UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3105
OPPENHEIMER CAPITAL APPRECIATION FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
Oppenheimerfunds, Inc.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: August 31
Date of reporting period: August 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Media 9.1%
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Software 7.8
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Pharmaceuticals 6.6
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Industrial Conglomerates 6.2
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Diversified Financial Services 6.1
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Semiconductors & Semiconductor Equipment 5.4
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Health Care Equipment & Supplies 5.2
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Communications Equipment 4.5
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Biotechnology 3.9
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Aerospace & Defense 3.8
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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General Electric Co. 4.6%
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Microsoft Corp. 4.1
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Comcast Corp., Cl. A Special, Non-Vtg. 3.1
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Exxon Mobil Corp. 2.6
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Citigroup, Inc. 2.4
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Amgen, Inc. 2.3
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Medtronic, Inc. 2.2
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Johnson & Johnson 2.2
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Cisco Systems, Inc. 2.2
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Time Warner, Inc. 2.1
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
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8 | OPPENHEIMER CAPITAL APPRECIATION FUND
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 25.1%
Software 8.0
Semiconductors & Semiconductor Equipment 5.5
Communications Equipment 4.7
Computers & Peripherals 3.3
Electronic Equipment & Instruments 1.3
Internet Software & Services 1.2
IT Services 1.1
Consumer Discretionary 18.9
Health Care 18.4
Industrials 12.8
Financials 8.8
Energy 6.8
Consumer Staples 5.7
Materials 2.8
Telecommunication Services 0.7
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of common stocks.
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9 | 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, 2005, 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, 2005, the Fund's returns proved slightly more modest than those of
its benchmark, the S&P 500 Index. The Fund's overall performance was driven
primarily by the stock market's generally upward trend throughout the period.
Performance relative to the benchmark suffered largely as a result of our
emphasis on large companies producing sustained long-term growth during a period
in which the market favored smaller, more volatile issues.
The Fund's investment strategy focuses on companies that we believe offer
strong 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.
Our disciplined stock selection process produced its greatest gains
relative to the benchmark in the technology and consumer discretionary sectors,
where overweighted positions and good individual stock selections boosted
performance. Several holdings contributed to returns in these two areas, most
notably Internet services provider Yahoo!, Inc.; semiconductor chip maker Intel
Corp.; online auctioneer eBay, Inc.; and a diverse group of retail stocks. In
addition, although energy is not considered one of the market's traditional
growth sectors, several key energy holdings positioned the Fund to participate
to a significant degree in the energy sector's outstanding gains. Top performers
included major integrated oil and gas companies, such as Exxon Mobil Corp., and
oil service providers, such as Schlumberger Ltd., the latter of which delivered
particularly strong returns during the final months of the reporting period.
On the other hand, performance compared to the benchmark suffered from the
Fund's failure to hold some of the market's better-performing consumer staples
stocks, an area in which we found few attractive growth-oriented investment
opportunities. Furthermore, large-cap pharmaceutical holdings, such as Pfizer,
Inc. and Merck & Co., Inc. were hurt by product-related problems, although the
Fund compensated for these declines in the health care sector with timely
investments in strong-performing biotechnology firms, such as Genentech, Inc.
and Amgen, Inc. Finally, a few other individual holdings, such as insurer
American International Group, Inc.; discount retailer Wal-Mart Stores, Inc.; and
beer distributor Anheuser-Busch Cos., Inc. encountered company-specific
difficulties that detracted from the Fund's performance. Lastly, during the
reporting
10 | OPPENHEIMER CAPITAL APPRECIATION FUND
period, the Fund received a special dividend of $3 per share from Microsoft
Corp. This special dividend represented a significant portion of the current
period's income.
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, 2005. 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.
11 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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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
Appreciation Fund
(Class A) S&P 500 Index
------------------- -------------
12-31-1994 9,425 10,000
03-31-1995 10,275 10,973
06-30-1995 11,482 12,019
09-30-1995 12,486 12,973
12-31-1995 12,710 13,753
03-31-1996 13,622 14,491
06-30-1996 14,322 15,141
08-31-1996 1 14,271 14,778
11-30-1996 16,503 17,251
02-28-1997 16,871 18,106
05-31-1997 18,159 19,524
08-31-1997 20,054 20,782
11-30-1997 20,484 22,168
02-28-1998 22,237 24,441
05-31-1998 22,899 25,509
08-31-1998 19,238 22,469
11-30-1998 23,284 27,418
02-28-1999 26,074 29,270
05-31-1999 27,551 30,874
08-31-1999 28,350 31,414
11-30-1999 31,462 33,147
02-29-2000 38,813 32,703
05-31-2000 38,050 34,106
08-31-2000 41,961 36,536
11-30-2000 34,605 31,746
02-28-2001 34,138 30,023
05-31-2001 34,987 30,509
08-31-2001 30,891 27,630
11-30-2001 30,741 27,869
02-28-2002 28,838 27,169
05-31-2002 28,061 26,288
08-31-2002 23,637 22,661
11-30-2002 24,837 23,268
02-28-2003 22,067 21,009
05-31-2003 25,538 24,167
08-31-2003 27,230 25,393
11-30-2003 28,585 26,778
02-29-2004 30,416 29,097
05-31-2004 29,862 28,595
08-31-2004 28,908 28,299
11-30-2004 30,724 30,217
02-28-2005 31,155 31,125
05-31-2005 31,385 30,948
08-31-2005 31,893 31,852
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 3.99% 5-Year -6.45% 10-Year 9.56%
12 | OPPENHEIMER CAPITAL APPRECIATION FUND
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
Appreciation Fund
(Class B) S&P 500 Index
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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
11-30-2004 23,442 23,376
02-28-2005 23,771 24,078
05-31-2005 23,947 23,942
08-31-2005 24,334 24,640
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 4.36% 5-Year -6.44% Since Inception (11/1/95) 9.47%
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 17 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
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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
Appreciation Fund
(Class C) S&P 500 Index
------------------- -------------
12-31-1994 10,000 10,000
03-31-1995 10,871 10,973
06-30-1995 12,116 12,019
09-30-1995 13,147 12,973
12-31-1995 13,356 13,753
03-31-1996 14,287 14,491
06-30-1996 14,987 15,141
08-31-1996 1 14,913 14,778
11-30-1996 17,209 17,251
02-28-1997 17,556 18,106
05-31-1997 18,855 19,524
08-31-1997 20,781 20,782
11-30-1997 21,183 22,168
02-28-1998 22,944 24,441
05-31-1998 23,583 25,509
08-31-1998 19,774 22,469
11-30-1998 23,883 27,418
02-28-1999 26,688 29,270
05-31-1999 28,144 30,874
08-31-1999 28,903 31,414
11-30-1999 32,010 33,147
02-29-2000 39,422 32,703
05-31-2000 38,576 34,106
08-31-2000 42,456 36,536
11-30-2000 34,939 31,746
02-28-2001 34,408 30,023
05-31-2001 35,195 30,509
08-31-2001 31,013 27,630
11-30-2001 30,804 27,869
02-28-2002 28,851 27,169
05-31-2002 28,012 26,288
08-31-2002 23,567 22,661
11-30-2002 24,711 23,268
02-28-2003 21,912 21,009
05-31-2003 25,312 24,167
08-31-2003 26,933 25,393
11-30-2003 28,217 26,778
02-29-2004 29,971 29,097
05-31-2004 29,362 28,595
08-31-2004 28,374 28,299
11-30-2004 30,094 30,217
02-28-2005 30,456 31,125
05-31-2005 30,621 30,948
08-31-2005 31,057 31,852
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 8.46% 5-Year -6.06% 10-Year 9.34%
14 | OPPENHEIMER CAPITAL APPRECIATION FUND
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
Appreciation Fund
(Class N) S&P 500 Index
------------------- -------------
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
11-30-2004 8,879 10,065
02-28-2005 8,993 10,367
05-31-2005 9,052 10,308
08-31-2005 9,191 10,609
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 8.94% 5-Year N/A Since Inception (3/1/01) -1.86%
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 17 FOR
FURTHER INFORMATION.
1. The Fund changed its fiscal year end from December 31 to August 31.
15 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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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
Appreciation Fund
(Class Y) S&P 500 Index
- ------------------- -------------
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
11-30-2004 15,130 14,262
02-28-2005 15,356 14,690
05-31-2005 15,486 14,607
08-31-2005 15,749 15,033
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 8/31/05
1-Year 10.73% 5-Year -4.99% Since Inception (11/3/97) 5.97%
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 17 FOR
FURTHER INFORMATION.
1. The Fund changed its fiscal year end from December 31 to August 31.
16 | 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.
17 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES
- --------------------------------------------------------------------------------
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.
18 | 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, 2005.
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
19 | 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 EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/05) (8/31/05) AUGUST 31, 2005
- --------------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,023.70 $ 5.42
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.86 5.41
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,019.30 9.87
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.48 9.85
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,019.70 9.41
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.93 9.39
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,022.00 7.26
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.05 7.25
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,025.60 3.53
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.73 3.52
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 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended August 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- --------------------------------
Class A 1.06%
- --------------------------------
Class B 1.93
- --------------------------------
Class C 1.84
- --------------------------------
Class N 1.42
- --------------------------------
Class Y 0.69
The expense ratios reflect voluntary waivers or 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
waivers or reimbursements.
- --------------------------------------------------------------------------------
20 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS August 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--97.0%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--18.3%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--2.3%
Carnival Corp. 1,789,800 $ 88,308,732
- --------------------------------------------------------------------------------
McDonald's Corp. 1,544,200 50,109,290
- --------------------------------------------------------------------------------
Royal Caribbean
Cruises Ltd. 1,423,600 60,816,192
-----------------
199,234,214
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.6%
eBay, Inc. 1 3,526,200 142,775,838
- --------------------------------------------------------------------------------
MEDIA--9.1%
Clear Channel Communications, Inc. 1,049,530 34,949,349
- --------------------------------------------------------------------------------
Comcast Corp., Cl. A Special, Non-Vtg. 1 8,924,425 269,339,147
- --------------------------------------------------------------------------------
News Corp., Inc., Cl. B 989,900 16,917,391
- --------------------------------------------------------------------------------
Time Warner, Inc. 10,280,600 184,228,352
- --------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A 1 1,748,696 47,039,922
- --------------------------------------------------------------------------------
Viacom, Inc., Cl. B 4,966,200 168,801,138
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 3,156,300 79,507,197
-----------------
800,782,496
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.9%
Federated Department Stores, Inc. 835,500 57,632,790
- --------------------------------------------------------------------------------
J.C. Penney Co., Inc. (Holding Co.) 1,164,500 56,629,635
- --------------------------------------------------------------------------------
Target Corp. 1,001,880 53,851,050
-----------------
168,113,475
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--3.4%
Bed Bath &
Beyond, Inc. 1 1,015,641 41,184,243
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 1,749,000 83,357,340
- --------------------------------------------------------------------------------
Home Depot, Inc. 1,729,400 69,729,408
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SPECIALTY RETAIL Continued
Lowe's Cos., Inc. 774,100 $ 49,782,371
- --------------------------------------------------------------------------------
Staples, Inc. 321,300 7,055,748
- --------------------------------------------------------------------------------
Williams-Sonoma, Inc. 1 1,184,500 47,676,125
-----------------
298,785,235
- --------------------------------------------------------------------------------
CONSUMER STAPLES--5.5%
- --------------------------------------------------------------------------------
BEVERAGES--1.8%
PepsiCo, Inc. 2,894,110 158,741,933
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.0%
Costco Wholesale Corp. 802,288 34,851,391
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 3,144,400 141,372,224
-----------------
176,223,615
- --------------------------------------------------------------------------------
FOOD PRODUCTS--0.1%
Campbell Soup Co. 338,400 9,948,960
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.6%
Procter & Gamble Co.
(The) 2,538,500 140,835,980
- --------------------------------------------------------------------------------
ENERGY--6.6%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.2%
GlobalSantaFe Corp. 1,207,600 56,612,288
- --------------------------------------------------------------------------------
Pride International, Inc. 1 273,800 6,927,140
- --------------------------------------------------------------------------------
Schlumberger Ltd. 1,637,500 141,201,625
- --------------------------------------------------------------------------------
Smith International, Inc. 399,000 13,861,260
- --------------------------------------------------------------------------------
Transocean, Inc. 1 1,008,900 59,565,456
-----------------
278,167,769
- --------------------------------------------------------------------------------
OIL & GAS--3.4%
Apache Corp. 206,000 14,753,720
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 3,863,600 231,429,640
- --------------------------------------------------------------------------------
Kinder Morgan Management LLC 1,057,770 50,328,697
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 33,800 2,806,414
-----------------
299,318,471
21 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--8.5%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--0.5%
Bank of America Corp. 1,124,900 $ 48,404,447
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--6.1%
American Express Co. 2,185,240 120,712,658
- --------------------------------------------------------------------------------
Citigroup, Inc. 4,890,100 214,039,677
- --------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 786,900 87,487,542
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 1,552,320 52,608,125
- --------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 250,500 26,467,830
- --------------------------------------------------------------------------------
Morgan Stanley 680,600 34,622,122
-----------------
535,937,954
- --------------------------------------------------------------------------------
INSURANCE--1.9%
American International Group, Inc. 883,000 52,273,600
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 566,900 41,412,045
- --------------------------------------------------------------------------------
Prudential Financial, Inc. 1,078,500 69,423,045
-----------------
163,108,690
- --------------------------------------------------------------------------------
HEALTH CARE--17.8%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--3.9%
Amgen, Inc. 1 2,541,400 203,057,860
- --------------------------------------------------------------------------------
Genentech, Inc. 1 770,200 72,352,588
- --------------------------------------------------------------------------------
Genzyme Corp. (General Division) 1 1,006,000 71,597,020
-----------------
347,007,468
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--5.2%
Medtronic, Inc. 3,457,795 197,094,315
- --------------------------------------------------------------------------------
Millipore Corp. 1 1,187,800 75,959,810
- --------------------------------------------------------------------------------
PerkinElmer, Inc. 1,793,300 37,121,310
- --------------------------------------------------------------------------------
Stryker Corp. 1,702,200 92,855,010
- --------------------------------------------------------------------------------
Varian Medical
Systems, Inc. 1 788,300 31,390,106
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Waters Corp. 1 560,600 $ 25,490,482
-----------------
459,911,033
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--2.1%
Aetna, Inc. 740,600 59,003,602
- --------------------------------------------------------------------------------
CIGNA Corp. 284,200 32,773,944
- --------------------------------------------------------------------------------
Laboratory Corp. of America Holdings 1 338,600 16,699,752
- --------------------------------------------------------------------------------
UnitedHealth Group, Inc. 1,462,900 75,339,350
-----------------
183,816,648
- --------------------------------------------------------------------------------
PHARMACEUTICALS--6.6%
Abbott Laboratories 1,128,800 50,942,744
- --------------------------------------------------------------------------------
Eli Lilly & Co. 326,600 17,969,532
- --------------------------------------------------------------------------------
Johnson & Johnson 3,085,000 195,558,150
- --------------------------------------------------------------------------------
Merck & Co., Inc. 1,434,621 40,499,351
- --------------------------------------------------------------------------------
Novartis AG 2,183,070 106,229,083
- --------------------------------------------------------------------------------
Pfizer, Inc. 3,087,889 78,648,533
- --------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.,
Sponsored ADR 2,720,250 88,244,910
-----------------
578,092,303
- --------------------------------------------------------------------------------
INDUSTRIALS--12.4%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.8%
Empresa Brasileira de Aeronautica SA, ADR 1,428,400 51,222,424
- --------------------------------------------------------------------------------
General Dynamics Corp. 318,900 36,542,751
- --------------------------------------------------------------------------------
Honeywell International, Inc. 1,085,300 41,545,284
- --------------------------------------------------------------------------------
L-3 Communications Holdings, Inc. 685,100 56,095,988
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 1,210,500 75,341,520
- --------------------------------------------------------------------------------
United Technologies Corp. 1,463,600 73,180,000
-----------------
333,927,967
22 | OPPENHEIMER CAPITAL APPRECIATION FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--1.5%
Expeditors
International of Washington, Inc. 769,106 $ 42,693,074
- --------------------------------------------------------------------------------
FedEx Corp. 1,112,300 90,585,712
----------------
133,278,786
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--6.2%
3M Co. 1,185,500 84,348,325
- --------------------------------------------------------------------------------
General Electric Co. 11,982,300 402,725,103
- --------------------------------------------------------------------------------
Tyco International Ltd. 2,191,200 60,981,096
----------------
548,054,524
- --------------------------------------------------------------------------------
MACHINERY--0.9%
Ingersoll-Rand Co., Cl. A 1,009,500 80,376,390
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--24.5%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--4.5%
Cisco Systems, Inc. 1 10,900,140 192,060,467
- --------------------------------------------------------------------------------
Lucent
Technologies, Inc. 1 9,054,500 27,887,860
- --------------------------------------------------------------------------------
Motorola, Inc. 3,619,200 79,188,096
- --------------------------------------------------------------------------------
Nokia Corp., Sponsored ADR 4,453,100 70,225,387
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 740,700 29,413,197
----------------
398,775,007
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.2%
Dell, Inc. 1 2,060,300 73,346,680
- --------------------------------------------------------------------------------
EMC Corp. 1 1,966,300 25,286,618
- --------------------------------------------------------------------------------
International Business Machines Corp. 2,003,100 161,489,922
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 1 4,605,400 17,500,520
----------------
277,623,740
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.3%
Agilent
Technologies, Inc. 1 1,439,800 46,303,968
- --------------------------------------------------------------------------------
Ingram Micro, Inc., Cl. A 1 1,834,200 32,116,842
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS Continued
Tektronix, Inc. 1,432,900 $ 36,209,383
----------------
114,630,193
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.2%
Yahoo!, Inc. 1 3,156,200 105,227,708
- --------------------------------------------------------------------------------
IT SERVICES--1.1%
Automatic Data Processing, Inc. 2,280,100 97,474,275
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.4%
Altera Corp. 1 799,600 17,487,252
- --------------------------------------------------------------------------------
Analog Devices, Inc. 1,192,040 43,449,858
- --------------------------------------------------------------------------------
Broadcom Corp., Cl. A 1 2,438,700 106,083,450
- --------------------------------------------------------------------------------
Intel Corp. 6,741,140 173,382,121
- --------------------------------------------------------------------------------
Linear Technology Corp. 1,176,100 44,609,473
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 2,616,500 85,507,220
----------------
470,519,374
- --------------------------------------------------------------------------------
SOFTWARE--7.8%
Adobe Systems, Inc. 2,743,468 74,183,375
- --------------------------------------------------------------------------------
Autodesk, Inc. 936,900 40,474,080
- --------------------------------------------------------------------------------
Cadence Design Systems, Inc. 1 1,965,000 31,459,650
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1 715,440 17,027,472
- --------------------------------------------------------------------------------
Mercury Interactive Corp. 1 1,088,100 39,900,627
- --------------------------------------------------------------------------------
Microsoft Corp. 13,277,711 363,809,281
- --------------------------------------------------------------------------------
SAP AG, Sponsored ADR 2,844,400 121,370,548
----------------
688,225,033
- --------------------------------------------------------------------------------
MATERIALS--2.8%
- --------------------------------------------------------------------------------
CHEMICALS--2.8%
Air Products & Chemicals, Inc. 1,136,600 62,967,640
- --------------------------------------------------------------------------------
E.I. DuPont de Nemours & Co. 2,091,300 82,752,741
- --------------------------------------------------------------------------------
Praxair, Inc. 2,002,100 96,701,430
----------------
242,421,811
23 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--0.6%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.6%
Sprint Nextel Corp. 2,194,200 $ 56,895,603
----------------
Total Common Stocks
(Cost $7,746,326,162) 8,536,636,940
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
SHORT-TERM NOTES--1.1%
- --------------------------------------------------------------------------------
Gemini Securitization
Corp., 3.52%,
9/19/05 2 $ 50,000,000 49,912,000
- --------------------------------------------------------------------------------
Sheffield Receivables
Corp., 3.55%,
9/27/05 2 50,000,000 49,871,806
----------------
Total Short-Term Notes
(Cost $99,783,806) 99,783,806
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--1.8%
- --------------------------------------------------------------------------------
Undivided interest of 31.04% in joint
repurchase agreement (Principal Amount/
Value $500,739,000, with a maturity value
of $500,787,961) with Cantor Fitzgerald
& Co./Cantor Fitzgerald Securities, 3.52%,
dated 8/31/05, to be repurchased at
$155,442,197 on 9/1/05, collateralized
by U.S. Treasury Bonds, 6.25%-7.50%,
11/15/16-8/15/23, with a value of
$468,462,803 and U.S. Treasury Nts.,
6.50%, 2/15/10, with a value of $43,204,980
(Cost $155,427,000) 155,427,000 155,427,000
VALUE
SEE NOTE 1
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $8,001,536,968) 99.9% $ 8,791,847,746
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 0.1 6,932,868
-------------------------------
NET ASSETS 100.0% $ 8,798,780,614
===============================
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 $99,783,806, or 1.13% 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.
24 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value (cost $8,001,536,968)--see accompanying
statement of investments $ 8,791,847,746
- --------------------------------------------------------------------------------
Cash 1,145,904
- --------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 25,069,516
Interest and dividends 11,929,928
Shares of beneficial interest sold 4,297,408
Other 219,844
----------------
Total assets 8,834,510,346
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 14,546,182
Investments purchased 14,057,725
Distribution and service plan fees 3,195,898
Transfer and shareholder servicing agent fees 1,804,602
Trustees' compensation 1,323,888
Shareholder communications 656,186
Other 145,251
----------------
Total liabilities 35,729,732
- --------------------------------------------------------------------------------
NET ASSETS $ 8,798,780,614
================
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 215,517
- --------------------------------------------------------------------------------
Additional paid-in capital 8,457,505,152
- --------------------------------------------------------------------------------
Accumulated net investment income 49,282,479
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (498,508,506)
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 790,285,972
----------------
NET ASSETS $ 8,798,780,614
================
25 | 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
$5,633,687,779 and 135,929,730 shares of beneficial interest outstanding) $41.45
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $43.98
- --------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$1,041,045,050 and 27,339,460 shares of beneficial interest outstanding) $38.08
- --------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$691,466,793 and 18,327,629 shares of beneficial interest outstanding) $37.73
- --------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$245,932,341 and 6,012,252 shares of beneficial interest outstanding) $40.91
- --------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $1,186,648,651 and 27,907,947 shares of beneficial interest
outstanding) $42.52
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $1,332,461) $ 142,938,972
- --------------------------------------------------------------------------------
Interest 8,622,900
----------------
Total investment income 151,561,872
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 49,541,160
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 13,537,595
Class B 10,973,112
Class C 6,804,810
Class N 1,102,660
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 13,342,913
Class B 3,522,989
Class C 1,685,032
Class N 755,584
Class Y 1,487,780
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 711,955
Class B 453,776
Class C 147,954
Class N 16,291
- --------------------------------------------------------------------------------
Trustees' compensation 364,934
- --------------------------------------------------------------------------------
Custodian fees and expenses 120,585
- --------------------------------------------------------------------------------
Other 223,642
----------------
Total expenses 104,792,772
Less reduction to custodian expenses (4,083)
Less waivers and reimbursements of expenses (20,641)
----------------
Net expenses 104,768,048
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 46,793,824
27 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments $ 264,337,264
Foreign currency transactions 8,851,809
--------------
Net realized gain 273,189,073
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 560,915,696
Translation of assets and liabilities denominated in foreign
currencies (3,956,895)
--------------
Net change in unrealized appreciation 556,958,801
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 876,941,698
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income (loss) $ 46,793,824 $ (3,605,969)
- --------------------------------------------------------------------------------
Net realized gain 273,189,073 304,533,281
- --------------------------------------------------------------------------------
Net change in unrealized appreciation 556,958,801 116,017,058
-------------------------------
Net increase in net assets resulting
from operations 876,941,698 416,944,370
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A (134,210,079) 678,678,523
Class B (162,283,904) (70,119,032)
Class C (7,839,660) 71,136,610
Class N 34,784,677 74,734,764
Class Y (352,359,573) 166,178,783
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Total increase 255,033,159 1,337,554,018
- --------------------------------------------------------------------------------
Beginning of period 8,543,747,455 7,206,193,437
-------------------------------
End of period (including accumulated net
investment income (loss) of $49,282,479
and $(1,140,376), respectively) $8,798,780,614 $8,543,747,455
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 37.57 $ 35.39 $ 30.72 $ 41.11 $ 62.12
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .26 1,2 .01 (.05) (.09) .10
Net realized and unrealized gain (loss) 3.62 2.17 4.72 (9.31) (15.86)
----------------------------------------------------------------------------------
Total from investment operations 3.88 2.18 4.67 (9.40) (15.76)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- -- (.99) (5.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 41.45 $ 37.57 $ 35.39 $ 30.72 $ 41.11
==================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 10.33% 6.16% 15.20% (23.48)% (26.38)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 5,633,688 $ 5,218,310 $ 4,288,332 $ 3,219,391 $ 3,055,197
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 5,597,821 $ 4,971,315 $ 3,655,594 $ 3,204,793 $ 3,255,995
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) 0.64% 2 0.09% (0.11)% (0.15)% 0.28%
Total expenses 1.06% 5 1.09% 5,6 1.17% 5 1.22% 5,6 1.03% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 38% 45% 42% 28% 46%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Net investment income per share and the net investment income ratio include
$.17 and 0.43%, respectively, resulting from a special dividend from Microsoft
Corp. in November 2004.
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.
30 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS B YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.82 $ 33.09 $ 28.95 $ 39.09 $ 59.80
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.08) 1,2 (.36) (.31) (.26) (.07)
Net realized and unrealized gain (loss) 3.34 2.09 4.45 (8.89) (15.39)
---------------------------------------------------------------------------------
Total from investment operations 3.26 1.73 4.14 (9.15) (15.46)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- -- (.99) (5.25)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.08 $ 34.82 $ 33.09 $ 28.95 $ 39.09
=================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 9.36% 5.23% 14.30% (24.07)% (26.95)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,041,045 $ 1,104,348 $ 1,114,052 $ 1,029,322 $ 1,242,098
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,099,380 $ 1,169,402 $ 1,001,311 $ 1,221,005 $ 1,265,753
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.21)% 2 (0.81)% (0.89)% (0.92)% (0.48)%
Total expenses 1.93% 1.99% 2.10% 1.99% 1.80%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5,6 1.97% 1.96% N/A 5,6 N/A 5
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 38% 45% 42% 28% 46%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Net investment loss per share and the net investment loss ratio include $.16
and 0.43%, respectively, resulting from a special dividend from Microsoft Corp.
in November 2004.
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 C YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.47 $ 32.72 $ 28.63 $ 38.64 $ 59.19
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1,2 (.16) (.23) (.11) (.01)
Net realized and unrealized gain (loss) 3.31 1.91 4.32 (8.91) (15.29)
----------------------------------------------------------------------------------
Total from investment operations 3.26 1.75 4.09 (9.02) (15.30)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- -- (.99) (5.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.73 $ 34.47 $ 32.72 $ 28.63 $ 38.64
==================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 9.46% 5.35% 14.28% (24.01)% (26.95)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 691,467 $ 638,676 $ 540,118 $ 450,989 $ 426,476
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 681,646 $ 623,172 $ 463,768 $ 477,369 $ 400,009
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.14)% 2 (0.69)% (0.89)% (0.87)% (0.48)%
Total expenses 1.84% 5 1.87% 5,6 1.96% 5 1.94% 5,6 1.80% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 38% 45% 42% 28% 46%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Net investment loss per share and the net investment loss ratio include $.16
and 0.43%, respectively, resulting from a special dividend from Microsoft Corp.
in November 2004.
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.
32 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS N YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 37.21 $ 35.17 $ 30.60 $ 41.05 $ 45.58
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .11 2,3 (.08) (.10) (.07) 2 (.01)
Net realized and unrealized gain (loss) 3.59 2.12 4.67 (9.39) 2 (4.52)
----------------------------------------------------------------------------------
Total from investment operations 3.70 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 $ 40.91 $ 37.21 $ 35.17 $ 30.60 $ 41.05
==================================================================================
TOTAL RETURN, AT NET ASSET VALUE 4 9.94% 5.80% 14.94% (23.67)% (9.94)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 245,932 $ 190,696 $ 111,374 $ 72,178 $ 6,791
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 221,007 $ 154,605 $ 86,761 $ 38,232 $ 3,173
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) 0.27% 3 (0.25)% (0.35)% (0.37)% (0.11)%
Total expenses 1.42% 1.46% 1.46% 1.46% 1.36%
Expenses after payments and waivers
and reduction to custodian expenses N/A 6,7 1.44% 1.42% N/A 6,7 N/A 6
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 38% 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. Net investment income per share and the net investment income ratio include
$.17 and 0.43%, respectively, resulting from a special dividend from Microsoft
Corp. in November 2004.
4. 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.
5. Annualized for periods of less than one full year.
6. Reduction to custodian expenses less than 0.01%.
7. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 38.40 $ 36.04 $ 31.16 $ 41.55 $ 62.51
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 1,2 .09 .01 .02 1 .27
Net realized and unrealized gain (loss) 3.67 2.27 4.87 (9.42) 1 (15.98)
----------------------------------------------------------------------------------
Total from investment operations 4.12 2.36 4.88 (9.40) (15.71)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain -- -- -- (.99) (5.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 42.52 $ 38.40 $ 36.04 $ 31.16 $ 41.55
==================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 10.73% 6.55% 15.66% (23.23)% (26.12)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,186,649 $ 1,391,718 $ 1,152,318 $ 864,437 $ 974,820
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,210,587 $ 1,327,404 $ 930,500 $ 968,867 $ 1,095,575
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.10% 2 0.47% 0.29% 0.17% 0.66%
Total expenses 0.69% 5 0.71% 5 0.78% 5,6 0.89% 5 0.66% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 38% 45% 42% 28% 46%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Net investment income per share and the net investment income ratio include
$.18 and 0.43%, respectively, resulting from a special dividend from Microsoft
Corp. in November 2004.
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.
34 | 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 exchanges are valued
based on the last sale price of the security traded on that exchange prior to
the time when the Fund's assets are valued. Securities traded on NASDAQ are
valued based on the closing price provided by NASDAQ prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the last sale price on the prior trading day, if it is within the spread of the
closing "bid" and "asked" prices, and if not, at the closing bid price.
Securities traded on foreign exchanges are valued based on the last sale price
on the principal exchange on which the security is traded, in the country that
is identified by the portfolio pricing service, prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the official closing price on the principal exchange. Corporate, government and
municipal debt instruments having a remaining maturity in excess of sixty days
and all mortgage-backed securities will be valued at the mean between the "bid"
and "asked" prices. Futures contracts traded on a commodities or futures
exchange will be valued at the final settlement price or official closing price
on the principal exchange as reported by such principal exchange at its trading
session ending at, or most recently prior to, the time when the Fund's assets
are valued. Securities may be valued primarily
35 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 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. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income 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. 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
36 | OPPENHEIMER CAPITAL APPRECIATION FUND
class. Operating expenses directly attributable to a specific class are charged
against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
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
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
----------------------------------------------------------------------------
$45,160,630 $-- $454,577,631 $751,763,996
1. As of August 31, 2005, the Fund had $454,510,399 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, 2005, details
of the capital loss carryforwards were as follows:
EXPIRING
-----------------------------
2011 $ 157,924,077
2012 296,586,322
----------------
Total $ 454,510,399
================
2. The Fund had $67,232 of post-October foreign currency losses which were
deferred.
3. During the fiscal year ended August 31, 2005, the Fund utilized $278,650,934
of capital loss carryforward to offset capital gains realized in that fiscal
year.
4. During the fiscal year ended August 31, 2004, 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, 2005. Net assets of the
Fund were unaffected by the reclassifications.
INCREASE TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
REDUCTION TO NET INVESTMENT REALIZED LOSS
PAID-IN CAPITAL INCOME ON INVESTMENTS
----------------------------------------------------
$5,072,075 $3,629,031 $1,443,044
37 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
No distributions were paid during the years ended August 31, 2005 and August 31,
2004.
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, 2005 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.
Federal tax cost of securities $ 8,040,058,944
=================
Gross unrealized appreciation $ 1,196,463,625
Gross unrealized depreciation (444,699,629)
-----------------
Net unrealized appreciation $ 751,763,996
=================
- --------------------------------------------------------------------------------
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, 2005, the Fund's projected benefit obligations were increased by $120,943
and payments of $63,775 were made to retired trustees, resulting in an
accumulated liability of $1,075,289 as of August 31, 2005.
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.
38 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
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 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, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------
CLASS A
Sold 40,436,717 $ 1,618,214,799 44,049,927 $ 1,683,774,151
Redeemed (43,402,126) (1,752,424,878) (26,327,315) (1,005,095,628)
------------------------------------------------------------------
Net increase (decrease) (2,965,409) $ (134,210,079) 17,722,612 $ 678,678,523
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS B
Sold 4,382,455 $ 161,855,078 6,370,743 $ 226,256,788
Redeemed (8,760,712) (324,138,982) (8,319,344) (296,375,820)
------------------------------------------------------------------
Net decrease (4,378,257) $ (162,283,904) (1,948,601) $ (70,119,032)
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS C
Sold 4,571,487 $ 167,476,288 5,516,439 $ 193,981,052
Redeemed (4,774,468) (175,315,948) (3,492,729) (122,844,442)
------------------------------------------------------------------
Net increase (decrease) (202,981) $ (7,839,660) 2,023,710 $ 71,136,610
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS N
Sold 3,078,565 $ 122,153,412 3,052,463 $ 116,239,098
Redeemed (2,190,999) (87,368,735) (1,094,111) (41,504,334)
------------------------------------------------------------------
Net increase 887,566 $ 34,784,677 1,958,352 $ 74,734,764
==================================================================
39 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------
CLASS Y
Sold 8,329,891 $ 344,067,572 9,392,719 $ 365,551,482
Redeemed (16,663,524) (696,427,145) (5,128,257) (199,372,699)
----------------------------------------------------------------
Net increase (decrease) (8,333,633) $(352,359,573) 4,264,462 $ 166,178,783
================================================================
- --------------------------------------------------------------------------------
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, 2005, were as
follows:
PURCHASES SALES
----------------------------------------------------------
Investment securities $3,227,875,219 $3,732,467,340
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.75% of the first $200 million of average annual net assets of
the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66%
of the next $200 million, 0.60% of the next $700 million, 0.58% of the next $1.0
billion, 0.56% of the next $2.0 billion, 0.54% of the next $2.0 billion, 0.52%
of the next $2.0 billion, and 0.50% of average annual net assets over $8.5
billion.
- --------------------------------------------------------------------------------
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, 2005, the Fund paid
$20,770,239 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum 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
40 | OPPENHEIMER CAPITAL APPRECIATION FUND
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 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 expenses under the plan at August 31, 2005
for Class B, Class C and Class N shares were $19,222,958, $9,952,252 and
$2,809,939, 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, 2005 $2,594,826 $32,458 $2,448,819 $143,743 $173,648
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended August 31, 2005, OFS
waived $15,294 and $5,347 for Class B 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.
41 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2005, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges 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 assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
42 | OPPENHEIMER CAPITAL APPRECIATION FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year 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, 2005, 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, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with U.S.
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
October 17, 2005
43 | OPPENHEIMER CAPITAL APPRECIATION FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended August
31, 2005 which are not designated as capital gain distributions should be
multiplied by 100% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended August 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $139,144,661 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2006, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
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.
44 | OPPENHEIMER CAPITAL APPRECIATION FUND
REPORT OF SHAREHOLDER MEETING Unaudited
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- --------------------------------------------------------------------------------
On August 17, 2005, a joint special meeting of shareholders was held at which
the eleven Trustees identified below were elected (Proposal No. 1) and changes
in, or the addition or elimination of, certain fundamental investment policies
were approved (Proposal No. 2) as described in the Fund's proxy statement for
that meeting. The following is a report of the votes cast:
- --------------------------------------------------------------------------------
PROPOSAL NO.1
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 130,221,591.545 1,713,898.417 131,935,489.962
Robert G. Galli 130,141,578.604 1,793,911.358 131,935,489.962
Phillip A. Griffiths 130,205,650.404 1,729,839.558 131,935,489.962
Mary F. Miller 130,191,926.358 1,743,563.604 131,935,489.962
Joel W. Motley 130,240,275.132 1,695,214.830 131,935,489.962
John V. Murphy 130,196,273.786 1,739,216.176 131,935,489.962
Kenneth A. Randall 130,071,107.067 1,864,382.895 131,935,489.962
Russell S. Reynolds, Jr. 130,068,237.561 1,867,252.401 131,935,489.962
Joseph M. Wikler 130,227,983.383 1,707,506.579 131,935,489.962
Peter I. Wold 130,237,354.472 1,698,135.490 131,935,489.962
Clayton K. Yeutter 130,094,236.722 1,841,253.240 131,935,489.962
- --------------------------------------------------------------------------------
PROPOSAL NO. 2: TO APPROVE A MODIFICATION TO THE FUND'S FUNDAMENTAL INVESTMENT
OBJECTIVE
BROKER
FOR AGAINST ABSTAIN NON-VOTES TOTAL
- --------------------------------------------------------------------------------
2B: Concentration of Investments
90,009,507.627 2,185,617.093 2,154,459.242 37,585,906.000 131,935,489.962
2C: Diversification of Investments
90,245,360.157 2,026,442.954 2,077,780.851 37,585,906.000 131,935,489.962
2K: Real Estate and Commodities
90,025,889.218 2,275,323.582 2,048,371.162 37,585,906.000 131,935,489.962
2L: Senior Securities
90,150,320.740 1,978,268.808 2,220,994.414 37,585,906.000 131,935,489.962
45 | OPPENHEIMER CAPITAL APPRECIATION FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (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 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 voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing 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.
46 | OPPENHEIMER CAPITAL APPRECIATION FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio manager and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that were available to the
Fund. The Board noted that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services and information the
Board received regarding the experience and professional qualifications of the
Manager's personnel and the size and functions of its staff. The Board members
also considered their experiences as directors or trustees of the Fund and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Fund's service agreements. The Board was aware that there are alternatives
to retaining the Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services to be provided, the Board
considered the experience of Jane Putnam and the Manager's Growth investment
team and analysts. Ms. Putnam has had over 15 years of experience managing
equity investments. Ms. Putnam had been primarily responsible for the day-to-day
management of the Fund's portfolio since July 1995 and was a Vice President of
the Fund and of the Manager and portfolio manager of other Oppenheimer funds.
47 | OPPENHEIMER CAPITAL APPRECIATION FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other large-cap core funds advised by
other investment advisers. The Board also receives and reviews comparative
performance information regarding the Fund and other funds at each Board
meeting. The Board noted that the Fund's five-year and ten-year performance were
better than its peer group average. However, its one-year and three-year
performance were below its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Fund. The independent
consultant provided comparative data in regard to the fees and expenses of the
Fund, other large-cap core funds and other funds with comparable asset levels
and distribution features. The Board considered that the Fund's management fees
and its total expenses were higher than its peer group average. In addition, the
Board evaluated the comparability of the fees charged and the services provided
to the Fund to the fees charged and services provided to other types of entities
advised by the Manager.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates and research
provided to the Manager in connection with permissible brokerage arrangements
(soft dollar arrangements).
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board considered that the Fund has recently experienced
significant asset growth and that, based on current asset levels, the Fund has
passed its last management fee breakpoint.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
48 | OPPENHEIMER CAPITAL APPRECIATION FUND
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the advisory
agreement for another year. In arriving at this decision, the Board did not
single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
49 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited
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- -------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, NEW
TRUSTEES YORK, NY 10281-1008. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR
HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board Attorney at Hogan & Hartson (law firm) (since June 1993); Director of Danielson
of Trustees (since 2003); Holding Corp. (waste-to-energy company) (since 2002); Director of Weyerhaeuser
Trustee (since 1993) Corp. (1999-April 2004); Director of Caterpillar, Inc. (1993-December 2002);
Age: 74 Director of ConAgra Foods (1993-2001); Director of Texas Instruments (1993-2001);
Director of FMC Corporation (1993-2001). Oversees 38 portfolios in the
OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research foundation)
Trustee (since 2005) (since 2005); Director of ICI Education Foundation (education foundation) (since
Age: 64 October 1991); President of the Investment Company Institute (trade association)
(1991-2004); Director of ICI Mutual Insurance Company (insurance company)
(1991-2004). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in the
Trustee (since 1993) OppenheimerFunds complex.
Age: 71
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since 2001);
Trustee (since 1999) Trustee of Woodward Academy (since 1983); Senior Advisor of The Andrew W. Mellon
Age: 67 Foundation (since 2001); Member of the National Academy of Sciences (since 1979);
Member of the American Philosophical Society (since 1996); Council on Foreign
Relations (since 2002); Director of the Institute for Advanced Study (1991-2004);
Director of Bankers Trust New York Corporation (1994-1999). Oversees 38 portfolios
in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October 1998);
Trustee (since 2004) and Senior Vice President and General Auditor of American Express Company
Age: 62 (financial services company) (July 1998-February 2003). Oversees 38 portfolios in
the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser)
Trustee (since 2002) (since 2002); Managing Director of Carmona Motley, Inc. (privately-held financial
Age: 53 adviser) (since January 2002); Managing Director of Carmona Motley Hoffman Inc.
(privately-held financial adviser) (January 1998-December 2001). Oversees 38
portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (since
Trustee (since 1987) February 1972); Former Director of Prime Retail, Inc. (real estate investment
Age: 78 trust), Dominion Energy Inc. (electric power and oil & gas producer), Lumbermens
Mutual Casualty Company, American Motorists Insurance Company and American
Manufacturers Mutual Insurance Company; Former President and Chief Executive
Officer of The Conference Board, Inc. (international economic and business
research). Oversees 38 portfolios in the OppenheimerFunds complex.
50 | OPPENHEIMER CAPITAL APPRECIATION FUND
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consulting
Trustee (since 1989) and executive recruiting) (since 1993); Life Trustee of International House
Age: 73 (non-profit educational organization); Former Trustee of The Historical Society of
the Town of Greenwich. Oversees 38 portfolios in the OppenheimerFunds complex.
JOSEPH M. WIKLER Director of the following medical device companies: Medintec (since 1992) and
Trustee (since 2005) Cathco (since 1996); Director of Lakes Environmental Association (since 1996);
Age: 64 Member of the Investment Committee of the Associated Jewish Charities of Baltimore
(since 1994); Director of Fortis/Hartford mutual funds (1994-December 2001).
Oversees 39 portfolios in the OppenheimerFunds complex.
PETER I. WOLD President of Wold Oil Properties, Inc. (oil and gas exploration and production
Trustee (since 2005) company) (since 1994); Vice President, Secretary and Treasurer of Wold Trona
Age: 57 Company, Inc. (soda ash processing and production) (since 1996); Vice President of
Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of
Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of
the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and
Director of PacifiCorp. (electric utility) (1995-1999). Oversees 39 portfolios in
the OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE
TERM AND AS AN OFFICER FOR AN ANNUAL TERM, OR UNTIL HIS RESIGNATION, RETIREMENT,
DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH
OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President
President and (since September 2000) of the Manager; President and Director or Trustee of other
Principal Executive Officer Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC")
(since 2001) (the Manager's parent holding company) and of Oppenheimer Partnership Holdings,
and Trustee Inc. (holding company subsidiary of the Manager) (since July 2001); Director of
(since 2001) OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November
Age: 56 2001); Chairman and Director of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July
2001); President and Director of OppenheimerFunds Legacy Program (charitable trust
program established by the Manager) (since July 2001); 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 Director (since July
2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company) (since February
1997); Director of DLB Acquisition Corporation (holding company parent of Babson
Capital Management LLC) (since June 1995); Member of the Investment Company
Institute's Board of Governors (since October 3, 2003); Chief Operating Officer of
the Manager (September 2000-June 2001); President and Trustee of MML Series
Investment Fund and MassMutual Select Funds (open-end investment companies)
(November 1999-November 2001); Director of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive Officer and Director of MML Bay
State Life Insurance Company (September 1999-August 2000); Director of Emerald
Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle
Bancorp) (June 1989-June 1998). Oversees 77
51 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JOHN V. MURPHY, portfolios as a Director or Trustee and 10 additional portfolios as officer in the
Continued OppenheimerFunds complex.
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OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND BAYLIN, WILBY, PUTNAM AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
11TH FLOOR, NEW YORK, NY 10281-1008, FOR MESSERS. WIXTED AND VANDEHEY, 6803 S.
TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR
UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. WILBY* Senior Vice President of the Manager since July 1994 and Senior Investment Officer
Vice President and Director of Equities of the Manager since July 2004. Mr. Wilby was Director of
(since 2005) International Equities of the Manager from May 2000 through July 2004 and Senior
Age: 61 Vice President of HarbourView Asset Management Corporation from May 1999 through
November 2001. Before joining OppenheimerFunds in 1991, Mr. Wilby was an
International Strategist at Brown Brothers Harriman & Co., a Managing Director and
Portfolio Manager at AIG Global Investors, an International Pension Manager at
Northern Trust Bank in Chicago and an International Financial Economist at
Northern Trust Bank and at the Federal Reserve Bank in Chicago. A portfolio
manager of other Oppenheimer funds.
MARC L. BAYLIN* Vice President of the Manager and a member of the Growth Equity Investment Team.
Vice President He was Managing Director and Lead Portfolio Manager at JP Morgan Fleming
(since 2005) Investment Management from June 2002 to August 2005 and was a Vice President of T.
Age: 37 Rowe Price, where he was an analyst from June 1993 and a portfolio manager from
March 1999 to June 2002. A portfolio manager of other Oppenheimer funds.
JANE PUTNAM,* Vice President of the Manager since October 1995; an officer of 2 portfolios in
Vice President the OppenheimerFunds complex.
(since 1995)
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March
Vice President and 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset
Chief Compliance Officer Management Corporation and Shareholder Services, Inc. (since June 1983). Former
(since 2004) Vice President and Director of Internal Audit of the Manager (1997-February
Age: 55 2004). An officer of 87 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer
Treasurer and of the following: HarbourView Asset Management Corporation, Shareholder Financial
Principal Financial and Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Accounting Officer Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
(since 1999) Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
Age: 46 (since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since June 2003); Treasurer
and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the
Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March
1999), Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 87 portfolios in the OppenheimerFunds complex.
52 | OPPENHEIMER CAPITAL APPRECIATION FUND
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2001) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 57 December 2001); General Counsel of Centennial Asset Management Corporation (since
December 2001); Senior Vice President and General Counsel of HarbourView Asset
Management Corporation (since December 2001); Secretary and General Counsel of OAC
(since November 2001); Assistant Secretary (since September 1997) and Director
(since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds
plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of Shareholder
Financial Services, Inc. and Shareholder Services, Inc. (since December 2001);
Senior Vice President, General Counsel and Director of OFI Private Investments,
Inc. and OFI Trust Company (since November 2001); Vice President of
OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and
General Counsel of OFI Institutional Asset Management, Inc. (since November 2001);
Director of OppenheimerFunds (Asia) Limited (since December 2003); 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 the following: Shareholder Services, Inc.
(May 1985-November 2001), Shareholder Financial Services, Inc.
(November 1989-November 2001), and OppenheimerFunds International Ltd.
(September 1997-November 2001). An officer of 87 portfolios in the
OppenheimerFunds complex.
*William L. Wilby and Marc L. Baylin became the portfolio managers of the Fund
effective October 1, 2005 and became Vice Presidents of the Fund effective
October 25, 2005. Jane Putnam retired as a Fund officer as of September 30,
2005.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
53 | 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 the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee financial expert," whether through the type of
specialized education or experience described in that Instruction. The Board
has concluded that while the members of the Audit Committee collectively have
the necessary attributes and experience required to serve effectively as an
Audit Committee, no single member possesses all of the required technical
attributes through the particular methods of education or experience set forth
in the Instructions to be designated as an audit committee financial expert.
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 2005 and $45,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $132,059 in fiscal 2005 and $39,500 in fiscal 2004 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 services: internal control reviews.
(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 $5,000 in fiscal 2005 and $6,000 in fiscal 2004 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 services: Preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
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.
(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.
Under applicable laws, pre-approval of non-audit services maybe 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 $137,059 in fiscal 2005 and $45,500 in fiscal
2004 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 trustees 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 accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the 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, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Capital Appreciation Fund
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: October 17, 2005