-----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, FY60pMkMuM8lcm+vlbIJuUCcGuJvyTbOx93V+XV6a5qDUShwVjGYTxR+kD1xCHvW VRYkXq1YFMvpq0Gf9TnU2w== 0000950133-97-003628.txt : 19971029 0000950133-97-003628.hdr.sgml : 19971029 ACCESSION NUMBER: 0000950133-97-003628 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971028 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER CAPITAL APPRECIATION FUND CENTRAL INDEX KEY: 0000319767 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133054122 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03105 FILM NUMBER: 97701836 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CTR SUITE 3400 CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: 2 WORLD TRADE CENTER 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER TARGET FUND INC DATE OF NAME CHANGE: 19870616 N-30D 1 OPPENHEIMER CAPITAL APPRECIATION FUND 8/31/97 1 ANNUAL REPORT AUGUST 31, 1997 OPPENHEIMER CAPITAL APPRECIATION FUND [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 CONTENTS 3 President's Letter 4 Fund Performance 6 An Interview with the Fund's Manager 10 Statement of Investments 17 Statement of Assets & Liabilities 18 Statement of Operations 19 Statements of Changes in Net Assets 20 Financial Highlights 22 Notes to Financial Statements 28 Independent Auditors' Report 29 Federal Income Tax Information 30 Officers & Trustees 32 Information & Services REPORT HIGHLIGHTS - -------------------------------------------------------------------------------- - - STELLAR PERFORMANCE: The Fund was the top-performing domestic equity fund within the OppenheimerFunds family for the one-year and three-year periods. - - FINANCIAL AND TECHNOLOGY STOCKS provided the Fund's most outstanding returns. - - OUR "BOTTOM-UP" STRATEGY helped us discover many excellent small and medium-sized companies that met our demanding criteria for earnings growth and valuation. AVG ANNUAL TOTAL RETURNS For the Period Ended 8/31/97(1) CLASS A 1 year 5 year 10 year 40.52% 20.65% 13.70% CLASS B Since 1 year 5 year Inception 39.30% N/A 28.40% CLASS C Since 1 year 5 year Inception 39.35% N/A 21.75% Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. 1. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 2 Oppenheimer Capital Appreciation Fund 3 [PHOTO] BRIDGET A. MACASKILL President Oppenheimer Capital Appreciation Fund DEAR SHAREHOLDER, - -------------------------------------------------------------------------------- I'd like to welcome you to the premier issue of our newly redesigned shareholder reports. As you can see, we've changed the format to allow easier access to the information you need to monitor your investments. Some notable additions are "at-a-glance" report highlights and charts that let you quickly assess how your Fund has performed. On the following pages, your portfolio team discuss their current investment thinking, your Fund's strategies, and performance. Before these commentaries, I'd like to share a few global observations. As we consider the world's financial markets over the past six months, some global trends emerge. For example, inflation has hit its lowest level in three decades worldwide, which has helped spur many bullish financial markets. The United States has been a beneficiary of this low-inflation environment, as well as of a strong dollar, robust corporate earnings and a healthy economy. However, many financial analysts are now concerned that the United States has reached a point in the business cycle where earnings could decline because companies are unable to further reduce costs. On the other hand, a wave of corporate restructuring throughout Europe has resulted in some exciting changes and opportunities. Because a similar restructuring took place in the United States ten years ago, European companies have been able to enjoy the benefit of hindsight by following our footsteps. Latin America, too, has begun to shift its economies more toward the U.S. capitalist model and has reported positive earnings growth along the way. With major changes occurring in today's economies around the globe, it's more important than ever to maintain a diversified portfolio across different countries and market sectors. Now is the time to speak to your financial adviser to ensure that your assets are allocated properly, so you have the opportunity to benefit from investments in both domestic and international funds. It's important to remember that investing abroad can involve greater risk and expenses--including political and economic uncertainties--and should be undertaken with a long-term approach in mind. To keep in touch with our views on the markets, visit our website, WWW.OPPENHEIMERFUNDS.COM, where you can access your account information and fund performance data, 24 hours a day. The site also features prospectuses, timely market updates and insightful commentaries. Our new shareholder reports and presence on the Internet are just two examples of our commitment to keeping you well informed. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. We look forward to helping you reach your investment goals in the future. Sincerely, /s/ BRIDGET A. MACASKILL Bridget A. Macaskill September 22, 1997 3 Oppenheimer Capital Appreciation Fund 4 AVG ANNUAL TOTAL RETURNS For the Period Ended 9/30/97(1)
CLASS A 1 year 5 year 10 year 28.69% 19.80% 13.59%
CLASS B Since 1 year 5 year Inception 30.32% N/A 28.37%
CLASS C Since 1 year 5 year Inception 34.37% N/A 22.66%
PERFORMANCE UPDATE - -------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund performed very well over the past twelve months, surpassing many of its competitors. In fact, for the one-year period ended 8/31/97, the Fund's Class A shares were ranked 23rd out of 206 capital appreciation funds by Lipper Analytical Services,(2) and provided an annualized total rate of return of 40.52%, before sales charges.(3) In addition, the Fund was the top-performing domestic equity fund within the OppenheimerFunds family for the one-year and three-year periods ended 8/31/97.
GROWTH OF $10,000 Over ten years (without sales charges)(4) Oppenheimer Capital Appreciation Fund Class A shares S&P 500 Index $ 10,000 $ 10,000 6,835 7,747 8,204 8,188 8,784 8,734 8,961 8,763 9,048 9,034 9,635 9,674 10,080 10,528 10,945 11,656 10,705 11,896 10,728 11,538 11,400 12,264 9,188 10,579 10,476 11,527 12,863 13,201 12,575 13,171 13,499 13,876 14,807 15,039 14,470 14,659 13,963 14,938 14,489 15,409 16,327 16,185 16,282 16,891 16,211 16,974 16,586 17,412 16,968 17,816 16,526 17,140 16,071 17,212 17,008 18,054 17,045 18,051 18,582 19,809 20,766 21,700 22,582 23,424 22,986 24,835 24,636 26,168 25,901 27,342 27,786 28,187 29,412 30,537 28,858 31,356 33,524 36,830 37,936 39,589 $37,936 $39,589
1. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Class A returns include the current maximum initial sales charge of 5.75%. Class A shares were first publicly offered on 1/22/81. The Fund's maximum sales charge for Class A shares was lower prior to 4/1/91, so actual performance may have been higher. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (since inception on 5/1/93). Class C returns for the 1-year period include the contingent deferred sales charge of 1% and have been available since 12/1/93. An explanation of the different performance calculations is in the Fund's prospectus. Class B and C shares are subject to an annual 0.25% service fee and 0.75% asset-based sales charge, and Class A shares are subject to an annual service fee not to exceed 0.25%. 4 Oppenheimer Capital Appreciation Fund 5 SECTOR WEIGHTINGS(5) - -Technology 29.5% - -Financial 20.4 - -Consumer Cyclical 16.3 - -Consumer Non-Cyclical 13.5 - -Industrial 8.2 - -Energy 7.0 - -Basic Materials 3.3 - -Utility 1.8
PORTFOLIO REVIEW - -------------------------------------------------------------------------------- Oppenheimer Capital Appreciation Fund is for investors looking for growth over the long term from a diverse portfolio of stocks. WHAT WE LOOK FOR - - Companies with ABOVE-AVERAGE GROWTH POTENTIAL. - - Companies increasing their EARNINGS MOMENTUM. - - Companies that have a history of positive earnings, as well as the potential for POSITIVE EARNINGS SURPRISES. - - Stocks that have LOW VALUATIONS relative to their future growth prospects.
TOP 10 STOCK HOLDINGS (Percentage of net assets)(5) ................................................................... Cisco Systems, Inc. 2.42% Tellabs, Inc. 1.52% ................................................................... BancOne Corp. 2.22 Pfizer, Inc. 1.47 ................................................................... Travelers Group, Inc. 2.19 SunAmerica, Inc. 1.38 ................................................................... Microsoft Corp. 2.19 Adaptec, Inc. 1.37 ................................................................... Green Tree Financial Corp. 1.68 Seagate Technology, Inc. 1.34 ...................................................................
2. Source: Lipper Analytical Services, Inc., 8/31/97. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions of the Fund's Class A shares reinvested. The Fund's Class A shares were ranked 23 of 206 (1-year), 19 of 78 (5-year) and 15 of 57 (10-year) among capital appreciation funds for the periods ended 8/31/97. Past performance does not guarantee future results. 3. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 4. Results of a hypothetical $10,000 investment in Class A shares on September 30, 1987. The S&P 500 is a broad-based unmanaged stock index including daily reinvestment of dividends, and cannot be purchased directly by investors. Past performance does not guarantee future results. 5. Portfolio is subject to change. Percentages are as of August 31, 1997 and are based on total market value of investments. 5 Oppenheimer Capital Appreciation Fund 6 "FINANCIAL AND TECHNOLOGY STOCKS HAVE DONE VERY WELL FOR US." AN INTERVIEW WITH YOUR FUND'S MANAGER - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED DURING THE PAST YEAR? Oppenheimer Capital Appreciation Fund's Class A shares have provided an annualized total rate of return of 40.52% before sales charges for the one-year period ended August 31, 1997.(1) The Fund also continued to provide competitive performance relative to its peers in the capital appreciation category, ranking 23rd of 206 funds as measured by Lipper Analytical Services(2) for the one-year period ended 8/31/97. In addition, the Capital Appreciation Fund was the top-performing domestic equity fund within the OppenheimerFunds family for the one-year and three-year periods ended 8/31/97. WERE YOU ABLE TO FIND ATTRACTIVE INVESTMENTS IN THE HIGH-FLYING STOCK MARKET? As investment managers using a "bottom-up" approach to stock selection, we tend to disregard overall market trends in favor of evaluating individual companies, one at a time. Nonetheless, we found few attractive investments among the larger, well-known companies as their valuations rose to the high end of their historical ranges. Instead, we found a number of small and medium-sized companies that meet our stringent criteria for earnings growth and valuation. In this environment, rather than pay higher prices for large growth stocks or assume the risks associated with very small, unproven companies, we have allowed cash to accumulate while we await more attractive investment opportunities. 1. Includes changes in net asset value per share without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 2. Source: Lipper Analytical Services, Inc., 8/31/97. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions of the Fund's Class A shares reinvested. The Fund's Class A shares were ranked 23 of 206 (1-year), 19 of 78 (5-year) and 15 of 57 (10-year) among capital appreciation funds for the periods ended 8/31/97. Past performance does not guarantee future results. 6 Oppenheimer Capital Appreciation Fund 7 [PHOTO] PORTFOLIO MANAGER Jane Putnam WHY HAVE LARGE-CAP STOCK PRICES RISEN SO DRAMATICALLY? There are a number of forces at work in today's markets that have driven large-capitalization stocks higher. First, large American companies became much more competitive in domestic and overseas markets when they restructured their operations to become more efficient and productive. This has allowed these companies to grow sales without commensurate increases in costs. Second, individuals have continued to invest more of their assets in the stock market, especially through retirement plans, as they have increasingly recognized the long-term benefits of stocks. Finally, many investors have chosen to invest conservatively, preferring the stocks of well-known, steadily growing companies whose stocks trade frequently instead of smaller, faster-growing companies with less liquidity. WHERE HAVE YOU FOUND THE MOST ATTRACTIVE INVESTMENTS? Our emphasis on evaluating individual stocks rather than broader markets often leads us to entire industries and economic sectors with good prospects. Over the last 12 months, a relatively large number of stocks in the financial and technology industries have done very well for us. In the financial industry, we have owned strong performers in the banking sector. In the technology sector, we have benefited from our positions in personal-computer manufacturers and related stocks such as Dell Computer, Compaq, SCI Systems and Microsoft. 7 Oppenheimer Capital Appreciation Fund 8 "WE USE A 'BOTTOM-UP' APPROACH TO STOCK SELECTION, EVALUATING INDIVIDUAL COMPANIES, ONE AT A TIME." AN INTERVIEW WITH YOUR FUND'S MANAGER - -------------------------------------------------------------------------------- WHAT INVESTMENTS WERE DISAPPOINTING? We were disappointed that we did not hold certain stocks for a longer time. Early in 1997, we reduced or eliminated our positions in some large-growth consumer-related and technology companies. At the time, our valuation measures indicated that these stocks had reached price levels that could not be reasonably supported by our expectations for future earnings growth, so we sold them and took profits. Despite their high valuations, however, the blue-chip rally continued to drive these stocks higher. In addition, we were disappointed that certain retail stocks did not perform in line with our expectations. For example, some apparel companies the Fund owns have not yet realized what we believe to be their potential for higher sales and greater operating efficiencies. WHAT IS YOUR OUTLOOK FOR THE FUTURE? As our relatively high cash position indicates, we are cautious about stocks over the near term. In our opinion, the market rallies of the past two to three years have inflated the prices of large growth stocks to unreasonable levels. As a result, even minor earnings disappointments may have a negative effect on their stocks, while there is little room for further gains in the event of positive earnings surprises. For this reason, we are keeping cash available to take advantage of buying opportunities as they emerge. We have already experienced two market corrections in the 5% to 10% range, one in February/March and the other in August. Both pull-backs provided limited opportunities to buy solid growth companies at more reasonable prices. If more opportunities in individual stocks arise over the next few months, we hope to eventually reduce our cash position to the 8% to 10% range. 8 Oppenheimer Capital Appreciation Fund 9 FINANCIALS - -------------------------------------------------------------------------------- 9 Oppenheimer Capital Appreciation Fund 10 STATEMENT OF INVESTMENTS August 31, 1997
MARKET VALUE SHARES SEE NOTE 1 =============================================================================== COMMON STOCKS--83.4% - ------------------------------------------------------------------------------- BASIC MATERIALS--2.8% - ------------------------------------------------------------------------------- CHEMICALS--2.4% Dexter Corp. 90,000 $ 3,420,000 - ------------------------------------------------------------------------------- Du Pont (E.I.) De Nemours & Co. 150,000 9,346,875 - ------------------------------------------------------------------------------- Goodrich (B.F.) Co. 84,000 3,538,500 - ------------------------------------------------------------------------------- IMC Global, Inc. 90,000 3,166,875 - ------------------------------------------------------------------------------- Morton International, Inc. 80,000 2,660,000 - ------------------------------------------------------------------------------- Praxair, Inc. 145,400 7,769,812 ---------- 29,902,062 - ------------------------------------------------------------------------------- METALS--0.4% Oregon Steel Mills, Inc. 135,200 3,641,950 - ------------------------------------------------------------------------------- USX-U.S. Steel Group, Inc. 50,000 1,756,250 ---------- 5,398,200 - ------------------------------------------------------------------------------- CONSUMER CYCLICALS--13.4% - ------------------------------------------------------------------------------- AUTOS & HOUSING--2.9% Arvin Industries, Inc. 144,900 5,044,331 - ------------------------------------------------------------------------------- Autoliv, Inc. 147,280 5,753,125 - ------------------------------------------------------------------------------- Centex Corp. 160,000 8,700,000 - ------------------------------------------------------------------------------- Furniture Brands International, Inc.(1) 283,400 4,994,925 - ------------------------------------------------------------------------------- Pulte Corp. 150,000 5,493,750 - ------------------------------------------------------------------------------- Toll Brothers, Inc.(1) 290,000 6,235,000 ---------- 36,221,131 - ------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--2.5% AMR Corp.(1) 38,000 3,828,500 - ------------------------------------------------------------------------------- Applebee's International, Inc. 97,500 2,486,250 - ------------------------------------------------------------------------------- Callaway Golf Co. 235,800 7,943,512 - ------------------------------------------------------------------------------- Carnival Corp., Cl. A 150,000 6,571,875 - ------------------------------------------------------------------------------- CKE Restaurants, Inc. 98,050 3,162,112 - ------------------------------------------------------------------------------- Delta Air Lines, Inc. 35,000 3,027,500 - ------------------------------------------------------------------------------- Disney (Walt) Co. 64,000 4,916,000 ---------- 31,935,749 - ------------------------------------------------------------------------------- MEDIA--0.2% Evergreen Media Corp., Cl. A(1) 65,000 3,111,875
10 Oppenheimer Capital Appreciation Fund 11
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- RETAIL: GENERAL--2.4% Federated Department Stores, Inc.(1) 160,000 $ 6,720,000 - ------------------------------------------------------------------------------- Fruit of the Loom, Inc., Cl. A(1) 70,000 1,872,500 - ------------------------------------------------------------------------------- Jones Apparel Group, Inc.(1) 139,200 6,986,100 - ------------------------------------------------------------------------------- Nautica Enterprises, Inc.(1) 127,000 3,024,187 - ------------------------------------------------------------------------------- Tommy Hilfiger Corp.(1) 280,000 12,215,000 ---------- 30,817,787 - ------------------------------------------------------------------------------- RETAIL: SPECIALTY--5.4% American Pad & Paper Co.(1) 44,900 1,032,700 - ------------------------------------------------------------------------------- Ann Taylor Stores Corp..(1) 167,000 2,859,875 - ------------------------------------------------------------------------------- Bed Bath & Beyond, Inc.(1) 200,000 6,200,000 - ------------------------------------------------------------------------------- CVS Corp. 242,000 13,642,750 - ------------------------------------------------------------------------------- Ethan Allen Interiors, Inc. 130,000 9,555,000 - ------------------------------------------------------------------------------- Gap, Inc. (The) 90,000 3,999,375 - ------------------------------------------------------------------------------- Nine West Group, Inc.(1) 245,800 10,385,050 - ------------------------------------------------------------------------------- Ross Stores, Inc. 137,000 4,024,375 - ------------------------------------------------------------------------------- Samsonite Corp.(1) 99,500 3,830,750 - ------------------------------------------------------------------------------- Tiffany & Co. 135,100 6,113,275 - ------------------------------------------------------------------------------- TJX Cos., Inc. 100,000 2,750,000 - ------------------------------------------------------------------------------- Williams-Sonoma, Inc.(1) 83,600 3,741,100 ---------- 68,134,250 - ------------------------------------------------------------------------------- CONSUMER NON-CYCLICALS--11.2% - ------------------------------------------------------------------------------- FOOD--1.9% JP Foodservice, Inc.(1) 125,900 3,832,081 - ------------------------------------------------------------------------------- Kroger Co.(1) 200,000 6,025,000 - ------------------------------------------------------------------------------- Richfood Holdings, Inc. 187,500 4,218,750 - ------------------------------------------------------------------------------- Safeway, Inc.(1) 190,000 9,678,125 ---------- 23,753,956 - ------------------------------------------------------------------------------- HEALTHCARE/DRUGS--2.0% Amgen, Inc.(1) 40,000 1,982,500 - ------------------------------------------------------------------------------- Biogen, Inc.(1) 70,000 2,756,250 - ------------------------------------------------------------------------------- Lilly (Eli) & Co. 55,000 5,754,375 - ------------------------------------------------------------------------------- Pfizer, Inc. 280,000 15,505,000 ---------- 25,998,125
11 Oppenheimer Capital Appreciation Fund 12 STATEMENT OF INVESTMENTS (Continued)
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- HEALTHCARE/SUPPLIES & SERVICES--6.3% Guidant Corp. 95,000 $ 8,342,187 - ------------------------------------------------------------------------------- Gulf South Medical Supply, Inc.(1) 130,000 3,282,500 - ------------------------------------------------------------------------------- HealthCare COMPARE Corp.(1) 188,600 10,514,450 - ------------------------------------------------------------------------------- HEALTHSOUTH Corp.(1) 245,000 6,109,687 - ------------------------------------------------------------------------------- Lincare Holdings, Inc.(1) 214,800 10,243,275 - ------------------------------------------------------------------------------- Medtronic, Inc. 45,000 4,066,875 - ------------------------------------------------------------------------------- Minimed, Inc.(1) 135,000 4,741,875 - ------------------------------------------------------------------------------- Oxford Health Plans, Inc.(1) 100,000 7,312,500 - ------------------------------------------------------------------------------- Renal Treatment Centers, Inc.(1) 241,900 8,194,362 - ------------------------------------------------------------------------------- Sofamor Danek Group, Inc.(1) 70,000 3,355,625 - ------------------------------------------------------------------------------- VISX, Inc.(1) 125,200 2,339,675 - ------------------------------------------------------------------------------- WellPoint Health Networks, Inc.(1) 217,000 11,799,375 ---------- 80,302,386 - ------------------------------------------------------------------------------- HOUSEHOLD GOODS--0.5% Blyth Industries, Inc.(1) 162,300 5,994,956 - ------------------------------------------------------------------------------- TOBACCO--0.5% Philip Morris Cos., Inc. 160,000 6,980,000 - ------------------------------------------------------------------------------- ENERGY--5.9% - ------------------------------------------------------------------------------- ENERGY SERVICES & PRODUCERS--3.8% BJ Services Co.(1) 85,000 6,141,250 - ------------------------------------------------------------------------------- ENSCO International, Inc. 115,000 7,302,500 - ------------------------------------------------------------------------------- Global Marine, Inc.(1) 232,000 6,597,500 - ------------------------------------------------------------------------------- Halliburton Co. 188,200 8,986,550 - ------------------------------------------------------------------------------- Smith International, Inc.(1) 75,000 5,456,250 - ------------------------------------------------------------------------------- Tidewater, Inc. 70,000 3,675,000 - ------------------------------------------------------------------------------- Transocean Offshore, Inc. 30,000 2,851,875 - ------------------------------------------------------------------------------- Varco International, Inc.(1) 165,900 6,594,525 ---------- 47,605,450 - ------------------------------------------------------------------------------- OIL-INTEGRATED--2.1% Mobil Corp. 80,000 5,820,000 - ------------------------------------------------------------------------------- Phillips Petroleum Co. 130,000 6,183,125 - ------------------------------------------------------------------------------- Unocal Corp. 135,000 5,273,437 - ------------------------------------------------------------------------------- USX-Marathon Group 270,000 8,791,875 ---------- 26,068,437
12 Oppenheimer Capital Appreciation Fund 13
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- FINANCIAL--17.0% - ------------------------------------------------------------------------------- BANKS--5.0% Banc One Corp. 438,065 $23,491,236 - ------------------------------------------------------------------------------- BankAmerica Corp. 60,000 3,948,750 - ------------------------------------------------------------------------------- BankBoston Corp. 125,000 10,390,625 - ------------------------------------------------------------------------------- First Chicago NBD Corp. 90,000 6,457,500 - ------------------------------------------------------------------------------- Societe Generale 36,000 4,465,943 - ------------------------------------------------------------------------------- SouthTrust Corp. 40,000 1,790,000 - ------------------------------------------------------------------------------- Star Banc Corp. 114,500 5,173,969 - ------------------------------------------------------------------------------- State Street Corp. 160,800 8,019,900 ---------- 63,737,923 - ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL--8.6% Associates First Capital Corp., Cl. A 124,000 7,199,750 - ------------------------------------------------------------------------------- Fannie Mae 112,000 4,928,000 - ------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp. 220,000 7,163,750 - ------------------------------------------------------------------------------- Finova Group, Inc. 92,600 7,830,487 - ------------------------------------------------------------------------------- Franklin Resources, Inc. 102,000 7,892,250 - ------------------------------------------------------------------------------- Green Tree Financial Corp. 405,000 17,794,687 - ------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 85,000 5,227,500 - ------------------------------------------------------------------------------- MGIC Investment Corp. 171,800 8,643,688 - ------------------------------------------------------------------------------- Morgan Stanley, Dean Witter, Discover & Co. 170,250 8,193,281 - ------------------------------------------------------------------------------- Price (T. Rowe) Associates, Inc. 125,200 6,886,000 - ------------------------------------------------------------------------------- Schwab (Charles) Corp. 100,000 4,243,750 - ------------------------------------------------------------------------------- Travelers Group, Inc. 365,000 23,177,500 ----------- 109,180,643 - ------------------------------------------------------------------------------- INSURANCE--3.4% Allstate Corp. 70,000 5,114,375 - ------------------------------------------------------------------------------- Conseco, Inc. 272,000 11,696,000 - ------------------------------------------------------------------------------- Equitable Cos., Inc. 265,000 11,527,500 - ------------------------------------------------------------------------------- SunAmerica, Inc. 270,000 14,546,250 ---------- 42,884,125
13 Oppenheimer Capital Appreciation Fund 14 STATEMENT OF INVESTMENTS (Continued)
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- INDUSTRIAL--6.8% - ------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.6% Emerson Electric Co. 140,000 $ 7,656,250 - ------------------------------------------------------------------------------- INDUSTRIAL MATERIALS--0.6% Rayonier, Inc. 157,700 7,697,731 - ------------------------------------------------------------------------------- INDUSTRIAL SERVICES--1.8% Corrections Corp. of America(1) 140,000 5,180,000 - ------------------------------------------------------------------------------- Culligan Water Technologies, Inc.(1) 80,500 3,713,063 - ------------------------------------------------------------------------------- Kent Electronics Corp.(1) 291,000 10,894,313 - ------------------------------------------------------------------------------- Manpower, Inc. 85,000 3,628,438 ---------- 23,415,814 - ------------------------------------------------------------------------------- MANUFACTURING--1.8% AGCO Corp. 135,300 4,397,250 - ------------------------------------------------------------------------------- American Standard Cos., Inc.(1) 110,000 5,170,000 - ------------------------------------------------------------------------------- Illinois Tool Works, Inc. 102,000 4,934,250 - ------------------------------------------------------------------------------- MascoTech, Inc. 210,000 4,396,875 - ------------------------------------------------------------------------------- Sealed Air Corp.(1) 67,000 3,475,625 ---------- 22,374,000 - ------------------------------------------------------------------------------- TRANSPORTATION--2.0% - ------------------------------------------------------------------------------- Burlington Northern Santa Fe Corp. 42,000 3,850,875 - ------------------------------------------------------------------------------- Canadian Pacific Ltd. (New) 400,000 11,675,000 - ------------------------------------------------------------------------------- Kansas City Southern Industries, Inc. 135,000 10,108,125 ---------- 25,634,000 - ------------------------------------------------------------------------------- TECHNOLOGY--24.8% - ------------------------------------------------------------------------------- COMPUTER HARDWARE--7.9% Adaptec, Inc.(1) 301,900 14,491,200 - ------------------------------------------------------------------------------- Cabletron Systems, Inc.(1) 217,000 6,564,250 - ------------------------------------------------------------------------------- Compaq Computer Corp.(1) 202,500 13,263,750 - ------------------------------------------------------------------------------- Dell Computer Corp.(1) 34,000 2,790,125 - ------------------------------------------------------------------------------- EMC Corp.(1) 255,000 13,084,688 - ------------------------------------------------------------------------------- Gateway 2000, Inc.(1) 331,600 12,973,850 - ------------------------------------------------------------------------------- International Business Machines Corp. 50,000 5,043,750 - ------------------------------------------------------------------------------- Quantum Corp.(1) 70,000 2,454,375 - ------------------------------------------------------------------------------- Seagate Technology, Inc.(1) 372,000 14,205,750 - ------------------------------------------------------------------------------- Sun Microsystems, Inc.(1) 202,000 9,696,000 - ------------------------------------------------------------------------------- Western Digital Corp.(1) 115,000 5,534,375 ----------- 100,102,113
14 Oppenheimer Capital Appreciation Fund 15
MARKET VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- COMPUTER SOFTWARE--7.2% BMC Software, Inc.(1) 170,600 $10,683,825 - ------------------------------------------------------------------------------- Cap Gemini SA 84,000 5,113,524 - ------------------------------------------------------------------------------- Computer Associates International, Inc. 75,000 5,015,625 - ------------------------------------------------------------------------------- First Data Corp. 245,040 10,061,955 - ------------------------------------------------------------------------------- Gartner Group, Inc., Cl. A(1) 60,000 1,586,250 - ------------------------------------------------------------------------------- HBO & Co. 140,000 10,027,500 - ------------------------------------------------------------------------------- McAfee Associates, Inc.(1) 152,100 8,612,663 - ------------------------------------------------------------------------------- Microsoft Corp.(1) 175,000 23,132,813 - ------------------------------------------------------------------------------- Peoplesoft, Inc.(1) 134,200 7,548,750 - ------------------------------------------------------------------------------- SAP AG, Preference 15,500 3,502,486 - ------------------------------------------------------------------------------- Structural Dynamics Research Corp.(1) 220,000 5,843,750 ---------- 91,129,141 - ------------------------------------------------------------------------------- ELECTRONICS--3.4% Analog Devices, Inc.(1) 153,333 5,079,156 - ------------------------------------------------------------------------------- Intel Corp. 117,000 10,778,625 - ------------------------------------------------------------------------------- LSI Logic Corp.(1) 150,000 4,828,125 - ------------------------------------------------------------------------------- Novellus Systems, Inc.(1) 60,800 6,969,200 - ------------------------------------------------------------------------------- SCI Systems, Inc.(1) 221,000 8,688,063 - ------------------------------------------------------------------------------- Vitesse Semiconductor Corp.(1) 132,800 6,258,200 ---------- 42,601,369 - ------------------------------------------------------------------------------- TELECOMMUNICATIONS-TECHNOLOGY--6.3% Andrew Corp.(1) 70,500 1,753,688 - ------------------------------------------------------------------------------- Ascend Communications, Inc.(1) 214,100 9,085,869 - ------------------------------------------------------------------------------- Cisco Systems, Inc.(1) 340,000 25,627,500 - ------------------------------------------------------------------------------- Lucent Technologies, Inc. 105,000 8,176,875 - ------------------------------------------------------------------------------- Newbridge Networks Corp.(1) 144,000 6,552,000 - ------------------------------------------------------------------------------- Pairgain Technologies, Inc.(1) 145,000 3,733,750 - ------------------------------------------------------------------------------- Tellabs, Inc.(1) 270,000 16,115,625 - ------------------------------------------------------------------------------- WorldCom, Inc. 305,000 9,130,938 ---------- 80,176,245 - ------------------------------------------------------------------------------- UTILITIES--1.5% - ------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.2% AES Corp. (The)(1) 100,000 3,700,000 - ------------------------------------------------------------------------------- CalEnergy, Inc.(1) 155,000 5,134,375 - ------------------------------------------------------------------------------- Empresa Nacional de Electricidad SA, Sponsored ADR 80,000 1,580,000 - ------------------------------------------------------------------------------- Pinnacle West Capital Corp. 155,000 5,008,438 ---------- 15,422,813
15 Oppenheimer Capital Appreciation Fund 16 STATEMENT OF INVESTMENTS (Continued)
MARKET VALUE SHARES SEE NOTE 1 - --------------------------------------------------------------------------------- TELEPHONE UTILITIES--0.3% Cincinnati Bell, Inc. 120,000 $ 3,232,500 Total Common Stocks (Cost $684,953,425) -------------- 1,057,469,031 FACE AMOUNT ================================================================================= REPURCHASE AGREEMENTS--16.8% - --------------------------------------------------------------------------------- Repurchase agreement with Zion First National Bank, 5.55%, dated 8/29/97, to be repurchased at $213,031,288 on 9/2/97, collateralized by U.S. Treasury Bonds, 8.125%-12.375%, 5/15/03-8/15/19, with a value of $193,021,710 and U.S. Treasury Nts., 5.625%, 2/28/01, with a value of $24,380,726 (Cost $212,900,000) $212,900,000 212,900,000 - --------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $897,853,425) 100.2% 1,270,369,031 - -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (2,639,627) ------------ -------------- NET ASSETS 100.0% $1,267,729,404 ============ ==============
1. Non-income producing security. See accompanying Notes to Financial Statements. 16 Oppenheimer Capital Appreciation Fund 17 STATEMENT OF ASSETS AND LIABILITIES August 31, 1997 ================================================================================ ASSETS Investments, at value (including repurchase agreements of $212,900,000) (cost $897,853,425)--see accompanying statement $1,270,369,031 - -------------------------------------------------------------------------------- Receivables: Shares of beneficial interest sold 2,909,830 Interest and dividends 741,182 - -------------------------------------------------------------------------------- Other 11,589 Total assets -------------- 1,274,031,632 ================================================================================ LIABILITIES Bank overdraft 692,502 - -------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 4,796,171 Distribution and service plan fees 357,218 Trustees' fees--Note 1 155,435 Other 300,902 --------- Total liabilities 6,302,228 ================================================================================ NET ASSETS $1,267,729,404 ============== ================================================================================ COMPOSITION OF NET ASSETS Paid-in capital $ 757,257,794 - -------------------------------------------------------------------------------- Undistributed net investment income 3,088,925 - -------------------------------------------------------------------------------- Accumulated net realized gain on investment transactions 134,867,079 - -------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies--Note 3 372,515,606 -------------- Net assets $1,267,729,404 ============== ================================================================================ NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $1,179,361,818 and 30,530,051 shares of beneficial interest outstanding) $38.63 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $40.99 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $52,219,689 and 1,371,795 shares of beneficial interest outstanding) $38.07 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $36,147,897 and 957,385 shares of beneficial interest outstanding) $37.76
See accompanying Notes to Financial Statements. 17 Oppenheimer Capital Appreciation Fund 18 STATEMENT OF OPERATIONS For the Year Ended August 31, 1997 =============================================================================== INVESTMENT INCOME Interest $ 9,888,153 - ------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $531) 5,941,853 ---------- Total income 15,830,006 =============================================================================== EXPENSES Management fees--Note 4 7,000,537 - ------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 1,636,360 Class B 235,392 Class C 194,401 - ------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 1,105,160 - ------------------------------------------------------------------------------- Shareholder reports 377,467 - ------------------------------------------------------------------------------- Custodian fees and expenses 84,034 - ------------------------------------------------------------------------------- Legal and auditing fees 63,618 - ------------------------------------------------------------------------------- Registration and filing fees: Class A 38,374 Class B 6,203 Class C 2,464 - ------------------------------------------------------------------------------- Other 25,386 ---------- Total expenses 10,769,396 =============================================================================== NET INVESTMENT INCOME 5,060,610 =============================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 152,001,499 Foreign currency transactions (199,224) ------------ Net realized gain 151,802,275 - ------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 185,046,905 Translation of assets and liabilities denominated in foreign currencies (454,785) ------------ Net change 184,592,120 ------------ Net realized and unrealized gain 336,394,395 =============================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $341,455,005 ============
See accompanying Notes to Financial Statements. 18 Oppenheimer Capital Appreciation Fund 19 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, DECEMBER 31, 1997 1996(1) 1995 ============================================================================================ OPERATIONS Net investment income $ 5,060,610 $ 2,862,338 $ 5,803,306 - -------------------------------------------------------------------------------------------- Net realized gain 151,802,275 75,873,404 71,199,990 - -------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 184,592,120 11,279,147 58,150,018 -------------- ------------ ------------ Net increase in net assets resulting from operations 341,455,005 90,014,889 135,153,314 ============================================================================================ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (4,636,803) -- (5,896,377) Class B (28,642) -- (8,658) Class C -- -- (24,850) - -------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (94,222,488) -- (69,237,207) Class B (1,584,506) -- (100,605) Class C (1,485,205) -- (663,926) ============================================================================================ BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A 162,027,172 (58,800,845) 397,611,091 Class B 41,048,636 2,415,163 2,840,388 Class C 20,849,794 2,250,436 5,989,404 ============================================================================================ NET ASSETS Total increase 463,422,963 35,879,643 465,662,574 - -------------------------------------------------------------------------------------------- Beginning of period 804,306,441 768,426,798 302,764,224 -------------- ------------ ------------ End of period [including undistributed (overdistributed) net investment income of $3,088,925, $2,693,760 and $(168,578), respectively] $1,267,729,404 $804,306,441 $768,426,798 ============== ============ ============
1. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. See accompanying Notes to Financial Statements. 19 Oppenheimer Capital Appreciation Fund 20 FINANCIAL HIGHLIGHTS
CLASS A ------------------------------------------------------------- YEAR ENDED AUGUST 31, YEAR ENDED DECEMBER 31, 1997 1996(3) 1995 1994 1993 ====================================================================================================== PER SHARE OPERATING DATA: Net asset value, beginning of period $30.81 $27.44 $22.63 $25.72 $25.25 - ------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) .18 .11 .24 .20 .13 Net realized and unrealized gain (loss) 11.36 3.26 7.61 (.11) .86 ------ ------ ------ ------ ------ Total income (loss) from investment operations 11.54 3.37 7.85 .09 .99 - ------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Dividends from net investment income (.17) -- (.24) (.20) (.12) Distributions from net realized gain (3.55) -- (2.80) (2.98) (.40) ------ ------ ------ ------ ------ Total dividends and distributions to shareholders (3.72) -- (3.04) (3.18) (.52) - ------------------------------------------------------------------------------------------------------ Net asset value, end of period $38.63 $30.81 $27.44 $22.63 $25.72 ====== ====== ====== ====== ====== ====================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(6) 40.52% 12.28% 34.85% 0.46% 3.93% ====================================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $1,179,362 $788,504 $758,439 $301,698 $368,806 - ------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 985,813 $789,903 $538,210 $325,003 $383,875 - ------------------------------------------------------------------------------------------------------ Ratios to average net assets: Net investment income (loss) 0.53% 0.55%(7) 1.08% 0.72% 0.47% Expenses 1.01% 1.09%(7) 1.03% 1.16% 1.07% - ------------------------------------------------------------------------------------------------------ Portfolio turnover rate(8) 66.0% 45.2% 71.9% 34.7% 22.9% Average brokerage commission rate(9) $0.0625 $0.0595 0.0578 -- --
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993. 2. Per share amounts calculated based on the weighted average number of shares outstanding during the period. 3. For the eight months ended August 31, 1996. The Fund changed its fiscal year end from December 31 to August 31. 4. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 5. Less than $0.005 per share. 6. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 20 Oppenheimer Capital Appreciation Fund 21
CLASS B CLASS C - -------- ------------------------------------ -------------------------------------------------- PERIOD ENDED YEAR ENDED AUGUST 31 DEC. 31, YEAR ENDED AUGUST 31, YEAR ENDED DECEMBER 31, 1992 1997 1996(3) 1995(4) 1997 1996(3) 1995 1994(2) 1993(1) ==================================================================================================== $23.76 $30.56 $27.37 $29.77 $30.27 $27.11 $22.50 $25.72 $25.92 - ---------------------------------------------------------------------------------------------------- .16 .07 --(5) (.14) .01 (.03) .09 -- (.01) 2.28 11.05 3.19 .78 11.03 3.19 7.43 (.15) .31 ------ ------ ------ ------ ------ ------ ------ ------ ------ 2.44 11.12 3.19 .64 11.04 3.16 7.52 (.15) .30 - ---------------------------------------------------------------------------------------------------- (.17) (.06) -- (.24) -- -- (.11) (.09) (.10) (.78) (3.55) -- (2.80) (3.55) -- (2.80) (2.98) (.40) ------ ------ ------ ------ ------ ------ ------ ------ ------ (.95) (3.61) -- (3.04) (3.55) -- (2.91) (3.07) (.50) - ---------------------------------------------------------------------------------------------------- $25.25 $38.07 $30.56 $27.37 $37.76 $30.27 $27.11 $22.50 $25.72 ====== ====== ====== ====== ====== ====== ====== ====== ====== ==================================================================================================== 10.27% 39.30% 11.65% 1.67% 39.35% 11.66% 33.56% (0.50)% 2.11% ==================================================================================================== $401,256 $52,220 $5,448 $2,751 $36,148 $10,355 $7,237 $1,066 $8 - ---------------------------------------------------------------------------------------------------- $362,295 $23,678 $4,285 $ 661 $19,508 $ 9,053 $3,792 $ 467 $6 - ---------------------------------------------------------------------------------------------------- 0.69% (0.33)% (0.25)%(7) (0.54)%(7) (0.32)% (0.30)%(7) 0.19% (0.02)% (0.07)%(7) 1.09% 1.86% 1.94%(7) 2.62%(7) 1.85% 1.93%(7) 1.90% 2.18% 2.18%(7) - ---------------------------------------------------------------------------------------------------- 42.3% 66.0% 45.2% 71.9% 66.0% 45.2% 71.9% 34.7% 22.9% -- $0.0625 $0.0595 $0.0578 $0.0625 $0.0595 $0.0578 -- --
7. Annualized. 8. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended August 31, 1997 were $575,587,380 and $558,414,051, respectively. 9. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for the period, divided by the total number of related shares purchased and sold. Generally, non-U.S. commissions are lower than U.S. commissions when expressed as cents per share but higher when expressed as a percentage of transactions because of the lower per-share prices of many non-U.S. securities. See accompanying Notes to Financial Statements. 21 Oppenheimer Capital Appreciation Fund 22 NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Capital Appreciation Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to seek capital appreciation, primarily through investment in equity securities. The Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency exchange contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. 22 Oppenheimer Capital Appreciation Fund 23 ================================================================================ REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. - -------------------------------------------------------------------------------- TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended August 31, 1997, a credit of $75,351 was made for the Fund's projected benefit obligations, and payments of $9,051 were made to retired trustees, resulting in an accumulated liability of $154,735 at August 31, 1997. - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. - -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. 23 Oppenheimer Capital Appreciation Fund 24 NOTES TO FINANCIAL STATEMENTS (Continued) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. ================================================================================ 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
YEAR ENDED PERIOD ENDED YEAR ENDED AUGUST 31, 1997 AUGUST 31, 1996(2) DECEMBER 31, 1995(1) -------------------------- -------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------------------- Class A: Sold 8,550,231 $ 291,467,633 2,809,568 $ 83,949,691 3,305,271 $ 90,988,885 Dividends and distributions reinvested 3,066,971 94,554,716 -- -- 2,635,092 71,461,980 Issued in connection with the acquisition of Oppenheimer Time Fund--Note 6 -- -- -- -- 11,277,345 315,314,574 Redeemed (6,683,422) (223,995,177) (4,852,702) (142,750,536) (2,909,180) (80,154,348) --------- ------------- ----------- ------------- ----------- ------------ Net increase (decrease) 4,933,780 $ 162,027,172 (2,043,134) $ (58,800,845) 14,308,528 $397,611,091 ========= ============= =========== ============= =========== ============ - ----------------------------------------------------------------------------------------------------------------- Class B: Sold 1,757,393 $ 59,666,544 358,325 $ 10,711,635 107,562 $ 3,071,314 Dividends and distributions reinvested 51,555 1,576,025 -- -- 3,988 107,888 Redeemed (615,428) (20,193,933) (280,568) (8,296,472) (11,032) (338,814) --------- ------------- ----------- ------------- ----------- ------------ Net increase 1,193,520 $ 41,048,636 77,757 $ 2,415,163 100,518 $ 2,840,388 ========= ============= =========== ============= =========== ============ - ----------------------------------------------------------------------------------------------------------------- Class C: Sold 776,983 $ 26,196,322 152,465 $ 4,501,923 257,084 $ 7,022,376 Dividends and distributions reinvested 45,592 1,381,908 -- -- 22,545 604,205 Redeemed (207,324) (6,728,436) (77,259) (2,251,487) (60,076) (1,637,177) --------- ------------- ----------- ------------- ----------- ------------ Net increase 615,251 $ 20,849,794 75,206 $ 2,250,436 219,553 $ 5,989,404 ========= ============= =========== ============= =========== ============
1. For the year ended December 31, 1995 for Class A and Class C shares and for the period from November 1, 1995 (inception of offering) to December 31, 1995 for Class B shares. 2. The Fund changed its fiscal year end from December 31 to August 31. 24 Oppenheimer Capital Appreciation Fund 25 ================================================================================ 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At August 31, 1997, net unrealized appreciation on investments of $372,515,606 was composed of gross appreciation of $387,767,534, and gross depreciation of $15,251,928. ================================================================================ 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.75% on the first $200 million of average annual net assets, 0.72% on the next $200 million, 0.69% on the next $200 million, 0.66% on the next $200 million and 0.60% on average annual net assets in excess of $800 million. The Manager has voluntarily undertaken to waive a portion of its management fee, whereby the Fund shall pay an annual management fee of 0.58% of its average annual net assets in excess of $1.5 billion. For the year ended August 31, 1997, commissions (sales charges paid by investors) on sales of Class A shares totaled $1,798,377, of which $539,543 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $1,149,607 and $180,563, respectively, of which $97,246 and $1,942, respectively, was paid to an affiliated broker/dealer for Class B and Class C. During the year ended August 31, 1997, OFDI received contingent deferred sales charges of $29,817 and $5,023, respectively, upon redemption of Class B and Class C shares as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a portion of its costs incurred in connection with the personal service and maintenance of shareholder accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the year ended August 31, 1997, OFDI paid $74,402 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 25 Oppenheimer Capital Appreciation Fund 26 NOTES TO FINANCIAL STATEMENTS (Continued) ================================================================================ 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The Fund has adopted a Distribution and Service Plan for Class B shares to compensate OFDI for its services and costs in distributing Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class B shares. OFDI also receives a service fee of 0.25% per year to compensate dealers for providing personal services for accounts that hold Class B shares. Both fees are computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the year ended August 31, 1997, OFDI retained $152,304 as compensation for Class B sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. As of August 31, 1997, OFDI had incurred unreimbursed expenses of $1,114,421 for Class B. The Fund has adopted a Distribution and Service Plan for Class C shares to reimburse OFDI for its services and costs in distributing Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class C shares. OFDI also receives a service fee of 0.25% per year to reimburse dealers for providing personal services for accounts that hold Class C shares. Both fees are computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the year ended August 31, 1997, OFDI paid $2,597 to an affiliated broker/dealer as reimbursement for Class C personal service and maintenance expenses and retained $98,687 as reimbursement for Class C sales commissions and service fee advances, as well as financing costs. If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for distributing shares before the Plan was terminated. As of August 31, 1997, OFDI had incurred unreimbursed expenses of $312,759 for Class C. ================================================================================ 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. 26 Oppenheimer Capital Appreciation Fund 27 ================================================================================ Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Gains and losses on outstanding contracts (unrealized appreciation or depreciation on forward contracts) are reported in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Fund's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. ================================================================================ 6. ACQUISITION OF OPPENHEIMER TIME FUND On June 23, 1995, the Fund acquired all of the net assets of Oppenheimer Time Fund, pursuant to an Agreement and Plan of Reorganization approved by the Oppenheimer Time Fund shareholders on June 20, 1995. The Fund issued 11,277,345 shares of beneficial interest (Class A), valued at $315,314,574 in exchange for the net assets, resulting in combined Class A net assets of $686,360,280 on June 23, 1995. The net assets acquired included net unrealized appreciation of $67,068,398. The exchange qualified as a tax-free reorganization for federal income tax purposes. ================================================================================ 7. SUBSEQUENT EVENT At a meeting held on August 7, 1997, the Board of Trustees approved the addition of Class Y shares for Oppenheimer Capital Appreciation Fund, to be offered at a future date. 27 Oppenheimer Capital Appreciation Fund 28 INDEPENDENT AUDITORS' REPORT ================================================================================ The Board of Trustees and Shareholders of Oppenheimer Capital Appreciation Fund: We have audited the accompanying statements of investments and assets and liabilities of Oppenheimer Capital Appreciation Fund (formerly Oppenheimer Target Fund) as of August 31, 1997, and the related statement of operations for the year then ended, the statements of changes in net assets for the year then ended, the eight-month period ended August 31, 1996 and the year ended December 31, 1995, and the financial highlights for the year ended August 31, 1997, the eight-month period ended August 31, 1996 and for each of the years in the four-year period ended December 31, 1995. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 1997 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Capital Appreciation Fund as of August 31, 1997, the results of its operations for the year then ended, the changes in its net assets for the year then ended, the eight-month period ended August 31, 1996 and the year ended December 31, 1995, and the financial highlights for the year ended August 31, 1997, the eight-month period ended August 31, 1996 and for each of the years in the four-year period ended December 31, 1995, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Denver, Colorado September 22, 1997 28 Oppenheimer Capital Appreciation Fund 29 FEDERAL INCOME TAX INFORMATION (unaudited) ================================================================================ In early 1998, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1997. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Distributions of $3.7229, $3.6127 and $3.5488 per share were paid to Class A, Class B and Class C shareholders, respectively, on December 13, 1996, of which, for each class of shares, $2.966 was designated as a "capital gain distribution" for federal income tax purposes. Whether received in stock or in cash, the capital gain distribution should be treated by shareholders as a gain from the sale of capital assets held for more than one year (long-term capital gains). Dividends paid by the Fund during the year ended August 31, 1997 which are not designated as capital gain distributions should be multiplied by 15.27% to arrive at the net amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax adviser for specific guidance. 29 Oppenheimer Capital Appreciation Fund 30 OPPENHEIMER CAPITAL APPRECIATION FUND ================================================================================ OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Jane Putnam, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary ================================================================================ INVESTMENT ADVISER OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AND SHAREHOLDER OppenheimerFunds Services SERVICING AGENT ================================================================================ CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES ================================================================================ INDEPENDENT AUDITORS KPMG Peat Marwick LLP ================================================================================ LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein This is a copy of a report to shareholders of Oppenheimer Capital Appreciation Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Capital Appreciation Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 30 Oppenheimer Capital Appreciation Fund 31 OPPENHEIMERFUNDS FAMILY ======================================================================================================= REAL ASSET FUNDS - ------------------------------------------------------------------------------------------------------- Real Asset Fund Gold & Special Minerals Fund ======================================================================================================= STOCK FUNDS - ------------------------------------------------------------------------------------------------------- Developing Markets Fund Quest Small Cap Value Fund Global Fund Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund International Growth Fund Quest Capital Value Fund Disciplined Value Fund Discovery Fund Growth Fund Quest Value Fund ======================================================================================================= STOCK &BOND FUNDS - ------------------------------------------------------------------------------------------------------- Main Street Income & Quest Growth &Income Disciplined Allocation Fund Growth Fund Value Fund Multiple Strategies Fund2 Quest Opportunity Value Fund Global Growth &Income Fund Bond Fund for Growth Total Return Fund Equity Income Fund ======================================================================================================= BOND FUNDS - ------------------------------------------------------------------------------------------------------- International Bond Fund Champion Income Fund U.S. Government Trust High Yield Fund Strategic Income Fund Limited-Term Government Fund Bond Fund ======================================================================================================= MUNICIPAL FUNDS - ------------------------------------------------------------------------------------------------------- California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division: Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund ======================================================================================================= MONEY MARKET FUNDS(4) - ------------------------------------------------------------------------------------------------------- Money Market Fund Cash Reserves ======================================================================================================= LIFESPAN - ------------------------------------------------------------------------------------------------------- Growth Fund Balanced Fund Income Fund
1. On 12/18/96, the Fund's name was changed from "Target Fund." 2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund." 3. Available only to investors in certain states. 4. An investment in money market funds is neither insured nor guaranteed by the U.S. government and there can be no assurance that a money market fund will be able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved. 31 Oppenheimer Capital Appreciation Fund 32 INTERNET 24-hr access to account information WWW.OPPENHEIMERFUNDS.COM GENERAL INFORMATION Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-525-7048 ACCOUNT TRANSACTIONS Mon-Fri 8:30am-9pm ET Sat 10am-4pm ET 1-800-852-8457 PHONELINK 24-hr automated information and automated transactions 1-800-533-3310 TELECOMMUNICATION DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-2pm ET 1-800-843-4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 INFORMATION AND SERVICES - -------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today, or visit us at our website at www.oppenheimerfunds.com-- we're here to help. [OPPENHEIMER FUNDS LOGO] RA320.001.0597 October 30, 1997 -----END PRIVACY-ENHANCED MESSAGE-----