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
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(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: August 31
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Date of reporting period: September 1, 2003 - August 31, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Media 10.3%
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Pharmaceuticals 9.1
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Diversified Financial Services 7.5
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Software 6.9
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Industrial Conglomerates 5.7
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Oil & Gas 5.1
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Health Care Equipment & Supplies 4.3
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Communications Equipment 4.2
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Beverages 3.9
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Biotechnology 3.7
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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General Electric Co. 4.9%
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Microsoft Corp. 3.6
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Pfizer, Inc. 2.7
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Comcast Corp., Cl. A Special, Non-Vtg. 2.6
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Citigroup, Inc. 2.4
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Medtronic, Inc. 2.2
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Viacom, Inc., Cl. B 2.2
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International Business Machines Corp. 2.2
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Cisco Systems, Inc. 2.0
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Exxon Mobil Corp. 2.0
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
7 | OPPENHEIMER CAPITAL APPRECIATION FUND
TOP HOLDINGS AND ALLOCATIONS
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Information Technology 21.7%
Health Care 18.1
Consumer Discretionary 16.2
Industrials 13.6
Financials 11.1
Consumer Staples 9.3
Energy 7.1
Materials 2.4
Telecommunication Services 0.5
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on common stocks.
8 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2004, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Over the 12-month period ended
August 31, 2004, the Fund delivered mildly weaker gains than its benchmark. The
Fund's overall performance was driven primarily by the stock market's broadly
based upward trend during the first half of the period, which outweighed
declines during the second half of the period. Performance relative to the
benchmark suffered largely as a result of the Fund's exposure to technology
stocks, an area which sustained particularly sharp losses during the market
downturn.
The Fund's investment strategy focuses on companies that we believe offer
potential for above-average growth, but that exhibit reasonable valuations
relative to their future growth prospects. In particular, we target companies
with a history of positive earnings or cash flow, together with increasing
earnings momentum and the potential for positive earnings surprises.
Our disciplined stock selection process delivered particularly strong
returns among health care stocks. The health care sector generally faced a
difficult environment during the period due to election year uncertainties and
concerns regarding the drug development pipelines at several major U.S.
pharmaceutical firms. As a result, the health care component of the S&P 500
Index produced only slight gains. However, the Fund's health care holdings
appreciated much more substantially, bolstered by gains among biotechnology
holdings, health insurers, diversified medical product companies, such as
Johnson & Johnson, Inc.; and certain European pharmaceutical firms.
Other sectors that contributed positively to the Fund's returns included
industrials and consumer staples. Although neither is a traditional
growth-oriented area, we found attractive investment opportunities in both that
we believed featured good growth potential at a reasonable price. For example,
among industrials, we established a significant position in General Electric
Co., a diversified company that has recently moved to emphasize growth-oriented
areas of its business, such as entertainment and medical. Among consumer
staples, we focused on companies, such as PepsiCo, Inc., that is increasing its
revenues by gaining traction in developing global markets. The Fund added to its
exposure in both of these areas during the period, a move that enhanced
performance.
On the negative side, prices for media stocks remained depressed despite
improving business fundamentals. At the end of the reporting period, the Fund's
largest industry allocation (10.3% of assets) was in media stocks, such as
Viacom, Inc. In addition, the Fund's growth-oriented investment strategy led us
to place greater emphasis than the
9 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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benchmark on technology stocks, a group that experienced sharp declines during
the second half of the period. During the reporting period, weak technology
stocks in the Fund included telecommunications equipment maker Nokia Corp.;
semiconductor maker Intel Corp.; and a leading manufacturer of scientific
instruments. However, we succeeded in limiting the Fund's losses in technology
by, in part, seeking to avoid high-flying stocks that failed to meet our
criteria for growth at a reasonable price. Such stocks tended to suffer the
sharpest declines during the technology downturn.
As prices declined for technology stocks across the board, we trimmed
holdings in relatively small-cap cyclical technology names and increased the
Fund's exposure to stable, bellwether companies, such as Cisco Systems, Inc.
During the period, we also trimmed consumer discretionary holdings such as
cruise lines, hotels, and casinos and gaming when they rose above attractive
price levels, a move that illustrates our disciplined, valuation sensitive
approach to growth investing.
The Fund's portfolio holdings, allocations and strategies are subject to
change.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until August 31, 2004. In the case of Class A and Class C shares,
performance is measured over a ten-fiscal-year period; in the case of Class B
shares, from the inception of the class on November 1, 1995. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001, and in the case of Class Y shares, from the inception of the class on
November 3, 1997. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charge on Class B, Class C, and Class N shares, and reinvestments of all
dividends and capital gains distributions. Past performance cannot guarantee
future results.
The Fund's performance is compared to the performance of the Standard &
Poor's (S&P) 500 Index, a broad-based index of equity securities widely regarded
as a general measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of income but does not consider the
effect of transaction costs, and none of the data in the graphs shows the effect
of taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the investments in the index.
10 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OPPENHEIMER CAPITAL APPRECIATION FUND (CLASS A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital S&P 500 Index
Appreciation Fund
(Class A)
12/31/1993 9,425 10,000
03/31/1994 9,179 9,621
06/30/1994 8,927 9,662
09/30/1994 9,447 10,133
12/31/1994 9,468 10,131
03/31/1995 10,321 11,117
06/30/1995 11,535 12,176
09/30/1995 12,543 13,143
12/31/1995 12,768 13,934
03/31/1996 13,684 14,682
06/30/1996 14,387 15,340
08/31/1996 1 14,336 14,972
11/30/1996 16,578 17,477
02/28/1997 16,948 18,344
05/31/1997 18,241 19,780
08/31/1997 20,145 21,055
11/30/1997 20,578 22,459
02/28/1998 22,338 24,762
05/31/1998 23,003 25,844
08/31/1998 19,326 22,765
11/30/1998 23,390 27,778
02/28/1999 26,193 29,655
05/31/1999 27,676 31,280
08/31/1999 28,479 31,826
11/30/1999 31,605 33,582
02/29/2000 38,989 33,132
05/31/2000 38,223 34,554
08/31/2000 42,152 37,016
11/30/2000 34,762 32,163
02/28/2001 34,293 30,417
05/31/2001 35,146 30,910
08/31/2001 31,032 27,993
11/30/2001 30,881 28,235
02/28/2002 28,970 27,525
05/31/2002 28,189 26,633
08/31/2002 23,745 22,958
11/30/2002 24,950 23,574
02/28/2003 22,168 21,285
05/31/2003 25,654 24,485
08/31/2003 27,354 25,726
11/30/2003 28,715 27,129
02/29/2004 30,554 29,479
05/31/2004 29,998 28,971
08/31/2004 29,039 28,671
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/04
1-Year 5-Year 10-Year
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0.06% -0.79% 10.94%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER
INFORMATION.
1. The Fund changed its fiscal year end from December 31 to August 31.
11 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OPPENHEIMER CAPITAL APPRECIATION FUND (CLASS B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital S&P 500 Index
Appreciation Fund
(Class B)
11/01/1995 10,000 10,000
12/31/1995 10,167 10,640
03/31/1996 10,873 11,211
06/30/1996 11,411 11,713
08/31/1996 1 11,352 11,432
11/30/1996 13,098 13,345
02/28/1997 13,362 14,007
05/31/1997 14,347 15,104
08/31/1997 15,813 16,077
11/30/1997 16,120 17,149
02/28/1998 17,458 18,907
05/31/1998 17,945 19,734
08/31/1998 15,044 17,382
11/30/1998 18,171 21,211
02/28/1999 20,310 22,643
05/31/1999 21,418 23,884
08/31/1999 21,995 24,301
11/30/1999 24,362 25,642
02/29/2000 29,998 25,299
05/31/2000 29,350 26,385
08/31/2000 32,305 28,264
11/30/2000 26,589 24,559
02/28/2001 26,179 23,226
05/31/2001 26,782 23,602
08/31/2001 23,601 21,375
11/30/2001 23,455 21,559
02/28/2002 22,003 21,018
05/31/2002 21,411 20,336
08/31/2002 18,035 17,530
11/30/2002 18,951 18,000
02/28/2003 16,837 16,253
05/31/2003 19,485 18,696
08/31/2003 20,777 19,644
11/30/2003 21,810 20,715
02/29/2004 23,207 22,509
05/31/2004 22,784 22,121
08/31/2004 22,056 21,892
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/04
1-Year 5-Year Since Inception
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0.23% -0.73% 9.37%
1. The Fund changed its fiscal year end from December 31 to August 31.
12 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OPPENHEIMER CAPITAL APPRECIATION FUND (CLASS C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital S&P 500 Index
Appreciation Fund
(Class C)
12/31/1993 10,000 10,121
03/31/1994 9,712 9,621
06/30/1994 9,421 9,662
09/30/1994 9,946 10,133
12/31/1994 9,950 10,131
03/31/1995 10,816 11,117
06/30/1995 12,054 12,176
09/30/1995 13,080 13,143
12/31/1995 13,289 13,934
03/31/1996 14,215 14,682
06/30/1996 14,911 15,340
08/31/1996 1 14,838 14,972
11/30/1996 17,122 17,477
02/28/1997 17,468 18,344
05/31/1997 18,760 19,780
08/31/1997 20,676 21,055
11/30/1997 21,076 22,459
02/28/1998 22,828 24,762
05/31/1998 23,464 25,844
08/31/1998 19,675 22,765
11/30/1998 23,763 27,778
02/28/1999 26,553 29,655
05/31/1999 28,002 31,280
08/31/1999 28,757 31,826
11/30/1999 31,849 33,582
02/29/2000 39,223 33,132
05/31/2000 38,381 34,554
08/31/2000 42,242 37,016
11/30/2000 34,763 32,163
02/28/2001 34,235 30,417
05/31/2001 35,017 30,910
08/31/2001 30,857 27,993
11/30/2001 30,649 28,235
02/28/2002 28,706 27,525
05/31/2002 27,870 26,633
08/31/2002 23,448 22,958
11/30/2002 24,586 23,574
02/28/2003 21,802 21,285
05/31/2003 25,184 24,485
08/31/2003 26,798 25,726
11/30/2003 28,075 27,129
02/29/2004 29,820 29,479
05/31/2004 29,214 28,971
08/31/2004 28,231 28,671
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/04
1-Year 5-Year 10-Year
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4.35% -0.37% 10.71%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE-INCEPTION RETURNS FOR CLASS B
SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 16 FOR
FURTHER INFORMATION.
1. The Fund changed its fiscal year end from December 31 to August 31.
13 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OPPENHEIMER CAPITAL APPRECIATION FUND (CLASS N)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital S&P 500 Index
Appreciation Fund
(Class N)
03/01/2001 10,000 10,000
05/31/2001 10,206 10,162
08/31/2001 9,006 9,203
11/30/2001 8,956 9,283
02/28/2002 8,398 9,049
05/31/2002 8,164 8,756
08/31/2002 6,875 7,548
11/30/2002 7,221 7,750
02/28/2003 6,414 6,998
05/31/2003 7,418 8,050
08/31/2003 7,901 8,458
11/30/2003 8,288 8,919
02/29/2004 8,811 9,692
05/31/2004 8,643 9,524
08/31/2004 8,360 9,426
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/04
1-Year Since Inception
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4.80% -4.99%
14 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OPPENHEIMER CAPITAL APPRECIATION FUND (CLASS Y)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital S&P 500 Index
Appreciation Fund
(Class Y)
11/03/1997 10,000 10,000
11/30/1997 9,833 10,463
02/28/1998 10,680 11,535
05/31/1998 11,009 12,039
08/31/1998 9,255 10,605
11/30/1998 11,211 12,940
02/28/1999 12,564 13,815
05/31/1999 13,291 14,572
08/31/1999 13,688 14,826
11/30/1999 15,203 15,644
02/29/2000 18,778 15,435
05/31/2000 18,430 16,097
08/31/2000 20,347 17,244
11/30/2000 16,789 14,983
02/28/2001 16,579 14,170
05/31/2001 17,009 14,399
08/31/2001 15,034 13,041
11/30/2001 14,965 13,153
02/28/2002 14,053 12,823
05/31/2002 13,690 12,407
08/31/2002 11,541 10,695
11/30/2002 12,138 10,982
02/28/2003 10,797 9,916
05/31/2003 12,508 11,406
08/31/2003 13,349 11,984
11/30/2003 14,023 12,638
02/29/2004 14,938 13,733
05/31/2004 14,679 13,496
08/31/2004 14,223 13,356
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES WITH SALES CHARGE OF THE FUND AT
8/31/04
1-Year 5-Year Since Inception
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6.55% 0.77% 5.29%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 1/22/81. Class A
returns include the current maximum initial sales charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 11/1/95. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "since inception" return for Class B uses Class A
performance for the period after conversion. Class B shares are subject to an
annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 12/1/93. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 11/3/97. Class Y
shares are offered only to certain institutional investors under special
agreements with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments;
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended August 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
17 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
BEGINNING ENDING
ACCOUNT ACCOUNT EXPENSES PAID
VALUE VALUE DURING 6 MONTHS
(3/1/04) (8/31/04) ENDED AUGUST 31, 2004
- ----------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 950.40 $ 5.26
- ----------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.76 5.45
- ----------------------------------------------------------------------
Class B Actual 1,000.00 946.20 9.79
- ----------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.13 10.13
- ----------------------------------------------------------------------
Class C Actual 1,000.00 946.70 9.10
- ----------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.84 9.42
- ----------------------------------------------------------------------
Class N Actual 1,000.00 948.70 6.98
- ----------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.00 7.23
- ----------------------------------------------------------------------
Class Y Actual 1,000.00 952.10 3.39
- ----------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.67 3.51
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those expense ratios for the 6-month
period ended August 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.07%
- ------------------------
Class B 1.99
- ------------------------
Class C 1.85
- ------------------------
Class N 1.42
- ------------------------
Class Y 0.69
The expense ratios reflect voluntary reimbursements of expenses by the Fund's
Transfer Agent that can be terminated at any time, without advance notice. The
"Financial Highlights" tables in the Fund's financial statements, included in
this report, also show the gross expense ratios, without such reimbursements.
18 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS August 31, 2004
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------
COMMON STOCKS--96.1%
- ---------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--15.6%
- ---------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.8%
Carnival Corp. 1,680,700 $ 76,959,253
- ---------------------------------------------------------------------------------
Royal Caribbean
Cruises Ltd. 1,843,200 76,124,160
----------------
153,083,413
- ---------------------------------------------------------------------------------
MEDIA--10.3%
Clear Channel
Communications,
Inc. 2,366,930 79,315,824
- ---------------------------------------------------------------------------------
Comcast Corp.,
Cl. A Special,
Non-Vtg. 1 8,125,825 225,491,644
- ---------------------------------------------------------------------------------
Cox
Communications,
Inc., Cl. A 1 685,300 22,518,958
- ---------------------------------------------------------------------------------
News Corp. Ltd.
(The), Sponsored
ADR 3,044,900 95,153,125
- ---------------------------------------------------------------------------------
Omnicom Group,
Inc. 469,500 32,306,295
- ---------------------------------------------------------------------------------
Time Warner, Inc. 1 10,586,200 173,084,370
- ---------------------------------------------------------------------------------
Univision
Communications,
Inc., Cl. A 1 2,048,896 67,613,568
- ---------------------------------------------------------------------------------
Viacom, Inc., Cl. B 5,570,000 185,536,700
----------------
881,020,484
- ---------------------------------------------------------------------------------
MULTILINE RETAIL--2.0%
Federated
Department
Stores, Inc. 983,000 42,662,200
- ---------------------------------------------------------------------------------
J.C. Penney Co., Inc.
(Holding Co.) 632,900 24,252,728
- ---------------------------------------------------------------------------------
Target Corp. 2,350,780 104,797,772
----------------
171,712,700
- ---------------------------------------------------------------------------------
SPECIALTY RETAIL--1.5%
Gap, Inc. (The) 3,842,200 72,002,828
- ---------------------------------------------------------------------------------
Home Depot, Inc. 1,173,500 42,903,160
- ---------------------------------------------------------------------------------
PetsMart, Inc. 308,230 8,648,934
----------------
123,554,922
- ---------------------------------------------------------------------------------
CONSUMER STAPLES--9.0%
- ---------------------------------------------------------------------------------
BEVERAGES--3.9%
Anheuser-Busch
Cos., Inc. 2,725,700 143,916,960
- ---------------------------------------------------------------------------------
Coca-Cola Co.
(The) 872,400 39,005,004
- ---------------------------------------------------------------------------------
PepsiCo, Inc. 2,920,410 146,020,500
----------------
328,942,464
- ---------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.3%
Costco Wholesale
Corp. 1,377,388 56,707,064
- ---------------------------------------------------------------------------------
Wal-Mart Stores,
Inc. 1,760,600 92,730,802
- ---------------------------------------------------------------------------------
Walgreen Co. 1,297,400 47,290,230
----------------
196,728,096
- ---------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--2.2%
Clorox Co. (The) 887,900 46,916,636
- ---------------------------------------------------------------------------------
Kimberly-Clark
Corp. 325,600 21,717,520
- ---------------------------------------------------------------------------------
Procter & Gamble
Co. (The) 2,147,000 120,167,590
----------------
188,801,746
- ---------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.6%
Estee Lauder Cos.,
Inc. (The), Cl. A 1,193,760 52,465,752
- ---------------------------------------------------------------------------------
ENERGY--6.8%
- ---------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.7%
BJ Services Co. 1 1,026,000 49,299,300
- ---------------------------------------------------------------------------------
Halliburton Co. 1,022,500 29,826,325
- ---------------------------------------------------------------------------------
Schlumberger Ltd. 1,035,200 63,975,360
----------------
143,100,985
- ---------------------------------------------------------------------------------
OIL & GAS--5.1%
Amerada Hess Corp. 380,300 30,614,150
- ---------------------------------------------------------------------------------
Apache Corp. 282,800 12,638,332
- ---------------------------------------------------------------------------------
Burlington
Resources, Inc. 1,145,100 41,486,973
- ---------------------------------------------------------------------------------
Encana Corp. 1,085,480 44,368,416
- ---------------------------------------------------------------------------------
Exxon Mobil Corp. 3,779,200 174,221,120
19 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------
OIL & GAS Continued
Kinder Morgan
Management LLC 1,318,375 $ 51,245,236
- ---------------------------------------------------------------------------------
Murphy Oil Corp. 324,900 24,533,199
- ---------------------------------------------------------------------------------
TotalFinaElf SA,
Sponsored ADR 597,000 58,500,030
----------------
437,607,456
- ---------------------------------------------------------------------------------
FINANCIALS--10.6%
- ---------------------------------------------------------------------------------
COMMERCIAL BANKS--0.6%
Bank of America
Corp. 1,003,400 45,132,932
- ---------------------------------------------------------------------------------
Commerce
Bancorp, Inc. 166,000 8,710,020
----------------
53,842,952
- ---------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--7.5%
American
Express Co. 2,194,640 109,775,893
- ---------------------------------------------------------------------------------
Bear Stearns Cos.,
Inc. (The) 519,600 45,683,232
- ---------------------------------------------------------------------------------
Citigroup, Inc. 4,424,300 206,083,894
- ---------------------------------------------------------------------------------
JPMorgan Chase
& Co. 3,612,020 142,963,752
- ---------------------------------------------------------------------------------
Morgan Stanley 2,661,100 134,997,603
- ---------------------------------------------------------------------------------
Providian Financial
Corp. 1 286,700 4,139,948
----------------
643,644,322
- ---------------------------------------------------------------------------------
INSURANCE--2.5%
American
International
Group, Inc. 1,697,900 120,958,396
- ---------------------------------------------------------------------------------
Prudential
Financial, Inc. 1,495,000 69,039,100
- ---------------------------------------------------------------------------------
XL Capital Ltd., Cl. A 305,200 21,425,040
----------------
211,422,536
- ---------------------------------------------------------------------------------
HEALTH CARE--17.4%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--3.7%
Amgen, Inc. 1 1,931,900 114,542,351
- ---------------------------------------------------------------------------------
Applera Corp./
Applied Biosystems
Group 1,177,080 22,411,603
- ---------------------------------------------------------------------------------
Biogen Idec, Inc. 1 1,117,000 66,271,610
- ---------------------------------------------------------------------------------
Digene Corp. 1 880,871 22,065,819
- ---------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 1,077,500 74,487,575
- ---------------------------------------------------------------------------------
Martek Biosciences
Corp. 1 81,900 4,373,460
- ---------------------------------------------------------------------------------
MedImmune, Inc. 1 569,000 13,582,030
----------------
317,734,448
- ---------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--4.3%
Medtronic, Inc. 3,740,095 186,069,726
- ---------------------------------------------------------------------------------
Millipore Corp. 1 1,685,700 84,790,710
- ---------------------------------------------------------------------------------
PerkinElmer, Inc. 1,763,100 30,818,988
- ---------------------------------------------------------------------------------
Stryker Corp. 1,124,100 50,921,730
- ---------------------------------------------------------------------------------
Waters Corp. 1 387,600 16,786,956
----------------
369,388,110
- ---------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.3%
Pharmaceutical
Product
Development, Inc. 1 691,100 23,462,845
- ---------------------------------------------------------------------------------
PHARMACEUTICALS--9.1%
Eli Lilly & Co. 1,585,100 100,574,595
- ---------------------------------------------------------------------------------
Johnson & Johnson 2,777,200 161,355,320
- ---------------------------------------------------------------------------------
Merck & Co., Inc. 1,873,421 84,247,742
- ---------------------------------------------------------------------------------
Novartis AG 2,340,028 108,153,331
- ---------------------------------------------------------------------------------
Pfizer, Inc. 7,016,689 229,235,230
- ---------------------------------------------------------------------------------
Roche Holdings AG 350,247 33,938,127
- ---------------------------------------------------------------------------------
Teva Pharmaceutical
Industries Ltd.,
Sponsored ADR 2,236,250 60,937,813
----------------
778,442,158
- ---------------------------------------------------------------------------------
INDUSTRIALS--13.1%
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.7%
Boeing Co. 600,500 31,358,110
- ---------------------------------------------------------------------------------
Honeywell
International, Inc. 1,625,000 58,467,500
- ---------------------------------------------------------------------------------
L-3 Communications
Holdings, Inc. 641,100 40,158,504
- ---------------------------------------------------------------------------------
Lockheed Martin
Corp. 1,297,500 69,779,550
20 | OPPENHEIMER CAPITAL APPRECIATION FUND
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------
AEROSPACE & DEFENSE Continued
Northrop Grumman
Corp. 664,000 $ 34,295,600
- ---------------------------------------------------------------------------------
Rockwell Collins,
Inc. 175,700 6,042,323
- ---------------------------------------------------------------------------------
United Technologies
Corp. 796,700 74,818,097
----------------
314,919,684
- ---------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--1.9%
Expeditors
International of
Washington, Inc. 824,306 40,209,647
- ---------------------------------------------------------------------------------
FedEx Corp. 571,800 46,881,882
- ---------------------------------------------------------------------------------
United Parcel
Service, Inc., Cl. B 998,400 72,933,120
----------------
160,024,649
- ---------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.0%
Manpower, Inc. 443,400 18,724,782
- ---------------------------------------------------------------------------------
Waste
Management, Inc. 2,528,100 70,255,899
----------------
88,980,681
- ---------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.1%
Rockwell
Automation, Inc. 221,100 8,622,900
- ---------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--5.7%
General Electric Co. 12,884,900 422,495,871
- ---------------------------------------------------------------------------------
Tyco International
Ltd. 2,190,700 68,612,724
----------------
491,108,595
- ---------------------------------------------------------------------------------
MACHINERY--0.7%
Ingersoll-Rand
Co., Cl. A 864,500 56,201,145
- ---------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--20.7%
- ---------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--4.2%
Cisco Systems, Inc. 1 9,315,140 174,752,026
- ---------------------------------------------------------------------------------
Lucent
Technologies, Inc. 1 6,212,600 19,445,438
- ---------------------------------------------------------------------------------
Motorola, Inc. 2,873,000 46,398,950
- ---------------------------------------------------------------------------------
Nokia Corp.,
Sponsored ADR 4,494,200 53,391,096
- ---------------------------------------------------------------------------------
QUALCOMM, Inc. 491,800 18,712,990
- ---------------------------------------------------------------------------------
Telefonaktiebolaget
LM Ericsson,
Sponsored ADR 1 1,598,700 43,228,848
----------------
355,929,348
- ---------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.3%
Dell, Inc. 1 2,421,400 84,361,576
- ---------------------------------------------------------------------------------
EMC Corp. 1 1,164,800 12,544,896
- ---------------------------------------------------------------------------------
International
Business
Machines Corp. 2,171,500 183,904,335
----------------
280,810,807
- ---------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.4%
Agilent
Technologies, Inc. 1 2,321,100 47,582,550
- ---------------------------------------------------------------------------------
Tektronix, Inc. 1,647,000 47,054,790
- ---------------------------------------------------------------------------------
Vishay
Intertechnology,
Inc. 1 1,942,000 24,760,500
----------------
119,397,840
- ---------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.5%
Yahoo!, Inc. 1 4,505,200 128,443,252
- ---------------------------------------------------------------------------------
IT SERVICES--0.4%
Accenture Ltd.,
Cl. A 1 1,522,600 39,739,860
- ---------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.0%
Analog Devices, Inc. 987,540 34,287,389
- ---------------------------------------------------------------------------------
Cypress
Semiconductor
Corp. 1 1,518,200 14,817,632
- ---------------------------------------------------------------------------------
Intel Corp. 7,386,140 157,250,921
- ---------------------------------------------------------------------------------
Texas
Instruments, Inc. 2,804,600 54,801,884
----------------
261,157,826
- ---------------------------------------------------------------------------------
SOFTWARE--6.9%
Adobe Systems, Inc. 2,374,134 108,901,527
- ---------------------------------------------------------------------------------
Cadence Design
Systems, Inc. 1 2,378,700 29,567,241
- ---------------------------------------------------------------------------------
Citrix Systems, Inc. 1 2,110,680 33,580,919
21 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------
SOFTWARE Continued
Microsoft Corp. 11,336,111 $ 309,475,830
- ---------------------------------------------------------------------------------
Novell, Inc. 1 1,283,800 7,574,420
- ---------------------------------------------------------------------------------
SAP AG,
Sponsored ADR 2,326,300 84,816,898
- ---------------------------------------------------------------------------------
Symantec Corp. 1 278,300 13,347,268
----------------
587,264,103
- ---------------------------------------------------------------------------------
MATERIALS--2.4%
- ---------------------------------------------------------------------------------
CHEMICALS--2.4%
Air Products &
Chemicals, Inc. 952,600 49,897,188
- ---------------------------------------------------------------------------------
Dow Chemical Co. 629,400 26,944,614
- ---------------------------------------------------------------------------------
E.I. DuPont de
Nemours & Co. 700,700 29,611,582
- ---------------------------------------------------------------------------------
Monsanto Co. 238,800 8,740,080
- ---------------------------------------------------------------------------------
Praxair, Inc. 2,111,800 85,696,844
----------------
200,890,308
- ---------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--0.5%
- ---------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.5%
Telefonos de Mexico
SA de CV,
Sponsored ADR 1,360,900 44,079,548
----------------
Total Common Stocks
(Cost $7,979,201,836) 8,212,525,935
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------------
SHORT-TERM NOTES--2.8%
- ---------------------------------------------------------------------------------
Barton Capital Corp.,
1.58%, 10/7/04 2 $ 38,945,000 38,883,467
- ---------------------------------------------------------------------------------
Old Line Funding
Corp.:
1.58%, 10/4/04 2 18,186,000 18,159,661
1.62%, 10/12/04 2 24,997,000 24,950,881
- ---------------------------------------------------------------------------------
Sheffield
Receivables Corp.:
1.50%, 9/7/04 2 30,000,000 29,992,500
1.60%, 9/28/04 2 45,000,000 44,946,000
- ---------------------------------------------------------------------------------
Windmill Funding
Corp.:
1.42%, 9/2/04 2 25,000,000 24,999,014
1.49%, 9/7/04 2 33,000,000 32,991,805
1.60%, 10/8/04 2 20,000,000 19,967,111
----------------
Total Short-Term Notes
(Cost $234,890,439) 234,890,439
- ---------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.0%
- ---------------------------------------------------------------------------------
Undivided interest of 42.24% in joint
repurchase agreement (Principal Amount/
Value $400,335,000, with a maturity value
of $400,352,125) with Cantor Fitzgerald
& Co./Cantor Fitzgerald Securities, 1.54%,
dated 8/31/04, to be repurchased at
$169,121,234 on 9/1/04, collateralized
by U.S. Treasury Bonds, 1.625%--11.25%,
1/31/05--2/15/15, with a value
of $408,806,656 (Cost
$169,114,000) 169,114,000 169,114,000
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $8,383,206,275) 100.9% 8,616,530,374
- ---------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.9) (72,782,919)
----------------------------------
NET ASSETS 100.0% $ 8,543,747,455
==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $234,890,439, or 2.75% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2004
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Investments, at value (cost $8,383,206,275)--see accompanying statement of investments $ 8,616,530,374
- ---------------------------------------------------------------------------------------------------------
Cash 1,146,172
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 10,336,976
Investments sold 8,711,332
Shares of beneficial interest sold 2,643,646
Other 131,932
----------------
Total assets 8,639,500,432
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 78,270,623
Shares of beneficial interest redeemed 10,341,842
Distribution and service plan fees 2,971,213
Transfer and shareholder servicing agent fees 1,801,184
Trustees' compensation 1,180,215
Shareholder communications 840,462
Other 347,438
----------------
Total liabilities 95,752,977
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 8,543,747,455
================
- ---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 230,510
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 9,084,470,773
- ---------------------------------------------------------------------------------------------------------
Accumulated net investment loss (1,140,376)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (773,140,623)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 233,327,171
----------------
NET ASSETS $ 8,543,747,455
================
23 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $5,218,309,811 and
138,895,139 shares of beneficial interest outstanding) $ 37.57
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 39.86
- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $1,104,347,802 and 31,717,717 shares
of beneficial interest outstanding) $ 34.82
- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $638,675,932 and 18,530,610 shares
of beneficial interest outstanding) $ 34.47
- ---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $190,696,095 and 5,124,686 shares
of beneficial interest outstanding) $ 37.21
- ---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$1,391,717,815 and 36,241,580 shares of beneficial interest outstanding) $ 38.40
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $1,051,101) $ 92,209,476
- --------------------------------------------------------------------------------
Interest 4,328,054
--------------
Total investment income 96,537,530
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 46,800,100
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 12,071,622
Class B 11,697,728
Class C 6,231,668
Class N 772,104
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 12,824,955
Class B 4,257,798
Class C 1,660,764
Class N 581,681
Class Y 1,761,300
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 256,263
Class B 555,377
Class C 132,075
Class N 2,358
- --------------------------------------------------------------------------------
Trustees' compensation 379,427
- --------------------------------------------------------------------------------
Custodian fees and expenses 224,677
- --------------------------------------------------------------------------------
Other 288,516
--------------
Total expenses 100,498,413
Less reduction to custodian expenses (16,398)
Less payments and waivers of expenses (338,516)
--------------
Net expenses 100,143,499
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (3,605,969)
25 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- ---------------------------------------------------------------------------------------
Net realized gain on:
Investments $ 302,169,142
Foreign currency transactions 1,813,922
Net increase from payment by affiliate 550,217
-------------
Net realized gain 304,533,281
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 113,687,536
Translation of assets and liabilities denominated in foreign currencies 2,329,522
-------------
Net change in unrealized appreciation 116,017,058
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 416,944,370
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2004 2003
- ------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------
Net investment loss $ (3,605,969) $ (14,584,020)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) 304,533,281 (737,292,237)
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 116,017,058 1,676,110,664
----------------------------------
Net increase in net assets resulting from operations 416,944,370 924,234,407
- ------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A 678,678,523 504,686,099
Class B (70,119,032) (50,319,183)
Class C 71,136,610 24,021,003
Class N 74,734,764 25,028,168
Class Y 166,178,783 142,226,078
- ------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------
Total increase 1,337,554,018 1,569,876,572
- ------------------------------------------------------------------------------------------------
Beginning of period 7,206,193,437 5,636,316,865
----------------------------------
End of period (including accumulated net investment loss of
$1,140,376 and $948,533, respectively) $ 8,543,747,455 $ 7,206,193,437
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 35.39 $ 30.72 $ 41.11 $ 62.12 $ 44.73
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .01 (.05) (.09) .10 (.02)
Net realized and unrealized gain (loss) 2.17 4.72 (9.31) (15.86) 20.63
-----------------------------------------------------------------------------------
Total from investment operations 2.18 4.67 (9.40) (15.76) 20.61
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain -- -- (.99) (5.25) (3.22)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.57 $ 35.39 $ 30.72 $ 41.11 $ 62.12
===================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 6.16% 15.20% (23.48)% (26.38)% 48.01%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 5,218,310 $ 4,288,332 $ 3,219,391 $ 3,055,197 $ 3,648,961
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 4,971,315 $ 3,655,594 $ 3,204,793 $ 3,255,995 $ 2,898,088
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) 0.09% (0.11)% (0.15)% 0.28% 0.00%
Total expenses 1.09% 3,4 1.17% 3 1.22% 3,4 1.03% 3 1.06% 3
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 42% 28% 46% 44%
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.
28 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS B YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.09 $ 28.95 $ 39.09 $ 59.80 $ 43.48
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.36) (.31) (.26) (.07) (.20)
Net realized and unrealized gain (loss) 2.09 4.45 (8.89) (15.39) 19.74
---------------------------------------------------------------------------
Total from investment operations 1.73 4.14 (9.15) (15.46) 19.54
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- (.99) (5.25) (3.22)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 34.82 $ 33.09 $ 28.95 $ 39.09 $ 59.80
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 5.23% 14.30% (24.07)% (26.95)% 46.88%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,104,348 $ 1,114,052 $ 1,029,322 $ 1,242,098 $ 1,333,387
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,169,402 $ 1,001,311 $ 1,221,005 $ 1,265,753 $ 922,480
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (0.81)% (0.89)% (0.92)% (0.48)% (0.76)%
Total expenses 1.99% 2.10% 1.99% 1.80% 1.83%
Expenses after payments and waivers
and reduction to custodian expenses 1.97% 1.96% N/A 3,4 N/A 3 N/A 3
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 42% 28% 46% 44%
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.
29 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.72 $ 28.63 $ 38.64 $ 59.19 $ 43.06
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.16) (.23) (.11) (.01) (.18)
Net realized and unrealized gain (loss) 1.91 4.32 (8.91) (15.29) 19.53
------------------------------------------------------------------------
Total from investment operations 1.75 4.09 (9.02) (15.30) 19.35
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- (.99) (5.25) (3.22)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 34.47 $ 32.72 $ 28.63 $ 38.64 $ 59.19
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 5.35% 14.28% (24.01)% (26.95)% 46.89%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 638,676 $ 540,118 $ 450,989 $ 426,476 $ 402,442
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 623,172 $ 463,768 $ 477,369 $ 400,009 $ 278,800
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (0.69)% (0.89)% (0.87)% (0.48)% (0.76)%
Total expenses 1.87% 3,4 1.96% 3 1.94% 3,4 1.80% 3 1.83% 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 42% 28% 46% 44%
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.
30 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS N YEAR ENDED AUGUST 31, 2004 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 (.08) (.10) (.07) 2 (.01)
Net realized and unrealized gain (loss) 2.12 4.67 (9.39) 2 (4.52)
-------------------------------------------------
Total from investment operations 2.04 4.57 (9.46) (4.53)
- -----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- (.99) --
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.21 $ 35.17 $ 30.60 $ 41.05
=================================================
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 5.80% 14.94% (23.67)% (9.94)%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 190,696 $ 111,374 $ 72,178 $ 6,791
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 154,605 $ 86,761 $ 38,232 $ 3,173
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.25)% (0.35)% (0.37)% (0.11)%
Total expenses 1.46% 1.46% 1.46% 1.36%
Expenses after payments and waivers and reduction
to custodian expenses 1.44% 1.42% N/A 5,6 N/A 5
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 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.
31 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.04 $ 31.16 $ 41.55 $ 62.51 $ 44.81
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .01 .02 1 .27 .13
Net realized and unrealized gain (loss) 2.27 4.87 (9.42) 1 (15.98) 20.79
------------------------------------------------------------------------------
Total from investment operations 2.36 4.88 (9.40) (15.71) 20.92
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- (.99) (5.25) (3.22)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.40 $ 36.04 $ 31.16 $ 41.55 $ 62.51
==============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.55% 15.66% (23.23)% (26.12)% 48.64%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,391,718 $ 1,152,318 $ 864,437 $ 974,820 $ 1,295,087
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,327,404 $ 930,500 $ 968,867 $ 1,095,575 $ 855,270
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.47% 0.29% 0.17% 0.66% 0.45%
Total expenses 0.71% 4 0.78% 4,5 0.89% 4 0.66% 4 0.64% 4
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45% 42% 28% 46% 44%
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.
32 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Capital Appreciation Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. 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 due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class 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. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. 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.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. 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.
Foreign and domestic 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 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
33 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for
business. 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. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
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. 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
34 | OPPENHEIMER CAPITAL APPRECIATION FUND
not offset by capital loss carryforwards, if any, to shareholders, therefore, no
federal income or excise tax provision is required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED BASED ON COST OF
NET INVESTMENT LONG-TERM LOSS SECURITIES FOR FEDERAL
INCOME GAIN CARRYFORWARD 1,2,3 INCOME TAX PURPOSES
----------------------------------------------------------------------------
$ -- $ -- $ 733,161,333 $ 193,347,875
1. As of August 31, 2004, the Fund had $733,161,333 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2004, details
of the capital carryforwards were as follows:
EXPIRING
------------------------
2010 $ 61,636,235
2011 374,938,776
2012 296,586,322
-------------
Total $ 733,161,333
=============
2. During the fiscal year ended August 31, 2004, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended August 31, 2003, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2004. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO
REDUCTION TO ACCUMULATED NET
REDUCTION TO ACCUMULATED NET REALIZED LOSS
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS
---------------------------------------------------
$ 8,137,473 $ 3,414,126 $ 4,723,347
No distributions were paid during the years ended August 31, 2004 and August 31,
2003.
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2004 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
35 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Total federal tax cost $ 8,423,185,571
================
Gross unrealized appreciation $ 802,141,286
Gross unrealized depreciation (608,793,411)
----------------
Net unrealized appreciation $ 193,347,875
================
- --------------------------------------------------------------------------------
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 year ended August
31, 2004, the Fund's projected benefit obligations were increased by $143,178
and payments of $73,625 were made to retired trustees, resulting in an
accumulated liability of $1,018,121 as of August 31, 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.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that
36 | OPPENHEIMER CAPITAL APPRECIATION FUND
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 $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED AUGUST 31, 2004 YEAR ENDED AUGUST 31, 2003
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A
Sold 44,049,927 $ 1,683,774,151 45,225,452 $ 1,394,693,911
Redeemed (26,327,315) (1,005,095,628) (28,851,156) (890,007,812)
---------------------------------------------------------------
Net increase 17,722,612 $ 678,678,523 16,374,296 $ 504,686,099
===============================================================
- --------------------------------------------------------------------------------
CLASS B
Sold 6,370,743 $ 226,256,788 6,747,394 $ 197,106,768
Redeemed (8,319,344) (296,375,820) (8,635,132) (247,425,951)
---------------------------------------------------------------
Net decrease (1,948,601) $ (70,119,032) (1,887,738) $ (50,319,183)
===============================================================
- --------------------------------------------------------------------------------
CLASS C
Sold 5,516,439 $ 193,981,052 4,972,919 $ 143,578,548
Redeemed (3,492,729) (122,844,442) (4,220,870) (119,557,545)
---------------------------------------------------------------
Net increase 2,023,710 $ 71,136,610 752,049 $ 24,021,003
===============================================================
- --------------------------------------------------------------------------------
CLASS N
Sold 3,052,463 $ 116,239,098 1,644,398 $ 50,946,387
Redeemed (1,094,111) (41,504,334) (836,639) (25,918,219)
---------------------------------------------------------------
Net increase 1,958,352 $ 74,734,764 807,759 $ 25,028,168
===============================================================
- --------------------------------------------------------------------------------
CLASS Y
Sold 9,392,719 $ 365,551,482 9,921,935 $ 316,008,775
Redeemed (5,128,257) (199,372,699) (5,689,335) (173,782,697)
---------------------------------------------------------------
Net increase 4,264,462 $ 166,178,783 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 year ended August 31, 2004, were
$4,554,482,042 and $3,490,902,536, 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
37 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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% 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.
- --------------------------------------------------------------------------------
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 year ended August 31, 2004, the Fund paid
$20,650,549 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $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.
- --------------------------------------------------------------------------------
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 all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
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 those 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 and 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 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
38 | OPPENHEIMER CAPITAL APPRECIATION FUND
expenses under the plan at August 31, 2004 for Class B, Class C and Class N
shares were $23,948,753, $9,273,924 and $2,251,979, 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
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
August 31, 2004 $ 2,506,575 $ 78,402 $ 2,425,021 $ 105,674 $ 115,630
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage
commissions for sales that is permitted under its investment advisory agreement,
the Fund's Manager terminated that practice in July 2003. Subsequently, the
Manager paid the Fund $550,217, an amount equivalent to certain of such
commissions incurred in prior years.
Effective July 1, 2003, the Manger 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.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average daily net assets per fiscal year
for all classes. During the year ended August 31, 2004, OFS waived $86,214,
$195,605, $18,323 and $38,374 for Class A, Class B, Class C and Class N shares,
respectively. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
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.
39 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
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 August 31, 2004, the Fund had no outstanding foreign currency
contracts.
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6. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well
as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund,
and nine directors/trustees of certain of the Funds (collectively, the
"Directors/Trustees"). The complaints allege that the Manager charged excessive
fees for distribution and other costs, improperly used assets of the Funds in
the form of directed brokerage commissions and 12b-1 fees to pay brokers to
promote sales of the Funds, and failed to properly disclose the use of Fund
assets to make those payments in violation of the Investment Company Act of 1940
and the Investment Advisers Act of 1940. The complaints further allege that by
permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the Investment
Company Act of 1940 and at common law.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
40 | OPPENHEIMER CAPITAL APPRECIATION FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER CAPITAL APPRECIATION FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Capital Appreciation Fund, including the statement of investments,
as of August 31, 2004, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 2004, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Capital Appreciation Fund as of August 31, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
KPMG LLP
Denver, Colorado
September 22, 2004
41 | OPPENHEIMER CAPITAL APPRECIATION FUND
FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
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- --------------------------------------------------------------------------------
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
1.800.525.7048, (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 is 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 Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
42 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited
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NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER
FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD BY TRUSTEE; NUMBER OF PORTFOLIOS
IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON
TRUSTEES WAY, CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN
INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH
OR REMOVAL.
CLAYTON K. YEUTTER, Of Counsel (since June 1993) Hogan & Hartson (a law firm); a
Chairman of the Board of director (since 2002) of Danielson Holding Corp. Formerly a
Trustees (since 2003); director of Weyerhaeuser Corp. (1999-April 2004), Caterpillar,
Trustee (since 1993) Inc. (1993-December 2002), ConAgra Foods (1993-2001), Texas
Age: 73 Instruments (1993-2001) and FMC Corporation (1993-2001). Oversees
25 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 35
Trustee (since 1993) portfolios in the OppenheimerFunds complex.
Age: 71
PHILLIP A. GRIFFITHS, A director (since 1991) of the Institute for Advanced Study,
Trustee (since 1999) Princeton, N.J., a director (since 2001) of GSI Lumonics, a
Age: 65 trustee (since 1983) of Woodward Academy, a Senior Advisor (since
2001) of The Andrew W. Mellon Foundation. A member of: the
National Academy of Sciences (since 1979), American Academy of
Arts and Sciences (since 1995), American Philosophical Society
(since 1996) and Council on Foreign Relations (since 2002).
Formerly a director of Bankers Trust New York Corporation
(1994-1999). Oversees 25 portfolios in the OppenheimerFunds
complex.
MARY F. MILLER, Formerly a Senior Vice President and General Auditor, American
Trustee (since 2004) Express Company (July 1998-February 2003). Member of Trustees of
Age: 61 the American Symphony Orchestra (October 1998 to present).
Oversees 14 portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director (since January 2002) Columbia Equity Financial Corp.
Trustee (since 2002) (privately-held financial adviser); Managing Director (since
Age: 52 January 2002) Carmona Motley, Inc. (privately-held financial
adviser). Formerly a Managing Director of Carmona Motley Hoffman
Inc. (privately-held financial adviser) (January 1998-December
2001). Oversees 25 portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, A director (since February 1972) of Dominion Resources, Inc.
Trustee (since 1987) (electric utility holding company); formerly a director of Prime
Age: 77 Retail, Inc. (real estate investment trust) and Dominion Energy,
Inc. (electric power and oil & gas producer), President and Chief
Executive Officer of The Conference Board, Inc. (international
economic and business research) and a director of Lumbermens
Mutual Casualty Company, American Motorists Insurance Company and
American Manufacturers Mutual Insurance Company. Oversees 25
portfolios in the OppenheimerFunds complex.
EDWARD V. REGAN, President, Baruch College, CUNY; a director of RBAsset (real
Trustee (since 1993) estate manager); a director of OffitBank; formerly Trustee,
Age: 74 Financial Accounting Foundation (FASB and GASB), Senior Fellow of
Jerome Levy Economics Institute, Bard College, Chairman of
Municipal Assistance Corporation for the City of New York, New
York State Comptroller and Trustee of New York State and Local
Retirement Fund. Oversees 25 investment companies in the
OppenheimerFunds complex.
43 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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RUSSELL S. REYNOLDS, JR., Chairman (since 1993) of The Directorship Search Group, Inc.
Trustee (since 1989) (corporate governance consulting and executive recruiting); a Life
Age: 72 Trustee of International House (non-profit educational
organization); a former trustee of The Historical Society of the
Town of Greenwich. Oversees 25 portfolios in the OppenheimerFunds
complex.
DONALD W. SPIRO,* Chairman Emeritus (since January 1991) of the Manager. Formerly a
Vice Chairman of the director (January 1969-August 1999) of the Manager. Oversees 25
Board of Trustees, portfolios in the OppenheimerFunds complex.
Trustee (since 1987)
Age: 78
*Mr. Spiro is expected to retire as Trustee of the Board I Funds
effective October 31, 2004.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD
AND OFFICER FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY
10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM, UNTIL HIS
RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001)
President and Trustee and President (since September 2000) of the Manager; President and
(since 2001) a director or trustee of other Oppenheimer funds; President and a
Age: 55 director (since July 2001) of Oppenheimer Acquisition Corp. (the
Manager's parent holding company) and of Oppenheimer Partnership
Holdings, Inc. (a holding company subsidiary of the Manager); a
director (since November 2001) of OppenheimerFunds Distributor,
Inc. (a subsidiary of the Manager); Chairman and a director (since
July 2001) of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent subsidiaries of the
Manager); President and a director (since July 2001) of
OppenheimerFunds Legacy Program (a charitable trust program
established by the Manager); a director of the following
investment advisory subsidiaries of the Manager: OFI Institutional
Asset Management, Inc., Centennial Asset Management Corporation,
Trinity Investment Management Corporation and Tremont Capital
Management, Inc. (since November 2001), HarbourView Asset
Management Corporation and OFI Private Investments, Inc. (since
July 2001); President (since November 1, 2001) and a director
(since July 2001) of Oppenheimer Real Asset Management, Inc.;
Executive Vice President (since February 1997) of Massachusetts
Mutual Life Insurance Company (the Manager's parent company); a
director (since June 1995) of DLB Acquisition Corporation (a
holding company that owns the shares of Babson Capital Management
LLC); a member of the Investment Company Institute's Board of
Governors (elected to serve from October 3, 2003 through September
30, 2006). Formerly, Chief Operating Officer (September 2000-June
2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional
Funds (open-end investment companies); a director (September
1999-August 2000) of C.M. Life Insurance Company; President, Chief
Executive Officer and director (September 1999-August 2000) of MML
Bay State Life Insurance Company; a director (June 1989-June 1998)
of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned
subsidiary of Emerald Isle Bancorp). Oversees 73 portfolios as
Trustee/Director and 10 portfolios as Officer in the
OppenheimerFunds complex.
44 | OPPENHEIMER CAPITAL APPRECIATION FUND
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OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR
MS. PUTNAM AND MR. ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY
STREET, 11TH FLOOR, NEW YORK, NY 10281-1008, AND FOR MR. WIXTED
AND MR. VANDEHEY, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924.
EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER
RESIGNATION, DEATH OR REMOVAL.
JANE PUTNAM, Vice President of the Manager since October 1995; an officer of 2
Vice President and portfolios in the OppenheimerFunds complex.
Portfolio Manager
(since 1995)
Age: 43
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the
Treasurer (since 1999) Manager; Treasurer of HarbourView Asset Management Corporation,
Age: 44 Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Oppenheimer Real Asset Management Corporation, and Oppenheimer
Partnership Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May 2000), of
OFI Institutional Asset Management, Inc. (since November 2000),
and of OppenheimerFunds Legacy Program (a Colorado non-profit
corporation) (since June 2003); Treasurer and Chief Financial
Officer (since May 2000) of OFI Trust Company (a trust company
subsidiary of the Manager); Assistant Treasurer (since March 1999)
of Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of
Centennial Asset Management Corporation (March 1999-October 2003)
and OppenheimerFunds Legacy Program (April 2000-June 2003);
Principal and Chief Operating Officer (March 1995-March 1999) at
Bankers Trust Company-Mutual Fund Services Division. An officer of
83 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel
Secretary (since 2001) (since February 2002) of the Manager; General Counsel and a
Age: 56 director (since November 2001) of the Distributor; General Counsel
(since November 2001) of Centennial Asset Management Corporation;
Senior Vice President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and General
Counsel (since November 2001) of Oppenheimer Acquisition Corp.;
Assistant Secretary and a director (since October 1997) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and a director (since November 2001) of Oppenheimer
Partnership Holdings, Inc.; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Senior Vice President,
General Counsel and a director (since November 2001) of
Shareholder Financial Services, Inc., Shareholder Services, Inc.,
OFI Private Investments, Inc. and OFI Trust Company; Vice
President (since November 2001) of OppenheimerFunds Legacy
Program; Senior Vice President and General Counsel (since November
2001) of OFI Institutional Asset Management, Inc.; a director
(since June 2003) of OppenheimerFunds (Asia) Limited. Formerly
Senior Vice President (May 1985-December 2003), Acting General
Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant
Secretary of Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November
2001); and OppenheimerFunds International Ltd. (October
1997-November 2001). An officer of 83 portfolios in the
OppenheimerFunds complex.
45 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March
Vice President and 2004) of the Manager; Vice President (since June 1983) of
Chief Compliance Officer OppenheimerFunds Distributor, Inc., Centennial Asset Management
(since 2004) Corporation and Shareholder Services, Inc. Formerly (until
Age: 53 February 2004) Vice President and Director of Internal Audit of
OppenheimerFunds, Inc. An officer of 83 portfolios in the
Oppenheimer funds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY
CALLING 1.800.525.7048.
46 | 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
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $45,000 in fiscal 2004 and $45,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $39,500 in fiscal 2004 and no such
fees in fiscal 2003 to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $6,000 in fiscal 2004 and $5,000 in
fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice
includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $1,456
in fiscal 2003.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two
fiscal years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include consultations regarding the registrant's
retirement plan with respect to its directors.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $45,500 in fiscal 2004 and $6,456 in
fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not
include any prohibited non-audit services as defined by the
Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
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-3(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(c)) as of August 31, 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)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)