<PAGE>
[FRONT COVER]
1999 ANNUAL REPORT
OPPENHEIMER
CAPITAL PRESERVATION FUND
--------------------------------------------------------------------------------
October 31, 1999
[LOGO] OPPENHEIMERFUNDS(R)
The Right Way to Invest
<PAGE>
BRIDGET A. MACASKILL
President
Oppenheimer
Capital Preservation Fund
Dear Shareholder,
Whenever a new year begins -- let alone a new decade or century -- it makes
sense to pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year-end, it became clearer that while the U.S. economy grew
robustly in 1999, inflation remained at low levels. Indeed, investors appeared
more comfortable with the economy after the Federal Reserve Board demonstrated
their inflation-fighting resolve by raising interest rates three times between
June and November.
As is normal in a rising interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of large-capitalization growth companies, principally in the technology arena.
Smaller and value-oriented stocks provided particularly lackluster returns, and
overall, foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a moderate-growth,
low-inflation course. As recent revisions of 1999's economic statistics
demonstrated, the economy has defied many analysts' forecasts by growing at a
strong rate, which should be positive for the bond market. Similarly, positive
economic forces could help the stock market's performance broaden to include
value-oriented and smaller stocks.
We see particularly compelling opportunities outside of the U.S. market. Many
foreign stocks also ended 1999 more attractively valued than large-cap U.S.
stocks, and economic trends in overseas markets could lead to higher stock
prices. In Europe, corporate restructuring has just begun, giving companies
there the same potential for cost-cutting and productivity improvements that
U.S. companies enjoyed ten years ago. In Japan and Asia, economic recovery is
expected to gain strength, which could allow stocks to rally from relatively low
levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar.
2 Oppenheimer Capital Preservation Fund
<PAGE>
Clearly, while the Internet is here to stay, all "dot-com" companies will not
survive, and many of these high-flying Internet stocks will eventually -- and
perhaps very suddenly -- return to more reasonable levels. The long-term winners
are most likely to be companies that support the Internet's growth with content
or infrastructure.
What else is in store for investors in 2000? Unfortunately, we have no
infallible crystal ball. However, we believe that, in almost any investment
environment, consistent success stems from an unwavering focus on fundamental
investment principles such as maintaining a long-term perspective, using
diversification to manage risks, and availing oneself of the services of a
knowledgeable financial advisor. Indeed, these principles serve as the
foundation for every investment we offer, helping to make OppenheimerFunds The
Right Way to Invest in 2000 and beyond.
Sincerely,
/s/Bridget A. Macaskill
Bridget A. Macaskill
November 19, 1999
These general market views represent opinions of OffenheimerFunds, Inc. and are
not intended to predict or depict performance of any particular fund. Specific
discussion, as it applies to your Fund is contained in the page that follows.
3 Oppenheimer Capital Preservation Fund
<PAGE>
PAGE 3
JOHN KOWALIK
Portfolio Manager
STRATEGY
The Fund is designed to invest in shares of other Oppenheimer fixed income
mutual funds. While keeping portfolio duration of 2 1/2 to 3 years, we will
attempt to allocate the assets of the portfolio primarily among shares of
Oppenheimer Limited-Term Government Fund, Oppenheimer Bond Fund, Oppenheimer
Money Market Fund and Oppenheimer Strategic Income Fund.(1)
COMMENTARY
Oppenheimer Capital Preservation Fund began operating on September 27, 1999.
During the Fund's relatively brief operations for this reporting period, overall
markets continued to be characterized by strong growth, subdued inflation,
investor preference for stocks over bonds, and the search for conclusive market
data. October, which tends to produce volatile markets, did not disappoint.
Investor concerns focused on a perceived spike in September producer prices, as
well as the Federal Reserve's stated bias toward raising short-term interest
rates. Indeed, by the middle of the month, yields were bumping up against recent
highs. However, as more calming data was released, yields started trending
downward toward the end of the month, based on easing fear of Fed tightening.
Investors seemed to tread cautiously, continuing their recent search for more
conclusive data.
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.
4 Oppenheimer Capital Preservation Fund
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS October 31, 1999
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==============================================================================================================================
FIXED INCOME FUNDS - 89.0%
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oppenheimer Bond Fund, Y Shares 406 $ 4,100
------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund, Y Shares 6,790 68,037
------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Income Fund, Y Shares 4,520 19,482
------------
Total Fixed Income Funds (Cost $91,865) 91,619
==============================================================================================================================
MONEY MARKET FUND - 11.0%
------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Money Market Fund, Inc. (Cost $11,368) 11,368 11,368
------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (Cost $103,233) 100.0% 102,987
------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.0 13
------------- --------------
NET ASSETS 100.0% $ 103,000
============= ==============
</TABLE>
See accompanying Notes to Financial Statements.
5 Oppenheimer Capital Preservation Fund
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999
<TABLE>
================================================================================================================================
ASSETS
<S> <C>
Investments, at value (cost $103,233) - see accompanying statement $102,987
--------------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 446
Wrapper agreement - Note 5 240
---------------------
Total assets 103,673
================================================================================================================================
LIABILITIES
Bank overdraft 31
--------------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends 561
Distribution and service plan fees 26
Transfer and shareholder servicing agent fees 25
Wrapper agreement fee 16
Other 14
---------------------
Total liabilities 673
================================================================================================================================
NET ASSETS $103,000
=====================
================================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $102,985
--------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 21
--------------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (6)
---------------------
Net assets $103,000
=====================
</TABLE>
<TABLE>
================================================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
<S> <C>
Net asset value and redemption price per share (based on net assets of
$100,000 and 10,000 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
--------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $1,000
and 100 shares of beneficial interest outstanding) $10.00
--------------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $1,000
and 100 shares of beneficial interest outstanding) $10.00
--------------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,000 and 100 shares of beneficial interest outstanding) $10.00
</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer Capital Preservation Fund
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Period from September 27, 1999 (commencement of
operations) to October 31, 1999
<TABLE>
================================================================================================================================
INVESTMENT INCOME
<S> <C>
Dividends $663
--------------------------------------------------------------------------------------------------------------------------------
Interest 15
---------------------
Total income 678
================================================================================================================================
EXPENSES
Management fees 74
--------------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 24
Class B 1
Class C 1
--------------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 25
--------------------------------------------------------------------------------------------------------------------------------
Wrapper agreement fee 16
--------------------------------------------------------------------------------------------------------------------------------
Other 13
---------------------
Total expenses 154
Less voluntary assumption (43)
---------------------
Net expenses 111
================================================================================================================================
NET INVESTMENT INCOME 567
================================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments --
--------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (246)
Wrapper agreement 240
---------------------
Net realized and unrealized loss (6)
================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $561
=====================
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Capital Preservation Fund
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1999(1)
================================================================================================================================
OPERATIONS
<S> <C>
Net investment income $567
--------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (6)
---------------------
Net increase in net assets resulting
from operations 561
================================================================================================================================
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment
income:
Class A (545)
Class B (5)
Class C (5)
Class Y (6)
================================================================================================================================
NET ASSETS
Total increase --
--------------------------------------------------------------------------------------------------------------------------------
Beginning of period 103,000 (2)
---------------------
End of period (including undistributed net investment
income of $21 for the period ended October 31, 1999) $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
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
----------------------------------------------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999(1) 1999(1) 1999(1) 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 .05 .05 .05 .06
----------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Total dividends from net investment income (.05) (.05) (.05) (.06)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00
============== =============== ============== ===============
==================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 0.55% 0.48% 0.48% 0.57%
----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $100 $1 $1 $1
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $100 $1 $1 $1
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.75% 5.10% 5.10% 6.19%
Expenses, before voluntary assumption 1.55% 2.25% 2.25% 1.15%
Expenses, after voluntary assumption 1.12% 1.81% 1.81% 0.72%
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 0% 0% 0% 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 inception of offering), 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 October 31, 1999 were $103,233 and $0, respectively.
See accompanying Notes to Financial Statements.
9 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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
October 31, 1999, the Fund has entered into one wrapper agreement, with the Bank
of America, NA.
10 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (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.
The Fund adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the period ended
October 31, 1999, amounts have been reclassified to reflect a decrease in
paid-in capital of $15. Undistributed net investment income was increased by
the same amount.
11 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (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. 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 October 31, 1999, net unrealized depreciation on securities of $6 was
composed of gross appreciation of $240, and gross depreciation of $246.
--------------------------------------------------------------------------------
4. MANAGEMENT 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 DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
CLASS A
PERIOD ENDED SHARES
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
October 31, 1999 $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------
</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.
12 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
<TABLE>
<CAPTION>
CLASS A CONTINGENT CLASS B CONTINGENT DEFERRED CLASS C CONTINGENT DEFERRED
DEFERRED SALES CHARGES SALES CHARGES RETAINED BY SALES CHARGES RETAINED BY
PERIOD ENDED RETAINED BY DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
October 31, 1999 $ -- $1,693 $ --
----------------------------------------------------------------------------------------------------------------
</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 fiscal year ended October 31, 1999,
payments under the Class A Plan totaled $24, all of which was paid by the
Distributor to recipients. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years.
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 PERIOD ENDED OCTOBER 31, 1999 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 $1 $ -- $ -- --%
-------------------------------------------------------------------------------------------------------------------
CLASS C PLAN 1 -- -- --
-------------------------------------------------------------------------------------------------------------------
</TABLE>
5. ILLIQUID OR RESTRICTED SECURITIES
As of October 31, 1999, 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.
13 Oppenheimer Capital Preservation Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 period ended October 31, 1999.
14 Oppenheimer Capital Preservation Fund
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INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Capital Preservation Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Capital Preservation Fund as of
October 31, 1999, and the related statement of operations and statement of
changes in net assets and the financial highlights for the period from September
27, 1999 (commencement of operations), to October 31, 1999. 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 audit.
We conducted our audit in accordance with generally
accepted auditing standards. 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 October 31, 1999, by correspondence with the custodian. 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 audit provides 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 Preservation Fund as of October 31,
1999, the results of its operations, the changes in net assets and the financial
highlights for the period from September 27, 1999 (commencement of operations),
to October 31, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
Denver, Colorado
November 19, 1999
15 Oppenheimer Capital Preservation Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. 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.
16 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
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
John S. Kowalik, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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
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.
17 Oppenheimer Capital Preservation Fund
<PAGE>
RA0755.001 December 30, 1999
