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
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Oppenheimer Capital Appreciation Fund
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(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: August 31
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Date of reporting period: 08/31/2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Communications Equipment 10.4%
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Capital Markets 6.4
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Aerospace & Defense 6.0
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Software 5.4
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Internet Software & Services 5.3
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Computers & Peripherals 4.6
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Pharmaceuticals 4.1
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Energy Equipment & Services 4.0
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Wireless Telecommunication Services 4.0
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Chemicals 3.6
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2007, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Cisco Systems, Inc. 3.6%
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Google, Inc., Cl. A 3.5
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Schlumberger Ltd. 2.5
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Apple, Inc. 2.3
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Monsanto Co. 2.2
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Research in Motion Ltd. 2.1
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Boeing Co. 2.0
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Las Vegas Sands Corp. 1.9
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eBay, Inc. 1.8
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Costco Wholesale Corp. 1.8
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2007, and are based on net assets. For up-to-date Top 10 Fund
holdings, please visit www.oppenheimerfunds.com.
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10 | 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 31.6%
Communications Equipment 10.5
Software 5.4
Internet Software & Services 5.4
Computers & Peripherals 4.6
IT Services 2.9
Semiconductors & Semiconductor Equipment 2.8
Health Care 13.3
Financials 11.5
Consumer Discretionary 11.3
Industrials 9.5
Energy 7.4
Consumer Staples 7.1
Materials 4.3
Telecommunication Services 4.0
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2007, and are based on the total market value of common stocks.
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11 | 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, 2007, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. We are pleased that the Fund's
Class A shares returned 17.62% (without sales charges) for the reporting period,
outperforming the 15.13% return of the S&P 500 Index ("the Index"). Strong
performance enabled the Fund to rank higher than the average of all funds in its
peer group in the Lipper Large-Cap Growth category.
For the 12-month reporting period, the Fund's best relative performance
stemmed from its holdings in the financials, information technology and
materials areas. Within the financials area, the Fund benefited most by avoiding
many of the commercial banks and diversified financial services companies, such
as Wachovia, Bank of America and Citigroup. Instead, we chose to hold an
overweight position in CME Group, Inc. (also known as the Chicago Mercantile
Exchange), the largest financial derivatives exchange in the United States and
the most diversified in the world, a decision that proved beneficial as the
stock continued to gain value from the enormous growth in the sophisticated
strategies used to hedge risk in a volatile market environment.
The Fund's heavy emphasis on information technology stocks also aided
performance, an area where we held almost double the weight of that of the
Index. A number of the Fund's stock choices fared well, including Research in
Motion Ltd. (RIM), whose primary product line includes the popular Blackberry(R)
used by thousands of organizations around the world as well as countless
individual users. We believe that RIM offers a differentiated product over its
competitors because of its extensive network operating system. In our view, the
company is in the early stages of a product cycle that has the potential for
strong growth over the coming three-to five-year period.
Other positive contributors within the information technology area
included Cisco Systems, Inc., a longtime holding for the Fund that remains one
of our larger holdings. For some time now we have believed that Cisco Systems
held a leading edge over its competitors by being the only company to offer a
complete suite of products aimed at the IP (Internet Protocol) market. The
company continued to dominate the market for equipment used to link networks and
power the Internet, and our overweight position there helped boost the Fund's
overall performance.
Apple, Inc. also performed well as the company continued to gain market
share from Microsoft Corp. with its Mac product line. The firm also continues to
post robust sales from its iPod portable music and video players and iTunes
online store, and is poised to benefit from strong sales of its latest product,
the iPhone. Finally, the Fund's investment in
12 | OPPENHEIMER CAPITAL APPRECIATION FUND
EMC Corp., a developer and provider of information infrastructure technology and
solutions, gained value from its virtual infrastructure software division.
Materials stocks posted solid gains for the Fund, most notably our
holdings in Monsanto Co., an agricultural company that helps farmers grow more
crops by applying biotechnology and genomics to seeds and herbicides. Monsanto
is the leading producer of the herbicide glyphosate, marketed as "Roundup" and,
through one of its subsidiaries, exclusively produces ROUNDUP READY soybean seed
for the commercial market. The company plans to launch a new line of
drought-tolerant corn seeds, which should yield the same amount of crops, using
less water. We remain confident in the stock.
On the other hand, in such a strong stock market environment, only two
areas hindered the Fund's relative performance: industrials and health care. In
both cases, declines were limited to a few individual stocks, each for
company-specific reasons. For example, in the industrials area, virtually all
the Fund's negative relative performance can be traced to its holdings in (The)
Corporate Executive Board Co., which provides best practices research,
decision-support tools and executive education to a membership of the world's
leading corporations and not-for-profit institutions. The stock encountered
difficulties when it missed its earnings estimates for two consecutive quarters,
citing an understaffing in its sales force. We continue to own the stock because
we remain confident in the firm's strong business model, among other things we
like about the stock. However, we are carefully monitoring the company's
progress over the near term.
Within the health care area, the Fund's underperformance primarily stemmed
from one holding, Varian Medical Systems, Inc., a manufacturer of medical
devices and software used in X-ray machines for the treatment of cancer and
other medical conditions. The company encountered delays in installation of
several of its products as well as increased competition, both of which hurt its
overall performance. As of the end of the reporting period, we have sold our
position in Varian Medical Systems.
In closing, we'd like to take this opportunity to remind shareholders that
regardless of what is happening in the stock market, we continue to adhere to
our time-proven bottom-up strategy of selecting stocks based on their individual
merits across a wide variety of industry groups that will help us to create a
well-diversified large-cap growth portfolio. We strive to own companies that we
believe have the potential to meaningfully grow earnings faster than the broader
market over a three- to five-year time horizon. In particular, we look for
businesses with sustainable earnings, strong earnings growth and sound capital
management. We also pay close attention to company valuations to avoid paying
too much for growth opportunities.
13 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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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, 2007. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. 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 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.
14 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class A)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital Appreciation
Fund (Class A) S&P 500 Index
08/31/1997 $ 9,425 $10,000
11/30/1997 $ 9,627 $10,667
02/28/1998 $10,451 $11,761
05/31/1998 $10,762 $12,275
08/31/1998 $ 9,042 $10,812
11/30/1998 $10,943 $13,193
02/28/1999 $12,255 $14,085
05/31/1999 $12,949 $14,856
08/31/1999 $13,324 $15,116
11/30/1999 $14,787 $15,950
02/29/2000 $18,242 $15,736
05/31/2000 $17,883 $16,412
08/31/2000 $19,721 $17,581
11/30/2000 $16,264 $15,276
02/28/2001 $16,044 $14,447
05/31/2001 $16,443 $14,681
08/31/2001 $14,519 $13,295
11/30/2001 $14,448 $13,410
02/28/2002 $13,554 $13,073
05/31/2002 $13,189 $12,649
08/31/2002 $11,109 $10,904
11/30/2002 $11,673 $11,197
02/28/2003 $10,371 $10,109
05/31/2003 $12,002 $11,629
08/31/2003 $12,798 $12,219
11/30/2003 $13,434 $12,885
02/29/2004 $14,295 $14,001
05/31/2004 $14,035 $13,760
08/31/2004 $13,586 $13,617
11/30/2004 $14,440 $14,540
02/28/2005 $14,642 $14,977
05/31/2005 $14,751 $14,892
08/31/2005 $14,989 $15,327
11/30/2005 $15,644 $15,767
02/28/2006 $16,079 $16,234
05/31/2006 $15,490 $16,178
08/31/2006 $15,668 $16,687
11/30/2006 $16,861 $18,009
02/28/2007 $16,959 $18,176
05/31/2007 $18,385 $19,862
08/31/2007 $18,428 $19,211
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/07
1-Year 10.86% 5-Year 9.35% 10-Year 6.30%
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, THE 10-YEAR RETURN FOR CLASS B SHARES
USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 20 FOR
FURTHER INFORMATION.
15 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class B)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital Appreciation
Fund (Class B) S&P 500 Index
08/31/1997 $10,000 $10,000
11/30/1997 $10,194 $10,667
02/28/1998 $11,041 $11,761
05/31/1998 $11,348 $12,275
08/31/1998 $ 9,514 $10,812
11/30/1998 $11,492 $13,193
02/28/1999 $12,844 $14,085
05/31/1999 $13,545 $14,856
08/31/1999 $13,909 $15,116
11/30/1999 $15,407 $15,950
02/29/2000 $18,971 $15,736
05/31/2000 $18,561 $16,412
08/31/2000 $20,430 $17,581
11/30/2000 $16,815 $15,276
02/28/2001 $16,555 $14,447
05/31/2001 $16,937 $14,681
08/31/2001 $14,925 $13,295
11/30/2001 $14,822 $13,410
02/28/2002 $13,881 $13,073
05/31/2002 $13,482 $12,649
08/31/2002 $11,333 $10,904
11/30/2002 $11,881 $11,197
02/28/2003 $10,538 $10,109
05/31/2003 $12,175 $11,629
08/31/2003 $12,959 $12,219
11/30/2003 $13,604 $12,885
02/29/2004 $14,475 $14,001
05/31/2004 $14,211 $13,760
08/31/2004 $13,757 $13,617
11/30/2004 $14,622 $14,540
02/28/2005 $14,827 $14,977
05/31/2005 $14,936 $14,892
08/31/2005 $15,178 $15,327
11/30/2005 $15,841 $15,767
02/28/2006 $16,281 $16,234
05/31/2006 $15,685 $16,178
08/31/2006 $15,865 $16,687
11/30/2006 $17,073 $18,009
02/28/2007 $17,173 $18,176
05/31/2007 $18,616 $19,862
08/31/2007 $18,660 $19,211
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/07
1-Year 11.67% 5-Year 9.45% 10-Year 6.44%
16 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class C)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital Appreciation
Fund (Class C) S&P 500 Index
08/31/1997 $10,000 $10,000
11/30/1997 $10,193 $10,667
02/28/1998 $11,041 $11,761
05/31/1998 $11,348 $12,275
08/31/1998 $ 9,516 $10,812
11/30/1998 $11,493 $13,193
02/28/1999 $12,842 $14,085
05/31/1999 $13,543 $14,856
08/31/1999 $13,908 $15,116
11/30/1999 $15,404 $15,950
02/29/2000 $18,970 $15,736
05/31/2000 $18,563 $16,412
08/31/2000 $20,430 $17,581
11/30/2000 $16,813 $15,276
02/28/2001 $16,558 $14,447
05/31/2001 $16,936 $14,681
08/31/2001 $14,924 $13,295
11/30/2001 $14,823 $13,410
02/28/2002 $13,883 $13,073
05/31/2002 $13,479 $12,649
08/31/2002 $11,340 $10,904
11/30/2002 $11,891 $11,197
02/28/2003 $10,544 $10,109
05/31/2003 $12,180 $11,629
08/31/2003 $12,961 $12,219
11/30/2003 $13,578 $12,885
02/29/2004 $14,422 $14,001
05/31/2004 $14,129 $13,760
08/31/2004 $13,654 $13,617
11/30/2004 $14,482 $14,540
02/28/2005 $14,656 $14,977
05/31/2005 $14,735 $14,892
08/31/2005 $14,945 $15,327
11/30/2005 $15,567 $15,767
02/28/2006 $14,971 $16,234
05/31/2006 $15,353 $16,178
08/31/2006 $15,504 $16,687
11/30/2006 $16,652 $18,009
02/28/2007 $16,716 $18,176
05/31/2007 $18,090 $19,862
08/31/2007 $18,094 $19,211
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/07
1-Year 15.71% 5-Year 9.79% 10-Year 6.11%
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, THE 10-YEAR RETURN FOR CLASS B SHARES
USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 20 FOR
FURTHER INFORMATION.
17 | OPPENHEIMER CAPITAL APPRECIATION FUND
FUND PERFORMANCE DISCUSSION
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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
11/30/2005 $ 9,582 $10,914
02/28/2006 $ 9,842 $11,237
05/31/2006 $ 9,472 $11,198
08/31/2006 $ 9,574 $11,550
11/30/2006 $10,295 $12,466
02/28/2007 $10,344 $12,582
05/31/2007 $11,205 $13,749
08/31/2007 $11,220 $13,298
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/07
1-Year 16.20% 5-Year 10.29% Since Inception (3/1/01) 1.79%
18 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class Y)
S&P 500 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Capital 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
11/30/2005 $16,453 $15,465
02/28/2006 $16,922 $15,923
05/31/2006 $16,320 $15,868
08/31/2006 $16,525 $16,367
11/30/2006 $17,800 $17,664
02/28/2007 $17,920 $17,828
05/31/2007 $19,448 $19,481
08/31/2007 $19,512 $18,842
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 8/31/07
1-Year 18.07% 5-Year 11.07% Since Inception (11/3/97) 7.04%
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, THE 10-YEAR RETURN FOR CLASS B SHARES
USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 20 FOR
FURTHER INFORMATION.
19 | 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 10-year 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.
20 | OPPENHEIMER CAPITAL APPRECIATION FUND
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.
21 | 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, 2007.
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 the
Statement of Additional Information). Therefore, the
22 | OPPENHEIMER CAPITAL APPRECIATION FUND
"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
(3/1/07) (8/31/07) AUGUST 31, 2007
- ----------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,086.60 $ 5.43
- ----------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,020.01 5.26
- ----------------------------------------------------------------------------
Class B Actual 1,000.00 1,082.30 9.59
- ----------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,016.03 9.29
- ----------------------------------------------------------------------------
Class C Actual 1,000.00 1,082.50 9.44
- ----------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,016.18 9.14
- ----------------------------------------------------------------------------
Class N Actual 1,000.00 1,084.70 7.28
- ----------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.25 7.04
- ----------------------------------------------------------------------------
Class Y Actual 1,000.00 1,088.80 3.43
- ----------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.93 3.32
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,
excluding indirect expenses from affiliated fund, based on the 6-month period
ended August 31, 2007 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 1.03%
- -----------------------------
Class B 1.82
- -----------------------------
Class C 1.79
- -----------------------------
Class N 1.38
- -----------------------------
Class Y 0.65
The expense ratios reflect reduction to custodian expenses and voluntary waivers
or reimbursements by the Fund's Manager 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 and reduction to custodian
expenses, if applicable.
- --------------------------------------------------------------------------------
23 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS August 31, 2007
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--98.8%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--11.1%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.9%
Las Vegas Sands Corp. 1 1,554,620 $ 154,995,614
- --------------------------------------------------------------------------------
MEDIA--3.0%
Comcast Corp., Cl. A
Special, Non-Vtg. 1 4,468,393 115,552,630
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series A 1 1,593,750 65,311,875
- --------------------------------------------------------------------------------
XM Satellite Radio
Holdings, Inc., Cl. A 1 4,919,810 61,350,031
-----------------
242,214,536
- --------------------------------------------------------------------------------
MULTILINE RETAIL--2.8%
J.C. Penney Co., Inc.
(Holding Co.) 1,721,910 118,398,532
- --------------------------------------------------------------------------------
Target Corp. 1,702,810 112,266,263
-----------------
230,664,795
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--2.3%
Abercrombie &
Fitch Co., Cl. A 434,980 34,232,926
- --------------------------------------------------------------------------------
Staples, Inc. 4,634,540 110,070,325
- --------------------------------------------------------------------------------
Tiffany & Co. 905,250 46,466,483
-----------------
190,769,734
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.1%
Polo Ralph Lauren
Corp., Cl. A 1,158,880 87,541,795
- --------------------------------------------------------------------------------
CONSUMER STAPLES--7.0%
- --------------------------------------------------------------------------------
BEVERAGES--0.5%
Fomento Economico
Mexicano SA de
CV, UBD 11,308,400 39,256,025
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.5%
Costco
Wholesale Corp. 2,387,300 147,415,775
- --------------------------------------------------------------------------------
Sysco Corp. 1,656,930 55,308,323
-----------------
202,724,098
- --------------------------------------------------------------------------------
FOOD PRODUCTS--2.9%
Cadbury
Schweppes plc 9,562,180 113,679,392
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FOOD PRODUCTS Continued
Nestle SA 284,092 $ 124,092,151
-----------------
237,771,543
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.1%
Reckitt Benckiser plc 1,716,139 93,389,906
- --------------------------------------------------------------------------------
ENERGY--7.3%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--4.0%
Schlumberger Ltd. 2,068,180 199,579,370
- --------------------------------------------------------------------------------
Smith
International, Inc. 1,922,950 128,856,880
-----------------
328,436,250
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS--3.3%
Occidental
Petroleum Corp. 1,843,700 104,519,353
- --------------------------------------------------------------------------------
Range
Resources Corp. 2,518,380 91,442,378
- --------------------------------------------------------------------------------
XTO Energy, Inc. 1,243,110 67,575,460
-----------------
263,537,191
- --------------------------------------------------------------------------------
FINANCIALS--11.4%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--6.4%
Fortress Investment
Group LLC, Cl. A 3,382,340 59,292,420
- --------------------------------------------------------------------------------
Franklin
Resources, Inc. 473,770 62,428,673
- --------------------------------------------------------------------------------
Goldman Sachs
Group, Inc. (The) 793,490 139,662,175
- --------------------------------------------------------------------------------
Legg Mason, Inc. 622,690 54,061,946
- --------------------------------------------------------------------------------
Northern
Trust Corp. 976,410 60,010,159
- --------------------------------------------------------------------------------
Schwab (Charles)
Corp. 1,525,810 30,211,038
- --------------------------------------------------------------------------------
UBS AG 2,218,536 115,615,657
-----------------
521,282,068
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.8%
CME Group, Inc. 246,860 136,957,928
- --------------------------------------------------------------------------------
Moody's Corp. 173,330 7,947,181
-----------------
144,905,109
24 | OPPENHEIMER CAPITAL APPRECIATION FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE--1.7%
AMBAC Financial
Group, Inc. 506,980 $ 31,848,484
- --------------------------------------------------------------------------------
Prudential
Financial, Inc. 1,212,960 108,899,549
-----------------
140,748,033
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.9%
CB Richard Ellis
Group, Inc., Cl. A 1 2,438,900 71,996,328
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.6%
Freddie Mac 820,460 50,548,541
- --------------------------------------------------------------------------------
HEALTH CARE--13.1%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--2.9%
Celgene Corp. 1 1,213,580 77,923,972
- --------------------------------------------------------------------------------
Genentech, Inc. 1 1,052,850 78,763,709
- --------------------------------------------------------------------------------
Gilead
Sciences, Inc. 1 2,072,490 75,376,461
-----------------
232,064,142
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.2%
Bard (C.R.), Inc. 425,350 35,469,937
- --------------------------------------------------------------------------------
St. Jude
Medical, Inc. 1 1,513,240 65,931,867
-----------------
101,401,804
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.0%
Medco Health
Solutions, Inc. 1 1,093,110 93,406,250
- --------------------------------------------------------------------------------
Schein (Henry), Inc. 1 819,820 47,705,326
- --------------------------------------------------------------------------------
WellPoint, Inc. 1 1,288,290 103,823,291
-----------------
244,934,867
- --------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--1.9%
Covance, Inc. 1 835,730 61,275,724
- --------------------------------------------------------------------------------
Thermo Fisher
Scientific, Inc. 1 1,752,710 95,049,463
-----------------
156,325,187
- --------------------------------------------------------------------------------
PHARMACEUTICALS--4.1%
Abbott Laboratories 1,028,620 53,395,664
- --------------------------------------------------------------------------------
Allergan, Inc. 824,530 49,480,045
- --------------------------------------------------------------------------------
Merck & Co., Inc. 911,710 45,740,491
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PHARMACEUTICALS Continued
Roche Holding AG 650,704 $ 113,034,858
- --------------------------------------------------------------------------------
Shire Pharmaceuticals
Group plc 2,801,230 73,028,417
-----------------
334,679,475
- --------------------------------------------------------------------------------
INDUSTRIALS--9.4%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--6.0%
Boeing Co. 1,657,780 160,307,326
- --------------------------------------------------------------------------------
Empresa Brasileira de
Aeronautica SA, ADR 910,200 41,104,632
- --------------------------------------------------------------------------------
General Dynamics
Corp. 1,208,910 94,971,970
- --------------------------------------------------------------------------------
Precision
Castparts Corp. 341,900 44,552,989
- --------------------------------------------------------------------------------
United Technologies
Corp. 1,963,700 146,550,931
-----------------
487,487,848
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.0%
Corporate Executive
Board Co. (The) 1,020,342 69,413,866
- --------------------------------------------------------------------------------
Robert Half
International, Inc. 440,530 14,070,528
-----------------
83,484,394
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.0%
ABB Ltd. 3,224,775 79,487,986
- --------------------------------------------------------------------------------
MACHINERY--0.5%
Joy Global, Inc. 892,020 38,704,748
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.9%
Fastenal Co. 1,622,130 73,985,349
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--31.3%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--10.4%
Cisco Systems, Inc. 1 9,116,360 290,994,211
- --------------------------------------------------------------------------------
Corning, Inc. 6,153,680 143,811,502
- --------------------------------------------------------------------------------
F5 Networks, Inc. 1 1,104,300 38,617,371
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 2,586,270 103,166,310
- --------------------------------------------------------------------------------
Research
in Motion Ltd. 1 2,029,380 173,329,346
- --------------------------------------------------------------------------------
Telefonaktiebolaget
LM Ericsson,
Sponsored ADR 2,620,100 97,493,921
-----------------
847,412,661
25 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--4.6%
Apple, Inc. 1 1,345,300 $ 186,297,144
- --------------------------------------------------------------------------------
EMC Corp. 1 6,144,690 120,804,605
- --------------------------------------------------------------------------------
Network
Appliance, Inc. 1 2,388,150 66,533,859
-----------------
373,635,608
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--5.3%
eBay, Inc. 1 4,355,380 148,518,458
- --------------------------------------------------------------------------------
Google, Inc., Cl. A 1 550,850 283,825,463
-----------------
432,343,921
- --------------------------------------------------------------------------------
IT SERVICES--2.8%
Affiliated Computer
Services, Inc., Cl. A 1 2,045,610 102,341,868
- --------------------------------------------------------------------------------
Automatic Data
Processing, Inc. 1,159,860 53,051,996
- --------------------------------------------------------------------------------
Cognizant Technology
Solutions Corp. 1 974,410 71,628,879
-----------------
227,022,743
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.8%
ASML Holding NV 1 2,306,400 68,430,888
- --------------------------------------------------------------------------------
Broadcom
Corp., Cl. A 1 2,633,370 90,851,265
- --------------------------------------------------------------------------------
Microchip
Technology, Inc. 1,816,390 69,967,343
-----------------
229,249,496
- --------------------------------------------------------------------------------
SOFTWARE--5.4%
Adobe Systems, Inc. 1 2,417,088 103,330,512
- --------------------------------------------------------------------------------
Amdocs Ltd. 1 2,415,250 85,258,325
- --------------------------------------------------------------------------------
Autodesk, Inc. 1 2,047,750 94,851,780
- --------------------------------------------------------------------------------
Microsoft Corp. 2,674,191 76,829,507
- --------------------------------------------------------------------------------
Red Hat, Inc. 1 2,209,220 42,969,329
- --------------------------------------------------------------------------------
Salesforce.com, Inc. 1 850,030 34,366,713
-----------------
437,606,166
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MATERIALS--4.2%
- --------------------------------------------------------------------------------
CHEMICALS--3.6%
Monsanto Co. 2,539,290 $ 177,090,085
- --------------------------------------------------------------------------------
Praxair, Inc. 1,617,120 122,351,299
-----------------
299,441,384
- --------------------------------------------------------------------------------
METALS & MINING--0.6%
Allegheny
Technologies, Inc. 474,210 47,131,732
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--4.0%
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--4.0%
America Movil SAB
de CV, ADR, Series L 1,361,200 82,298,148
- --------------------------------------------------------------------------------
American Tower
Corp. 1 2,137,060 84,670,317
- --------------------------------------------------------------------------------
Crown Castle
International Corp. 1 1,984,070 72,934,413
- --------------------------------------------------------------------------------
NII Holdings, Inc. 1 1,057,680 83,747,102
-----------------
323,649,980
-----------------
Total Common Stocks
(Cost $6,194,636,431) 8,050,831,057
- --------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--1.3%
Oppenheimer Institutional
Money Market Fund,
Cl. E, 5.44% 2,3
(Cost $105,210,056) 105,210,056 105,210,056
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE (COST $6,299,846,487) 100.1% 8,156,041,113
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (10,053,724)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $ 8,145,987,389
=================================
26 | OPPENHEIMER CAPITAL APPRECIATION FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended August 31, 2007, by virtue of the Fund owning at
least 5% of the voting securities of the issuer or as a result of the Fund and
the issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2006 ADDITIONS REDUCTIONS AUGUST 31, 2007
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E -- 1,268,698,117 1,163,488,061 105,210,056
VALUE DIVIDEND
SEE NOTE 1 INCOME
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E $ 105,210,056 $ 3,370,929
3. Rate shown is the 7-day yield as of August 31, 2007.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2007
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $6,194,636,431) $ 8,050,831,057
Affiliated companies (cost $105,210,056) 105,210,056
----------------
8,156,041,113
- ---------------------------------------------------------------------------------------------------------
Cash 5,677,573
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 27,098,083
Dividends 5,785,883
Shares of beneficial interest sold 2,614,517
Other 532,829
----------------
Total assets 8,197,749,998
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
Payables and other liabilities:
Investments purchased 35,408,350
Shares of beneficial interest redeemed 9,863,266
Distribution and service plan fees 2,748,470
Trustees' compensation 1,480,349
Transfer and shareholder servicing agent fees 1,422,435
Shareholder communications 669,490
Other 170,249
----------------
Total liabilities 51,762,609
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 8,145,987,389
================
- ---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest $ 163,157
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 6,162,472,994
- ---------------------------------------------------------------------------------------------------------
Accumulated net investment loss (1,456,026)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 128,625,141
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 1,856,182,123
----------------
NET ASSETS $ 8,145,987,389
================
28 | OPPENHEIMER CAPITAL APPRECIATION FUND
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $5,437,581,433 and 107,320,706 shares of beneficial interest outstanding) $ 50.67
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $ 53.76
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $723,519,327 and 15,710,363 shares of beneficial interest outstanding) $ 46.05
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $687,082,730 and 15,040,083 shares of beneficial interest outstanding) $ 45.68
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $241,592,945 and 4,851,088 shares of beneficial interest outstanding) $ 49.80
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $1,056,210,954 and 20,234,322 shares of beneficial interest outstanding) $ 52.20
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2007
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $1,712,515) $ 58,561,218
Affiliated companies 3,370,929
- ---------------------------------------------------------------------------------------------------------
Interest 840,229
- ---------------------------------------------------------------------------------------------------------
Portfolio lending fees 55,988
- ---------------------------------------------------------------------------------------------------------
Other income 205,526
--------------
Total investment income 63,033,890
- ---------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 45,400,437
- ---------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 12,745,920
Class B 8,051,159
Class C 6,777,480
Class N 1,281,470
- ---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 12,297,214
Class B 2,017,257
Class C 1,490,765
Class N 802,636
Class Y 738,978
- ---------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 640,989
Class B 273,118
Class C 99,544
Class N 16,750
- ---------------------------------------------------------------------------------------------------------
Trustees' compensation 400,111
- ---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 147,939
- ---------------------------------------------------------------------------------------------------------
Other 150,086
--------------
Total expenses 93,331,853
Less reduction to custodian expenses (5,184)
Less waivers and reimbursements of expenses (63,808)
--------------
Net expenses 93,262,861
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (30,228,971)
30 | OPPENHEIMER CAPITAL APPRECIATION FUND
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
Net realized gain on:
Investments from unaffiliated companies $ 625,448,851
Foreign currency transactions 6,223,870
---------------
Net realized gain 631,672,721
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 670,858,836
Translation of assets and liabilities denominated in foreign currencies 6,526,613
--------------
Net change in unrealized appreciation 677,385,449
- ---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,278,829,199
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2007 2006
- --------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (30,228,971) $ (34,347,551)
- --------------------------------------------------------------------------------------------------------------
Net realized gain 631,672,721 23,209,078
- --------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 677,385,449 388,510,702
--------------------------------
Net increase in net assets resulting from operations 1,278,829,199 377,372,229
- --------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A -- (32,952,692)
Class B -- --
Class C -- --
Class N -- (755,526)
Class Y -- (11,953,955)
--------------------------------
-- (45,662,173)
- --------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A (711,314,069) (573,549,510)
Class B (254,371,683) (228,134,092)
Class C (63,359,072) (70,708,579)
Class N (50,155,981) (4,627,002)
Class Y 270,627,361 (577,739,853)
--------------------------------
(808,573,444) (1,454,759,036)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 470,255,755 (1,123,048,980)
- --------------------------------------------------------------------------------------------------------------
Beginning of period 7,675,731,634 8,798,780,614
--------------------------------
End of period (including accumulated net investment loss of
$1,456,026 and $1,315,915, respectively) $8,145,987,389 $7,675,731,634
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 43.08 $ 41.45 $ 37.57 $ 35.39 $ 30.72
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.13) 1 (.12) 1 .26 1,2 .01 (.05)
Net realized and unrealized gain 7.72 2.00 3.62 2.17 4.72
--------------------------------------------------------------------------------
Total from investment operations 7.59 1.88 3.88 2.18 4.67
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.25) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 50.67 $ 43.08 $ 41.45 $ 37.57 $ 35.39
================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 17.62% 4.53% 10.33% 6.16% 15.20%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $5,437,581 $5,278,253 $5,633,688 $5,218,310 $4,288,332
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,386,165 $5,569,912 $5,597,821 $4,971,315 $3,655,594
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.27)% (0.28)% 0.64% 2 0.09% (0.11)%
Total expenses 1.05% 5,6,7 1.07% 6 1.06% 6 1.09% 6,8 1.17% 6
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 83% 38% 45% 42%
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 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 less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as
follows:
Year Ended August 31, 2007 1.05%
6. Reduction to custodian expenses less than 0.005%.
7. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
8. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED AUGUST 31, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 39.47 $ 38.08 $ 34.82 $ 33.09 $ 28.95
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.46) 1 (.45) 1 (.08) 1,2 (.36) (.31)
Net realized and unrealized gain 7.04 1.84 3.34 2.09 4.45
--------------------------------------------------------------------------
Total from investment operations 6.58 1.39 3.26 1.73 4.14
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 46.05 $ 39.47 $ 38.08 $ 34.82 $ 33.09
==========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 16.67% 3.65% 9.36% 5.23% 14.30%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 723,519 $ 851,836 $ 1,041,045 $ 1,104,348 $ 1,114,052
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 806,550 $ 964,658 $ 1,099,380 $ 1,169,402 $ 1,001,311
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.06)% (1.13)% (0.21)% 2 (0.81)% (0.89)%
Total expenses 1.86% 5 1.93% 1.93% 1.99% 2.10%
Expenses after payments, waivers and/or
reimbursements and reduction to custodian
expenses 1.86% 1.92% 1.93% 1.97% 1.96%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 83% 38% 45% 42%
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
$.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 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 less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as
follows:
Year Ended August 31, 2007 1.86%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS C YEAR ENDED AUGUST 31, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 39.14 $ 37.73 $ 34.47 $ 32.72 $ 28.63
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.44) 1 (.41) 1 (.05) 1,2 (.16) (.23)
Net realized and unrealized gain 6.98 1.82 3.31 1.91 4.32
----------------------------------------------------------------------------
Total from investment operations 6.54 1.41 3.26 1.75 4.09
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 45.68 $ 39.14 $ 37.73 $ 34.47 $ 32.72
============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 16.71% 3.74% 9.46% 5.35% 14.28%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 687,083 $ 646,333 $ 691,467 $ 638,676 $ 540,118
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 678,427 $ 684,056 $ 681,646 $ 623,172 $ 463,768
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.02)% (1.05)% (0.14)% 2 (0.69)% (0.89)%
Total expenses 1.81% 5,6,7 1.84% 6 1.84% 6 1.87% 6,8 1.96% 6
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 83% 38% 45% 42%
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
$.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 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 less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as
follows:
Year Ended August 31, 2007 1.81%
6. Reduction to custodian expenses less than 0.005%.
7. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
8. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED AUGUST 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.49 $ 40.91 $ 37.21 $ 35.17 $ 30.60
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.28) 1 (.27) 1 .11 1,2 (.08) (.10)
Net realized and unrealized gain 7.59 1.98 3.59 2.12 4.67
-------------------------------------------------------------------
Total from investment operations 7.31 1.71 3.70 2.04 4.57
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.13) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 49.80 $ 42.49 $ 40.91 $ 37.21 $ 35.17
===================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 17.20% 4.16% 9.94% 5.80% 14.94%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 241,593 $ 250,167 $ 245,932 $ 190,696 $ 111,374
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 257,444 $ 253,590 $ 221,007 $ 154,605 $ 86,761
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.60)% (0.63)% 0.27% 2 (0.25)% (0.35)%
Total expenses 1.39% 5 1.42% 1.42% 1.46% 1.46%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 1.39% 1.42% 1.42% 1.44% 1.42%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 83% 38% 45% 42%
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 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 less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as
follows:
Year Ended August 31, 2007 1.39%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER CAPITAL APPRECIATION FUND
CLASS Y YEAR ENDED AUGUST 31, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 44.21 $ 42.52 $ 38.40 $ 36.04 $ 31.16
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 1 .05 1 .45 1,2 .09 .01
Net realized and unrealized gain 7.92 2.05 3.67 2.27 4.87
--------------------------------------------------------------------------------
Total from investment operations 7.99 2.10 4.12 2.36 4.88
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.41) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 52.20 $ 44.21 $ 42.52 $ 38.40 $ 36.04
================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 18.07% 4.93% 10.73% 6.55% 15.66%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,056,211 $649,143 $1,186,649 $1,391,718 $1,152,318
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 865,096 $766,929 $1,210,587 $1,327,404 $ 930,500
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.13% 0.11% 1.10% 2 0.47% 0.29%
Total expenses 0.66% 5,6,7 0.70% 6,8 0.69% 6 0.71% 6 0.78% 6,8
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 83% 38% 45% 42%
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 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 less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as
follows:
Year Ended August 31, 2007 0.66%
6. Reduction to custodian expenses less than 0.005%.
7. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
8. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | 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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. 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(R) 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, as 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
38 | OPPENHEIMER CAPITAL APPRECIATION FUND
valued. Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded. 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. Investments in open-end registered investment companies (including
affiliated funds) are valued at that fund's net asset value. 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.
- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") which seeks current income and
stability of principal. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of
1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's
investment in IMMF is included in the Statement of Investments, if applicable.
As a shareholder, the Fund is subject to its proportional share of IMMF's Class
E expenses, including its management fee. The Manager will waive fees and/or
reimburse Fund expenses in an amount equal to the indirect management fees
incurred through the Fund's investment in IMMF.
39 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
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 TAX PURPOSES
------------------------------------------------------------------------
$-- $175,550,567 $70,517 $1,809,327,208
1. The Fund had $70,517 of post-October foreign currency losses which were
deferred.
2. During the fiscal year ended August 31, 2007, the Fund utilized $424,180,295
of capital loss carryforward to offset capital gains realized in that fiscal
year.
3. During the fiscal year ended August 31, 2006, the Fund utilized $30,330,104
of capital loss carryforward to offset capital gains realized in that fiscal
year.
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, 2007. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
REDUCTION TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL LOSS ON INVESTMENTS 4
---------------------------------------------------
$2,658,131 $30,088,860 $27,430,729
4. $27,393,703, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.
40 | OPPENHEIMER CAPITAL APPRECIATION FUND
The tax character of distributions paid during the years ended August 31, 2007
and August 31, 2006 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2007 AUGUST 31, 2006
-----------------------------------------------------------
Distributions paid from:
Ordinary income $-- $45,662,173
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, 2007 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 $6,346,701,402
==============
Gross unrealized appreciation $1,944,884,189
Gross unrealized depreciation (135,556,981)
--------------
Net unrealized appreciation $1,809,327,208
==============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the year ended August 31, 2007, the Fund's
projected benefit obligations were increased by $225,287 and payments of
$277,638 were made to retired trustees, resulting in an accumulated liability of
$934,562 as of August 31, 2007.
The Board of Trustees has adopted a compensation deferral 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 compensation deferral plan.
41 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
- --------------------------------------------------------------------------------
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, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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.
42 | OPPENHEIMER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED AUGUST 31, 2007 YEAR ENDED AUGUST 31, 2006
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
CLASS A
Sold 21,222,885 $ 1,010,056,897 26,489,676 $ 1,142,952,788
Dividends and/or
distributions reinvested -- -- 674,183 29,394,376
Redeemed (36,425,258) (1,721,370,966) (40,570,510) (1,745,896,674)
---------------------------------------------------------------------
Net decrease (15,202,373) $ (711,314,069) (13,406,651) $ (573,549,510)
=====================================================================
- ---------------------------------------------------------------------------------------------------
CLASS B
Sold 1,959,540 $ 84,668,049 2,775,274 $ 110,036,806
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (7,830,689) (339,039,732) (8,533,222) (338,170,898)
---------------------------------------------------------------------
Net decrease (5,871,149) $ (254,371,683) (5,757,948) $ (228,134,092)
=====================================================================
- ---------------------------------------------------------------------------------------------------
CLASS C
Sold 2,511,786 $ 108,170,132 3,099,965 $ 121,778,447
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (3,986,345) (171,529,204) (4,912,952) (192,487,026)
---------------------------------------------------------------------
Net decrease (1,474,559) $ (63,359,072) (1,812,987) $ (70,708,579)
=====================================================================
- ---------------------------------------------------------------------------------------------------
CLASS N
Sold 1,577,607 $ 73,777,815 2,202,829 $ 93,779,542
Dividends and/or
distributions reinvested -- -- 16,507 711,630
Redeemed (2,614,445) (123,933,796) (2,343,662) (99,118,174)
---------------------------------------------------------------------
Net decrease (1,036,838) $ (50,155,981) (124,326) $ (4,627,002)
=====================================================================
- ---------------------------------------------------------------------------------------------------
CLASS Y
Sold 7,490,658 $ 366,439,984 9,675,483 $ 427,182,549
Dividends and/or
distributions reinvested -- -- 245,563 10,957,036
Redeemed (1,940,608) (95,812,623) (23,144,721) (1,015,879,438)
---------------------------------------------------------------------
Net increase (decrease) 5,550,050 $ 270,627,361 (13,223,675) $ (577,739,853)
=====================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the year ended August
31, 2007, were as follows:
PURCHASES SALES
--------------------------------------------------------------
Investment securities $ 3,994,829,193 $ 4,834,800,851
43 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 average net assets as shown in the following table:
FEE SCHEDULE
-----------------------------------------
Up to $200 million 0.75%
Next $200 million 0.72
Next $200 million 0.69
Next $200 million 0.66
Next $700 million 0.60
Next $1 billion 0.58
Next $2 billion 0.56
Next $2 billion 0.54
Next $2 billion 0.52
Next $2.5 billion 0.50
Over $11 billion 0.48
- --------------------------------------------------------------------------------
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, 2007, the Fund paid
$17,558,406 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.
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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.
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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
periodically 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 periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.
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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
44 | OPPENHEIMER CAPITAL APPRECIATION FUND
asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% 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 determines its uncompensated expenses under the
plan at calendar quarter ends. The Distributor's aggregate uncompensated
expenses under the plan at June 30, 2007 for Class B, Class C and Class N shares
were $12,335,624, $12,412,619 and $3,698,930, 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 following table 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, 2007 $ 1,702,996 $ 30,029 $ 1,415,080 $ 34,883 $ 10,605
- ------------------------------------------------------------------------------------------------
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. This undertaking may be amended or
withdrawn at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the year ended August 31, 2007, the Manager waived $63,808 for IMMF
management fees.
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5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and
45 | OPPENHEIMER CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS Continued
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5. FOREIGN CURRENCY CONTRACTS Continued
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, 2007, the Fund had no outstanding foreign currency
contracts.
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6. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. If the borrower defaults on its obligation
to return the securities loaned because of insolvency or other reasons, the Fund
could experience delays and cost in recovering the securities loaned or in
gaining access to the collateral. The Fund continues to receive the economic
benefit of interest or dividends paid on the securities loaned in the form of a
substitute payment received from the borrower. As of August 31, 2007, the Fund
had no securities on loan.
- --------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
August 31, 2007, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.
In September 2006, ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition
46 | OPPENHEIMER CAPITAL APPRECIATION FUND
of fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of August
31, 2007, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
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8. FUND REORGANIZATION
On May 17, 2007, the Board of Trustees of Oppenheimer Emerging Technologies Fund
("Emerging Technologies Fund") approved a proposal to reorganize Emerging
Technologies Fund with and into the Fund. In a shareholder meeting to be held on
October 19, 2007, shareholders of Emerging Technologies Fund will be asked to
approve a Plan of Reorganization between Emerging Technologies Fund and the
Fund, and the transactions contemplated thereby, including (a) the transfer of
substantially all the assets of Emerging Technologies Fund to the Fund in
exchange for Class A, Class B, Class C, Class N and Class Y shares of the Fund,
(b) the distribution of Class A, Class B, Class C, Class N and Class Y shares of
the Fund to the Class A, Class B, Class C, Class N and Class Y shareholders of
Emerging Technologies Fund in complete liquidation of Emerging Technologies Fund
and (c) the cancellation of the outstanding shares of Emerging Technologies
Fund.
On May 17, 2007, the Board of Trustees of Oppenheimer Enterprise Fund
("Enterprise Fund") approved a proposal to reorganize Enterprise Fund with and
into the Fund. In a shareholder meeting to be held on November 30, 2007,
shareholders of Enterprise Fund will be asked to approve a Plan of
Reorganization between Enterprise Fund and the Fund, and the transactions
contemplated thereby, including (a) the transfer of substantially all the assets
of Enterprise Fund to the Fund in exchange for Class A, Class B, Class C, Class
N and Class Y shares of the Fund, (b) the distribution of Class A, Class B,
Class C, Class N and Class Y shares of the Fund to the Class A, Class B, Class
C, Class N and Class Y shareholders of Enterprise Fund in complete liquidation
of Enterprise Fund and (c) the cancellation of the outstanding shares of
Enterprise Fund.
On June 14, 2007, the Board of Trustees of Oppenheimer Growth Fund
("Growth Fund") approved a proposal to reorganize Growth Fund with and into the
Fund. In a shareholder meeting to be held on November 2, 2007, shareholders of
Growth Fund will be asked to approve a Plan of Reorganization between Growth
Fund and the Fund, and the transactions contemplated thereby, including (a) the
transfer of substantially all the assets of Growth Fund to the Fund in exchange
for Class A, Class B, Class C, Class N and Class Y shares of the Fund, (b) the
distribution of Class A, Class B, Class C, Class N and Class Y shares of the
Fund to the Class A, Class B, Class C, Class N and Class Y shareholders of
Growth Fund in complete liquidation of Growth Fund and (c) the cancellation of
the outstanding shares of Growth Fund.
47 | 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, 2007, 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, 2007, 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 of August 31, 2007, 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 12, 2007
48 | OPPENHEIMER CAPITAL APPRECIATION FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2008, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2007. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
49 | 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.
50 | 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
investment advisory agreement (the "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 Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE, QUALITY, AND EXTENT OF SERVICES. The Board considered information
about the nature and extent of the services provided to the Fund and information
regarding the Manager's key personnel who provide such services. The Manager's
duties include providing the Fund with 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; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel who are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
51 | OPPENHEIMER CAPITAL APPRECIATION FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took account of the fact 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 has received regarding the experience and
professional qualifications of the Manager's personnel and the size and
functions of its staff. In its evaluation of the quality of the portfolio
management services provided, the Board considered the experience of Marc
Baylin, the portfolio manager for the Fund, and the Manager's Growth investment
team and analysts. The Board members also considered their experiences with the
Manager and its officers and other personnel through their service on the Boards
of the Fund and other funds advised by the Manager. The Board considered
information regarding the quality of services provided by affiliates of the
Manager, which its members have become knowledgeable about in connection with
the renewal of the Fund's service agreements. In light of the foregoing, the
Board concluded that the Fund benefits from the services provided under the
Agreement and from the Manager's experience, reputation, personnel, operations,
and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
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 retail front-end load and no-load
large-cap growth funds advised by the Manager and by other investment advisers.
The Board noted that the Fund's one-year, five-year and ten-year performance
were better than its peer group median. However its three-year performance was
below its peer group median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also considered the comparability of the fees charged and the services provided
to the Fund to the fees and services for other clients or accounts advised by
the Manager. The independent consultant provided comparative data in regard to
the fees and expenses of the Fund, other large-cap growth funds and other funds
with comparable asset levels and distribution features. The Board noted that the
Fund's total expenses are lower than its peer group median although its
contractual and actual management fees are equal to its peer group median.
52 | OPPENHEIMER CAPITAL APPRECIATION FUND
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share economies of scale that may exist as the Fund grows with its
shareholders.
BENEFITS TO THE MANAGER. The Board considered information regarding the
Manager's costs in serving as the Fund's investment adviser, including the costs
associated with the personnel and systems necessary to manage the Fund, and
information regarding the Manager's profitability from its relationship with the
Fund. 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 to considering the profits
realized by the Manager, the Board considered information 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 for services
provided and research provided to the Manager in connection with permissible
brokerage arrangements (soft dollar arrangements).
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.
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 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 Agreement,
including the management fee, in light of all of the surrounding circumstances.
53 | 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
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Chairman of the Board Director of Special Value Opportunities Fund, LLC (registered investment company)
of Trustees (since 2007), (since September 2004); Member of Zurich Financial Services Investment
Trustee (since 2005) Advisory Board (insurance) (since October 2004); Board of Governing Trustees
Age: 64 of The Jackson Laboratory (non-profit) (since August 1990); Trustee of the
Institute for Advanced Study (non-profit educational institute) (since May 1992);
Special Limited Partner of Odyssey Investment Partners, LLC (private equity
investment) (January 1999-September 2004); Trustee of Research Foundation of
AIMR (2000-2002) (investment research, non-profit); Governor, Jerome Levy
Economics Institute of Bard College (August 1990-September 2001) (economics
research); Director of Ray & Berendtson, Inc. (May 2000-April 2002) (executive
search firm). Oversees 65 portfolios in the OppenheimerFunds complex.
DAVID K. DOWNES, President, Chief Executive Officer and Board Member of CRAFund Advisors, Inc.
Trustee (since 2007) (investment management company) (since January 2004); President of The
Age: 67 Community Reinvestment Act Qualified Investment Fund (investment management
company) (since January 2004); Independent Chairman of the Board of
Trustees of Quaker Investment Trust (registered investment company) (since
January 2004); Director of Internet Capital Group (information technology
company) (since October 2003); Chief Operating Officer and Chief Financial Officer
of Lincoln National Investment Companies, Inc. (subsidiary of Lincoln National
Corporation, a publicly traded company) and Delaware Investments U.S., Inc.
(investment management subsidiary of Lincoln National Corporation) (1993-2003);
President, Chief Executive Officer and Trustee of Delaware Investment
Family of Funds (1993-2003); President and Board Member of Lincoln National
Convertible Securities Funds, Inc. and the Lincoln National Income Funds, TDC
(1993-2003); Chairman and Chief Executive Officer of Retirement Financial
Services, Inc. (registered transfer agent and investment adviser and subsidiary of
Delaware Investments U.S., Inc.) (1993-2003); President and Chief Executive
Officer of Delaware Service Company, Inc. (1995-2003); Chief Administrative
Officer, Chief Financial Officer, Vice Chairman and Director of Equitable Capital
Management Corporation (investment subsidiary of Equitable Life Assurance
Society) (1985-1992); Corporate Controller of Merrill Lynch & Company (financial
services holding company) (1977-1985); held the following positions at the
Colonial Penn Group, Inc. (insurance company): Corporate Budget Director
(1974-1977), Assistant Treasurer (1972-1974) and Director of Corporate Taxes
(1969-1972); held the following positions at Price Waterhouse & Company
(financial services firm): Tax Manager (1967-1969), Tax Senior (1965-1967) and
Staff Accountant (1963-1965); United States Marine Corps (1957-1959). Oversees
65 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)
Age: 66 (October 1991-August 2006); President of the Investment Company Institute
(trade association) (October 1991-June 2004); Director of ICI Mutual Insurance
Company (insurance company) (October 1991-June 2004). Oversees 55 portfolios
in the OppenheimerFunds complex.
54 | OPPENHEIMER CAPITAL APPRECIATION FUND
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 65 portfolios in the
Trustee (since 1993) OppenheimerFunds complex.
Age: 74
PHILLIP A. GRIFFITHS, Distinguished Presidential Fellow for International Affairs (since 2002) and
Trustee (since 1999) Member (since 1979) of the National Academy of Sciences; Council on Foreign
Age: 69 Relations (since 2002); Director of GSI Lumonics Inc. (precision medical equipment
supplier) (since 2001); Senior Advisor of The Andrew W. Mellon Foundation
(since 2001); Chair of Science Initiative Group (since 1999); Member
of the American Philosophical Society (since 1996); Trustee of Woodward
Academy (since 1983); Foreign Associate of Third World Academy of Sciences;
Director of the Institute for Advanced Study (1991-2004); Director of Bankers
Trust New York Corporation (1994-1999); Provost at Duke University (1983-1991).
Oversees 55 portfolios in the OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2004) 1998); and Senior Vice President and General Auditor of American Express
Age: 64 Company (financial services company) (July 1998-February 2003). Oversees 55
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Managing Director of Public Capital Advisors, LLC (privately-held financial
Trustee (since 2002) adviser) (since January 2006); Director of Columbia Equity Financial Corp.
Age: 55 (privately-held financial adviser) (since 2002); Managing Director of Carmona
Motley, Inc. (privately-held financial adviser) (since January 2002); Managing
Director of Carmona Motley Hoffman Inc. (privately-held financial adviser)
(January 1998-December 2001); Member of the Finance and Budget Committee
of the Council on Foreign Relations, Member of the Investment Committee of
the Episcopal Church of America, Member of the Investment Committee and
Board of Human Rights Watch and the Investment Committee of Historic
Hudson Valley. Oversees 55 portfolios in the OppenheimerFunds complex.
RUSSELL S. REYNOLDS, JR., Chairman of RSR Partners (formerly "The Directorship Search Group, Inc.")
Trustee (since 1989) (corporate governance consulting and executive recruiting) (since 1993); Life Trustee
Age: 75 of International House (non-profit educational organization); Former Trustee of
The Historical Society of the Town of Greenwich; Former Director of Greenwich
Hospital Association. Oversees 55 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 (environmental
Age: 66 protection organization) (since 1996); Member of the Investment Committee of
the Associated Jewish Charities of Baltimore (since 1994); Director of Fortis/
Hartford mutual funds (1994-December 2001); Director of C-TASC (a privately
held bio-statistics company) (since May 2007). Oversees 55 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 of American Talc Company, Inc. (talc mining
Age: 59 and milling) (since 1999); Managing Member of Hole-in-the-Wall Ranch
(cattle ranching) (since 1979); Vice President, Secretary and Treasurer of Wold
Trona Company, Inc. (soda ash processing and production) (1996-2006); 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 55
portfolios in the OppenheimerFunds complex.
55 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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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, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE
TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER
FOR AN INDEFINITE 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 of the Manager (since June 2001);
Trustee, President and President of the Manager (September 2000-March 2007); President and director
Principal Executive Officer or trustee of other Oppenheimer funds; President and Director of Oppenheimer
(since 2001) Acquisition Corp. ("OAC") (the Manager's parent holding company) and of
Age: 58 Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc.
(subsidiary of the Manager) (since November 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). Oversees
102 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS OF THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. BAYLIN,
THE FUND ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND
MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR
AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
MARC L. BAYLIN, Vice President of the Manager and a member of the Growth Equity Investment
Vice President and Portfolio Team; Managing Director and Lead Portfolio Manager at JP Morgan Fleming
Manager (since 2005) Investment Management (June 2002-August 2005); Vice President of T. Rowe
Age: 39 Price, where he was an analyst from June 1993 and a portfolio manager (March
1999-June 2002). An officer of other Oppenheimer funds.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and Chief March 2004); Chief Compliance Officer of the Manager, OppenheimerFunds
Compliance Officer Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc.
(since 2004) (since March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Age: 57 Centennial Asset Management Corporation and Shareholder Services, Inc.
(since June 1983). Former Vice President and Director of Internal Audit of
the Manager (1997-February 2004). An officer of 102 portfolios in the
OppenheimerFunds complex.
56 | OPPENHEIMER CAPITAL APPRECIATION FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer and Principal the following: HarbourView Asset Management Corporation, Shareholder Financial
Financial & Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc.
Officer (since 1999) and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private
Age: 48 Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. (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 102 portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Vice President of the Manager (since February 2007); Assistant Vice President
Assistant Treasurer of the Manager (August 2002-February 2007); Manager/Financial Product
(since 2004) Accounting of the Manager (November 1998-July 2002). An officer of 102 portfolios
Age: 37 in the OppenheimerFunds complex.
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004);
(since 2005) Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003);
Age: 37 Director of Mutual Fund Operations at American Data Services, Inc. (September
2000-May 2001). An officer of 102 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Vice President and Secretary 2002) of the Manager; General Counsel and Director of the Distributor (since
(since 2001) December 2001); General Counsel of Centennial Asset Management Corporation
Age: 59 (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 102 portfolios in the OppenheimerFunds complex.
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First
Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December
(since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant
Age: 39 General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (formerly,
PaineWebber Incorporated). An officer of 102 portfolios in the OppenheimerFunds
complex.
57 | OPPENHEIMER CAPITAL APPRECIATION FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); First Vice President (2001-September 2004); Director
(since 2004) (2000-September 2004) and Vice President (1998-2000) of Merrill Lynch Investment
Age: 43 Management. An officer of 102 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary
Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant
(since 2001) Secretary (since October 2003) of the Distributor; Assistant Secretary of
Age: 42 Centennial Asset Management Corporation (since October 2003); Vice President
and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant
Secretary of OppenheimerFunds Legacy Program and Shareholder Financial
Services, Inc. (since December 2001); Assistant Counsel of the Manager
(August 1994-October 2003). An officer of 102 portfolios in the
OppenheimerFunds complex.
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.
58 | 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 David Downes, a
member of the Board's Audit Committee, is an audit committee financial expert
and that Mr. Downes is "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $28,000 in fiscal 2007 and $45,000 in fiscal 2006.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed $243,390 in fiscal 2007 and $183,800 in fiscal 2006 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 include: internal control reviews and professional services
relating to FAS 123R.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $456 in fiscal 2007 and no such fees in fiscal 2006 to the
registrant during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2007 and $1,536 in fiscal 2006 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 include: Preparation of form 5500.
(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 $243,846 in fiscal 2007 and $185,336 in
fiscal 2006 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) No such services were rendered.
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 08/31/2007, 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: 10/09/2007
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: 10/09/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 10/09/2007