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 811-3105
Oppenheimer Capital Appreciation 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.
Two World Financial Center, New York, New York 10281-1008
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: August 31
Date of reporting period: September 1, 2003 - February 29, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS February 29, 2004 / Unaudited
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
COMMON STOCKS--96.2%
- ------------------------------------------------------
CONSUMER DISCRETIONARY--19.3%
- ------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--4.1%
Carnival Corp. 3,164,900 $ 140,426,613
- ------------------------------------------------------
International Game
Technology 1,145,500 44,949,420
- ------------------------------------------------------
Royal Caribbean
Cruises Ltd. 3,319,900 146,905,575
- ------------------------------------------------------
Starwood Hotels
& Resorts
Worldwide, Inc. 491,800 19,185,118
------------------
351,466,726
- ------------------------------------------------------
HOUSEHOLD DURABLES--0.5%
Ethan Allen
Interiors, Inc. 815,470 35,448,481
- ------------------------------------------------------
Tupperware Corp. 487,100 9,303,610
------------------
44,752,091
- ------------------------------------------------------
MEDIA--11.7%
Clear Channel
Communications,
Inc. 2,325,530 100,090,811
- ------------------------------------------------------
Comcast Corp., Cl. A
Special, Non-Vtg. 1 7,828,350 228,744,387
- ------------------------------------------------------
Cox Communications,
Inc., Cl. A 1 673,200 21,811,680
- ------------------------------------------------------
Liberty Media Corp.,
Cl. A 1 1,272,300 14,504,220
- ------------------------------------------------------
New York Times Co.
(The), Cl. A 893,300 40,770,212
- ------------------------------------------------------
News Corp. Ltd.
(The), Sponsored
ADR 2,992,200 112,057,890
- ------------------------------------------------------
Omnicom Group,
Inc. 461,500 37,750,700
- ------------------------------------------------------
Time Warner, Inc. 1 9,999,400 172,489,650
- ------------------------------------------------------
Univision
Communications,
Inc., Cl. A 1 1,911,396 68,103,039
- ------------------------------------------------------
Viacom, Inc., Cl. B 5,471,000 210,414,660
------------------
1,006,737,249
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
MULTILINE RETAIL--1.7%
Federated
Department Stores,
Inc. 751,500 $ 39,356,055
- ------------------------------------------------------
Target Corp. 2,289,100 100,628,836
------------------
139,984,891
- ------------------------------------------------------
SPECIALTY RETAIL--1.3%
Gap, Inc. (The) 2,841,300 59,099,040
- ------------------------------------------------------
Petco Animal
Supplies, Inc. 1 274,800 8,925,504
- ------------------------------------------------------
PetsMart, Inc. 1,149,500 31,197,430
- ------------------------------------------------------
Weight Watchers
International, Inc. 1 350,500 13,150,760
------------------
112,372,734
- ------------------------------------------------------
CONSUMER STAPLES--7.2%
- ------------------------------------------------------
BEVERAGES--3.7%
Anheuser-Busch
Cos., Inc. 2,698,900 143,635,458
- ------------------------------------------------------
Coca-Cola Co. (The) 751,300 37,534,948
- ------------------------------------------------------
PepsiCo, Inc. 2,558,100 132,765,390
------------------
313,935,796
- ------------------------------------------------------
FOOD & STAPLES RETAILING--1.5%
Costco Wholesale
Corp. 1 1,110,100 43,216,193
- ------------------------------------------------------
Wal-Mart Stores,
Inc. 1,481,400 88,232,184
------------------
131,448,377
- ------------------------------------------------------
FOOD PRODUCTS--0.1%
Archer-Daniels-
Midland Co. 379,000 6,518,800
- ------------------------------------------------------
HOUSEHOLD PRODUCTS--1.2%
Clorox Co. (The) 649,300 31,854,658
- ------------------------------------------------------
Procter & Gamble
Corp. (The) 681,600 69,870,816
------------------
101,725,474
- ------------------------------------------------------
PERSONAL PRODUCTS--0.5%
Estee Lauder Cos.,
Inc. (The), Cl. A 1,030,760 43,910,376
9 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
TOBACCO--0.2%
Altria Group, Inc. 301,900 $ 17,374,345
- ------------------------------------------------------
ENERGY--6.0%
- ------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.9%
BJ Services Co. 1 1,130,300 48,930,687
- ------------------------------------------------------
Halliburton Co. 863,900 27,610,244
- ------------------------------------------------------
Noble Corp. 1 551,110 22,375,066
- ------------------------------------------------------
Rowan Cos., Inc. 1 787,500 18,506,250
- ------------------------------------------------------
Schlumberger Ltd. 694,000 44,756,060
------------------
162,178,307
- ------------------------------------------------------
OIL & GAS--4.1%
Amerada Hess Corp. 743,700 47,857,095
- ------------------------------------------------------
BP plc, ADR 434,000 21,352,800
- ------------------------------------------------------
Burlington
Resources, Inc. 562,500 32,928,750
- ------------------------------------------------------
Encana Corp. 1,062,780 45,814,194
- ------------------------------------------------------
Exxon Mobil Corp. 3,619,700 152,642,749
- ------------------------------------------------------
TotalFinaElf SA,
Sponsored ADR 1 586,600 53,961,334
------------------
354,556,922
- ------------------------------------------------------
FINANCIALS--12.7%
- ------------------------------------------------------
COMMERCIAL BANKS--2.0%
Bank of America
Corp. 1,043,700 85,499,904
- ------------------------------------------------------
Bank One Corp. 1,682,000 90,794,360
------------------
176,294,264
- ------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--8.3%
American
Express Co. 2,334,400 124,703,648
- ------------------------------------------------------
Ameritrade
Holding Corp. 1 644,700 10,495,716
- ------------------------------------------------------
Bear Stearns Cos.,
Inc. (The) 499,300 43,858,512
- ------------------------------------------------------
Citigroup, Inc. 4,332,000 217,726,320
- ------------------------------------------------------
J.P. Morgan Chase
& Co. 1,322,200 54,236,644
- ------------------------------------------------------
Merrill Lynch
& Co., Inc. 929,300 56,882,453
- ------------------------------------------------------
Morgan Stanley 2,616,300 156,350,088
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Schwab (Charles)
Corp. 3,926,200 $ 48,056,688
------------------
712,310,069
- ------------------------------------------------------
INSURANCE--1.9%
American
International
Group, Inc. 1,516,300 112,206,200
- ------------------------------------------------------
XL Capital Ltd.,
Cl. A 652,700 50,035,982
------------------
162,242,182
- ------------------------------------------------------
REAL ESTATE--0.5%
Host Marriott
Corp. 1 3,240,600 39,405,696
- ------------------------------------------------------
HEALTH CARE--13.1%
- ------------------------------------------------------
BIOTECHNOLOGY--3.5%
Amgen, Inc. 1 1,169,500 74,298,335
- ------------------------------------------------------
Biogen Idec, Inc. 1 1,110,000 61,549,500
- ------------------------------------------------------
Celgene Corp. 1 744,300 30,508,857
- ------------------------------------------------------
Digene Corp. 1 494,500 18,791,000
- ------------------------------------------------------
Gen-Probe, Inc. 1 227,100 7,764,549
- ------------------------------------------------------
Gilead Sciences,
Inc. 1 1,055,000 57,191,550
- ------------------------------------------------------
Invitrogen Corp. 1 285,700 21,056,090
- ------------------------------------------------------
MedImmune, Inc. 1 523,200 13,441,008
- ------------------------------------------------------
Serono SA, ADR 1 1,114,800 18,750,936
------------------
303,351,825
- ------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.2%
Applera Corp./
Applied Biosystems
Group 815,680 18,597,504
- ------------------------------------------------------
Medtronic, Inc. 3,299,700 154,755,930
- ------------------------------------------------------
Millipore Corp. 1 1,172,600 61,385,610
- ------------------------------------------------------
Nektar
Therapeutics 1 537,500 10,239,375
- ------------------------------------------------------
Varian Medical
Systems, Inc. 1 341,500 28,597,210
------------------
273,575,629
- ------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.0%
Aetna, Inc. 1,077,800 87,075,462
10 | OPPENHEIMER CAPITAL APPRECIATION FUND
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
PHARMACEUTICALS--5.4%
Bristol-Myers
Squibb Co. 1,348,600 $ 37,518,052
- ------------------------------------------------------
Dr. Reddy's
Laboratories Ltd.,
Sponsored ADR 637,100 16,214,195
- ------------------------------------------------------
Medicis
Pharmaceutical
Corp., Cl. A 330,800 13,023,596
- ------------------------------------------------------
Perrigo Co. 900,510 17,595,965
- ------------------------------------------------------
Pfizer, Inc. 4,713,700 172,757,105
- ------------------------------------------------------
Roche Holdings AG 1 470,000 48,478,406
- ------------------------------------------------------
Teva Pharmaceutical
Industries Ltd.,
Sponsored ADR 2,407,875 156,511,875
------------------
462,099,194
- ------------------------------------------------------
INDUSTRIALS--11.0%
- ------------------------------------------------------
AEROSPACE & DEFENSE--2.9%
Honeywell
International, Inc. 1,684,100 59,027,705
- ------------------------------------------------------
L-3 Communications
Holdings, Inc. 1 602,900 32,267,208
- ------------------------------------------------------
Lockheed Martin
Corp. 1,274,700 58,993,116
- ------------------------------------------------------
Northrop Grumman
Corp. 414,600 41,920,206
- ------------------------------------------------------
United Technologies
Corp. 619,000 57,016,090
------------------
249,224,325
- ------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.7%
Expeditors
International of
Washington, Inc. 810,000 31,217,400
- ------------------------------------------------------
United Parcel Service,
Inc., Cl. B 455,600 32,179,028
------------------
63,396,428
- ------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.0%
Dun & Bradstreet
Corp. 1 528,800 28,142,736
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES Continued
Waste Management,
Inc. 1,953,000 $ 55,660,500
------------------
83,803,236
- ------------------------------------------------------
INDUSTRIAL CONGLOMERATES--4.7%
3M Co. 341,700 26,659,434
- ------------------------------------------------------
General Electric Co. 10,175,900 330,920,268
- ------------------------------------------------------
Tyco International
Ltd. 1,547,200 44,203,504
------------------
401,783,206
- ------------------------------------------------------
MACHINERY--1.1%
Danaher Corp. 288,000 25,813,440
- ------------------------------------------------------
Dover Corp. 436,200 17,094,678
- ------------------------------------------------------
Ingersoll-Rand Co.,
Cl. A 744,500 49,494,360
------------------
92,402,478
- ------------------------------------------------------
ROAD & RAIL--0.6%
Canadian National
Railway Co. 417,400 24,718,428
- ------------------------------------------------------
Norfolk Southern
Corp. 1,161,400 25,736,624
------------------
50,455,052
- ------------------------------------------------------
INFORMATION TECHNOLOGY--23.8%
- ------------------------------------------------------
COMMUNICATIONS EQUIPMENT--5.1%
3Com Corp. 1 1,444,500 10,111,500
- ------------------------------------------------------
Alcatel SA 1 1,624,487 26,279,894
- ------------------------------------------------------
Cisco Systems,
Inc. 1 7,531,300 173,973,030
- ------------------------------------------------------
Lucent
Technologies, Inc. 1 6,973,400 29,218,546
- ------------------------------------------------------
Motorola, Inc. 2,535,500 46,779,975
- ------------------------------------------------------
Nokia Oyj,
Sponsored ADR 1 6,773,800 147,465,626
------------------
433,828,571
- ------------------------------------------------------
COMPUTERS & PERIPHERALS--3.4%
Dell, Inc. 1 2,585,800 84,426,370
- ------------------------------------------------------
EMC Corp. 1 715,500 10,245,960
- ------------------------------------------------------
Hewlett-Packard Co. 788,000 17,895,480
11 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
COMPUTERS & PERIPHERALS Continued
International Business
Machines Corp. 1,571,500 $ 151,649,750
- ------------------------------------------------------
SanDisk Corp. 1 1,046,400 26,536,704
- ------------------------------------------------------
Seagate Technology
International, Inc.
(Escrow Shares) 1,2,3 1,000,000 --
------------------
290,754,264
- ------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.2%
Agilent Technologies,
Inc. 1 1,638,200 56,010,058
- ------------------------------------------------------
PerkinElmer, Inc. 1,169,200 24,366,128
- ------------------------------------------------------
Sanmina-SCI Corp. 1 2,058,500 26,122,365
- ------------------------------------------------------
Tektronix, Inc. 1,337,400 42,863,670
- ------------------------------------------------------
Vishay
Intertechnology,
Inc. 1 1,908,300 42,955,833
------------------
192,318,054
- ------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.3%
Yahoo!, Inc. 1 2,561,800 113,743,920
- ------------------------------------------------------
IT SERVICES--0.5%
Infosys
Technologies Ltd. 418,900 46,968,474
- ------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.8%
Analog Devices, Inc. 630,800 31,476,920
- ------------------------------------------------------
Applied Materials,
Inc. 1 899,300 19,101,132
- ------------------------------------------------------
ASML Holding NV 1 1,420,000 25,929,200
- ------------------------------------------------------
ATI Technologies,
Inc. 1 435,600 6,782,292
- ------------------------------------------------------
Cypress
Semiconductor
Corp. 1 3,625,800 78,244,764
- ------------------------------------------------------
Intel Corp. 6,017,700 175,897,371
- ------------------------------------------------------
LSI Logic Corp. 1 1,618,900 16,350,890
- ------------------------------------------------------
STMicroelectronics
NV 1 878,500 22,709,225
- ------------------------------------------------------
Taiwan
Semiconductor
Manufacturing Co.
Ltd., ADR 1 3,865,844 40,166,119
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT
Continued
Texas Instruments,
Inc. 2,681,400 $ 82,184,910
------------------
498,842,823
- ------------------------------------------------------
SOFTWARE--5.5%
Adobe Systems, Inc. 2,044,100 76,122,284
- ------------------------------------------------------
Cadence Design
Systems, Inc. 1 2,196,000 33,884,280
- ------------------------------------------------------
Intuit, Inc. 1 380,300 16,870,108
- ------------------------------------------------------
Microsoft Corp. 10,513,300 278,602,450
- ------------------------------------------------------
Network
Associates, Inc. 1 847,400 14,863,396
- ------------------------------------------------------
Novell, Inc. 1 1,012,100 10,303,178
- ------------------------------------------------------
Veritas Software
Corp. 1 1,219,700 37,103,274
------------------
467,748,970
- ------------------------------------------------------
MATERIALS--1.9%
- ------------------------------------------------------
CHEMICALS--1.9%
Air Products &
Chemicals, Inc. 936,100 45,157,464
- ------------------------------------------------------
Dow Chemical Co. 698,300 30,355,101
- ------------------------------------------------------
Ecolab, Inc. 644,000 17,587,640
- ------------------------------------------------------
Praxair, Inc. 1,957,600 71,100,032
------------------
164,200,237
- ------------------------------------------------------
TELECOMMUNICATION SERVICES--0.5%
- ------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.5%
Telefonos de
Mexico SA,
Sponsored ADR 1,234,400 41,932,568
- ------------------------------------------------------
UTILITIES--0.7%
- ------------------------------------------------------
GAS UTILITIES--0.6%
Kinder Morgan
Management LLC 1,246,216 53,736,834
- ------------------------------------------------------
WATER UTILITIES--0.1%
Aqua America, Inc. 253,218 5,472,042
------------------
Total Common Stocks
(Cost $7,440,410,276) 8,253,927,891
12 | OPPENHEIMER CAPITAL APPRECIATION FUND
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------
OTHER SECURITIES--0.4%
- ------------------------------------------------------
Nasdaq-100 Unit
Investment Trust
(Cost $28,087,898) 1,014,300 $ 37,082,808
PRINCIPAL
AMOUNT
- ------------------------------------------------------
SHORT-TERM NOTES--1.3%
- ------------------------------------------------------
Old Line Funding Corp.:
1.03%, 3/2/04 $47,965,000 47,963,628
1.03%, 3/17/04 25,130,000 25,118,496
- ------------------------------------------------------
Yorktown Capital
LLC, 1.03%, 3/22/04 40,000,000 39,975,967
------------------
Total Short-Term Notes
(Cost $113,058,091) 113,058,091
- ------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.3%
- ------------------------------------------------------
Undivided interest of
52.53% in joint
repurchase agreement
(Principal Amount/Market
Value $371,932,000)
with Zion Bank/Capital
Markets Group, 0.98%,
dated 2/27/04, to be
repurchased at
$195,393,956 on 3/1/04,
collateralized by U.S.
Treasury Bonds, 1.75%--
11.25%, 12/15/04--2/15/15,
with a value of
$328,930,645 and U.S.
Treasury Nts., 6%,
8/15/04, with a value
of $50,875,180 (Cost
$195,378,000) 195,378,000 195,378,000
- ------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $7,776,934,265) 100.2% 8,599,446,790
- ------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.2) (15,071,751)
------------------------------
NET ASSETS 100.0% $8,584,375,039
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Identifies issues considered to be illiquid. See Note 6 of Notes to Financial
Statements.
3. Received as the result of issuer reorganization. Currently has minimal market
value.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13 | OPPENHEIMER CAPITAL APPRECIATION FUND
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- ------------------------------------------------------------------------------
February 29, 2004
- ------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------
Investments, at value (cost $7,776,934,265)--
see accompanying statement $8,599,446,790
- ------------------------------------------------------------------------------
Cash 383,908
- ------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 34,356,502
Investments sold 25,316,845
Interest and dividends 9,158,860
Other 129,811
-----------------
Total assets 8,668,792,716
- ------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 57,392,334
Shares of beneficial interest redeemed 16,286,203
Foreign capital gains tax 3,828,958
Distribution and service plan fees 2,857,803
Transfer and shareholder servicing agent fees 1,792,830
Trustees' compensation 1,085,219
Shareholder communications 1,044,097
Other 130,233
-----------------
Total liabilities 84,417,677
- ------------------------------------------------------------------------------
NET ASSETS $8,584,375,039
=================
- ------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 220,227
- ------------------------------------------------------------------------------
Additional paid-in capital 8,688,697,851
- ------------------------------------------------------------------------------
Accumulated net investment loss (7,334,332)
- ------------------------------------------------------------------------------
Accumulated net realized loss on investments
and foreign currency transactions (915,892,274)
- ------------------------------------------------------------------------------
Net unrealized appreciation on investments and
translation of assets and liabilities
denominated in foreign currencies 818,683,567
-----------------
NET ASSETS $8,584,375,039
=================
14 | OPPENHEIMER CAPITAL APPRECIATION FUND
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $5,153,085,294 and 130,361,459 shares of
beneficial interest outstanding) $39.53
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $41.94
- -------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $1,232,459,901 and 33,486,528
shares of beneficial interest outstanding) $36.80
- -------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $652,482,704 and 17,921,739
shares of beneficial interest outstanding) $36.41
- -------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $160,556,848 and 4,093,578
shares of beneficial interest outstanding) $39.22
- -------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per
share (based on net assets of $1,385,790,292 and 34,363,286
shares of beneficial interest outstanding) $40.33
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15 | OPPENHEIMER CAPITAL APPRECIATION FUND
- ------------------------------------------------------------
STATEMENT OF OPERATIONS Unaudited
- ------------------------------------------------------------
For the Six Months Ended February 29, 2004
- -------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $289,263) $ 39,608,806
- -------------------------------------------------------------------------------
Interest 2,368,978
--------------
Total investment income 41,977,784
- -------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------
Management fees 22,457,943
- -------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 5,703,348
Class B 5,852,305
Class C 2,970,177
Class N 329,414
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 6,340,444
Class B 2,273,128
Class C 839,862
Class N 264,845
Class Y 892,048
- -------------------------------------------------------------------------------
Shareholder communications:
Class A 251,579
Class B 110,341
Class C 39,327
Class N 6,138
- -------------------------------------------------------------------------------
Trustees' compensation 188,758
- -------------------------------------------------------------------------------
Custodian fees and expenses 61,582
- -------------------------------------------------------------------------------
Other 139,262
--------------
Total expenses 48,720,501
Less reduction to custodian expenses (6,178)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class A (86,176)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class B (214,562)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class C (18,316)
Less voluntary waiver of transfer and
shareholder servicing agent fees--Class N (31,686)
--------------
Net expenses 48,363,583
- -------------------------------------------------------------------------------
NET INVESTMENT LOSS (6,385,799)
16 | OPPENHEIMER CAPITAL APPRECIATION FUND
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
Net realized gain on:
Investments (net of foreign capital gains tax of $1,415,481) $164,704,193
Foreign currency transactions 1,800,784
--------------
Net realized gain 166,504,977
- -------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $3,828,958) 700,143,637
Translation of assets and liabilities
denominated in foreign currencies 1,229,817
--------------
Net change in unrealized appreciation 701,373,454
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $861,492,632
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
(UNAUDITED) 2003
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss $ (6,385,799) $ (14,584,020)
- --------------------------------------------------------------------------------
Net realized gain (loss) 166,504,977 (737,292,237)
- --------------------------------------------------------------------------------
Net change in unrealized
appreciation (depreciation) 701,373,454 1,676,110,664
----------------------------------
Net increase in net assets resulting
from operations 861,492,632 924,234,407
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from beneficial interest
transactions:
Class A 346,625,389 504,686,099
Class B (6,112,381) (50,319,183)
Class C 49,325,094 24,021,003
Class N 35,191,443 25,028,168
Class Y 91,659,425 142,226,078
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Total increase 1,378,181,602 1,569,876,572
- --------------------------------------------------------------------------------
Beginning of period 7,206,193,437 5,636,316,865
----------------------------------
End of period (including accumulated
net investment loss
of $7,334,332 and $948,533,
respectively) $8,584,375,039 $7,206,193,437
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS A (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 35.39 $ 30.72 $ 41.11 $ 62.12 $ 44.73 $ 32.53
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.05) (.09) .10 (.02) (.04)
Net realized and unrealized gain (loss) 4.16 4.72 (9.31) (15.86) 20.63 14.87
---------------------------------------------------------------------------
Total from investment operations 4.14 4.67 (9.40) (15.76) 20.61 14.83
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.09)
Distributions from net realized gain -- -- (.99) (5.25) (3.22) (2.54)
---------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- -- (.99) (5.25) (3.22) (2.63)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $39.53 $35.39 $30.72 $41.11 $62.12 $44.73
===========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 11.70% 15.20% (23.48)% (26.38)% 48.01% 47.36%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $5,153,085 $4,288,332 $3,219,391 $3,055,197 $3,648,961 $2,071,317
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,729,420 $3,655,594 $3,204,793 $3,255,995 $2,898,088 $1,788,774
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.03)% (0.11)% (0.15)% 0.28% 0.00% (0.05)%
Total expenses 1.10% 3,4 1.17% 3 1.22% 3,4 1.03% 3 1.06% 3 1.04% 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 42% 28% 46% 44% 59%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS B (UNAUDITED) 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.09 $ 28.95 $ 39.09 $ 59.80 $ 43.48 $ 31.85
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.16) (.31) (.26) (.07) (.20) (.21)
Net realized and unrealized gain (loss) 3.87 4.45 (8.89) (15.39) 19.74 14.38
--------------------------------------------------------------------------
Total from investment operations 3.71 4.14 (9.15) (15.46) 19.54 14.17
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain -- -- (.99) (5.25) (3.22) (2.54)
--------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- -- (.99) (5.25) (3.22) (2.54)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.80 $33.09 $28.95 $39.09 $59.80 $43.48
==========================================================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 11.21% 14.30% (24.07)% (26.95)% 46.88% 46.20%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,232,460 $1,114,052 $1,029,322 $1,242,098 $1,333,387 $531,625
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,175,572 $1,001,311 $1,221,005 $1,265,753 $ 922,480 $372,157
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (0.89)% (0.89)% (0.92)% (0.48)% (0.76)% (0.86)%
Total expenses 1.99% 2.10% 1.99% 1.80% 1.83% 1.84%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.95% 1.96% N/A 3,4 N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 42% 28% 46% 44% 59%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER CAPITAL APPRECIATION FUND
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS C (UNAUDITED) 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.72 $ 28.63 $ 38.64 $ 59.19 $ 43.06 $ 31.57
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.08) (.23) (.11) (.01) (.18) (.23)
Net realized and unrealized gain (loss) 3.77 4.32 (8.91) (15.29) 19.53 14.26
--------------------------------------------------------------------------
Total from investment operations 3.69 4.09 (9.02) (15.30) 19.35 14.03
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to \
shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain -- -- (.99) (5.25) (3.22) (2.54)
--------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- -- (.99) (5.25) (3.22) (2.54)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.41 $32.72 $28.63 $38.64 $59.19 $43.06
==========================================================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 11.28% 14.28% (24.01)% (26.95)% 46.89% 46.16%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $652,483 $540,118 $450,989 $426,476 $402,442 $165,231
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $596,912 $463,768 $477,369 $400,009 $278,800 $126,443
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (0.80)% (0.89)% (0.87)% (0.48)% (0.76)% (0.86)%
Total expenses 1.87% 3,4 1.96% 3 1.94% 3,4 1.80% 3 1.83% 3 1.85% 3
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 42% 28% 46% 44% 59%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS N (UNAUDITED) 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 35.17 $ 30.60 $ 41.05 $ 45.58
- -----------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.06) (.10) (.07) 2 (.01)
Net realized and unrealized gain (loss) 4.11 4.67 (9.39) 2 (4.52)
------------------------------------------------
Total from investment operations 4.05 4.57 (9.46) (4.53)
- -----------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- --
Distributions from net realized gain -- -- (.99) --
------------------------------------------------
Total dividends and/or distributions
to shareholders -- -- (.99) --
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $39.22 $35.17 $30.60 $41.05
================================================
- -----------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 11.51% 14.94% (23.67)% (9.94)%
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $160,557 $111,374 $72,178 $6,791
- -----------------------------------------------------------------------------------------------
Average net assets (in thousands) $132,554 $ 86,761 $38,232 $3,173
- -----------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.37)% (0.35)% (0.37)% (0.11)%
Total expenses 1.49% 1.46% 1.46% 1.36%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.44% 1.42% N/A 5,6 N/A 5
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 42% 28% 46%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER CAPITAL APPRECIATION FUND
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS Y (UNAUDITED) 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.04 $ 31.16 $ 41.55 $ 62.51 $ 44.81 $ 32.56
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .02 .01 .02 1 .27 .13 .13
Net realized and unrealized gain (loss) 4.27 4.87 (9.42) 1 (15.98) 20.79 14.85
--------------------------------------------------------------------------
Total from investment operations 4.29 4.88 (9.40) (15.71) 20.92 14.98
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.19)
Distributions from net realized gain -- -- (.99) (5.25) (3.22) (2.54)
- -------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- -- (.99) (5.25) (3.22) (2.73)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $40.33 $36.04 $31.16 $41.55 $62.51 $44.81
==========================================================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.90% 15.66% (23.23)% (26.12)% 48.64% 47.90%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,385,790 $1,152,318 $864,437 $ 974,820 $1,295,087 $420,455
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,276,355 $ 930,500 $968,867 $1,095,575 $ 855,270 $307,498
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.35% 0.29% 0.17% 0.66% 0.45% 0.30%
Total expenses 0.72% 4 0.78% 4,5 0.89% 4 0.66% 4 0.64% 4 0.68% 4
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 42% 28% 46% 44% 59%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Capital Appreciation Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class N shares are sold only through retirement plans.
Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. 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. Classes A, B, C and N
have separate distribution and/or service plans. No such plan has been adopted
for Class Y shares. Class B shares will automatically convert to Class A shares
six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities may be valued
primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Securities whose values have been materially affected by what
the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective foreign exchanges
will be fair valued. Fair value is determined in good faith using consistently
applied procedures under the supervision of the Board of Trustees. Short-term
"money market type" debt securities with remaining maturities of sixty days or
less are valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
24 | OPPENHEIMER CAPITAL APPRECIATION FUND
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint
trading accounts on a daily basis. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. 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 and principal. 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 on a
daily basis 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 comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company 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 February 29, 2004, the Fund had available for federal income tax
purposes an estimated unused capital loss carryforward of $872,073,769 expiring
by 2011. This estimated capital loss carryforward represents carryforward as of
the end of the last fiscal year, increased for losses deferred under tax
accounting rules to 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 February 29, 2004 and the year ended August
31, 2003, the Fund used $166,504,977 and $0, respectively, of carryforward to
offset capital gains realized.
As of August 31, 2003, the Fund had available for federal income tax purposes
post-October losses of $602,003,735 and unused capital loss carryforwards as
follows:
EXPIRING
----------------------
2010 $ 61,636,235
2011 374,938,776
------------
Total $436,575,011
============
Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.
25 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 February 29, 2004, the Fund's projected benefit obligations were
increased by $70,823 and payments of $73,625 were made to retired trustees,
resulting in an accumulated liability of $945,766 as of February 29, 2004.
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, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or are invested in other
Oppenheimer funds 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. Amounts will
be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
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. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
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.
26 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
SIX MONTHS ENDED FEBRUARY 29, 2004 YEAR ENDED AUGUST 31, 2003
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A
Sold 22,734,690 $ 859,118,752 45,225,452 $1,394,693,911
Redeemed (13,545,758) (512,493,363) (28,851,156) (890,007,812)
-----------------------------------------------------------------
Net increase 9,188,932 $ 346,625,389 16,374,296 $ 504,686,099
=================================================================
- --------------------------------------------------------------------------------
CLASS B
Sold 3,528,975 $ 124,241,467 6,747,394 $ 197,106,768
Redeemed (3,708,765) (130,353,848) (8,635,132) (247,425,951)
-----------------------------------------------------------------
Net decrease (179,790) $ (6,112,381) (1,887,738) $ (50,319,183)
=================================================================
- --------------------------------------------------------------------------------
CLASS C
Sold 2,943,917 $ 102,688,241 4,972,919 $ 143,578,548
Redeemed (1,529,078) (53,363,147) (4,220,870) (119,557,545)
-----------------------------------------------------------------
Net increase 1,414,839 $ 49,325,094 752,049 $ 24,021,003
=================================================================
- --------------------------------------------------------------------------------
CLASS N
Sold 1,469,921 $ 55,634,041 1,644,398 $ 50,946,387
Redeemed (542,677) (20,442,598) (836,639) (25,918,219)
-----------------------------------------------------------------
Net increase 927,244 $ 35,191,443 807,759 $ 25,028,168
=================================================================
- --------------------------------------------------------------------------------
CLASS Y
Sold 4,097,897 $ 156,945,379 9,921,935 $ 316,008,775
Redeemed (1,711,729) (65,285,954) (5,689,335) (173,782,697)
-----------------------------------------------------------------
Net increase 2,386,168 $ 91,659,425 4,232,600 $ 142,226,078
=================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended February 29, 2004, were
$2,330,419,527 and $1,640,874,055, respectively.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Effective January 1, 2004, management fees paid to the Manager
were in accordance with the investment advisory agreement with the Fund which
provides for a fee at an annual rate of 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 $700
million, 0.58% of the next $1.0 billion, 0.56% of the next $2.0 billion, 0.54%
of the next $2.0 billion, 0.52% of the next $2.0 billion, and 0.50% of average
annual net assets over $8.5 billion. Prior to January 1, 2004, the annual
advisory fee rate was 0.75% of the first $200 million of aggregate net assets,
0.72%
27 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
of the next $200 million, 0.69% of the next $200 million, 0.66% of the next
$200 million, 0.60% of the next $700 million, 0.58% of the next $1.0 billion,
0.56% of the next $2.0 billion, 0.54% of the next $4.0 billion, and 0.52% of
aggregate net assets over $8.5 billion.
Effective July 1, 2003 the Manager has voluntarily undertaken to waive fees
or reimburse expenses of Class Y shares so that "Total Annual Operating
Expenses" of Class Y shares do not exceed 0.75% of average daily net assets.
The Manager may amend or withdraw these waivers and reimbursements at any time
without notice to shareholders.
- --------------------------------------------------------------------------------
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 per account fee. For the six months ended February 29, 2004,
the Fund paid $10,170,511 to OFS for services to the Fund.
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 Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
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. The Distributor currently uses the fees it receives
from the Fund to pay brokers, dealers and other financial institutions for
personal services and account maintenance services they provide for their
customers who hold Class A shares. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. Fees incurred by the Fund under the plan are detailed in the
Statement of Operations.
- --------------------------------------------------------------------------------
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 to compensate the Distributor for its services in connection with the
distribution of these shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B shares and on Class C shares and 0.25% per year on Class N shares. The
Distributor also receives a service fee of up to 0.25% per year under each
plan. If either the Class B, Class C or Class N plan is terminated by the Fund
or by the shareholders of a class, the Board of Trustees and its independent
trustees
28 | OPPENHEIMER CAPITAL APPRECIATION FUND
must determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the service fee and/or asset-based sales charge in
respect to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at February 29,
2004 for Class B, Class C and Class N shares was $25,245,991, $8,420,332 and
$1,719,542, respectively. Fees incurred by the Fund under the plans are
detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------
February 29, 2004 $1,154,726 $47,961 $1,168,281 $46,120 $47,797
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation
or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of February 29, 2004, the Fund had no outstanding foreign currency
contracts.
29 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of February 29, 2004, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 10% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of
February 29, 2004 was zero.
- --------------------------------------------------------------------------------
7. BORROWING AND LENDING ARRANGEMENTS
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 (the SEC) 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. The
SEC's order requires the Fund's Board of Trustees to adopt operating policies
and procedures to administer interfund borrowing and lending. 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 Manager. 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 February 29, 2004.
30 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
31 | OPPENHEIMER CAPITAL APPRECIATION FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that Edward V.
Regan, the Chairman of the Board's Audit Committee, possesses the technical
attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as
an "audit committee financial expert," and has designated Mr. Regan as the Audit
Committee's financial expert. Mr. Regan is an "independent" Trustee pursuant to
paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semiannual reports.
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a meeting of the Board of Trustees of the registrant held on February 18,
2004, the Board adopted (1) a policy that, should the Board determine that a
vacancy exists or is likely to exist on the Board, the Governance Committee of
the Board, which is comprised entirely of independent trustees, shall consider
any candidates for Board membership recommended by the registrant's security
holders and (2) a policy that security holders wishing to submit a nominee for
election to the Board may do so by mailing their submission to the offices of
OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street - 11th
Floor, New York, NY 10281-1008, to the attention of the Chair of the Governance
Committee. Prior to February 18, 2004, the Board did not have a formalized
policy with respect to consideration of security holder nominees or a procedure
by which security holders may make their submissions. In addition to security
holder nominees, the Governance Committee may also consider nominees recommended
by independent Board members or recommended by any other Board members and is
authorized under its Charter, upon Board approval, to retain an executive search
firm to assist in screening potential candidates. Upon Board approval, the
Governance Committee may also obtain legal, financial, or other external counsel
that may be necessary or desirable in the screening process.
ITEM 10. 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 February 29, 2004, registrant's principal
executive officer and principal financial officer found
registrant's disclosure controls and procedures to provide
reasonable assurances 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 over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)