0001110538-01-500167.txt : 20011101
0001110538-01-500167.hdr.sgml : 20011101
ACCESSION NUMBER: 0001110538-01-500167
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010831
FILED AS OF DATE: 20011031
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: OPPENHEIMER CAPITAL APPRECIATION FUND
CENTRAL INDEX KEY: 0000319767
STANDARD INDUSTRIAL CLASSIFICATION: []
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: 1772171
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
opp211352.txt
[photo--mountains]
Annual Report August 31, 2001
Oppenheimer
Capital Appreciation Fund
[logo] OppenheimerFunds(R)
The Right Way to Invest
REPORT HIGHLIGHTS
Fund Objective
Oppenheimer Capital Appreciation Fund seeks capital appreciation.
CONTENTS
1 Letter to
Shareholders
2 An Interview
with Your Fund's
Manager
6 Fund Performance
12 Financial
Statements
37 Independent
Auditors' Report
38 Federal
Income Tax
Information
39 Officers and
Trustees
Average Annual Total Returns*
For the 1-Year Period
Ended 8/31/01
Without With
Sales Chg. Sales Chg.
---------------------------------
Class A -26.38% -30.62%
---------------------------------
Class B -26.95 -30.21
---------------------------------
Class C -26.95 -27.60
---------------------------------
Class Y -26.12
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 10 for further details.
LETTER TO SHAREHOLDERS
Dear Shareholder,
September 11, 2001, was a tragic day for our country. As you may know, our
corporate headquarters were located at Two World Trade Center in New York City.
Although we are thankful that all OppenheimerFunds employees were able to safely
evacuate the World Trade Center, our thoughts and prayers remain with the
countless families whose lives have been affected by these terrible events. As a
company and as individuals, we will be forever indebted to the hundreds of law
enforcement officers, firefighters and rescue workers who continue to serve so
heroically in this time of great need.
To express our gratitude, we have established a 501(c)3 charity, the "World
Trade Center Legacy Relief Fund," in which we will match the first $1 million in
donations. All donations will be sent to qualified, pre-screened charities that
support the families of victims of this tragic event, such as the American Red
Cross and the New York Fire Fighters 9-11 Disaster Relief Fund.
As the events of September 11 unfolded, OppenheimerFunds quickly and
efficiently implemented its emergency recovery plans. By the next day, our
portfolio managers, analysts and other employees were overseeing the assets in
your fund's portfolio and accessing vital information in real time. And, thanks
to our multiple operating locations, well-distributed resources and rigorous
back-up procedures, our shareholder-account and Fund investment records remained
intact.
In these difficult times, it is important to remember that our portfolio
management team is a sophisticated group of investment professionals with
extensive experience. They are diligently monitoring the events that are shaping
the financial world and economy. Just as your financial advisor employs
diversification and asset allocation to determine the appropriate balance of
risk and reward for your portfolio, OppenheimerFunds portfolio managers are
guided by similar principles: broad diversification, a focus on business
fundamentals and a long-term investment perspective.
At OppenheimerFunds we understand that these are trying times for investors.
We encourage you to work closely with your financial advisor and to stay focused
on your long-term investment goals. Once again, thank you for your continued
confidence. We look forward to showing and sharing with you the strength,
expertise and resolve which makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ John V. Murphy
John V. Murphy
September 24, 2001
[photo]
John V. Murphy
Chairman, President and
Chief Executive Officer
OppenheimerFunds, Inc.
1 | OPPENHEIMER CAPITAL APPRECIATION FUND
AN INTERVIEW WITH YOUR FUND'S MANAGER
Q How would you characterize the performance of Oppenheimer Capital Appreciation
Fund during the 12-month period that ended August 31, 2001?
A. While the overall performance of the Fund suffered due mainly to volatile and
challenging market conditions, the Fund's returns, relative to its benchmark and
peers, were good, staying the course with the S&P 500 Index. We attribute that
largely to our growth-at-a-reasonable-price investment strategy, which enabled
us to lower the Fund's holdings in the technology sector earlier than most of
our peers.
What made this such a challenging period?
The past 12 months have been something of a "payback" following several years of
above average growth up until the spring of 2000. There has proven to be excess
capacity throughout many sectors of the economy, particularly in the technology
and telecom industries. The real drawback has been the wide range of effects the
technology slowdown has had on many other seemingly unrelated sectors.
In addition to the technology slowdown, the economy suffered from rising
energy costs and elevated interest rates during 2000. Despite all this, consumer
spending remained relatively strong, providing greater support for some
consumer-related businesses. A wide range of healthcare companies also prospered
due to a more favorable regulatory environment and rising reimbursement rates
for a variety of medical services.
[photo]
Portfolio Management
Team (l to r)
Edward Amberger
Jane Putnam
(Portfolio Manager)
2 | OPPENHEIMER CAPITAL APPRECIATION FUND
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. This
approach helped us limit the impact of technology stock volatility on the Fund
by steering us away from the sector's most speculative, highly valued stocks. As
economic conditions weakened, we responded by reducing our positions in
technology companies that showed evidence of decelerating earnings growth. While
we began the reporting period with approximately 30% of the Fund invested in
technology, by the mid-point of the period we had cut our technology position to
under 20%. Among our remaining technology holdings, we emphasized companies with
a track record of delivering moderate but steady earnings in a slowing economy.
Similarly, outside the technology sector, our disciplined investment approach
led us to emphasize individual companies that were well positioned to continue
growing despite the challenging economic environment. Among consumer cyclicals,
we added to our holdings among retailers and cruise lines, such as Carnival
Corp., that enjoyed strong underlying business fundamentals and were selling at
relatively low prices. In the media and entertainment areas, we targeted
well-established companies, such as AOL Time Warner, Inc., positioned to benefit
from a rebound in advertising revenue. In the healthcare sector, we focused on
pharmaceutical companies, such as Johnson & Johnson, about to bring significant
new products to market, and orthopedic companies benefiting from growing demand
from an aging population. Among financials, we reduced our positions in capital
market-sensitive companies in favor of interest-rate-sensitive companies
including banks, thrifts and government agencies, such as Freddie Mac (Federal
Home Loan Mortgage Corp.). Finally, in the utility sector, we sold stocks of
power generators that had benefited from rising prices for oil and gas in the
first quarter of 2001.
[callout]
Our broadly diversified investments in a variety of industries, plus a strategic
allocation to cash, helped support the Fund's value at a time when many stocks
were suffering steep declines.
3 | OPPENHEIMER CAPITAL APPRECIATION FUND
AN INTERVIEW WITH YOUR FUND'S MANAGER
In general, these broadly diversified investments performed well during the
period. Together with our 11% allocation of the portfolio's assets to short-term
securities, they helped support the Fund's value at a time when many stocks were
suffering steep declines.
Did any investments fail to meet your expectations?
We were disappointed with the performance of a few specific holdings that failed
to buck the generally negative market trend. For example, Nokia Corp. dipped
during the period as a result of projections for slower growth over the near
term. Some of our wireless telecommunications holdings also declined in response
to delays in the widespread adoption of next-generation wireless technologies.
However, our small allocation to these stocks, relative to our benchmark and
peers, helped reduce the negative impact of these companies' weak returns on the
Fund.
What is your outlook over the coming months?
As we begin to look out to 2002 and beyond, we have tried to position the Fund
to be ready for a wide range of market environments. While falling interest
rates are creating a more favorable environment for economic growth, there is no
way to tell if economic growth rates are likely to respond before 2002. We have
continued to have strong holdings in the consumer cyclical sector, as we believe
the sector's modest growth will continue for decent gains in 2002. In addition,
we have shifted our weight in certain areas of technology, mainly
semiconductors, that we feel will be the first to benefit from a turnaround.
Accordingly, we are closely watching corporate earnings for signs of growth,
while focusing on individual companies that we believe are well positioned to
meet or exceed expectations.
Average Annual
Total Returns
For the Periods Ended 9/30/01(1)
Class A
1-Year 5-Year 10-Year
------------------------
-34.50% 10.84% 13.16%
Class B Since
1-Year 5-Year Inception
------------------------
-34.13% 11.00% 13.11%
Class C Since
1-Year 5-Year Inception
------------------------
-31.66% 11.27% 13.82%
Class Y Since
1-Year 5-Year Inception
------------------------
-30.25% N/A 7.53%
1. See Notes on page 10 for further details.
4 | OPPENHEIMER CAPITAL APPRECIATION FUND
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(3)
-----------------------------------------------------------
Computer Software 9.1%
-----------------------------------------------------------
Broadcasting 7.0
-----------------------------------------------------------
Diversified Financial 6.9
-----------------------------------------------------------
Healthcare/Drugs 6.8
-----------------------------------------------------------
Electronics 5.7
Top Ten Common Stock Holdings(3)
-----------------------------------------------------------
AOL Time Warner, Inc. 3.5%
-----------------------------------------------------------
Comcast Corp., Cl. A Special 3.1
-----------------------------------------------------------
Microsoft Corp. 2.9
-----------------------------------------------------------
Citigroup, Inc. 2.4
-----------------------------------------------------------
Viacom, Inc., Cl. B 2.2
-----------------------------------------------------------
Johnson & Johnson 2.0
-----------------------------------------------------------
Exxon Mobil Corp. 1.5
-----------------------------------------------------------
Pfizer, Inc. 1.5
-----------------------------------------------------------
Clear Channel Communications, Inc. 1.5
-----------------------------------------------------------
Carnival Corp. 1.5
Sector Allocation(2)
[pie chart]
Technology 23.2%
Consumer
Staples 17.4
Financial 14.5
Healthcare 12.6
Consumer
Cyclicals 10.8
Capital Goods 8.1
Energy 6.8
Utilities 4.3
Basic Materials 1.1
Communication
Services 0.7
Transportation 0.5
2. Portfolio is subject to change. Percentages are as of August 31, 2001, and
are based on total market value of the Fund's common stock holdings.
3. Portfolio is subject to change. Percentages are as of August 31, 2001, and
are based on net assets.
5 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE
How Has the Fund Performed?
Below is a discussion, by OppenheimerFunds, Inc., of the Fund's performance
during its fiscal year ended August 31, 2001, followed by a graphical comparison
of the Fund's performance to an appropriate broad-based market index.
Management's discussion of performance. During the one-year period that ended
August 31, 2001, Oppenheimer Capital Appreciation Fund generally performed on
par with the S&P 500 Index. We attribute the Fund's strong relative performance
partly to three key factors: our disciplined approach to maintaining a
well-diversified portfolio, our success in finding good investment opportunities
among defensive companies that exhibited growth despite a slowing economic
environment, and our timely move to take advantage of attractive prices in
cyclical stocks that were hurt by the economic slowdown. Most of our
best-performing holdings were grouped among various consumer-related industries,
as well as the healthcare, financial and utilities sectors. Our 11% allocation
of assets to short-term securities also helped maintain the Fund's net asset
value. Weak results in the technology and telecommunications sectors undermined
performance. However, we allocated a relatively small percentage of assets to
these sectors compared to our benchmark and most of our peers.
6 | OPPENHEIMER CAPITAL APPRECIATION FUND
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of shares of the
Fund held until August 31, 2001; in the case of Class A shares, performance is
measured over a 10-year period; in the case of Class B shares, from the
inception of the Class on November 1, 1995, in the case of Class C shares, from
the inception of the Class on December 1, 1993, and in the case of Class Y
shares, from the inception of the Class on November 3, 1997. Because Class N
shares of the Fund were first publicly offered on March 1, 2001, no performance
information on Class N shares is included.
The Fund's performance reflects the deduction of the maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B and Class C shares, and reinvestment of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effect of
Fund business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the index shown.
7 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
Oppenheimer Capital Appreciation
Fund (Class A) S&P 500 Index
12/31/91 9425 10000
9211 9748
8882 9933
9223 10246
10393 10761
10364 11230
10318 11284
10557 11575
12/31/93 10801 11843
10519 11395
10229 11442
10826 12001
10850 11999
11828 13166
13218 14421
14374 15566
12/31/95 14631 16502
15681 17388
16487 18167
08/31/96(1) 16428 17732
18998 20699
19422 21725
20904 23426
08/31/97 23085 24935
23581 26598
25598 29326
26361 30607
08/31/98 22147 26960
26803 32898
30016 35120
31716 37045
08/31/99 32635 37692
36217 39771
44680 39239
43801 40923
08/31/00 48304 43838
39836 38091
39298 36023
40275 36606
08/31/01 35561 33152
Average Annual Total Return of Class A Shares of the Fund at 8/31/01(1,2)
1-Year -30.62% 5-Year 15.33% 10-Year 14.43%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
Oppenheimer Capital Appreciation
Fund (Class B) S&P 500 Index
11/01/95 10000 10000
12/31/95 10167 10640
03/31/96 10873 11211
06/30/96 11411 11713
08/31/96 11352 11432
11/30/96 13098 13345
02/28/97 13362 14007
05/31/97 14347 15104
08/31/97 15813 16077
11/30/97 16120 17149
02/28/98 17458 18907
05/31/98 17945 19734
08/31/98 15044 17382
11/30/98 18171 21211
02/28/99 20310 22643
05/31/99 21418 23884
08/31/99 21995 24301
11/30/99 24362 25642
02/29/00 29998 25299
05/31/00 29350 26385
08/31/00 32305 28264
11/30/00 26590 24559
02/28/01 26179 23226
05/31/01 26782 23602
08/31/01 23501 21375
Average Annual Total Return of Class B Shares of the Fund at 8/31/01(1,2)
1-Year -30.21% 5-Year 15.54% Since Inception 15.77%
1. The Fund changed its fiscal year from 12/31 to 8/31.
2. See Notes on page 10 for further details.
8 | OPPENHEIMER CAPITAL APPRECIATION FUND
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
Oppenheimer Capital Appreciation
Fund (Class C) S&P 500 Index
12/01/93 10000 10000
12/31/93 10117 10121
03/31/94 9825 9738
06/30/94 9530 9778
09/30/94 10061 10256
12/31/94 10066 10254
03/31/95 10942 11251
06/30/95 12195 12324
09/30/95 13233 13302
12/31/95 13444 14103
03/31/96 14381 14859
06/30/96 15085 15525
08/31/96 15011 15153
11/30/96 17322 17689
02/28/97 17671 18566
05/31/97 18978 20020
08/31/97 20917 21309
11/30/97 21322 22731
02/28/98 23094 25061
05/31/98 23737 26157
08/31/98 19904 23040
11/30/98 24040 28114
02/28/99 26863 30013
05/31/99 28329 31658
08/31/99 29092 32211
11/30/99 32220 33988
02/29/00 39681 33533
05/31/00 38829 34972
08/31/00 42735 37463
11/30/00 35168 32552
02/28/01 34634 30785
05/31/01 35426 31283
08/31/01 31217 28332
Average Annual Total Return of Class C Shares of the Fund at 8/31/01(1,2)
1-Year -27.60% 5-Year 15.77% Since Inception 15.82%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[mountain chart]
Oppenheimer Capital Appreciation
Fund (Class Y) S&P 500 Index
11/03/97 10000 10000
11/30/97 9833 10463
02/28/98 10680 11535
05/31/98 11009 12039
08/31/98 9255 10605
11/30/98 11211 12940
02/28/99 12564 13815
05/31/99 13291 14572
08/31/99 13688 14826
11/30/99 15203 15644
02/29/00 18778 15435
05/31/00 18430 16097
08/31/00 20347 17244
11/30/00 16789 14983
02/28/01 16579 14170
05/31/01 17009 14399
08/31/01 15034 13041
Average Annual Total Return of Class Y Shares of the Fund at 8/31/01(1,2)
1-Year -26.12% Since Inception 11.24%
The performance information for the S&P 500 Index in the graphs begins on
12/31/91 for Class A, 10/31/95 for Class B, 11/30/93 for Class C and 10/31/97
for Class Y.
Past performance cannot guarantee future results. Graphs are not drawn to the
same scale.
9 | 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 and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the effects 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. The Fund's portfolio allocations,
management and strategies are subject to change. 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),
2% (5-year) and 1% (since inception). 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, therefore no
performance information on Class N shares is included in this report. Class N
shares are offered only through retirement plans. 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
agreements with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER CAPITAL APPRECIATION FUND
Financials
11 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS August 31, 2001
Market Value
Shares See Note 1
==================================================================================
Common Stocks--87.0%
----------------------------------------------------------------------------------
Basic Materials--1.0%
----------------------------------------------------------------------------------
Chemicals--0.4%
IMC Global, Inc. 401,000 $ 4,735,810
----------------------------------------------------------------------------------
PPG Industries, Inc. 300,000 16,236,000
------------
20,971,810
----------------------------------------------------------------------------------
Paper--0.6%
International Paper Co. 800,000 32,096,000
----------------------------------------------------------------------------------
Capital Goods--7.1%
----------------------------------------------------------------------------------
Aerospace/Defense--0.4%
Boeing Co. 200,000 10,240,000
----------------------------------------------------------------------------------
Northrop Grumman Corp. 133,400 10,938,800
------------
21,178,800
----------------------------------------------------------------------------------
Electrical Equipment--1.1%
General Electric Co. 550,000 22,539,000
----------------------------------------------------------------------------------
SPX Corp.(1) 60,060 6,981,975
----------------------------------------------------------------------------------
Vishay Intertechnology, Inc.(1) 1,535,000 35,811,550
------------
65,332,525
----------------------------------------------------------------------------------
Industrial Services--1.3%
Philadelphia Suburban Corp. 149,100 4,115,160
----------------------------------------------------------------------------------
Waste Management, Inc. 2,200,000 68,046,000
------------
72,161,160
----------------------------------------------------------------------------------
Manufacturing--4.3%
Flextronics International Ltd.(1) 1,860,000 40,808,400
----------------------------------------------------------------------------------
Honeywell International, Inc. 1,100,000 40,986,000
----------------------------------------------------------------------------------
Mettler-Toledo International, Inc.(1) 527,350 24,136,810
----------------------------------------------------------------------------------
Millipore Corp. 281,000 17,829,450
----------------------------------------------------------------------------------
Sanmina Corp.(1) 3,693,700 66,523,537
----------------------------------------------------------------------------------
Tyco International Ltd. 1,009,791 52,458,642
------------
242,742,839
----------------------------------------------------------------------------------
Communication Services--0.6%
----------------------------------------------------------------------------------
Telecommunications: Long Distance--0.1%
WorldCom, Inc./WorldCom Group(1) 617,000 7,934,620
----------------------------------------------------------------------------------
Telecommunications: Wireless--0.5%
Vodafone Group plc, Sponsored ADR 1,323,300 26,664,495
----------------------------------------------------------------------------------
Consumer Cyclicals--9.3%
----------------------------------------------------------------------------------
Autos & Housing--0.5%
Centex Corp. 182,690 8,001,822
----------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 615,160 21,715,148
------------
29,716,970
12 | OPPENHEIMER CAPITAL APPRECIATION FUND
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Consumer Services--1.1%
Omnicom Group, Inc. 790,000 $ 61,454,100
----------------------------------------------------------------------------------
Leisure & Entertainment--2.7%
Carnival Corp. 2,670,000 83,517,600
----------------------------------------------------------------------------------
Fairmont Hotels & Resorts, Inc.(1) 355,000 8,262,951
----------------------------------------------------------------------------------
Harley-Davidson, Inc. 710,000 34,498,900
----------------------------------------------------------------------------------
Host Marriott Corp. 2,225,000 28,480,000
------------
154,759,451
----------------------------------------------------------------------------------
Media--2.5%
Kadant, Inc.(1) 210,196 2,911,215
----------------------------------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 1,090,000 64,582,500
----------------------------------------------------------------------------------
News Corp. Ltd. (The), Sponsored ADR 2,300,000 74,957,000
------------
142,450,715
----------------------------------------------------------------------------------
Retail: Specialty--2.5%
Circuit City Stores, Inc./Circuit City Group 765,000 12,775,500
----------------------------------------------------------------------------------
Gap, Inc. 2,200,000 43,230,000
----------------------------------------------------------------------------------
Home Depot, Inc. 600,000 27,570,000
----------------------------------------------------------------------------------
Nike, Inc., Cl. B 490,000 24,500,000
----------------------------------------------------------------------------------
Rite Aid Corp.(1) 1,100,000 8,734,000
----------------------------------------------------------------------------------
Tiffany & Co. 900,000 28,035,000
------------
144,844,500
----------------------------------------------------------------------------------
Consumer Staples--15.1%
----------------------------------------------------------------------------------
Beverages--2.4%
Anheuser-Busch Cos., Inc. 1,760,000 75,750,400
----------------------------------------------------------------------------------
PepsiCo, Inc. 1,300,000 61,100,000
------------
136,850,400
----------------------------------------------------------------------------------
Broadcasting--7.0%
Adelphia Communications Corp., Cl. A(1) 903,000 28,489,650
----------------------------------------------------------------------------------
Cablevision Systems Corp., Cl. A(1) 900,000 42,030,000
----------------------------------------------------------------------------------
Clear Channel Communications, Inc.(1) 1,697,440 85,330,309
----------------------------------------------------------------------------------
Comcast Corp., Cl. A Special(1) 4,900,000 179,487,000
----------------------------------------------------------------------------------
Fox Entertainment Group, Inc., A Shares(1) 700,000 17,164,00
----------------------------------------------------------------------------------
Hispanic Broadcasting Corp.(1) 1,177,925 24,312,372
----------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A(1) 770,000 22,969,100
------------
399,782,431
----------------------------------------------------------------------------------
Entertainment--3.3%
Royal Caribbean Cruises Ltd. 2,700,000 63,018,000
----------------------------------------------------------------------------------
Viacom, Inc., Cl. B(1) 3,000,000 127,200,000
------------
190,218,000
13 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Food--0.2%
Sysco Corp. 360,000 $ 10,087,200
----------------------------------------------------------------------------------
Food & Drug Retailers--2.2%
CVS Corp. 900,000 32,499,000
----------------------------------------------------------------------------------
Kroger Co. (The)(1) 1,260,000 33,541,200
----------------------------------------------------------------------------------
Safeway, Inc.(1) 1,376,000 62,071,360
------------
128,111,560
----------------------------------------------------------------------------------
Energy--5.9%
----------------------------------------------------------------------------------
Energy Services--1.9%
BJ Services Co.(1) 1,020,000 22,878,600
----------------------------------------------------------------------------------
Halliburton Co. 860,000 23,959,600
----------------------------------------------------------------------------------
Noble Drilling Corp.(1) 437,510 11,900,272
----------------------------------------------------------------------------------
PanCanadian Energy Corp.(1) 971,280 22,713,954
----------------------------------------------------------------------------------
Rowan Cos., Inc.(1) 550,000 8,552,500
----------------------------------------------------------------------------------
Schlumberger Ltd. 164,060 8,038,940
----------------------------------------------------------------------------------
Varco International, Inc.(1) 600,000 9,108,000
------------
107,151,866
----------------------------------------------------------------------------------
Oil: Domestic--2.6%
Amerada Hess Corp. 700,000 54,397,000
----------------------------------------------------------------------------------
Exxon Mobil Corp. 2,200,000 88,330,000
----------------------------------------------------------------------------------
Suncor Energy, Inc. 224,370 6,248,705
------------
148,975,705
----------------------------------------------------------------------------------
Oil: International--1.4%
TotalFinaElf SA, Sponsored ADR 1,080,000 79,758,000
----------------------------------------------------------------------------------
Financial--12.6%
----------------------------------------------------------------------------------
Banks--2.3%
Bank of America Corp. 780,000 47,970,000
----------------------------------------------------------------------------------
Bank One Corp. 1,000,000 34,690,000
----------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 1,100,000 43,340,000
----------------------------------------------------------------------------------
TCF Financial Corp. 109,900 4,989,460
------------
130,989,460
----------------------------------------------------------------------------------
Diversified Financial--6.9%
Citigroup, Inc. 3,010,000 137,707,500
----------------------------------------------------------------------------------
Concord EFS, Inc.(1) 550,520 28,885,784
----------------------------------------------------------------------------------
Fannie Mae 700,000 53,347,000
----------------------------------------------------------------------------------
Freddie Mac 1,320,000 83,001,600
----------------------------------------------------------------------------------
Schwab (Charles) Corp. 2,700,000 33,642,000
----------------------------------------------------------------------------------
USA Education, Inc. 700,000 55,447,000
------------
392,030,884
14 | OPPENHEIMER CAPITAL APPRECIATION FUND
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Insurance--2.8%
American International Group, Inc. 900,000 $ 70,380,000
----------------------------------------------------------------------------------
Everest Re Group Ltd. 290,000 18,821,000
----------------------------------------------------------------------------------
Willis Group Holdings Ltd.(1) 599,420 11,275,090
----------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 740,000 61,420,000
------------
161,896,090
----------------------------------------------------------------------------------
Real Estate Investment Trusts--0.6%
Boston Properties, Inc. 925,000 36,445,000
----------------------------------------------------------------------------------
Healthcare--11.0%
----------------------------------------------------------------------------------
Healthcare/Drugs--6.8%
Andrx Group(1) 333,120 23,415,005
----------------------------------------------------------------------------------
Genzyme Corp. (General Division)(1) 597,110 33,820,310
----------------------------------------------------------------------------------
GlaxoSmithKline plc, ADR 690,000 36,535,500
----------------------------------------------------------------------------------
HCA, Inc. 260,000 11,892,400
----------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(1) 540,490 32,034,842
----------------------------------------------------------------------------------
Johnson & Johnson 2,189,000 115,382,190
----------------------------------------------------------------------------------
Perrigo Co.(1) 1,175,370 18,970,472
----------------------------------------------------------------------------------
Pfizer, Inc. 2,260,000 86,580,600
----------------------------------------------------------------------------------
Serono SA, Sponsored ADR 1,200,000 27,840,000
------------
386,471,319
----------------------------------------------------------------------------------
Healthcare/Supplies & Services--4.2%
Applera Corp./Applied Biosystems Group 1,310,000 32,763,100
----------------------------------------------------------------------------------
Biomet, Inc. 1,298,775 35,885,153
----------------------------------------------------------------------------------
Covance, Inc.(1) 910,000 17,490,200
----------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 710,000 12,836,800
----------------------------------------------------------------------------------
McKesson Corp. 790,000 31,007,500
----------------------------------------------------------------------------------
Medtronic, Inc. 970,000 44,173,800
----------------------------------------------------------------------------------
PerkinElmer, Inc. 708,580 22,731,246
----------------------------------------------------------------------------------
Stryker Corp. 741,080 40,633,416
------------
237,521,215
----------------------------------------------------------------------------------
Technology--20.2%
----------------------------------------------------------------------------------
Computer Hardware--0.3%
SanDisk Corp.(1) 825,000 16,920,750
----------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 120,000 1,557,600
------------
18,478,350
----------------------------------------------------------------------------------
Computer Services--0.8%
First Data Corp. 666,000 43,856,100
15 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Computer Software--9.1%
AOL Time Warner, Inc.(1) 5,300,000 $197,955,000
----------------------------------------------------------------------------------
Cadence Design Systems, Inc.(1) 1,400,000 30,772,000
----------------------------------------------------------------------------------
Check Point Software Technologies Ltd.(1) 755,150 24,157,249
----------------------------------------------------------------------------------
Electronic Arts, Inc.(1) 843,230 48,662,803
----------------------------------------------------------------------------------
Microsoft Corp.(1) 2,900,000 165,445,000
----------------------------------------------------------------------------------
Oracle Corp.(1) 400,000 4,884,000
----------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 770,000 26,549,600
----------------------------------------------------------------------------------
Veritas Software Corp.(1) 796,533 22,876,428
------------
521,302,080
----------------------------------------------------------------------------------
Communications Equipment--4.3%
CIENA Corp.(1) 700,000 11,984,000
----------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 3,350,000 54,705,500
----------------------------------------------------------------------------------
Extreme Networks, Inc.(1) 1,140,500 18,213,785
----------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., ADR, Cl. B 950,000 4,731,000
----------------------------------------------------------------------------------
Lucent Technologies, Inc. 1,590,000 10,843,800
----------------------------------------------------------------------------------
Newport Corp. 500,000 9,060,000
----------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR, A Shares 4,120,000 64,848,800
----------------------------------------------------------------------------------
QUALCOMM, Inc.(1) 1,200,000 70,620,000
------------
245,006,885
----------------------------------------------------------------------------------
Electronics--5.7%
Analog Devices, Inc.(1) 440,000 21,023,200
----------------------------------------------------------------------------------
Atmel Corp.(1) 3,228,100 30,957,479
----------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 1,050,000 22,690,500
----------------------------------------------------------------------------------
International Rectifier Corp.(1) 790,000 29,214,200
----------------------------------------------------------------------------------
Micron Technology, Inc.(1) 1,300,000 48,893,000
----------------------------------------------------------------------------------
National Semiconductor Corp.(1) 1,020,000 33,711,000
----------------------------------------------------------------------------------
RF Micro Devices, Inc.(1) 1,740,000 44,300,400
----------------------------------------------------------------------------------
Texas Instruments, Inc. 800,000 26,480,000
----------------------------------------------------------------------------------
Thermo Electron Corp.(1) 330,000 7,151,100
----------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 1,200,000 17,520,000
----------------------------------------------------------------------------------
Waters Corp.(1) 1,280,000 42,406,400
------------
324,347,279
----------------------------------------------------------------------------------
Transportation--0.4%
----------------------------------------------------------------------------------
Railroads & Truckers--0.2%
Canadian Pacific Ltd.(1) 710,000 13,328,818
----------------------------------------------------------------------------------
Shipping--0.2%
Expeditors International of Washington, Inc. 250,000 12,715,000
16 | OPPENHEIMER CAPITAL APPRECIATION FUND
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Utilities--3.8%
----------------------------------------------------------------------------------
Electric Utilities--1.2%
Duke Energy Corp. 1,600,000 $ 62,896,000
----------------------------------------------------------------------------------
Potomac Electric Power Co. 190,260 4,278,947
--------------
67,174,947
----------------------------------------------------------------------------------
Gas Utilities--2.6%
El Paso Corp. 1,600,000 77,744,000
----------------------------------------------------------------------------------
Enron Corp. 800,000 27,992,000
----------------------------------------------------------------------------------
Kinder Morgan, Inc. 210,000 11,676,000
----------------------------------------------------------------------------------
Williams Cos., Inc. (The) 910,000 29,620,500
--------------
147,032,500
--------------
Total Common Stocks (Cost $5,246,682,395) 4,961,839,074
Principal
Amount
==================================================================================
U.S. Government Obligations--0.5%
U.S. Treasury Nts., 6.375%, 4/30/02 (Cost $29,883,766) $30,000,000 30,601,200
==================================================================================
Structured Instruments--0.6%
Credit Suisse First Boston Corp. (New York Branch),
Carnival Corp. Equity Linked Nts., 7%, 7/17/02(2) 15,000,834 21,001,168
----------------------------------------------------------------------------------
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 10,500,000
--------------
Total Structured Instruments (Cost $30,000,834) 31,501,168
==================================================================================
Short-Term Notes--8.2%
Barton Capital Corp.:
3.52%, 10/4/01 25,000,000 24,919,333
3.65%, 9/7/01 50,000,000 49,969,583
----------------------------------------------------------------------------------
Corporate Receivables Corp.:
3.46%, 10/10/01 25,000,000 24,906,292
3.49%, 10/2/01 50,000,000 49,849,736
----------------------------------------------------------------------------------
CXC, Inc.:
3.47%. 10/1/01 25,000,000 24,927,708
3.48%, 10/4/01 50,000,000 49,840,500
----------------------------------------------------------------------------------
GOVCO, Inc.:
3.52%, 10/3/01 50,000,000 49,843,556
3.64%, 9/11/01 25,000,000 24,974,722
----------------------------------------------------------------------------------
Greyhawk Funding LLC:
3.45%, 10/12/01 40,000,000 39,842,833
3.50%, 10/18/01 40,000,000 39,817,222
----------------------------------------------------------------------------------
National Rural Utilities Cooperative
Finance Corp., 3.63%, 9/10/01 33,000,000 32,970,053
----------------------------------------------------------------------------------
Sheffield Receivables Corp., 3.69%, 9/6/01 35,000,000 34,982,063
----------------------------------------------------------------------------------
Verizon Network Funding, 3.64%, 9/14/01 20,900,000 20,872,528
--------------
Total Short-Term Notes (Cost $467,716,129) 467,716,129
17 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
==================================================================================
Repurchase Agreements--3.4%
Repurchase agreement with PaineWebber, Inc.,
3.67%, dated 8/31/01, to be repurchased at
$195,201,566 on 9/4/01, collateralized by
Federal National Mortgage Assn., 6%-6.50%,
8/1/16-6/1/31, with a value of $199,573,457
(Cost $195,122,000) $195,122,000 $ 195,122,000
----------------------------------------------------------------------------------
Total Investments, at Value (Cost $5,969,405,124) 99.7% 5,686,779,571
----------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.3 18,603,011
-----------------------------
Net Assets 100.0% $5,705,382,582
=============================
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.
18 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2001
==================================================================================
Assets
Investments, at value (cost $5,969,405,124)--
see accompanying statement $5,686,779,571
----------------------------------------------------------------------------------
Cash 63,817
----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 25,527,791
Investments sold 22,580,083
Interest and dividends 5,178,122
Other 388,822
--------------
Total assets 5,740,518,206
==================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 21,260,510
Shares of beneficial interest redeemed 10,144,233
Distribution and service plan fees 2,016,598
Trustees' compensation 765,116
Transfer and shareholder servicing agent fees 404,459
Shareholder reports 38,870
Other 505,838
--------------
Total liabilities 35,135,624
==================================================================================
Net Assets $5,705,382,582
==============
==================================================================================
Composition of Net Assets
Paid-in capital $5,855,824,694
----------------------------------------------------------------------------------
Accumulated net investment loss (739,767)
----------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments and
foreign currency transactions 132,954,948
----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated in
foreign currencies (282,657,293)
--------------
Net Assets $5,705,382,582
==============
19 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
===============================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$3,055,197,170 and 74,319,407 shares of beneficial interest outstanding) $41.11
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $43.62
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$1,242,098,454 and 31,774,279 shares of beneficial interest outstanding) $39.09
-----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $426,476,160
and 11,036,377 shares of beneficial interest outstanding) $38.64
-----------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $6,790,836 $41.05
and 165,428 shares of beneficial interest outstanding)
-----------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $974,819,962 and 23,459,182 shares of beneficial interest
outstanding) $41.55
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2001
==================================================================================
Investment Income
Interest $ 39,704,570
----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $261,631) 39,471,531
---------------
Total income 79,176,101
==================================================================================
Expenses
Management fees 35,024,076
----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 7,637,291
Class B 12,648,587
Class C 3,997,529
Class N 7,904
----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 5,239,603
Class B 2,040,275
Class C 653,404
Class N 3,741
Class Y 241,405
----------------------------------------------------------------------------------
Shareholder reports 1,755,268
----------------------------------------------------------------------------------
Trustees' compensation 679,230
----------------------------------------------------------------------------------
Custodian fees and expenses 85,828
----------------------------------------------------------------------------------
Other 778,544
---------------
Total expenses 70,792,685
Less reduction to custodian expenses (43,775)
---------------
Net expenses 70,748,910
==================================================================================
Net Investment Income 8,427,191
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 217,642,403
Foreign currency transactions (1,164,791)
---------------
Net realized gain (loss) 216,477,612
----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (2,129,820,226)
Translation of assets and liabilities denominated
in foreign currencies (34,160)
---------------
Net change (2,129,854,386)
---------------
Net realized and unrealized gain (loss) (1,913,376,774)
==================================================================================
Net Decrease in Net Assets Resulting from Operations $(1,904,949,583)
===============
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended August 31, 2001 2000
==================================================================================
Operations
Net investment income (loss) $ 8,427,191 $ (5,304,730)
----------------------------------------------------------------------------------
Net realized gain (loss) 216,477,612 610,521,636
----------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) (2,129,854,386) 1,150,983,759
-----------------------------
Net increase (decrease) in net assets resulting
from operations (1,904,949,583) 1,756,200,665
==================================================================================
Dividends and/or Distributions to Shareholders
Distributions from net realized gain:
Class A (315,580,814) (156,146,182)
Class B (125,027,291) (44,540,426)
Class C (38,476,846) (13,722,828)
Class N -- --
Class Y (110,054,951) (34,586,462)
==================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A 742,228,163 665,798,352
Class B 436,276,561 530,123,230
Class C 189,865,151 155,176,037
Class N 7,285,737 --
Class Y 143,938,999 632,947,701
==================================================================================
Net Assets
Total increase (decrease) (974,494,874) 3,491,250,087
----------------------------------------------------------------------------------
Beginning of period 6,679,877,456 3,188,627,369
-----------------------------
End of period (including accumulated net investment
loss of $739,767 and $277,880, respectively) $5,705,382,582 $6,679,877,456
=============================
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
Class A Year Ended August 31, 2001 2000 1999 1998 1997
===========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $62.12 $44.73 $32.53 $38.63 $30.81
---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .10 (.02) (.04) .17 .18
Net realized and unrealized gain (loss) (15.86) 20.63 14.87 (1.55) 11.36
---------------------------------------------------------------------
Total income (loss) from
investment operations (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 (5.25) (3.22) (2.54) (4.57) (3.55)
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (5.25) (3.22) (2.63) (4.72) (3.72)
---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $41.11 $62.12 $44.73 $32.53 $38.63
=====================================================================
===========================================================================================================================
Total Return, at Net Asset Value(1) (26.38)% 48.01% 47.36% (4.06)% 40.52%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $3,055,197 $3,648,961 $2,071,317 $1,233,958 $1,179,362
---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,255,995 $2,898,088 $1,788,774 $1,352,628 $ 985,813
---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income (loss) 0.28% 0% (0.05)% 0.48% 0.53%
Expenses 1.03% 1.06% 1.04% 1.00%(3) 1.01%(3)
---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 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 additonal 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.
23 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
Class B Year Ended August 31, 2001 2000 1999 1998 1997
==========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $59.80 $43.48 $31.85 $38.07 $30.56
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.07) (.20) (.21) (.02) .07
Net realized and unrealized gain (loss) (15.39) 19.74 14.38 (1.62) 11.05
------------------------------------------------------------------
Total income (loss) from
investment operations (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 (5.25) (3.22) (2.54) (4.57) (3.55)
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (5.25) (3.22) (2.54) (4.58) (3.61)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $39.09 $59.80 $43.48 $31.85 $38.07
==================================================================
==========================================================================================================================
Total Return, at Net Asset Value(1) (26.95)% 46.88% 46.20% (4.86)% 39.30%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,242,098 $1,333,387 $531,625 $193,638 $52,220
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,265,753 $ 922,480 $372,157 $132,908 $23,678
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss (0.48)% (0.76)% (0.86)% (0.37)% (0.33)%
Expenses 1.80% 1.83% 1.84% 1.81%(3) 1.86%(3)
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 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 additonal 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.
24 | OPPENHEIMER CAPITAL APPRECIATION FUND
Class C Year Ended August 31, 2001 2000 1999 1998 1997
========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $59.19 $43.06 $31.57 $37.76 $30.27
------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.01) (.18) (.23) (.03) .01
Net realized and unrealized gain (loss) (15.29) 19.53 14.26 (1.59) 11.03
----------------------------------------------------------------
Total income (loss) from
investment operations (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 (5.25) (3.22) (2.54) (4.57) (3.55)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (5.25) (3.22) (2.54) (4.57) (3.55)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $38.64 $59.19 $43.06 $31.57 $37.76
================================================================
========================================================================================================================
Total Return, at Net Asset Value(1) (26.95)% 46.89% 46.16% (4.84)% 39.35%
========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $426,476 $402,442 $165,231 $76,058 $36,148
------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $400,009 $278,800 $126,443 $61,503 $19,508
------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss (0.48)% (0.76)% (0.86)% (0.36)% (0.32)%
Expenses 1.80% 1.83% 1.85% 1.82%(3) 1.85%(3)
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 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 additonal 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.
25 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
Period Ended
Class N August 31, 2001(1)
==============================================================
Per Share Operating Data
Net asset value, beginning of period $45.58
--------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.01)
Net realized and unrealized gain (loss) (4.52)
------
Total income (loss) from investment operations (4.53)
--------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income --
Distributions from net realized gain --
------
Total dividends and/or distributions to shareholders --
--------------------------------------------------------------
Net asset value, end of period $41.05
======
==============================================================
Total Return, at Net Asset Value(2) (9.94)%
==============================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,791
--------------------------------------------------------------
Average net assets (in thousands) $3,173
--------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.11)%
Expenses 1.36%
--------------------------------------------------------------
Portfolio turnover rate 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.
26 | OPPENHEIMER CAPITAL APPRECIATION FUND
Class Y Year Ended August 31, 2001 2000 1999 1998(1)
====================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $62.51 $44.81 $32.56 $40.15
--------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .13 .13 .30
Net realized and unrealized gain (loss) (15.98) 20.79 14.85 (3.11)
--------------------------------------------------------
Total income (loss) from investment operations (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 (5.25) (3.22) (2.54) (4.57)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (5.25) (3.22) (2.73) (4.78)
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $41.55 $62.51 $44.81 $32.56
========================================================
====================================================================================================================
Total Return, at Net Asset Value(2) (26.12)% 48.64% 47.90% (7.45)%
====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 974,820 $1,295,087 $420,455 $180,512
--------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,095,575 $ 855,270 $307,498 $139,050
--------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 0.66% 0.45% 0.30% 0.75%
Expenses 0.66% 0.64% 0.68% 0.69%(4)
--------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 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.
27 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Capital Appreciation Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as 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).
28 | OPPENHEIMER CAPITAL APPRECIATION FUND
--------------------------------------------------------------------------------
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 August 31, 2001,
the market value of these securities comprised 0.6% of the Fund's net assets,
and resulted in unrealized gains in the current period of $1,500,334.
--------------------------------------------------------------------------------
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.
29 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
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
year ended August 31, 2001, the Fund's projected benefit obligations were
increased by $474,179 and payments of $12,292 were made to retired trustees,
resulting in an accumulated liability of $739,802 as of August 31, 2001.
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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended August 31, 2001, amounts have been reclassified to reflect an
increase in paid-in capital of $15,509,985, a decrease in accumulated net
investment income of $8,889,078, and a decrease in accumulated net realized
gain on investments of $6,620,907. This reclassification includes $15,509,985
distributed in connection with Fund share redemptions which increased paid-in
capital and reduced accumulated net realized gain. Net assets of the Fund were
unaffected by the reclassifications.
30 | OPPENHEIMER CAPITAL APPRECIATION 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.
31 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
Year Ended August 31, 2001(1) Year Ended August 31, 2000
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------
Class A
Sold 22,608,674 $1,080,716,997 21,248,494 $1,161,716,520
Dividends and/or
distributions reinvested 6,337,191 296,137,035 2,997,611 146,972,843
Redeemed (13,365,396) (634,625,869) (11,817,625) (642,891,011)
-------------------------------------------------------------------------------
Net increase (decrease) 15,580,469 $ 742,228,163 12,428,480 $ 665,798,352
===============================================================================
--------------------------------------------------------------------------------------------------------------
Class B
Sold 12,135,550 $ 557,398,730 12,651,311 $ 670,804,410
Dividends and/or
distributions reinvested 2,633,268 117,655,350 907,173 43,064,587
Redeemed (5,291,430) (238,777,519) (3,488,619) (183,745,767)
-------------------------------------------------------------------------------
Net increase (decrease) 9,477,388 $ 436,276,561 10,069,865 $ 530,123,230
===============================================================================
--------------------------------------------------------------------------------------------------------------
Class C
Sold 5,484,946 $ 247,461,141 4,959,476 $ 257,314,222
Dividends and/or
distributions reinvested 812,514 35,888,768 280,983 13,200,947
Redeemed (2,060,592) (93,484,758) (2,278,272) (115,339,132)
-------------------------------------------------------------------------------
Net increase (decrease) 4,236,868 $ 189,865,151 2,962,187 $ 155,176,037
===============================================================================
--------------------------------------------------------------------------------------------------------------
Class N
Sold 178,524 $ 7,841,445 -- $ --
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (13,096) (555,708) -- --
-------------------------------------------------------------------------------
Net increase (decrease) 165,428 $ 7,285,737 -- $ --
===============================================================================
--------------------------------------------------------------------------------------------------------------
Class Y
Sold 7,131,501 $ 354,385,311 12,933,936 $ 723,894,124
Dividends and/or
distributions reinvested 2,298,717 108,246,627 703,262 34,586,461
Redeemed (6,689,239) (318,692,939) (2,302,166) (125,532,884)
-------------------------------------------------------------------------------
Net increase (decrease) 2,740,979 $ 143,938,999 11,335,032 $ 632,947,701
===============================================================================
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.
32 | 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 year ended August 31, 2001, were
$3,428,733,360 and $2,453,054,235, respectively.
As of August 31, 2001, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $5,984,595,716 was:
Gross unrealized appreciation $ 425,881,547
Gross unrealized depreciation (723,697,692)
-------------
Net unrealized appreciation (depreciation) $(297,816,145)
=============
================================================================================
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 average annual net assets over $4.5 billion.
Starting January 1, 2001, the rate was revised to be 0.54% of average annual
net assets over $4.5 billion to $8.5 billion and 0.52% of average annual net
assets over $8.5 billion. The Fund's management fee for the year ended August
31, 2001, 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.
--------------------------------------------------------------------------------
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.
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 Commissions Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C on Class C
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1) Distributor(1)
------------------------------------------------------------------------------------------------------------------
August 31, 2001 $10,082,655 $2,828,156 $1,634,569 $16,125,855 $1,835,899 $75,470
1. The Distributor advances commission 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 Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
---------------------------------------------------------------------------------------
August 31, 2001 $99,138 $2,111,146 $116,686 $47
33 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Fees and Other Transactions with Affiliates Continued
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 0.25% 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 0.25% of the average annual net
assets consisting of Class A shares of the Fund. For the year ended August 31,
2001, payments under the Class A plan totaled $7,637,291, all of which were
paid by the Distributor to recipients, and included $461,442 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.
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.
34 | OPPENHEIMER CAPITAL APPRECIATION FUND
Distribution fees paid to the Distributor for the year ended August 31, 2001,
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 $12,648,587 $10,375,861 $22,812,921 1.84%
Class C Plan 3,997,529 1,289,829 3,394,731 0.80
Class N Plan 7,904 6,201 46,201 0.68
================================================================================
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.
================================================================================
6. Illiquid Securities
As of August 31, 2001, 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 August
31, 2001, was $21,001,168, which represents 0.37% of the Fund's net assets.
35 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
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 year ended or at August
31, 2001.
36 | OPPENHEIMER CAPITAL APPRECIATION FUND
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Capital Appreciation Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Capital Appreciation Fund, including the statement of investments,
as of August 31, 2001, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. 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 auditing standards generally
accepted in the United States of America. 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. Our procedures included confirmation of
securities owned as of August 31, 2001, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. 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, 2001, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
September 24, 2001
37 | OPPENHEIMER CAPITAL APPRECIATION FUND
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2002, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2001. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $5.2547 per share were paid to Class A, Class B, Class C and
Class Y shareholders, respectively, on December 5, 2000, of which $2.0931 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 fiscal year ended August 31, 2001,
which are not designated as capital gain distributions should be multiplied by
100% to arrive at the amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
38 | 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
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
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors KPMG LLP
================================================================================
Legal Counsel Mayer, Brown & Platt
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., 6803 S. Tucson Way,
Englewood, CO 80112-3924.
(C)Copyright 2001 OppenheimerFunds, Inc.
All rights reserved.
39 | 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(1) 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
Large Cap Growth Fund
Value Fund(2)
Quest Capital Value Fund
Quest Value Fund
Trinity Growth Fund
Trinity Core Fund
Trinity Value Fund
---------------------------------------------------------------------------------------------------------------------------
Income Taxable Municipal
International Bond Fund California Municipal Fund(4)
High Yield Fund Florida Municipal Fund(4)
Champion Income Fund New Jersey Municipal Fund(4)
Strategic Income Fund New York Municipal Fund(4)
Bond Fund Pennsylvania Municipal Fund(4)
Senior Floating Rate Fund Municipal Bond Fund
U.S. Government Trust Intermediate Municipal Fund
Limited-Term Government Fund
Capital Preservation Fund(3)
Rochester Division
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(5)
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. The Fund's name was changed from "Oppenheimer Quest Small Cap Fund(SM)" on
3/1/01.
2. The Fund's name was changed from "Oppenheimer Disciplined Value Fund" on
2/28/01.
3. Available only through qualified retirement plans.
4. Available to investors only in certain states.
5. The Fund's name was changed from "Oppenheimer Select Managers Gartmore
Millennium Growth Fund" on 5/11/01.
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.
For more complete information about any of the Oppenheimer funds, including
charges, expenses and risks, ask for a prospectus from 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.
40 | OPPENHEIMER CAPITAL APPRECIATION FUND
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance.(1) So call us today, or visit our website-- we're here to
help.
Internet
24-hr access to account information and transactions(2)
www.oppenheimerfunds.com
--------------------------------------------------------------------------------
General Information
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
--------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
--------------------------------------------------------------------------------
PhoneLink(2)
24-hr automated information and automated transactions
1.800.CALL OPP (1.800.225.5677)
--------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 9am-6:30pm ET 1.800.843.4461
--------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
--------------------------------------------------------------------------------
eDocs Direct
Receive shareholder report and prospectus notifications for your funds via
email. Sign up at www.oppenheimerfunds.com.
--------------------------------------------------------------------------------
Ticker Symbols
Class A: OPTFX Class B: OTGBX Class C: OTFCX Class N: OTCNX Class Y: OTCYX
1. Automatic investment plans do not assure profit or protect against losses in
declining markets.
2. At times the website or PhoneLink may be inaccessible or their transaction
features may be unavailable.
[logo] OppenheimerFunds(R)
Distributor, Inc.
RA0320.001.0801 October 30, 2001