UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-8799
Oppenheimer Capital Preservation Fund
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: October 31
Date of reporting period: October 31, 2002 - April 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
April 30, 2003
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Oppenheimer Management
Capital Preservation Fund Commentaries
and
Semiannual
Report
- --------------------------------------------------------------------------------
MANAGEMENT COMMENTARIES
Performance Update
Investment Strategy Discussion
SEMIANNUAL REPORT AND FINANCIAL STATEMENTS
Listing of Investments
Financials
"Oppenheimer Capital Preservation Fund's performance for the first six months of
the fiscal year was generally positive, as spread sectors (non-treasury
securities, i.e. corporate bonds) outperformed Treasuries, most of the Fund's
investments benefited performance. The Fund also produced a favorable yield due
mostly to the Fund's exposure to the corporate bond sector, particularly,
higher-yielding bonds."
[LOGO OMITTED]
OPPENHEIMERFUNDS[R]
The Right Way to Invest
HIGHLIGHTS
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MANAGEMENT COMMENTARIES AND ADDITIONAL DISCLOSURES
1 Letter to Shareholders
2 An Interview with Your Fund's Managers
25 Trustees and Officers
28 Privacy Policy Notice
SEMIANNUAL REPORT AND FINANCIAL STATEMENTS
6 Statement of Investments
7 Statement of Assets and Liabilities
9 Statement of Operations
10 Statements of Changes in Net Assets
11 Financial Highlights
16 Notes to Financial Statements
Fund Objective
Oppenheimer Capital Preservation Fund seeks high current income while seeking to
maintain a stable value per share.
- ----------------------------------
Cumulative Total Returns*
For the 6-Month Period
Ended 4/30/03
Without With
Sales Chg. Sales Chg.
- ----------------------------------
Class A 1.43% -2.12%
- ----------------------------------
Class B 1.06 -2.94
- ----------------------------------
Class C 1.04 0.04
- ----------------------------------
Class N 1.57 0.57
- ----------------------------------
Class Y 2.08
Average Annual Total Returns*
For the 1-Year Period
Ended 4/30/03
Without With
Sales Chg. Sales Chg.
- ----------------------------------
Class A 3.77% 0.13%
- ----------------------------------
Class B 3.06 -0.94
- ----------------------------------
Class C 3.04 2.04
- ----------------------------------
Class N 3.96 2.96
- ----------------------------------
Class Y 4.45
- ----------------------------------
Standardized Yields 1
For the 30 Days
Ended 4/30/03
- ----------------------------------
Class A 3.00%
- ----------------------------------
Class B 2.37
- ----------------------------------
Class C 2.38
- ----------------------------------
Class N 3.08
- ----------------------------------
Class Y 6.08
- ----------------------------------
1. Standardized yield is based on net investment income for the 30-day period
ended April 30, 2003. Falling share prices will tend to artificially raise
yields.
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.
Oppenheimer Capital Preservation Fund is not a money market fund and there is no
guarantee that the Fund will be able to maintain a stable net asset value.
*See Notes on page 5 for further details.
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Not part of the semiannual report to Fund shareholders
- ------------------------------------------------------
LETTER TO SHAREHOLDERS
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Dear Shareholder,
It is nearly impossible to reflect on the past six months without thinking about
the war with Iraq. We experienced a range of emotions in the days leading up to
the war and especially as the media brought the war into our homes, as never
before.
At OppenheimerFunds, we face the difficult task of looking beyond the war to
see its long-term impact, together with other factors, on the global economy,
the financial markets and, in the end, your investment with us. It's a
responsibility that we take very seriously and becomes our primary focus during
uncertain times like these.
It is our strong belief that investors can be well served by this
professional insight and by the guidance provided by a financial advisor. In
partnership with OppenheimerFunds, your financial advisor can help you navigate
through this volatile and sometimes unpredictable environment. We encourage you
to continue to work closely with your advisor to develop and implement an
investment plan that fits your goals and risk tolerance.
On our end, we continue to be the home to some of the most experienced and
talented investment professionals in the industry. They remain focused on proven
methods that drive informed, intelligent investment decisions. It is an approach
we are proud of and one that has served investors well in a variety of market
conditions.
We've found that in good times and bad, the fundamental principles of
investing remain key for financial success. These principles-- investing
according to your goals, diversifying your portfolio and benefiting from the
value of professional investment advice--are simple ideas that have proven
themselves over time, and, we believe, will prove themselves again.
We thank you for your continued confidence in OppenheimerFunds and encourage
you to visit our website, www.oppenheimerfunds.com, or speak with your advisor
for up to date information on your investments and the markets.
Sincerely,
/S/John V. Murphy
John V. Murphy
May 21, 2003
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict performance of the securities markets or any particular
fund. Specific information that applies to your Fund is contained in the pages
that follow.
[PHOTO JOHN V. MURPHY}
John V. Murphy
President
Oppenheimer
Capital Preservation
Fund
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Not part of the semiannual report to Fund shareholders
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1 | OPPENHEIMER CAPITAL PRESERVATION FUND
AN INTERVIEW WITH YOUR FUND'S MANAGERS
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Q
How did Oppenheimer Capital Preservation Fund perform for the six-month period
ended April 30, 2003?
A. We are reasonably pleased with the Fund's performance for the first half of
its fiscal year, which was positive. These results are especially rewarding
given the extreme volatility, as well as continued negative returns from many
segments of the equity markets-at-large. What's more, the Fund provided a
favorable yield, while at the same time, preserving its net asset value. In this
regard, the Fund succeeded in offering investors a cushion against market
volatility and against downturns in other areas of the financial markets.
From a relative perspective, the Fund slightly lagged its peers, ranking
somewhat below the median. However, since the Fund is a "fund of funds," it is a
challenge to make a true comparison to a uniform peer group. Overall, we believe
the Fund successfully smoothed out the returns an investor might experience if
he or she invested directly in each of the other Oppenheimer funds in which the
Fund invests ("underlying funds"), and provided what we believe were generally
favorable returns.
What factors most significantly drove performance?
The diverse mix of fixed-income holdings of the "underlying funds" served the
Fund well in this very difficult macro environment, and was a primary driver of
its positive performance. During the period, many segments of the fixed-income
markets fared well versus equities, which of course bode well for the Fund.
Within the fixed-income markets, non-Treasury securities, or "spread products",
outperformed Treasuries this period. The Fund's exposure to these types of bonds
was a clear contributor to performance as well.
On another positive note, our allocations to Oppenheimer Bond Fund and
Oppenheimer Strategic Income Fund added
[SIDEBAR]
Portfolio Management
Team
Angelo Manioudakis
Benjamin Gord
Chuck Moon
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Not part of the semiannual report to Fund shareholders
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2 | OPPENHEIMER CAPITAL PRESERVATION FUND
to performance. Both of these Funds have varying degrees of exposure to the
corporate bond sector as well as to other non-Treasury fixed-income securities.
Plus, they tend to be more aggressive in terms of expected risk. These segments
of the bond markets performed quite well this period in addition to offering a
considerable yield advantage--in some cases, five full percentage points--over
Treasuries. As a result, these two components of Oppenheimer Capital
Preservation Fund supported performance.
While absolute performance for the period was favorable, we believe the
reason the Fund slightly lagged its peer group was because the Fund has shorter
duration--or interest-rate sensitivity--than many funds in that group. This was
largely due to our high allocation--roughly 69%--to Oppenheimer Limited-Term
Government Fund, which, as its name indicates, emphasizes short- and
intermediate-term U.S. government securities. This allocation is in line with
the Fund's mandate as described in the prospectus. Had we reduced this
allocation slightly, and increased the Fund's exposure to either Oppenheimer
Bond Fund or Oppenheimer Strategic Income Fund, we might have added to the
Fund's performance. However, we believe the impact of such an adjustment would
have been negligible.
What general market conditions during the period impacted the Fund?
Basically, interest rates continued a downward trend, ratcheting lower
intermittently over the period. As a result, Treasury securities performed
reasonably well. Regarding the Treasury yield curve, the Fund's positioning at
the start of the period was generally neutral, meaning that we did not
anticipate any significant movement or change in the shape of the curve in the
short term. As it turned out, the curve did not change much at all during the
period, which worked to the Fund's advantage.
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Not part of the semiannual report to Fund shareholders
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3 | OPPENHEIMER CAPITAL PRESERVATION FUND
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
U.S. government agency securities performed quite well, outperforming
Treasuries. The Fund's exposure to these securities benefited Fund performance.
However, the most dramatic outperformance generally came from the riskier
elements of the spread sectors, such as corporate bonds. As a result, our
exposure to virtually all of these segments of the bond markets supported
performance this period.
What is your outlook?
We are confident corporate bonds will continue to perform well and offer
favorable yields over Treasuries. This is due to the fact that companies are
sharpening their focus on their balance sheets, which tends to bode well for
corporate bondholders.
In the mortgage sector, valuations relative to Treasuries are fair, in our
opinion. However, as these securities cheapen, as we expect, we'll likely
increase the Fund's exposure to those types of bonds from its current neutral
weighting. At this time, we do not plan to extend the Fund's duration as we
maintain our belief that interest rates remain somewhat vulnerable to changes in
the near term.
We remain confident that the Fund offers the potential for capital
preservation without compromising earnings potential, since the Fund holds
exposure to many higher-yielding segments of the bond markets. The Fund's
ability to offer these benefits, as well as its consistent performance and
ability to provide a cushion against overall market volatility, as well as a
stable net asset value, are part of what makes Oppenheimer Capital Preservation
Fund part of The Right Way to Invest.
[SIDEBAR]
- -------------------------------
Average Annual
Total Returns with
Sales Charge
For the Periods Ended 3/31/03 2
Class A Since
1-Year Inception
- -------------------------------
0.38% 4.41%
Class B Since
1-Year Inception
- -------------------------------
- -0.68% 4.25%
Class C Since
1-Year Inception
- -------------------------------
2.29% 4.75%
Class N Since
1-Year Inception
- -------------------------------
3.19% 5.06%
Class Y Since
1-Year Inception
- -------------------------------
4.68% 5.83%
- -------------------------------
2. See Notes on page 5 for further details.
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Not part of the semiannual report to Fund shareholders
- ------------------------------------------------------
4 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES
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In reviewing performance, please remember that past performance cannot guarantee
future results. Investment return and principal value of an investment in the
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than the original cost. Because of ongoing market volatility, the
Fund's performance may be subject to substantial fluctuations, and current
performance may be more or less than the results shown. For updates on the
Fund's performance, visit our website at www.oppenheimerfunds.com.
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.
This Fund is only available through qualified retirement plans. Class A shares
of the Fund were first publicly offered on 9/27/99.
Class A returns include the current maximum initial sales charge of 3.50%.
Class B shares of the Fund were first publicly offered on 9/27/99. Class B
returns include the applicable contingent deferred sales charges of 4% (1-year)
and 2% (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 9/27/99. 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. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. 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 9/27/99. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
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Not part of the semiannual report to Fund shareholders
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5 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENT OF INVESTMENTS April 30, 2003 / Unaudited
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Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------
Investments in Affiliated Companies--93.1%
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Fixed Income Funds--88.3%
Oppenheimer Bond Fund, Cl. Y 2,930,199 $ 30,210,350
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Oppenheimer Limited-Term Government Fund, Cl. Y 20,076,549 207,993,050
- ------------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund, Cl. Y 12,520,403 49,330,387
------------
287,533,787
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Money Market Fund--4.8%
Oppenheimer Money Market Fund, Inc. 15,470,983 15,470,984
------------
Total Investments in Affiliated Companies (Cost $296,903,250) 303,004,771
Principal
Amount
- ------------------------------------------------------------------------------------
Joint Repurchase Agreements--0.1%
Undivided interest of 0.13% in joint repurchase
agreement (Market Value $332,883,000) with Banc One
Capital Markets, Inc., 1.26%, dated 4/30/03, to be
repurchased at $425,015 on 5/1/03, collateralized by
U.S. Treasury Nts., 4.875%--5.875%, 11/15/04--2/15/12,
with a value of $327,261,153 and U.S. Treasury Bonds,
2.125%, 8/31/04, with a value of $12,489,849 (Cost
$425,000) $425,000 425,000
- ------------------------------------------------------------------------------------
Total Investments, at Value (Cost $297,328,250) 93.2% 303,429,771
- ------------------------------------------------------------------------------------
Other Assets Net of Liabilities 6.8 22,117,825
------------------------
Net Assets 100.0% $325,547,596
========================
See accompanying Notes to Financial Statements.
6 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
April 30, 2003
- -----------------------------------------------------------------------------------
Assets
Investments, at value--see accompanying statement:
Affiliated companies (cost $297,328,250) $303,429,771
- -----------------------------------------------------------------------------------
Cash 139,821
- -----------------------------------------------------------------------------------
Cash used for collateral on futures 25,000
- -----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 25,345,645
Interest and dividends 533,662
Other 5,129
-------------
Total assets 329,479,028
- -----------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Wrapper agreement 3,219,038
Shares of beneficial interest redeemed 524,998
Transfer and shareholder servicing agent fees 60,324
Distribution and service plan fees 60,065
Daily variation on futures contracts 13,753
Shareholder reports 13,710
Trustees' compensation 8,164
Dividends 78
Other 31,302
-------------
Total liabilities 3,931,432
- -----------------------------------------------------------------------------------
Net Assets $325,547,596
=============
- -----------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $323,814,818
- -----------------------------------------------------------------------------------
Overdistributed net investment income (800,304)
- -----------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (490,136)
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments and wrapper agreement 3,023,218
-------------
Net Assets $325,547,596
=============
7 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based
on net assets of $96,361,715 and 9,636,169 shares of
beneficial interest outstanding) $10.00
Maximum offering price per share (net asset value plus
sales charge of 3.50% of offering price) $10.36
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $8,203,156 and
820,361 shares of beneficial interest outstanding) $10.00
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $19,890,336 and
1,989,230 shares of beneficial interest outstanding) $10.00
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $200,388,343 and
20,038,602 shares of beneficial interest outstanding) $10.00
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price
per share (based on net assets of $704,046 and 70,396
shares of beneficial interest outstanding) $10.00
See accompanying Notes to Financial Statements.
8 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended April 30, 2003
- -----------------------------------------------------------------------------------
Investment Income
Dividends from affiliated companies $4,310,474
- -----------------------------------------------------------------------------------
Interest 22,165
-----------
Total investment income 4,332,639
- -----------------------------------------------------------------------------------
Expenses
Management fees 957,245
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 106,884
Class B 33,358
Class C 81,101
Class N 185,383
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 272,161
Class B 32,569
Class C 62,739
Class N 116,078
Class Y 18
- -----------------------------------------------------------------------------------
Wrapper fees 207,659
- -----------------------------------------------------------------------------------
Shareholder reports 27,147
- -----------------------------------------------------------------------------------
Trustees' compensation 6,632
- -----------------------------------------------------------------------------------
Custodian fees and expenses 3,418
- -----------------------------------------------------------------------------------
Other 1,606
-----------
Total expenses 2,093,998
Less reduction to custodian expenses (265)
Less voluntary reimbursement of expenses (569,511)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class A (137,093)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class B (19,222)
Less voluntary waiver of transfer and shareholder servicing agent
fees--Class C (30,141)
-----------
Net expenses 1,337,766
- -----------------------------------------------------------------------------------
Net Investment Income 2,994,873
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from affiliated companies 217,001
Closing of futures contracts (66,272)
-----------
Net realized gain 150,729
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments from affiliated companies 4,898,549
Wrapper agreement (4,255,207)
-----------
Net change 643,342
-----------
Net realized and unrealized gain 794,071
- -----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $3,788,944
===========
See accompanying Notes to Financial Statements.
9 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
April 30, 2003 October 31,
(Unaudited) 2002
- -----------------------------------------------------------------------------------
Operations
Net investment income $ 2,994,873 $ 5,200,284
- -----------------------------------------------------------------------------------
Net realized gain (loss) 150,729 (686,530)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation 643,342 2,153,270
---------------------------
Net increase in net assets resulting from operations 3,788,944 6,667,024
- -----------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment
income:
Class A (1,234,316) (2,422,826)
Class B (69,631) (102,516)
Class C (167,145) (205,654)
Class N (2,317,707) (2,350,783)
Class Y (145) (95)
- -----------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (726,971)
Class B -- (38,902)
Class C -- (79,157)
Class N -- (740,098)
Class Y -- (23)
- -----------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions:
Class A 17,778,467 28,403,767
Class B 2,998,801 3,427,529
Class C 7,452,133 10,595,020
Class N 81,592,410 111,483,337
Class Y 701,652 120
- -----------------------------------------------------------------------------------
Net Assets
Total increase 110,523,463 153,909,772
- -----------------------------------------------------------------------------------
Beginning of period 215,024,133 61,114,361
---------------------------
End of period [including overdistributed net investment
income of $800,304 and $6,233, respectively] $325,547,596 $215,024,133
===========================
See accompanying Notes to Financial Statements.
10 | OPPENHEIMER CAPITAL PRESERVATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class A (Unaudited) 2002 2001 2000 1999 1
- -------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .12 .42 .56 .57 .05
Net realized and unrealized gain .02 .09 .02 .03 --
----------------------------------------------------------------
Total from investment operations .14 .51 .58 .60 .05
- -------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.14) (.41) (.55) (.60) (.05)
Tax return of capital distribution -- (.10) (.03) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.14) (.51) (.58) (.60) (.05)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
================================================================
- -------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 1.43% 5.25% 6.00% 6.18% 0.55%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $96,362 $78,552 $50,179 $10,431 $100
- -------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $87,248 $62,359 $33,976 $ 7,171 $100
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.32% 3.90% 5.39% 5.55% 5.75%
Expenses, gross 1.81% 1.71% 1.58% 1.96% 1.55%
Expenses, net 1.05% 4,5,6 1.18% 4,5,6 1.14% 4,5 1.51% 4,5 1.12% 5
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 47% 36% 89% 0%
<FN>
1. For the period from September 27, 1999 (inception of offering) to October 31,
1999.
2. Assumes an 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. Reduction to custodian expenses less than 0.01%.
5. Net of voluntary reimbursement of expenses.
6. Net of voluntary waiver of transfer agent fees.
</FN>
See accompanying Notes to Financial Statements.
11 | OPPENHEIMER CAPITAL PRESERVATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class B (Unaudited) 2002 2001 2000 1999 1
- ---------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 .37 .50 .51 .05
Net realized and unrealized gain .03 .08 .02 .02 --
------------------------------------------------------------
Total from investment operations .11 .45 .52 .53 .05
- ---------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.11) (.35) (.49) (.53) (.05)
Tax return of capital distribution -- (.10) (.03) -- --
------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.11) (.45) (.52) (.53) (.05)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
============================================================
- ---------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 1.06% 4.59% 5.31% 5.43% 0.48%
- ---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $8,203 $5,205 $1,777 $331 $1
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $6,744 $3,337 $ 676 $ 82 $1
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.46% 3.15% 4.61% 4.55% 5.10%
Expenses, gross 2.90% 2.37% 2.34% 2.71% 2.25%
Expenses, net 1.89% 4,5,6 1.84% 4,5,6 1.90% 4,5 2.26% 4,5 1.81% 5
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 47% 36% 89% 0%
<FN>
1. For the period from September 27, 1999 (inception of offering) to October 31,
1999.
2. Assumes an 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. Reduction to custodian expenses less than 0.01%.
5. Net of voluntary reimbursement of expenses.
6. Net of voluntary waiver of transfer agent fees.
</FN>
See accompanying Notes to Financial Statements.
12 | OPPENHEIMER CAPITAL PRESERVATION FUND
Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class C (Unaudited) 2002 2001 2000 1999 1
- ------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 .38 .51 .50 .05
Net realized and unrealized gain .02 .07 .01 .03 --
---------------------------------------------------------------
Total from investment operations .10 .45 .52 .53 .05
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.10) (.35) (.49) (.53) (.05)
Tax return of capital distribution -- (.10) (.03) -- --
---------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.10) (.45) (.52) (.53) (.05)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
===============================================================
- ------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 1.04% 4.58% 5.31% 5.43% 0.48%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $19,890 $12,437 $1,845 $48 $1
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,396 $ 6,790 $ 652 $25 $1
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.46% 3.07% 4.54% 4.65% 5.10%
Expenses, gross 2.70% 2.35% 2.36% 2.71% 2.25%
Expenses, net 1.89% 4,5,6 1.82% 4,5,6 1.92% 4,5 2.26% 4,5 1.81% 5
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 47% 36% 89% 0%
- ------------------------------------------------------------------------------------------------------------
<FN>
1. For the period from September 27, 1999 (inception of offering) to October 31,
1999.
2. Assumes an 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. Reduction to custodian expenses less than 0.01%.
5. Net of voluntary reimbursement of expenses.
6. Net of voluntary waiver of transfer agent fees.
</FN>
See accompanying Notes to Financial Statements.
13 | OPPENHEIMER CAPITAL PRESERVATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class N (Unaudited) 2002 2001 1
- -------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
- -------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 .45 .38
Net realized and unrealized gain .03 .07 -- 2
-----------------------------------
Total from investment operations .16 .52 .38
- -------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) (.42) (.36)
Tax return of capital distribution -- (.10) (.02)
-----------------------------------
Total dividends and/or distributions to shareholders (.16) (.52) (.38)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00
===================================
- -------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 1.57% 5.29% 3.88%
- -------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $200,388 $118,829 $7,311
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $149,850 $ 63,485 $3,002
- -------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.46% 3.86% 5.18%
Expenses, gross 1.34% 1.52% 1.64%
Expenses, net 0.90% 5,6 0.99% 5,6,7 1.20% 5,6
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 47% 36%
- -------------------------------------------------------------------------------------------------
<FN>
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Less than $0.005 per share.
3. Assumes an 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Net of voluntary reimbursement of expenses.
7. Net of voluntary waiver of transfer agent fees.
</FN>
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER CAPITAL PRESERVATION FUND
Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class Y (Unaudited) 2002 2001 2000 1999 1
- -------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 10.00 $10.00 $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 .41 .58 .59 .06
Net realized and unrealized gain (loss) (.05) .11 .03 .03 --
----------------------------------------------------------------
Total from investment operations .21 .52 .61 .62 .06
- -------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.21) (.42) (.58) (.62) (.06)
Tax return of capital distribution -- (.10) (.03) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.21) (.52) (.61) (.62) (.06)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
================================================================
- -------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 2.08% 5.35% 6.25% 6.43% 0.57%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $704 $2 $2 $1 $1
- -------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 14 $2 $2 $1 $1
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.88% 4.13% 5.73% 5.88% 6.19%
Expenses, gross 1.19% 67.64% 43.02% 1.71% 1.15%
Expenses, net 0.75% 4,5 1.09% 4,5,6 0.82% 4,5,6 1.26% 4,5 0.72% 5
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 47% 36% 89% 0%
- -------------------------------------------------------------------------------------------------------------
<FN>
1. For the period from September 27, 1999 (inception of offering) to October 31,
1999.
2. Assumes an 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.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Net of voluntary reimbursement of expenses.
6. Net of voluntary waiver of transfer agent fees.
</FN>
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Capital Preservation Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund seeks high current income while seeking to maintain a stable value
per share. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). Shares of the Fund are offered solely to participant-directed
qualified retirement plans and 403(b)(7) Custodial Plans meeting specified
criteria (the Plans). Plan participant purchases of Fund shares are handled in
accordance with each Plan's specific provisions. Plan participants should
contact their Plan administrator for details concerning how they may purchase
shares of the Fund.
The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold with a front-end sales charge of 3.50%, and reduced for larger
purchases. Class B, Class C and Class N shares are offered without a front-end
sales charge, but may be subject to a contingent deferred-sales charge (CDSC) if
redeemed within 5 years or 12 months or 18 months, respectively, of purchase.
Retirement plans that offer Class N shares may impose charges on those accounts.
Class Y shares are offered without front end and contingent-deferred sales
charges. Class Y shares are only available for plans that have special
arrangements with OppenheimerFunds Distributor, Inc. (the Distributor). All
classes of shares have identical rights and voting privileges,. Earnings, net
assets and net asset value per share may differ by minor amounts due to each
class having its own expenses directly attributable to that class. Expenses
included in the accompanying financial statements reflect the expenses of the
Fund and do not include any expenses associated with the Underlying Funds.
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 Fund
assesses a 2% fee on the proceeds of fund shares that are redeemed (either by
selling or exchanging to another Oppenheimer fund) within 30 days of their
purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. The Fund will, under normal circumstances, invest in Class
Y shares of Oppenheimer Limited-Term Government Fund, Oppenheimer Bond Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Strategic Income Fund, and in
shares of Oppenheimer Money Market Fund, Inc. (collectively referred to as the
"underlying funds"). The net asset values of the underlying funds are determined
as of the close of The New York Stock Exchange, on each day the Exchange is open
for trading. The net asset value per share is determined by dividing the value
of the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding.
The Fund may invest in certain portfolio securities, as described in the
Fund's prospectus. Portfolio securities are valued at the close of the New York
Stock Exchange on each trading day. Listed and unlisted securities for which
such information is regularly
16 | OPPENHEIMER CAPITAL PRESERVATION FUND
reported are valued at the last sale price of the day or, in the absence of
sales, at values based on the closing bid or the last sale price on the prior
trading day. Long-term and short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the Board of Trustees. Such
securities which cannot be valued by an approved portfolio pricing service are
valued using dealer-supplied valuations provided the Manager is satisfied that
the firm rendering the quotes is reliable and that the quotes reflect current
market value, or are valued under consistently applied procedures established by
the Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Foreign currency exchange contracts are
valued based on the closing prices of the foreign currency contract rates in the
London foreign exchange markets on a daily basis as provided by a reliable bank
or dealer.
The Fund will, under normal circumstances, enter into wrapper agreements with
insurance companies and banks. If an insurance wrap contract or a synthetic
Guaranteed Investment Contract, collectively, "wrapper agreement" obligates the
contract provider to maintain the book value of all or a portion of the Fund's
investments up to a specified maximum dollar amount, such contract will be
valued at its fair value. The book value of the covered assets is the price the
Fund paid for such securities plus interest on those assets accrued at a rate
calculated pursuant to a formula specified in the wrapper agreement ("crediting
rate"). The crediting rate is normally reset monthly. However, if there is a
material change in interest rates or purchases or redemptions of fund shares,
the crediting rate may be reset more frequently. The fair value of the contract
generally will be equal to the difference between the book value, and the market
value of the Fund's portfolio investments subject to the contract. If the market
value of the Fund's portfolio investments is greater than its Book Value, the
contract value will be reflected as a liability of the Fund in the amount of the
difference, i.e. a negative value. If the market value of the Fund's portfolio
investments is less than its Book Value, the contract value will be reflected as
an asset of the Fund in the amount of the difference, i.e. a positive value,
reflecting the potential liability of the contract provider to the Fund. In
performing its fair value determination, the Board of Trustees will take into
consideration the creditworthiness of the contract provider and the ability and
willingness of the contract provider to pay amounts under the contract. As of
April 30, 2003, the Fund has entered into one wrapper agreement, with the Bank
of America, NA. Total fees paid for the six months ended April 30, 2003, to Bank
of America, NA, for this agreement were $207,659.
- --------------------------------------------------------------------------------
Joint Repurchase Agreements. The Fund, along with other affiliated funds of the
Manager, may transfer uninvested cash balances into one or more joint repurchase
agreement accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest
17 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
and principal; however, in the event of default by the other party to the
agreement, retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
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 capital loss carryforwards, if any, to shareholders.
Therefore, no federal income or excise tax provision is required.
As of April 30, 2003, the Fund had available for federal income tax purposes
an estimated unused capital loss carryforward of zero. This estimated capital
loss carryforward represents losses deferred under tax accounting rules for the
current fiscal year and is increased or decreased by capital losses or gains
realized in the first six months of the current fiscal year. During the six
months ended April 30, 2003, the Fund did not use carryforward to offset capital
gains realized. During the year ended October 31, 2002, the Fund did not use
carryforward to offset capital gains realized.
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the six months ended
April 30, 2003, the Fund's projected benefit obligations were increased by
$1,738 and payments of $265 were made to retired trustees, resulting in an
accumulated liability of $7,705 as of April 30, 2003.
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 the annual compensation they are entitled to receive from the Fund.
Under the plan, the compensation deferred is invested by the Fund in the fund(s)
selected by the trustee. 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 paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character
18 | OPPENHEIMER CAPITAL PRESERVATION FUND
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 net realized gain was recorded by the Fund.
The tax character of distributions paid during the six months ended April 30,
2003 and the year ended October 31, 2002 was as follows:
Six Months Ended Year Ended
April 30, 2003 October 31, 2002
- ------------------------------------------------------------------------
Distributions paid from:
Ordinary income $3,788,944 $5,081,874
Long-term capital gain -- --
Return of capital -- 1,585,151
-----------------------------
Total $3,788,944 $6,667,025
=============================
- --------------------------------------------------------------------------------
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 recorded on the trade date.
Realized 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.
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
Six Months Ended April 30, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
Class A
Sold 3,008,213 $30,082,141 4,777,641 $ 47,776,413
Dividends and/or
distributions reinvested 123,290 1,232,902 315,148 3,151,481
Redeemed (1,353,657) (13,536,576) (2,252,412) (22,524,127)
-------------------------------------------------------
Net increase 1,777,846 $17,778,467 2,840,377 $ 28,403,767
=======================================================
19 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest Continued
Six Months Ended April 30, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
Class B
Sold 401,861 $ 4,018,622 502,556 $ 5,025,559
Dividends and/or
distributions reinvested 6,956 69,561 14,387 143,871
Redeemed (108,937) (1,089,382) (174,190) (1,741,901)
-------------------------------------------------------
Net increase 299,880 $ 2,998,801 342,753 $ 3,427,529
=======================================================
- -----------------------------------------------------------------------------------
Class C
Sold 1,061,469 $ 10,614,698 1,306,242 $ 13,062,427
Dividends and/or
distributions reinvested 16,653 166,531 28,550 285,500
Redeemed (332,909) (3,329,096) (275,290) (2,752,907)
-------------------------------------------------------
Net increase 745,213 $ 7,452,133 1,059,502 $ 10,595,020
=======================================================
- -----------------------------------------------------------------------------------
Class N
Sold 11,171,456 $111,714,558 13,543,716 $135,437,153
Dividends and/or
distributions reinvested 231,377 2,313,776 308,954 3,089,545
Redeemed (3,243,592) (32,435,924) (2,704,336) (27,043,361)
-------------------------------------------------------
Net increase 8,159,241 $ 81,592,410 11,148,334 $111,483,337
=======================================================
- -----------------------------------------------------------------------------------
Class Y
Sold 70,151 $ 701,507 -- $ --
Dividends and/or
distributions reinvested 14 145 12 120
Redeemed -- -- -- --
-------------------------------------------------------
Net increase 70,165 $ 701,652 12 $ 120
=======================================================
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended April 30, 2003, were
$100,997,059 and $15,926,973, respectively.
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Under the Investment Advisory Agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional assets as
the Fund grows: 0.75% of the first $200 million of average annual net assets of
the Fund, 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 $200 million and 0.50% of average
annual net assets over $1 billion. The management fees payable by the Fund are
reduced by the management fees paid by the underlying Oppenheimer funds on
assets representing investments by the Fund in shares of those underlying funds.
That is done so that shareholders of the Fund do not pay direct and indirect
management fees in excess of 0.75%.
20 | OPPENHEIMER CAPITAL PRESERVATION FUND
- --------------------------------------------------------------------------------
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 a $22.50 per account fee.
Additionally, Class Y shares are subject to minimum fees of $5,000 for assets
of less than $10 million and $10,000 for assets of $10 million or more. The
Class Y shares are subject to the minimum fees in the event that the per account
fee does not equal or exceed the applicable minimum fees. OFS may voluntarily
waive the minimum fees.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% of average annual net assets for all classes.
This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (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 Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
Six Months on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- ----------------------------------------------------------------------------------------------
April 30, 2003 $32,416 $3,871 $30,048 $102,491 $97,419 $148,973
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its own
resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Six Months Ended Distributor Distributor Distributor Distributor
- --------------------------------------------------------------------------------
April 30, 2003 $194 $35,909 $13,533 $184,948
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A
Shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the six months ended April 30, 2003, payments
under the Class A Plan totaled $106,884, all of which were paid by the
Distributor to recipients, and included $3,182 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.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year
21 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
on Class B shares and on Class C shares. The Distributor also receives a service
fee of 0.25% per year under each plan.
Distribution fees paid to the Distributor for the six months ended April 30,
2003, 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 $ 33,358 $30,087 $271,701 3.31%
Class C Plan 81,101 61,408 270,320 1.36
Class N Plan 185,383 -- 882,340 0.44
- --------------------------------------------------------------------------------
5. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to broadly
based securities indices "financial futures" or debt securities "interest rate
futures" in order to gain exposure to or to seek to protect against changes in
market value of stock and bonds or interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying fixed income
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin. Realized gains
and losses are reported on the Statement of Operations as closing and expiration
of futures contracts.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
22 | OPPENHEIMER CAPITAL PRESERVATION FUND
As of April 30, 2003, the Fund had outstanding futures contracts as follows:
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts April 30, 2003 (Depreciation)
- ------------------------------------------------------------------------------------
Contracts to Purchase
U.S. Treasury Nts., 2 yr. 6/26/03 7 $1,511,344 $ 6,047
--------
Contracts to Sell
U.S. Treasury Nts., 5 yr. 6/19/03 28 3,185,000 (11,195)
--------
$(5,148)
========
- --------------------------------------------------------------------------------
6. Illiquid or Restricted Securities
As of April 30, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. A Wrapper Agreement is considered
to be an illiquid security. The Fund intends to invest no more than 15% of its
net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities.
- --------------------------------------------------------------------------------
7. Borrowing and Lending Arrangements
Bank Borrowings. The Fund had the ability to borrow from banks for temporary or
emergency purposes. Asset coverage for borrowings must be at least 300%. The
Fund and other Oppenheimer funds participated in a $400 million unsecured line
of credit from a bank, for liquidity purposes. Under that line of credit, each
fund was charged interest on its borrowings at a rate equal to the Federal Funds
rate plus 0.45%. The Fund paid a commitment fee on its pro rata share of the
average unutilized amount of the credit facility at a rate of 0.08% per annum.
The credit facility was terminated on November 12, 2002, when the Fund entered
into the interfund borrowing and lending arrangements described below.
The Fund had no outstanding borrowings under the credit facility through
November 12, 2002.
- --------------------------------------------------------------------------------
Interfund Borrowing and Lending Arrangements. Commencing November 12, 2002, the
Fund entered into an "interfund borrowing and lending arrangement" with other
funds in the Oppenheimer funds complex, to allow funds to borrow for liquidity
purposes. The arrangement was initiated pursuant to exemptive relief granted by
the Securities and Exchange Commission to allow these affiliated funds to lend
money to, and borrow money from, each other, in an attempt to reduce borrowing
costs below those of bank loan facilities. Under the arrangement the Fund may
lend money to other Oppenheimer funds and may borrow from other Oppenheimer
funds at a rate set by the Fund's Board of Trustees, based upon a recommendation
by the investment manager.
23 | OPPENHEIMER CAPITAL PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Borrowing and Lending Arrangements Continued
The Fund's borrowings, if any, are subject to asset coverage requirements under
the Investment Company Act and the provisions of the SEC order and other
applicable regulations. If the Fund borrows money, there is a risk that the loan
could be called on one day's notice, in which case the Fund might have to borrow
from a bank at higher rates if a loan were not available from another
Oppenheimer fund. If the Fund lends money to another fund, it will be subject to
the risk that the other fund might not repay the loan in a timely manner, or at
all.
The Fund had no interfund borrowings or loans outstanding during the six
months ended or at April 30, 2003.
24 | OPPENHEIMER CAPITAL PRESERVATION FUND
OPPENHEIMER Capital Preservation Fund
- --------------------------------------------------------------------------------
Trustees and Officers Clayton K. Yeutter, Chairman and Trustee
Donald W. Spiro, Vice Chairman and Trustee
John V. Murphy, President and Trustee
Robert G. Galli, Trustee
Phillip A. Griffiths, Trustee
Joel W. Motley, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Angelo Manioudakis, Vice President
Robert G. Zack, Secretary
Brian W. Wixted, Treasurer
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Investment Advisor OppenheimerFunds, Inc.
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Distributor OppenheimerFunds Distributor, Inc.
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Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
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Independent Auditors KPMG LLP
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Legal Counsel Mayer Brown Rowe & Maw
The financial statements included herein have been taken from the records of the
Fund without examination of those records by the independent auditors.
(C)Copyright 2003 OppenheimerFunds, Inc. All rights reserved.
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Not part of the semiannual report to Fund shareholders
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25 | OPPENHEIMER CAPITAL PRESERVATION FUND
OPPENHEIMERFUNDS FAMILY
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Global Equity Developing Markets Fund Global Fund
International Small Company Fund Quest Global Value Fund, Inc.
International Growth Fund Global Opportunities Fund 1
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Equity Stock Stock & Bond
Emerging Technologies Fund Quest Opportunity Value Fund
Emerging Growth Fund Total Return Fund, Inc.
Enterprise Fund Quest Balanced Value Fund
Discovery Fund Capital Income Fund
Main Street Small Cap Fund(R) Multiple Strategies Fund
Small Cap Value Fund Disciplined Allocation Fund
MidCap Fund Convertible Securities Fund
Main Street Opportunity Fund(R) Specialty
Growth Fund Real Asset Fund(R)
Capital Appreciation Fund Gold & Special Minerals Fund
Main Street Fund(R) 2 Tremont Market Neutral Fund, LLC 3
Value Fund Tremont Opportunity Fund, LLC 3
Quest Capital Value Fund, Inc.
Quest Value Fund, Inc.
Trinity Large Cap Growth Fund
Trinity Core Fund
Trinity Value Fund
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Income Taxable Rochester Division
International Bond Fund California Municipal Fund 5
High Yield Fund New Jersey Municipal Fund 5
Champion Income Fund AMT-Free New York Municipals 5,6
Strategic Income Fund Municipal Bond Fund
Bond Fund Limited Term Municipal Fund
Total Return Bond Fund Rochester National Municipals
Senior Floating Rate Fund Rochester Fund Municipals
U.S. Government Trust Limited Term New York Municipal Fund
Limited-Term Government Fund Pennsylvania Municipal Fund 5
Capital Preservation Fund 4
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Select Managers Stock Stock & Bond
Mercury Advisors Focus Growth Fund QM Active Balanced Fund 4
Gartmore Millennium Growth Fund II
Jennison Growth Fund Salomon
Brothers All Cap Fund
Mercury Advisors S&P 500(R) Index Fund 4
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Money Market 7 Money Market Fund, Inc. Cash Reserves
<FN>
1. The Fund's name changed from Oppenheimer Global Growth & Income Fund on
6/1/03.
2. The Fund's name changed from Oppenheimer Main Street Growth & Income Fund(R)
on 4/30/03.
3. Special investor qualification and minimum investment requirements apply. See
the prospectus for details.
4. Available only through qualified retirement plans.
5. Available to investors only in certain states.
6. The Fund's name changed from Oppenheimer New York Municipal Fund on 1/22/03.
7. 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.
</FN>
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Not part of the semiannual report to Fund shareholders
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26 | OPPENHEIMER CAPITAL PRESERVATION FUND
1.800.CALL OPP PHONELINK
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Call 1.800.CALL OPP (1.800.225.5677) for answers to many of your questions. Our
automated speech recognition system provides you access to all the information
and services you need.
With PhoneLink you can:
o Obtain account balances, share price (NAV) and dividends paid
o Verify your most recent transactions
o Buy, redeem or exchange mutual fund shares
o Create custom lists of your accounts, funds or market indices
o Order duplicate statements or Form 1099 DIV
o Obtain market data (closing market information for Dow Jones Industrial
Average, Nasdaq Composite and S&P 500 Index)
o Speak to a Customer Service Representative 1 by saying "Agent" when prompted
o And more!
Quick list of PhoneLink commands
Say To:
[Account # or Social Security # + PIN] Get dollar and share balances, NAVs,
transaction history or request transactions
[Fund name, share class] Get current price/dividend information
Balance Hear your balance/list of accounts
History Hear your most recent transactions
Purchase or buy Buy shares
Exchange Exchange shares
Liquidation or redemption Sell shares
Dow Jones or Market Indices Hear closing market information
(Dow Jones Industrial Average, Nasdaq
Composite and S&P 500)
Custom list Create, play or edit custom list of your
accounts, funds or market indices
1. You may speak to a Customer Service Representative during normal business
hours.
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Not part of the semiannual report to Fund shareholders
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27 | OPPENHEIMER CAPITAL PRESERVATION FUND
PRIVACY POLICY NOTICE
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As an Oppenheimer fund shareholder, you are entitled to know how we protect your
personal information and how we limit its disclosure.
Information Sources
We obtain nonpublic personal information about our shareholders from the
following sources:
o Applications or other forms
o When you create a user ID and password for online account access
o When you enroll in eDocs Direct, our electronic document delivery service
o Your transactions with us, our affiliates or others
o A software program on our website, often referred to as a "cookie," which
indicates which parts of our site you've visited
If you visit www.oppenheimerfunds.com and do not log on to the secure account
information areas, we do not obtain any personal information about you. When you
do log on to a secure area, we do obtain your user ID and password to identify
you.
We also use this information to provide you with products and services you have
requested, to inform you about products and services that you may be interested
in and to assist you in other ways.
Protection of Information
We do not disclose any nonpublic personal information (such as names on a
customer list) about current or former customers to anyone, except as permitted
by law.
Disclosure of Information
We send your financial advisor (as designated by you) copies of confirmations,
account statements and other documents reporting activity in your fund accounts.
We may also use details about you and your investments to help us, our financial
service affiliates or firms that jointly market their financial products and
services with ours, to better serve your investment needs or suggest financial
services or educational material that may be of interest to you.
Right of Refusal
We will not disclose your personal information to unaffiliated third parties
(except as permitted by law), unless we first offer you a reasonable opportunity
to refuse or "opt out" of such disclosure.
Security
In the coming months, an Internet browser that supports 128-bit encryption will
be required to view the secure pages of www.oppenheimerfunds.com. These areas
include:
o Account access
o Create a user ID and profile
o User profile
o eDocs Direct, our electronic document delivery service
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Not part of the semiannual report to Fund shareholders
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28 | OPPENHEIMER CAPITAL PRESERVATION FUND
To find out if your Internet browser supports 128-bit encryption, or for
instructions on how to upgrade your browser, visit the Help section of
www.oppenheimerfunds.com.
Emails and Encryption
As a security measure, we do not include personal or account information in
nonsecure emails, and we advise you not to send such information to us in
nonsecure emails. Instead, you may take advantage of the secure features of our
website to encrypt your email correspondence. To do this, you will need to use
an Internet browser that supports 128-bit encryption. If you are not sure if
your Internet browser supports 128-bit encryption, or need instructions on how
to upgrade your browser, visit the Help section of www.oppenheimerfunds.com for
assistance.
o All transactions, including redemptions, exchanges and purchases are secured
by Secure Socket Layers (SSL) and encryption. SSL is used to establish a
secure connection between your PC and OppenheimerFunds' server. It transmits
information in an encrypted and scrambled format.
o Encryption is achieved through an electronic scrambling technology that uses
a "key" to code and then decode the data. Encryption acts like the cable
converter box you may have on your television set. It scrambles data with
secret code so that no one can make sense of it while it is being
transmitted. When the data reaches its destination, the same software
unscrambles the data.
o You can exit the secure area by either closing your browser, or for added
security, you can use the Log Out of Account Area button before you close
your browser.
Other Security Measures
We maintain physical, electronic and procedural safeguards to protect your
personal account information. Our employees and agents have access to that
information only so that they may offer you products or provide services to you,
for example, when responding to your account questions.
How You Can Help
You can also do your part to keep your account information private, and to
prevent unauthorized transactions. If you obtain a user ID and password for your
account, do not allow it to be used by anyone else. Also, take special
precautions when accessing your account on a computer used by others.
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This joint notice describes the privacy policies of Oppenheimer funds,
OppenheimerFunds Distributor, Inc., the trustee of OppenheimerFunds Individual
Retirement Accounts (IRAs) and the custodian of the OppenheimerFunds 403(b)(7)
tax-sheltered custodial accounts. It applies to all Oppenheimer fund accounts
you presently have, or may open in the future, using your Social Security
number--whether or not you remain a shareholder of our funds. If you have any
questions about these privacy policies, write to us at P.O. Box 5270, Denver, CO
80217-5270, email us by clicking on the Contact Us section of our website at
www.oppenheimerfunds.com or call us at 1.800.CALL OPP (1.800.225.5677).
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Not part of the semiannual report to Fund shareholders
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29 | OPPENHEIMER CAPITAL PRESERVATION FUND
INFORMATION AND SERVICES
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[GRAPHIC]
Get This Report Online!
You can quickly view, download and print this report at your convenience. It's
EASY, FAST, CONVENIENT, and FREE! With OppenheimerFunds eDocs Direct, you'll
receive email notification when shareholder reports, prospectuses or prospectus
supplements for your fund(s) become available online, instead of receiving them
through the mail. You'll cut down on paper mail and help reduce fund expenses!
Sign up for eDocs Direct today at
www.oppenheimerfunds.com
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Internet
24-hr access to account information and transactions1
www.oppenheimerfunds.com
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PhoneLink 1 and General Information
24-hr automated information and automated transactions
Representatives also available Mon-Fri 8am-9pm ET
Sat (January-April) 10am-4pm ET
1.800.CALL OPP (1.800.225.5677)
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Written Correspondence and Transaction Requests
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
For Overnight Delivery
OppenheimerFunds Services
10200 East Girard Avenue, Building D
Denver, CO 80231
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Ticker Symbols
Class A: OCAPX Class B: OCPBX Class C: OCPCX Class N: OCPNX Class Y: OCPYX
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1. At times the website or PhoneLink may be inaccessible or their transaction
features may be unavailable.
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Not part of the semiannual report to Fund shareholders
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[LOGO OMITTED]
OPPENHEIMERFUNDS[R]
Distributor, Inc.
RS0755.001.0403 June 27, 2003
ITEM 2. CODE OF ETHICS - NOT REQUIRED
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - NOT REQUIRED
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. RESERVED
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of April 30, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)