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.
STATEMENT OF INVESTMENTS April 30, 2003 / Unaudited
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Market Value
Shares See Note 1
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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
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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
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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
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Total Investments, at Value (Cost $297,328,250) 93.2% 303,429,771
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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
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April 30, 2003
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Assets
Investments, at value--see accompanying statement:
Affiliated companies (cost $297,328,250) $303,429,771
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Cash 139,821
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Cash used for collateral on futures 25,000
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Receivables and other assets:
Shares of beneficial interest sold 25,345,645
Interest and dividends 533,662
Other 5,129
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Total assets 329,479,028
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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
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Total liabilities 3,931,432
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Net Assets $325,547,596
=============
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Composition of Net Assets
Paid-in capital $323,814,818
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Overdistributed net investment income (800,304)
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Accumulated net realized loss on investment transactions (490,136)
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Net unrealized appreciation on investments and wrapper agreement 3,023,218
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Net Assets $325,547,596
=============
7 | OPPENHEIMER CAPITAL PRESERVATION FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
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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
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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
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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
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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
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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
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For the Six Months Ended April 30, 2003
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Investment Income
Dividends from affiliated companies $4,310,474
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Interest 22,165
-----------
Total investment income 4,332,639
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Expenses
Management fees 957,245
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Distribution and service plan fees:
Class A 106,884
Class B 33,358
Class C 81,101
Class N 185,383
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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
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Wrapper fees 207,659
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Shareholder reports 27,147
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Trustees' compensation 6,632
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Custodian fees and expenses 3,418
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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
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Net Investment Income 2,994,873
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Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from affiliated companies 217,001
Closing of futures contracts (66,272)
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Net realized gain 150,729
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Net change in unrealized appreciation (depreciation) on:
Investments from affiliated companies 4,898,549
Wrapper agreement (4,255,207)
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Net change 643,342
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Net realized and unrealized gain 794,071
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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
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Six Months Year
Ended Ended
April 30, 2003 October 31,
(Unaudited) 2002
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Operations
Net investment income $ 2,994,873 $ 5,200,284
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Net realized gain (loss) 150,729 (686,530)
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Net change in unrealized appreciation 643,342 2,153,270
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Net increase in net assets resulting from operations 3,788,944 6,667,024
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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)
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Tax return of capital distribution:
Class A -- (726,971)
Class B -- (38,902)
Class C -- (79,157)
Class N -- (740,098)
Class Y -- (23)
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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
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Net Assets
Total increase 110,523,463 153,909,772
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Beginning of period 215,024,133 61,114,361
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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
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Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class A (Unaudited) 2002 2001 2000 1999 1
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Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
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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
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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)
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Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
================================================================
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Total Return, at Net Asset Value 2 1.43% 5.25% 6.00% 6.18% 0.55%
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Ratios/Supplemental Data
Net assets, end of period (in thousands) $96,362 $78,552 $50,179 $10,431 $100
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Average net assets (in thousands) $87,248 $62,359 $33,976 $ 7,171 $100
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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
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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
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Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class B (Unaudited) 2002 2001 2000 1999 1
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Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
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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
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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)
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Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
============================================================
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Total Return, at Net Asset Value 2 1.06% 4.59% 5.31% 5.43% 0.48%
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Ratios/Supplemental Data
Net assets, end of period (in thousands) $8,203 $5,205 $1,777 $331 $1
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Average net assets (in thousands) $6,744 $3,337 $ 676 $ 82 $1
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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
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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
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Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
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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
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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)
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Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00
===============================================================
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Total Return, at Net Asset Value 2 1.04% 4.58% 5.31% 5.43% 0.48%
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Ratios/Supplemental Data
Net assets, end of period (in thousands) $19,890 $12,437 $1,845 $48 $1
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Average net assets (in thousands) $16,396 $ 6,790 $ 652 $25 $1
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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
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Portfolio turnover rate 6% 47% 36% 89% 0%
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<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
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Six Months Year
Ended Ended
April 30, 2003 Oct. 31,
Class N (Unaudited) 2002 2001 1
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Per Share Operating Data
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
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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
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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)
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Net asset value, end of period $10.00 $10.00 $10.00
===================================
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Total Return, at Net Asset Value 3 1.57% 5.29% 3.88%
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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
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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
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Portfolio turnover rate 6% 47% 36%
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<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
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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
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Portfolio turnover rate 6% 47% 36% 89% 0%
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<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
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- --------------------------------------------------------------------------------
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.
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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
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)