------------------------------------------------------- SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung), Sponsored ADR 800,000 27,336,000 - -------------------------------------------------------------------------------------------------------------------------------- Veritas Software Corp.(1) 729,200 25,879,308 ---------------- 387,268,965 - -------------------------------------------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--3.4% CIENA Corp.(1) 910,400 7,064,704 - -------------------------------------------------------------------------------------------------------------------------------- Cisco Systems, Inc.(1) 3,555,300 50,734,131 - -------------------------------------------------------------------------------------------------------------------------------- Extreme Networks, Inc.(1) 1,452,700 9,137,483 - -------------------------------------------------------------------------------------------------------------------------------- L.M. Ericsson Telephone Co., ADR, Cl. B 1,661,100 7,009,842 - -------------------------------------------------------------------------------------------------------------------------------- Lucent Technologies, Inc. 1,974,000 11,034,660 - -------------------------------------------------------------------------------------------------------------------------------- Nokia Corp., Sponsored ADR, A Shares 5,000,000 103,850,000 - -------------------------------------------------------------------------------------------------------------------------------- QUALCOMM, Inc.(1) 530,600 17,642,450 ---------------- 206,473,270 - -------------------------------------------------------------------------------------------------------------------------------- ELECTRONICS--5.0% Analog Devices, Inc.(1) 467,000 17,377,070 - -------------------------------------------------------------------------------------------------------------------------------- Atmel Corp.(1) 960,000 6,940,800 - -------------------------------------------------------------------------------------------------------------------------------- Cypress Semiconductor Corp.(1) 1,663,500 33,020,475 - -------------------------------------------------------------------------------------------------------------------------------- Intel Corp. 1,550,000 44,252,500 - -------------------------------------------------------------------------------------------------------------------------------- International Rectifier Corp.(1) 965,800 35,464,176 - -------------------------------------------------------------------------------------------------------------------------------- Micron Technology, Inc.(1) 1,379,700 44,357,355 - -------------------------------------------------------------------------------------------------------------------------------- National Semiconductor Corp.(1) 1,082,500 27,224,875 - -------------------------------------------------------------------------------------------------------------------------------- RF Micro Devices, Inc.(1) 1,822,900 28,510,156 - -------------------------------------------------------------------------------------------------------------------------------- Texas Instruments, Inc. 1,030,100 30,233,435 - -------------------------------------------------------------------------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 1,494,800 10,493,496 - -------------------------------------------------------------------------------------------------------------------------------- Waters Corp.(1) 920,000 28,750,000 ---------------- 306,624,338 - -------------------------------------------------------------------------------------------------------------------------------- TRANSPORTATION--0.2% - -------------------------------------------------------------------------------------------------------------------------------- RAILROADS & TRUCKERS--0.2% Canadian Pacific Ltd. 753,400 15,096,173 - -------------------------------------------------------------------------------------------------------------------------------- UTILITIES--2.5% - -------------------------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.0% Calpine Corp.(1) 600,000 4,410,000 - -------------------------------------------------------------------------------------------------------------------------------- Duke Energy Corp. 1,698,000 59,939,400 ---------------- 64,349,400
12 OPPENHEIMER CAPITAL APPRECIATION FUND
MARKET VALUE SHARES SEE NOTE 1 ================================================================================================================================ GAS UTILITIES--1.5% El Paso Corp. 1,897,800 $ 74,166,024 - -------------------------------------------------------------------------------------------------------------------------------- Williams Cos., Inc. (The) 965,800 14,921,610 ---------------- 89,087,634 ---------------- Total Common Stocks (Cost $6,067,756,068) 5,499,392,882
PRINCIPAL AMOUNT ================================================================================================================================ U.S. GOVERNMENT OBLIGATIONS--0.5% - -------------------------------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 6.375%, 4/30/02 (Cost $29,927,108) $ 30,000,000 30,240,240 ================================================================================================================================ STRUCTURED INSTRUMENTS--0.4% Credit Suisse First Boston Corp. (New York Branch), Carnival Corp. Equity Linked Nts., 7%, 7/17/022 15,000,834 19,651,093 - -------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., Medium-Term Stock Linked Nts., Series B, 7%, 7/8/02 (linked to the performance of The Gap, Inc. common stock) 15,000,000 6,328,500 ---------------- Total Structured Instruments (Cost $30,000,834) 25,979,593 ================================================================================================================================ SHORT-TERM NOTES--4.8% Barton Capital Corp., 1.80%, 3/5/02 20,020,000 20,015,996 - -------------------------------------------------------------------------------------------------------------------------------- Delaware Funding Corp.: 1.79%, 3/5/02 48,536,000 48,526,347 1.80%, 4/10/02 25,000,000 24,950,000 - -------------------------------------------------------------------------------------------------------------------------------- Edison Asset Securitization LLC, 1.74%, 3/1/02 50,000,000 50,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Greyhawk Funding LLC, 1.79%, 3/25/02 25,000,000 24,970,166 - -------------------------------------------------------------------------------------------------------------------------------- Old Line Funding Corp.: 1.65%, 3/7/02 50,000,000 49,986,250 1.81%, 3/15/02 25,000,000 24,982,403 - -------------------------------------------------------------------------------------------------------------------------------- Sheffield Receivables Corp., 1.81%, 3/8/02 50,000,000 49,982,403 ---------------- Total Short-Term Notes (Cost $293,413,565) 293,413,565 ================================================================================================================================ REPURCHASE AGREEMENTS--4.5% - -------------------------------------------------------------------------------------------------------------------------------- Repurchase agreement with DB Alex Brown LLC, 1.85%, dated 2/28/02, to be repurchased at $273,752,067 on 3/1/02, collateralized by U.S. Treasury Bonds, 6.75%-7.25%, 5/15/16-8/15/26, with a value of $279,281,877 (Cost $273,738,000) 273,738,000 273,738,000 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $6,694,835,575) 99.8% 6,122,764,280 - -------------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.2 13,716,406 --------------------------------------- NET ASSETS 100.0% $6,136,480,686 =======================================
FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income-producing security. 2. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 13 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
FEBRUARY 28, 2002 ====================================================================================================================== ASSETS Investments, at value (cost $6,694,835,575)--see accompanying statement $ 6,122,764,280 - ---------------------------------------------------------------------------------------------------------------------- Cash 1,196,739 - ---------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 22,360,089 Investments sold 10,053,047 Interest and dividends 6,323,464 Other 60,074 ----------------- Total assets 6,162,757,693 ====================================================================================================================== LIABILITIES Payables and other liabilities: Investments purchased 15,591,033 Shares of beneficial interest redeemed 6,838,049 Distribution and service plan fees 1,992,452 Trustees' compensation 823,801 Shareholder reports 609,830 Transfer and shareholder servicing agent fees 80,153 Other 341,689 ----------------- Total liabilities 26,277,007 ====================================================================================================================== NET ASSETS $ 6,136,480,686 ================= ====================================================================================================================== COMPOSITION OF NET ASSETS - ---------------------------------------------------------------------------------------------------------------------- Paid-in capital $ 6,853,025,978 - ---------------------------------------------------------------------------------------------------------------------- Accumulated net investment loss (9,248,377) - ---------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (135,225,620) - ---------------------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (572,071,295) ----------------- NET ASSETS $ 6,136,480,686 =================
14 OPPENHEIMER CAPITAL APPRECIATION FUND ======================================================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $3,319,761,192 and 88,572,750 shares of beneficial interest outstanding) $37.48 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $39.77 - ------------------------------------------------------------------------------------------------------------------------ Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $1,268,481,336 and 35,771,679 shares of beneficial interest outstanding) $35.46 - ------------------------------------------------------------------------------------------------------------------------ Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $497,261,629 and 14,188,080 shares of beneficial interest outstanding) $35.05 - ------------------------------------------------------------------------------------------------------------------------ Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $38,632,533 and 1,033,572 shares of beneficial interest outstanding) $37.38 - ------------------------------------------------------------------------------------------------------------------------ Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $1,012,343,996 and 26,682,428 shares of beneficial interest outstanding) $37.94
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 15 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENT OF OPERATIONS UNAUDITED
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 =================================================================================================================== INVESTMENT INCOME Dividends (net of foreign withholding taxes of $84,823) $ 21,432,165 - ------------------------------------------------------------------------------------------------------------------- Interest 8,981,571 --------------- Total income 30,413,736 =================================================================================================================== EXPENSES Management fees 16,798,428 - ------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 3,650,742 Class B 6,146,189 Class C 2,180,031 Class N 47,806 - ------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 4,385,413 Class B 1,736,434 Class C 634,315 Class N 27,471 Class Y 1,287,412 - ------------------------------------------------------------------------------------------------------------------- Shareholder reports 1,461,394 - ------------------------------------------------------------------------------------------------------------------- Trustees' compensation 173,388 - ------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 45,118 - ------------------------------------------------------------------------------------------------------------------- Other 368,998 ---------------- Total expenses 38,943,139 Less reduction to custodian expenses (20,793) ---------------- Net expenses 38,922,346 =================================================================================================================== NET INVESTMENT LOSS (8,508,610) =================================================================================================================== REALIZED AND UNREALIZED LOSS Net realized loss on: Investments (119,680,531) Foreign currency transactions (241,068) ---------------- Net realized loss (119,921,599) - ------------------------------------------------------------------------------------------------------------------- Net change in unrealized depreciation on: Investments (288,617,198) Translation of assets and liabilities denominated in foreign currencies (796,804) ---------------- Net change (289,414,002) ---------------- Net realized and unrealized loss (409,335,601) =================================================================================================================== NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(417,844,211) ================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 OPPENHEIMER CAPITAL APPRECIATION FUND STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, (UNAUDITED) 2001 ================================================================================================================= OPERATIONS - ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) $ (8,508,610) $ 8,427,191 - ----------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (119,921,599) 216,477,612 - ----------------------------------------------------------------------------------------------------------------- Net change in unrealized depreciation (289,414,002) (2,129,854,386) ----------------------------------- Net decrease in net assets resulting from operations (417,844,211) (1,904,949,583) ================================================================================================================= DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Distributions from net realized gain: Class A (78,924,776) (315,580,814) Class B (32,882,122) (125,027,291) Class C (12,072,818) (38,476,846) Class N (448,693) -- Class Y (23,930,560) (110,054,951) ================================================================================================================= BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions: Class A 561,676,188 742,228,163 Class B 151,090,483 436,276,561 Class C 116,316,641 189,865,151 Class N 34,067,221 7,285,737 Class Y 134,050,751 143,938,999 ================================================================================================================= NET ASSETS Total increase (decrease) 431,098,104 (974,494,874) - ----------------------------------------------------------------------------------------------------------------- Beginning of period 5,705,382,582 6,679,877,456 ----------------------------------- End of period (including accumulated net investment loss of $9,248,377 and $739,767, respectively) $6,136,480,686 $5,705,382,582 ===================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 OPPENHEIMER CAPITAL APPRECIATION FUND FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, CLASS A (UNAUDITED) 2001 2000 1999 1998 1997 ==================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 41.11 $ 62.12 $ 44.73 $ 32.53 $ 38.63 $ 30.81 - -------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.04) .10 (.02) (.04) .17 .18 Net realized and unrealized gain (loss) (2.60) (15.86) 20.63 14.87 (1.55) 11.36 -------------------------------------------------------------------- Total income (loss) from investment operations (2.64) (15.76) 20.61 14.83 (1.38) 11.54 - -------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.09) (.15) (.17) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) (3.55) -------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.63) (4.72) (3.72) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $37.48 $41.11 $62.12 $44.73 $32.53 $38.63 ==================================================================== ==================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (6.65)% (26.38)% 48.01% 47.36% (4.06)% 40.52% ==================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $3,319,761 $3,055,197 $3,648,961 $2,071,317 $1,233,958 $1,179,362 - -------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $3,129,379 $3,255,995 $2,898,088 $1,788,774 $1,352,628 $ 985,813 - -------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income (loss) (0.12)% 0.28% 0.00% (0.05)% 0.48% 0.53% Expenses 1.17% 1.03% 1.06% 1.04% 1.00%(3) 1.01%(3) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 13% 46% 44% 59% 60% 66%
1. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 OPPENHEIMER CAPITAL APPRECIATION FUND
SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, CLASS B (UNAUDITED) 2001 2000 1999 1998 1997 =================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 39.09 $ 59.80 $ 43.48 $ 31.85 $ 38.07 $ 30.56 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.09) (.07) (.20) (.21) (.02) .07 Net realized and unrealized gain (loss) (2.55) (15.39) 19.74 14.38 (1.62) 11.05 ------------------------------------------------------------------- Total income (loss) from investment operations (2.64) (15.46) 19.54 14.17 (1.64) 11.12 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- (.01) (.06) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) (3.55) ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.54) (4.58) (3.61) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $35.46 $39.09 $59.80 $43.48 $31.85 $38.07 =================================================================== =================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (6.99)% (26.95)% 46.88% 46.20% (4.86)% 39.30% =================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,268,481 $1,242,098 $1,333,387 $531,625 $193,638 $52,220 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,239,570 $1,265,753 $ 922,480 $372,157 $132,908 $23,678 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment loss (0.88)% (0.48)% (0.76)% (0.86)% (0.37)% (0.33)% Expenses 1.93% 1.80% 1.83% 1.84% 1.81%(3) 1.86%(3) - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 13% 46% 44% 59% 60% 66%
1. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 OPPENHEIMER CAPITAL APPRECIATION FUND FINANCIAL HIGHLIGHTS CONTINUED
SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, CLASS C (UNAUDITED) 2001 2000 1999 1998 1997 =================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 38.64 $ 59.19 $ 43.06 $ 31.57 $ 37.76 $ 30.27 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.02) (.01) (.18) (.23) (.03) .01 Net realized and unrealized gain (loss) (2.58) (15.29) 19.53 14.26 (1.59) 11.03 ------------------------------------------------------------------ Total income (loss) from investment operations (2.60) (15.30) 19.35 14.03 (1.62) 11.04 - ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- -- -- Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) (3.55) ------------------------------------------------------------------ Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.54) (4.57) (3.55) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $35.05 $38.64 $59.19 $43.06 $31.57 $37.76 ================================================================== =================================================================================================================== Total Return, at Net Asset Value(1) (6.97)% (26.95)% 46.89% 46.16% (4.84)% 39.35% =================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $497,262 $426,476 $402,442 $165,231 $76,058 $36,148 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $452,598 $400,009 $278,800 $126,443 $61,503 $19,508 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment loss (0.85)% (0.48)% (0.76)% (0.86)% (0.36)% (0.32)% Expenses 1.90% 1.80% 1.83% 1.85% 1.82%(3) 1.85%(3) - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 13% 46% 44% 59% 60% 66%
1. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 OPPENHEIMER CAPITAL APPRECIATION FUND
SIX MONTHS PERIOD ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, CLASS N (UNAUDITED) 2001(1) ==================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 41.05 $ 45.58 - -------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .03 (.01) Net realized and unrealized loss (2.71) (4.52) ------------------------- Total loss from investment operations (2.68) (4.53) - -------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- Distributions from net realized gain (.99) -- ------------------------- Total dividends and/or distributions to shareholders (.99) -- - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $37.38 $41.05 ========================= ==================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(2) (6.75)% (9.94)% ==================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $38,633 $6,791 - -------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $19,459 $3,173 - -------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment loss (0.36)% (0.11)% Expenses 1.43% 1.36% - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 13% 46%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 OPPENHEIMER CAPITAL APPRECIATION FUND FINANCIAL HIGHLIGHTS CONTINUED
SIX MONTHS YEAR ENDED ENDED FEBRUARY 28, 2002 AUGUST 31, CLASS Y (UNAUDITED) 2001 2000 1999 1998(1) ==================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 41.55 $ 62.51 $ 44.81 $ 32.56 $ 40.15 - -------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.03) .27 .13 .13 .30 Net realized and unrealized gain (loss) (2.59) (15.98) 20.79 14.85 (3.11) ---------------------------------------------------------------- Total income (loss) from investment operations (2.62) (15.71) 20.92 14.98 (2.81) - -------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- (.19) (.21) Distributions from net realized gain (.99) (5.25) (3.22) (2.54) (4.57) ---------------------------------------------------------------- Total dividends and/or distributions to shareholders (.99) (5.25) (3.22) (2.73) (4.78) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $37.94 $41.55 $62.51 $44.81 $32.56 ================================================================ ==================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(2) (6.53)% (26.12)% 48.64% 47.90% (7.45)% ==================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $1,012,344 $ 974,820 $1,295,087 $420,455 $180,512 - -------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 964,203 $1,095,575 $ 855,270 $307,498 $139,050 - -------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 0.13% 0.66% 0.45% 0.30% 0.75% Expenses 0.92% 0.66% 0.64% 0.68% 0.69%(4) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 13% 46% 44% 59% 60%
1. For the period from November 3, 1997 (inception of offering) to August 31, 1998. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 OPPENHEIMER CAPITAL APPRECIATION FUND 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 an open-end management investment company. The Fund's investment objective is to seek capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC. All classes of shares have identical rights 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, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in structured notes whose market values and redemption prices are linked to the market value of specific securities. The structured notes are leveraged, which increases the Fund's exposure to changes in prices of the underlying securities and increases the volatility of each note's market value relative to the change in the underlying security prices. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of February 28, 2002, the market value of these securities comprised 0.4% of the Fund's net assets, and resulted in unrealized losses in the current period of $4,021,241. 23 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS UNAUDITED/CONTINUED =============================================================================== 1. SIGNIFICANT ACCOUNTING POLICIES Continued FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTs. The Fund requires its custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent Board of 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, 2002, the Fund's projected benefit obligations were increased by $65,247 and payments of $12,047 were made to retired trustees, resulting in an accumulated liability of $793,002 as of February 28, 2002. 24 OPPENHEIMER CAPITAL APPRECIATION FUND The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of annual compensation they are entitled to receive from the Fund. Under the plan, the compensation deferred is periodically adjusted as though an equivalent amount had been invested for the Board of Trustees in shares of one or more Oppenheimer funds selected by the trustee. The amount paid to the Board of Trustees under the plan will be determined based upon the performance of the selected funds. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. - ------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. - ------------------------------------------------------------------------------- CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. - ------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - ------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. - ------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 25 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED FEBRUARY 28, 2002 YEAR ENDED AUGUST 31, 2001(1) SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------- CLASS A Sold 20,573,860 $ 802,029,590 22,608,674 $ 1,080,716,997 Dividends and/or distributions reinvested 1,755,774 72,759,214 6,337,191 296,137,035 Redeemed (8,076,291) (313,112,616) (13,365,396) (634,625,869) ------------------------------------------------------------------------------- Net increase 14,253,343 $ 561,676,188 15,580,469 $ 742,228,163 =============================================================================== - ------------------------------------------------------------------------------------------------------------------- CLASS B Sold 6,604,392 $ 244,139,579 12,135,550 $ 557,398,730 Dividends and/or distributions reinvested 786,341 30,887,504 2,633,268 117,655,350 Redeemed (3,393,333) (123,936,600) (5,291,430) (238,777,519) ------------------------------------------------------------------------------- Net increase 3,997,400 $ 151,090,483 9,477,388 $ 436,276,561 =============================================================================== - ------------------------------------------------------------------------------------------------------------------- CLASS C Sold 4,136,104 $ 150,970,834 5,484,946 $ 247,461,141 Dividends and/or distributions reinvested 277,038 10,754,627 812,514 35,888,768 Redeemed (1,261,439) (45,408,820) (2,060,592) (93,484,758) ------------------------------------------------------------------------------- Net increase 3,151,703 $ 116,316,641 4,236,868 $ 189,865,151 =============================================================================== - ------------------------------------------------------------------------------------------------------------------- CLASS N Sold 931,033 $ 36,467,569 178,524 $ 7,841,445 Dividends and/or distributions reinvested 10,848 448,566 -- -- Redeemed (73,737) (2,848,914) (13,096) (555,708) ------------------------------------------------------------------------------- Net increase 868,144 $ 34,067,221 165,428 $ 7,285,737 =============================================================================== - ------------------------------------------------------------------------------------------------------------------- CLASS Y Sold 5,592,558 $ 221,168,589 7,131,501 $ 354,385,311 Dividends and/or distributions reinvested 557,609 23,369,417 2,298,717 108,246,627 Redeemed (2,926,921) (110,487,255) (6,689,239) (318,692,939) ------------------------------------------------------------------------------- Net increase 3,223,246 $ 134,050,751 2,740,979 $ 143,938,999 ===============================================================================
1. For the year ended August 31, 2001, for Class A, B, C and Y shares and for the period from March 1, 2001 (inception of offering) to August 31, 2001, for Class N shares. 26 OPPENHEIMER CAPITAL APPRECIATION FUND ================================================================================ 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended February 28, 2002, were $1,611,327,784 and $671,350,195, respectively. ================================================================================ 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700 million, 0.58% of the next $1.0 billion, 0.56% of the next $2.0 billion, 0.54% of the next $4.0 billion and 0.52% of average annual net assets over $8.5 billion. The Fund's management fee for the six months ended February 28, 2002, was an annualized rate of 0.58%. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS an agreed-upon per account fee. Additionally, Class Y shares are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Class Y shares are subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees to 0.25% per annum of Class Y shares, effective January 1, 2001, and for all other classes, 0.35% per annum, effective October 1, 2001. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement with the Manager, the Distributor acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. 27 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES CONTINUED The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
AGGREGATE CLASS A CONCESSIONS CONCESSIONS CONCESSIONS CONCESSIONS FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C ON CLASS N SIX SALES CHARGES SALES CHARGES SHARES SHARES SHARES SHARES MONTHS ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY ADVANCED BY ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) - --------------------------------------------------------------------------------------------------------------- February 28, 2002 $5,168,317 $1,261,487 $1,159,721 $7,117,034 $1,248,281 $327,336
1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale.
CLASS A CLASS B CLASS C CLASS N CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED SIX SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - -------------------------------------------------------------------------------------------------------- February 28, 2002 $31,672 $1,221,111 $47,783 $205
The Fund has adopted a Service Plan for Class A shares and Distribution and Service Plans for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the Distributor for all or a portion of its costs incurred in connection with the distribution and/or servicing of the shares of the particular class. - -------------------------------------------------------------------------------- CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor currently uses the fees it receives from the Fund to pay brokers, dealers and other financial institutions. The Class A service plan permits reimbursements to the Distributor at a rate of up to a specified percent of average annual net assets of Class A shares purchased. The Distributor makes payments to plan recipients quarterly at an annual rate not to exceed a specified percent of the average annual net assets consisting of Class A shares of the Fund. For the six months ended February 28, 2002, payments under the Class A plan totaled $3,650,742, all of which were paid by the Distributor to recipients, and included $210,132 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. - -------------------------------------------------------------------------------- CLASS B, CLASS C AND CLASS N DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service fees and distribution fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular business day during the period. The Class B, Class C and Class N plans provide for the Distributor to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the plan during the period for which the fee is paid. 28 OPPENHEIMER CAPITAL APPRECIATION FUND The Distributor retains the asset-based sales charge on Class B shares. The Distributor retains the asset-based sales charge on Class C shares during the first year the shares are outstanding. The Distributor retains the asset-based sales charge on Class N shares. The asset-based sales charges on Class B, Class C and Class N shares allow investors to buy shares without a front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The Distributor's actual expenses in selling Class B, Class C and Class N shares may be more than the payments it receives from the contingent deferred sales charges collected on redeemed shares and asset-based sales charges from the Fund under the plans. If any plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to the Distributor for distributing shares before the plan was terminated. The plans allow for the carryforward of distribution expenses, to be recovered from asset-based sales charges in subsequent fiscal periods. Distribution fees paid to the Distributor for the six months ended February 28, 2002, were as follows:
DISTRIBUTOR'S DISTRIBUTOR'S AGGREGATE AGGREGATE UNREIMBURSED UNREIMBURSED EXPENSES AS % TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS - ------------------------------------------------------------------------------------------------ Class B Plan $6,146,189 $5,034,805 $28,296,458 2.23% Class C Plan 2,180,031 760,888 5,300,869 1.07 Class N Plan 47,806 41,052 495,967 1.28
================================================================================ 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. 29 OPPENHEIMER CAPITAL APPRECIATION FUND NOTES TO FINANCIAL STATEMENTS Unaudited / continued ================================================================================ 6. ILLIQUID SECURITIES As of February 28, 2002, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. The aggregate value of illiquid securities subject to this limitation as of February 28, 2002 was $19,651,093, which represents 0.32% of the Fund's net assets. ================================================================================ 7. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.08% per annum. The Fund had no borrowings outstanding during the six months ended or at February 28, 2002. 30 OPPENHEIMER CAPITAL APPRECIATION FUND OPPENHEIMER CAPITAL APPRECIATION FUND ================================================================================ OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees John V. Murphy, President and Trustee Robert G. Galli, Trustee Phillip A. Griffiths, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Clayton K. Yeutter, Trustee Jane Putnam, Vice President Robert G. Zack, Secretary Brian W. Wixted, Treasurer Scott T. Farrar, Assistant Treasurer Katherine P. Feld, Assistant Secretary Kathleen T. Ives, Assistant Secretary Denis R. Molleur, 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 LLP ================================================================================ LEGAL COUNSEL Mayer, Brown, Rowe and Maw The financial statements included herein have been taken from the records of the Fund without examination of those records by the independent auditors. OPPENHEIMER FUNDS ARE DISTRIBUTED BY OPPENHEIMERFUNDS DISTRIBUTOR, INC. 498 SEVENTH AVENUE, NEW YORK, NEW YORK 10018 (C)Copyright 2002 OppenheimerFunds, Inc. All rights reserved. 31 OPPENHEIMER CAPITAL APPRECIATION FUND OPPENHEIMERFUNDS FAMILY GLOBAL EQUITY Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund Europe Fund Global Growth & Income Fund International Growth Fund ============================================================================================================= EQUITY STOCK STOCK & BOND Emerging Technologies Fund Quest Opportunity Value Fund Emerging Growth Fund Total Return Fund Enterprise Fund Quest Balanced Value Fund Discovery Fund Capital Income Fund Main Street(R) Small Cap Fund Multiple Strategies Fund Small Cap Value Fund Disciplined Allocation Fund MidCap Fund Convertible Securities Fund Main Street(R) Opportunity Fund SPECIALTY Growth Fund Real Asset Fund(R) Capital Appreciation Fund Gold & Special Minerals Fund Main Street(R) Growth & Income Fund Tremont Market Neutral Fund, LLC(2) Value Fund Tremont Opportunity Fund, LLC(2) Quest Capital Value Fund Quest Value Fund Trinity Large Cap Growth Fund(1) Trinity Core Fund Trinity Value Fund ============================================================================================================= INCOME TAXABLE MUNICIPAL International Bond Fund California Municipal Fund(5) High Yield Fund New Jersey Municipal Fund(5) Champion Income Fund New York Municipal Fund(5) Strategic Income Fund Pennsylvania Municipal Fund(5) Bond Fund Municipal Bond Fund Senior Floating Rate Fund Intermediate Municipal Fund U.S. Government Trust Limited-Term Government Fund Capital Preservation Fund(3) ROCHESTER DIVISION Rochester National Municipals(4) Rochester Fund Municipals Limited Term New York Municipal Fund ============================================================================================================= SELECT MANAGERS STOCK STOCK & BOND Mercury Advisors Focus Growth Fund QM Active Balanced Fund(3) Gartmore Millennium Growth Fund II Jennison Growth Fund Salomon Brothers Capital Fund Mercury Advisors S&P 500(R) Index Fund(3) ============================================================================================================= MONEY MARKET(6) Money Market Fund Cash Reserves
1. Oppenheimer Trinity Growth Fund was reorganized into Oppenheimer Large Cap Growth Fund and was renamed Oppenheimer Trinity Large Cap Growth Fund effective 10/12/01. 2. Special investor qualification and minimum investment requirements apply. See the prospectus for details. 3. Available only through qualified retirement plans. 4. The Fund's name was changed from "Oppenheimer Florida Municipal Fund" on 10/1/01. 5. Available to investors only in certain states. 6. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. 32 OPPENHEIMER CAPITAL APPRECIATION FUND INFORMATION AND SERVICES GET THIS REPORT ONLINE! With OppenheimerFunds EDOCS DIRECT, you'll receive email notification when shareholder reports, prospectuses or prospectus supplements for your fund(s) become available online, instead of receiving them through the mail. You'll be able to quickly view, download and print them at your convenience. Sign up today at WWW.OPPENHEIMERFUNDS.COM. - -------------------------------------------------------------------------------- INTERNET 24-hr access to account information and transactions(1) WWW.OPPENHEIMERFUNDS.COM - -------------------------------------------------------------------------------- GENERAL INFORMATION Mon-Fri 8am-9pm ET, Sat (January-April) 10am-4pm ET 1.800.525.7048 - -------------------------------------------------------------------------------- PHONELINK(1) 24-hr automated information and automated transactions 1.800 CALL OPP (1.800.225.5677) - -------------------------------------------------------------------------------- TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 - -------------------------------------------------------------------------------- TICKER SYMBOLS Class A: OPTFX Class B: OTGBX Class C: OTFCX Class N: OTCNX Class Y: OTCYX - -------------------------------------------------------------------------------- 1. At times, the website or PhoneLink may be inaccessible or their transaction features may be unavailable. RS0320.001.0202 April 29, 2002 [OPPENHEIMER LOGO] -----END PRIVACY-ENHANCED MESSAGE-----