<PAGE>
Semiannual Report April 30, 2000
Oppenheimer
Capital Preservation Fund
[LOGO]OppenheimerFunds/R/
The Right Way to Invest
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[INSIDE BLANK FRONT COVER]
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PRESIDENT'S LETTER
BRIDGET A. MACASKILL
President
Oppenheimer
Capital Preservation Fund
DEAR SHAREHOLDER,
For many years, we have encouraged investors to consider whether they could
tolerate more risk in their long-term investments by participating in the stock
market, which has historically provided higher long-term returns than any other
asset class. Today, however, we have a very different concern: some investors
may have assumed too much risk by concentrating their investments in just a
handful of stocks or sectors or by "chasing performance."
Several months ago, Alan Greenspan, the Chairman of the Federal Reserve Board,
stated his view that the spectacular returns some sectors of the market were
then experiencing may have been partly responsible for pushing our economy to
growth rates that could lead to higher inflation. Today it is clear that the
dramatic rise in the prices of a narrow segment of the market created enormous
wealth for some investors. The result of this new-found wealth has been a
substantial increase in spending that the Federal Reserve Board believes could
threaten the healthy growth of our economy.
That's why the Fed has been raising interest rates steadily and decisively
over the past year. By making borrowing more expensive, the Fed has been
attempting to slow economic growth. It is a precarious balancing act: too much
tightening creates the risk of recession, while too little opens the door to
inflation.
The implications of the Fed's resolve are clear: investors must continue to
be prepared for near-term market volatility. In the bond market, higher interest
rates usually lead to lower bond prices. In the stock market, slower economic
growth often reduces corporate earnings and puts downward pressure on stock
prices. Highly valued stocks can be particularly vulnerable to a correction. The
Securities and Exchange Commission Chairman, Arthur Levitt, has been cautioning
investors against the expectation that the types of returns seen in the recent
bull market will last forever.
Because of the prospect of continued market volatility, we encourage you to
consider diversifying your investments. Indeed, diversification may help you
mitigate the effects of sharp declines in any one area. It may also help you
better position your portfolio to seek greater returns over the long run.
While some "new economy" stocks have risen over the last year, many
so-called "old economy" stocks are selling at low prices. In the bond market,
higher interest rates over the short term may reduce inflation concerns, which
should be beneficial over the long term. By buying out-of-favor investments,
you may be able to profit when and if they return to favor.
What specific investments should you consider today so that you are prepared for
tomorrow? The answer depends on your individual investing goals, risk tolerance
and financial circumstances. We urge you to talk with your financial advisor
about ways to diversify your portfolio. This may include considering global
diversification as part of your strategy. While investing abroad has special
risks, such as the effects of foreign currency fluctuations, it also offers
opportunities to participate in global economic growth and to hedge against the
volatility in U.S. markets.
We thank you for your continued confidence in OppenheimerFunds, THE RIGHT WAY TO
INVEST.
Sincerely,
/s/Bridget A. Macaskill
Bridget A. Macaskill
May 19, 2000
2 Oppenheimer Capital Preservation Fund
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OPPENHEIMER CAPITAL PRESERVATION FUND
STRATEGY
The Fund is designed to invest in shares of other Oppenheimer fixed income
mutual funds. While keeping a portfolio duration of 2 1 /2 to 3 years, we will
attempt to allocate the assets of the portfolio primarily among Class Y shares
of Oppenheimer Limited-Term Government Fund, Class Y shares of Oppenheimer Bond
Fund, Class Y shares of Oppenheimer Strategic Income Fund and shares of
Oppenheimer Money Market Fund, Inc. And although the Fund currently does not
invest in Class Y shares of Oppenheimer U.S. Government Trust, it can.(1)
COMMENTARY BY JOHN KOWALIK, PORTFOLIO MANAGER
This has been an eventful period in the fixed income markets, characterized
by increased volatility and the emergence of some new interest rate trends. One
notable event was January's inversion of the yield curve. Short-term interest
rates rose during the period, influenced by continued Federal Reserve rate
tightening. However, yields on 30-year Treasury bonds were suppressed due to the
"shortage effect" caused by the reduced issuance calendar and the government's
debt buy-back program. Additional market gyrations were inspired by earlier
speculation that the government might withdraw its backing of federal agency
debt, a trial balloon that was later shot down by Treasury officials.
Corporate and mortgage securities underperformed Treasuries during the
period. This was due, in part, to the attractive alternative yields available
from shorter-term government securities and concern about the effects of
accelerating inflation rates. Also, some investors, surprised by the rally in
short-term government securities, needed to sell corporate and mortgage
securities to raise cash to cover their short government positions. This
increased the downward pressure on the prices of these bonds.
During the six-month period ended April 30, 2000, Oppenheimer Capital
Preservation Fund shielded investors from the downward pressure on the prices of
bonds owned by the underlying Funds and maintained a stable share value.
Similarly, as new assets came into the Fund, they were invested in the higher
current interest rate environment, boosting the Fund's yield.
1. Oppenheimer Capital Preservation Fund is not a money market fund, and there
can be no assurance that it will be able to maintain a stable net asset value
per share.
3 Oppenheimer Capital Preservation Fund
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<TABLE>
<CAPTION>
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STATEMENT OF INVESTMENTS April 30, 2000 (Unaudited)
MARKET VALUE
SHARES SEE NOTE 1
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FIXED INCOME FUNDS - 82.9%
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<S> <C> <C>
Oppenheimer Bond Fund, Y Shares 27,569 $ 267,421
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Oppenheimer Limited-Term Government Fund, Y Shares 471,893 4,643,428
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Oppenheimer Strategic Income Fund, Y Shares 320,096 1,357,211
--------------
Total Common Stocks (Cost $6,302,935) 6,268,060
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MONEY MARKET FUND - 9.6%
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Oppenheimer Money Market Fund, Inc. (Cost $724,235) 724,235 724,235
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TOTAL INVESTMENTS, AT VALUE (COST $7,027,170) 92.5% 6,992,295
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OTHER ASSETS NET OF LIABILITIES 7.5 565,291
------------------------------------------
NET ASSETS 100.0% $7,557,586
==========================================
</TABLE>
See accompanying Notes to Financial Statements.
4 Oppenheimer Capital Preservation Fund
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<TABLE>
<CAPTION>
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STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 (Unaudited)
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ASSETS
<S> <C>
Investments, at value (cost $7,027,170) - see accompanying statement $6,992,295
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Receivables and other assets:
Shares of beneficial interest sold 497,196
Wrapper agreement - Note 5 84,999
Interest and dividends 30,014
Other 2,347
----------------------
Total assets 7,606,851
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LIABILITIES
Bank overdraft 37,213
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Payables and other liabilities:
Shares of beneficial interest redeemed 6,108
Transfer and shareholder servicing agent fees 2,974
Distribution and service plan fees 1,446
Wrapper fee 881
Custodian fees 624
Other 19
----------------------
Total liabilities 49,265
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NET ASSETS $7,557,586
======================
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COMPOSITION OF NET ASSETS
Paid-in capital $7,557,586
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Overdistributed net investment income (1,870)
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Accumulated net realized loss on investment transactions (48,254)
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Net unrealized appreciation on investments 50,124
----------------------
Net assets $7,557,586
======================
</TABLE>
5 Oppenheimer Capital Preservation Fund
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<TABLE>
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NET ASSET VALUE PER SHARE
Class A Shares:
<S> <C>
Net asset value and redemption price per share (based on net assets of
$7,459,465 and 745,948 shares of beneficial interest outstanding) $10.00
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.36
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Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $77,451
and 7,745 shares of beneficial interest outstanding) $10.00
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Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $19,630
and 1,963 shares of beneficial interest outstanding) $10.00
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Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,040 and 104 shares of beneficial interest outstanding) $10.00
</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer Capital Preservation Fund
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<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2000 (Unaudited)
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INVESTMENT INCOME
<S> <C>
Dividends $212,903
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Interest 2,788
----------------------
Total income 215,691
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EXPENSES
Management fees 22,679
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Distribution and service plan fees:
Class A 7,470
Class B 225
Class C 58
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Legal, auditing and other professional fees 7,500
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Wrapper fee 4,892
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Transfer and shareholder servicing agent fees 2,974
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Custodian fees and expenses 816
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Other 701
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Total expenses 47,315
Less expenses paid indirectly (192)
Less voluntary assumption (13,553)
----------------------
Net expenses 33,570
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NET INVESTMENT INCOME 182,121
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REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (48,254)
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Net change in unrealized appreciation or depreciation on investments 50,130
----------------------
Net realized and unrealized gain 1,876
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $183,997
======================
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Capital Preservation Fund
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<TABLE>
<CAPTION>
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STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
APRIL 30, 2000 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1999(1)
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Operations
<S> <C> <C>
Net investment income $182,121 $567
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Net realized gain (loss) (48,254) --
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Net change in unrealized appreciation or depreciation 50,130 (6)
----------------------- ----------------------
Net increase in net assets resulting from operations 183,997 561
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (182,459) (545)
Class B (1,211) (5)
Class C (310) (5)
Class Y (32) (6)
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BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions:
Class A 7,359,481 --
Class B 76,454 --
Class C 18,629 --
Class Y 37 --
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NET ASSETS
Total increase 7,454,586 --
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Beginning of period 103,000 103,000(2)
----------------------- ----------------------
End of period [including undistributed (overdistributed) net investment
income of $(1,870) and $21, respectively] $7,557,586 $103,000
======================= ======================
</TABLE>
1. For the period from September 27, 1999 (commencement of operations) to
October 31, 1999.
2. Reflects the value of the Manager's initial seed money investment at
June 11, 1999.
See accompanying Notes to Financial Statements.
8 Oppenheimer Capital Preservation Fund
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
------------------------------------ -------------------------------------
SIX MONTHS PERIOD ENDED SIX MONTHS PERIOD ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
2000 (UNAUDITED) 1999(1) 2000 (UNAUDITED) 1999(1)
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PER SHARE OPERATING DATA
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .30 .05 .26 .05
Net realized and unrealized gain -- -- .01 --
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Total income from investment operations .30 .05 .27 .05
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Dividends and/or distributions to shareholders:
Total dividends from net investment income (.30) (.05) (.27) (.05)
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Net asset value, end of period $10.00 $10.00 $10.00 $10.00
=================== ============== ================= ==============
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TOTAL RETURN, AT NET ASSET VALUE(2) 3.04% 0.55% 2.68% 0.48%
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RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $7,459 $100 $77 $1
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Average net assets (in thousands) $6,059 $100 $46 $1
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Ratios to average net assets:(3)
Net investment income 5.53% 5.75% 4.85% 5.10%
Expenses 1.54% 1.55% 2.29% 2.25%
Expenses, net of indirect expenses and
voluntary assumption 1.09% 1.12% 1.83% 1.81%
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Portfolio turnover rate(4) 86% 0% 86% 0%
</TABLE>
1. For the period from September 27, 1999 (commencement of operations) to
October 31, 1999.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended April 30, 2000 were $11,554,763 and $4,582,572, respectively.
See accompanying Notes to Financial Statements.
9 Oppenheimer Capital Preservation Fund
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS C CLASS Y
------------------------------------ ---------------------------------------
SIX MONTHS PERIOD ENDED SIX MONTHS PERIOD ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
2000 (UNAUDITED) 1999(1) 2000 (UNAUDITED) 1999(1)
--------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .26 .05 .31 .06
Net realized and unrealized gain .01 -- -- --
-------------------------------------------------------------------------------
Total income from investment operations .27 .05 .31 .06
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Dividends and/or distributions to shareholders:
Total dividends from net investment income (.27) (.05) (.31) (.06)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00
=================== ============== ================== ==============
--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 2.68% 0.48% 3.16% 0.57%
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $20 $1 $1 $1
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $12 $1 $1 $1
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Ratios to average net assets:(3)
Net investment income 4.82% 5.10% 5.62% 6.19%
Expenses 2.30% 2.25% 1.47% 1.15%
Expenses, net of indirect expenses and
voluntary assumption 1.85% 1.81% 1.01% 0.72%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 86% 0% 86% 0%
</TABLE>
1. For the period from September 27, 1999 (commencement of operations) to
October 31, 1999.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended April 30, 2000 were $11,554,763 and $4,582,572, respectively.
See accompanying Notes to Financial Statements.
10 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Capital Preservation Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
The Fund seeks high current income while seeking to maintain a stable value per
share. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
Shares of the Fund are offered solely to participant-directed qualified
retirement plans and 403(b)(7) Custodial Plans meeting specified criteria (the
Plans). Plan participant purchases of Fund shares are handled in accordance with
each Plan's specific provisions. Plan participants should contact their Plan
administrator for details concerning how they may purchase shares of the Fund.
The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares are
sold with a front-end sales charge of 3.50%, and reduced for larger purchases.
Class B and Class C shares are offered without front-end sales charge, but may
be subject to a contingent deferred-sales charge (CDSC) if redeemed within 5
years or 12 months, respectively, of purchase. Class Y shares are offered
without front-end and contingent-deferred sales charges. Class Y shares are only
available for plans that have special arrangements with OppenheimerFunds
Distributor, Inc. (the Distributor).
All classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Expenses included in the accompanying financial statements reflect the
expenses of the Fund and do not include any expenses associated with the
Underlying Funds. Classes A, B and C 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 will, under normal circumstances, invest in Class
Y shares of Oppenheimer Limited-Term Government Fund, Oppenheimer Bond Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Strategic Income Fund, and in
shares of Oppenheimer Money Market Fund, Inc. (collectively referred to as the
"underlying funds"). The net asset values of the underlying funds are determined
as of the close of The New York Stock Exchange, on each day the Exchange is open
for trading. The net asset value per share is determined by dividing the value
of the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding.
The Fund may invest in certain portfolio securities, as described in the Fund's
prospectus. Portfolio securities are valued at the close of the New York Stock
Exchange on each trading day. Listed and unlisted securities for which such
information is regularly reported are valued at the last sale price of the day
or, in the absence of sales, at values based on the closing bid or the last sale
price on the prior trading day. Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service approved by the Board of
Trustees. Such securities which cannot be valued by an approved portfolio
pricing service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the quotes
reflect current market value, or are valued under consistently applied
procedures established by the Board of Trustees to determine fair value in good
faith. Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount. Foreign
currency exchange contracts are valued based on the closing prices of the
foreign currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer.
The Fund will, under normal circumstances, enter into wrapper agreements with
insurance companies and banks. If an insurance wrap contract or a synthetic
Guaranteed Investment Contract (GIC) obligates the contract provider to maintain
the "Book Value" of all or a portion of the Fund's investments up to a specified
maximum dollar amount, such contract will be valued at its fair value. The fair
value of the contract generally will be equal to the difference between the
"Book Value," and the market value of the Fund's portfolio investments subject
to the contract. If the market value of the Fund's portfolio investments is
greater than its Book Value, the contract value will be reflected as a liability
("wrapper agreement") of the Fund in the amount of the difference, i.e. a
negative value. If the market value of the Fund's portfolio investments is less
than its Book Value, the contract value will be reflected as an asset ("wrapper
agreement") of the Fund in the amount of the difference, i.e. a positive value,
reflecting the potential liability of the contract provider to the Fund. In
performing its fair value determination, the Board of Trustees will take into
consideration the creditworthiness of the contract provider and the ability and
willingness of the contract provider to pay amounts under the contract. As of
April 30, 2000, the Fund has entered into one wrapper agreement, with the Bank
of America, NA.
11 Oppenheimer Capital Preservation Fund
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NOTES TO FINANCIAL STATEMENTS Unaudited/Continued
1. SIGNIFICANT ACCOUNTING POLICIES Continued
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
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.
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
TRUSTEES' COMPENSATION. The Fund has adopted a unfunded retirement plan for the
Fund's independent Trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service.
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables Trustees to elect to defer receipt of all or a portion of
annual compensation they are entitled to receive from the Fund. Under the plan,
the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustee in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. 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 income per
share.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-distribution date. The Board of Trustees, in an effort to
maintain a stable net asset value per share in the event of an additional
distribution, may declare, effective on the ex-distribution date of an
additional distribution, a reverse split of the shares of the Fund in an amount
that will cause the total number of shares held by each shareholder, including
shares acquired on reinvestment of that distribution, to remain the same as
before that distribution was paid.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of distributions made during the year from net investment income or
net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
12 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited/Continued
1. SIGNIFICANT ACCOUNTING POLICIES Continued
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest for the
six months ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED APRIL 30, 2000
SHARES AMOUNT
-----------------------------------------------------------------------------------
CLASS A
<S> <C> <C>
Sold 1,196,717 $11,967,176
Dividends and/or distributions reinvested 18,300 183,003
Redeemed (479,069) (4,790,698)
--------- -----------
Net increase 735,948 $ 7,359,481
========= ===========
-----------------------------------------------------------------------------------
CLASS B
Sold 7,524 $ 75,238
Dividends and/or distributions reinvested 121 1,216
Redeemed -- --
--------- -----------
Net increase 7,645 $ 76,454
========= ===========
-----------------------------------------------------------------------------------
CLASS C
Sold 2,346 $ 23,458
Dividends and/or distributions reinvested 31 316
Redeemed (514) (5,145)
--------- -----------
Net increase 1,863 $ 18,629
========= ===========
-----------------------------------------------------------------------------------
CLASS Y
Sold -- $ --
Dividends and/or distributions reinvested 4 37
Redeemed -- --
---------- -----------
Net increase 4 $ 37
========== ===========
</TABLE>
There were no transactions in shares of beneficial interest for the period from
September 27, 1999 (commencement of operations) to October 31, 1999.
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of April 30, 2000, net unrealized depreciation on securities of $34,875 was
composed entirely of gross depreciation.
13 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited/Continued
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the Investment Advisory Agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional assets as
the Fund grows: 0.75% of the first $200 million of average annual net assets of
the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66%
of the next $200 million, 0.60% of the next $200 million and 0.50% of average
annual net assets over $1 billion. That fee shall be reduced by the management
fees received by the Manager during the period from the underlying funds
attributable to investments by the Fund in shares of such underlying funds. This
is to assure that the management fee paid directly and indirectly by the Fund to
the Manager shall not exceed the fees described above.
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the shareholder servicing agent for the Fund on an "at-cost" basis. OFS
also acts as the shareholder servicing agent for the other Oppenheimer funds.
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, OppenheimerFunds Distributor, Inc (OFDI) acts as the Fund's
principal underwriter in the continuous public offering of the different classes
of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
------------------- ------------ -------------------- -------------------- ------------------- --------------------
AGGREGATE CLASS A FRONT-END COMMISSIONS ON COMMISSIONS ON COMMISSIONS ON
FRONT-END SALES CHARGES CLASS A SHARES CLASS B SHARES CLASS C SHARES
SALES RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
CHARGES ON DISTRIBUTOR DISTRIBUTOR1 DISTRIBUTOR1 DISTRIBUTOR1
SIX CLASS A
MONTHS ENDED SHARES
<S> <C> <C> <C> <C> <C>
-------------------- ------------ -------------------- -------------------- ------------------- --------------------
April 30, 2000 $14,249 $1,250 $14,249 $2,257 $ --
-------------------- ------------ -------------------- -------------------- ------------------- --------------------
</TABLE>
1. THE DISTRIBUTOR ADVANCES COMMISSION PAYMENTS TO DEALERS FOR CERTAIN SALES
OF CLASS A SHARES AND FOR SALES OF CLASS B AND CLASS C SHARES FROM ITS OWN
RESOURCES AT THE TIME OF SALE.
<TABLE>
<CAPTION>
-------------------- --------------------------- -------------------------------- ----------------------------------
SIX CLASS A CONTINGENT CLASS B CONTINGENT DEFERRED CLASS C CONTINGENT DEFERRED
MONTHS DEFERRED SALES CHARGES SALES CHARGES RETAINED BY SALES CHARGES RETAINED BY
ENDED RETAINED BY DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
<S> <C> <C> <C>
-------------------- --------------------------- -------------------------------- ----------------------------------
April 30, 2000 $ -- $ -- $ --
-------------------- --------------------------- -------------------------------- ----------------------------------
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
Company Act. Under those plans the Fund pays the Distributor for all or a
portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
CLASS A SERVICE PLAN. Under the Class A service plan, the Distributor currently
uses the fees it receives from the Fund to pay brokers, dealers and other
financial institutions. The Class A service plan permits reimbursements to the
Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the six months ended April 30, 2000, payments
under the Class A Plan totaled $7,470, all of which was paid by the Distributor
to recipients. That included $1,554 paid to an affiliate of the Manager. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years.
14 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited/Continued
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plan provides for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may be
more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and from the Fund under the plans. If either the
Class B or the Class C plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
DISTRIBUTION FEES PAID TO THE DISTRIBUTOR FOR THE SIX MONTHS ENDED APRIL 30, 2000 WERE AS FOLLOWS:
----------------------------------------------------------------------------------------------------------------------
DISTRIBUTOR'S
DISTRIBUTOR'S AGGREGATE UNREIMBURSED EXPENSES
TOTAL PAYMENTS AMOUNT RETAINED BY UNREIMBURSED EXPENSES AS % OF NET ASSETS OF
UNDER PLAN DISTRIBUTOR UNDER PLAN CLASS
------------------- --------------------- ---------------------- ---------------------------- ------------------------
<S> <C> <C> <C> <C>
CLASS B PLAN $225 $-- $3,655 4.72%
------------------- --------------------- ---------------------- ---------------------------- ------------------------
CLASS C PLAN 58 -- -- --
------------------- --------------------- ---------------------- ---------------------------- ------------------------
</TABLE>
5. ILLIQUID OR RESTRICTED SECURITIES
As of April 30, 2000, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. A Wrapper Agreement is considered
to be an illiquid security. The Fund intends to invest no more than 15% of its
net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
6. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of 0.08%
per annum.
The Fund had no borrowings outstanding during the six months ended April 30,
2000.
15 Oppenheimer Capital Preservation Fund
<PAGE>
OPPENHEIMER CAPITAL PRESERVATION FUND
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the
Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Phillip A. Griffiths, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Clayton K. Yeutter, Trustee
John S. Kowalik, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR OppenheimerFunds, Inc.
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF PORTFOLIO Citibank, N.A.
SECURITIES
INDEPENDENT AUDITORS KPMG LLP
LEGAL COUNSEL Mayer, Brown & Platt
The financial statements included herein have been taken from the records of
the Fund without examination of the independent accountants.
This is a copy of a report to shareholders of Oppenheimer Capital
Preservation Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Capital Preservation Fund. For material
information concerning the Fund, see the Prospectus.
SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE
NOT GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
OPPENHEIMER FUNDS ARE DISTRIBUTED BY OPPENHEIMERFUNDS DISTRIBUTOR, INC.,
TWO WORLD TRADE CENTER, NEW YORK, NY 10048-0203
(C) Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
16 Oppenheimer Capital Preservation Fund
<PAGE>
RS0755.001.400 June 29, 2000
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