<PAGE> 1
[PHOTO]
OPPENHEIMER CAPITAL APPRECIATION FUND
SEMIANNUAL REPORT FEBRUARY 28, 1997
"We have some
IMPORTANT
financial goals,
so we want
our investment
to INCREASE
in value
over time."
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
NEWS
OUTPERFORMED AVERAGE
Cumulative Total Return for the
3-Year Period Ended 3/31/97:
Oppenheimer Capital
Appreciation Fund
Class A (at net asset value)(2)
74.63%
Lipper Capital Appreciation Average
for 123 Capital Appreciation Funds for the
3-Year Period Ended 3/31/97(4)
47.31%
THIS FUND IS FOR PEOPLE WHO WANT THE POTENTIAL FOR SOLID INVESTMENT GROWTH
OVER THE LONG TERM.
HOW YOUR FUND IS MANAGED
Oppenheimer Capital Appreciation Fund seeks long-term growth by investing in
the stocks of "growth-type" companies and cyclical industries that the Fund's
investment managers believe have opportunities for capital growth.
In today's stock market, the Fund's managers are targeting consumer and
industrial companies with strong earnings momentum, as well as companies that
have excellent growth prospects, especially in the technology sector, such as
computer software and net-working. The Fund also invests in U.S.-based
companies that are believed to have superior growth potential because their
products or services are in high demand abroad.(1)
PERFORMANCE
Cumulative total returns for the six months ended 2/28/97 were 18.22% for Class
A shares, 17.71% for Class B shares and 17.72% for Class C shares, without
deducting sales charges.(2)
Your Fund's average annual total returns for Class A shares for the 1-,
5- and 10-year periods ended 3/31/97 were 10.41%, 13.45% and 10.36%,
respectively. For Class B shares, average annual total returns for the 1-year
period ended 3/31/97 and since inception on 11/1/95 were 11.13% and 15.25%,
respectively. For Class C shares, average annual total returns for the 1-year
period ended 3/31/97 and since inception on 12/1/93 were 15.14% and 16.63%,
respectively.(3)
OUTLOOK
"We're very optimistic about this year. We believe that 1997 will be a year
that will place great importance on earnings growth."
Jane Putnam, Portfolio Manager
February 28, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. 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 THE ORIGINAL COST. For more complete
information, please review the prospectus carefully before you invest. As of
12/18/96, the Fund's name was changed from "Target Fund."
1. The Fund's portfolio is subject to change.
2. Based on the change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Class A returns include the current maximum initial sales charge of 5.75%.
Class A shares were first publicly offered on 1/22/81. The Fund's maximum
sales charge for Class A shares was higher during a portion of some of the
periods shown, so that actual investment results would have been less. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 4% (since inception). Class C returns include the 1% contingent deferred
sales charge for the 1-year result. An explanation of the different performance
calculations is in the Fund's prospectus. Class B and Class C shares are
subject to an annual 0.75% asset-based sales charge.
4. Source: Lipper Analytical Services, 3/31/97. The Lipper average is shown for
comparative purposes only. Funds included in the index may have different
investment policies and risks than the Fund. Oppenheimer Capital Appreciation
Fund is characterized by Lipper as a capital appreciation fund. Lipper
performance is based on total return and does not take sales charges into
account.
2 Oppenheimer Capital Appreciation Fund
<PAGE> 3
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer Capital Appreciation Fund
DEAR SHAREHOLDER,
As we advised you at year end, we don't expect 1997's stock market to report
the record-breaking returns we saw last year. However, we do believe it may be
a period in which investors can take advantage of some great buying
opportunities created by lower stock valuations. Our optimism can be traced to
solid economic fundamentals that should remain stable throughout the calendar
year and the robust investing habits of aging baby boomers.
First, the economy has been expanding slowly, but steadily. Interest
rates have remained relatively low despite the Federal Reserve's recent
increase in short-term rates. In turn, low interest rates translate into
reduced borrowing rates for companies and individuals. Companies have taken
advantage of the savings by using it to improve their technologies, thereby
increasing their productivity and efficiency. By downsizing and implementing
other cost-cutting strategies, companies in the United States should now be
better equipped to compete globally.
In addition, inflation has been at its lowest level in three decades.
While it's true that an increase in interest rates often indicates an
accelerating economy, the Federal Reserve has been quick to acknowledge that
inflation and growth are under control. In fact, they've labeled the recent
move as a "preemptive" act to keep inflation at these low levels and extend the
economy's healthy growth cycle.
Second, monthly cash flows into mutual funds have been higher, largely
due to the savings pattern of the baby boomers. The first wave of this
generation--those just turning 50--are beginning to direct more money toward
their retirement. Concerned about proposed cutbacks in Social Security
benefits, more and more individuals believe they will have to fund a large
portion of their retirement themselves. And, as they gradually pay off their
children's college expenses and reduce their mortgages, they are positioned to
save more aggressively.
For these reasons we remain confident about the opportunities available
in the stock market this year. Of course, selectivity will be the key to
allocating an effective portfolio. Therefore, it will be important to base
choices on the individual merits of a company, such as strong management,
fundamental business policies and long-term prospects for the future. And for
investors, as always, maintaining a long-term time horizon is essential.
Because, while short-term swings will certainly occur and past performance is
no guarantee of future results, the market's long-term trend has been to move
higher and higher.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
March 21, 1997
3 Oppenheimer Capital Appreciation Fund
<PAGE> 4
Q + A
[PHOTO]
Q WHAT INVESTMENTS MADE POSITIVE
CONTRIBUTIONS TO PERFORMANCE?
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW DID THE FUND PERFORM?
Our performance has been strong. We attribute Oppenheimer Capital Appreciation
Fund's success to having higher exposure to the market-leading sectors of
technology and financial services and having more of a large-cap concentration
as compared to most of our peers. During the period, many investors were
seeking liquidity and established, more dependable earnings, two
characteristics more likely to apply to large-cap companies. As a result of our
strategic positioning, Oppenheimer Capital Appreciation Fund finished 36th out
of 202 capital appreciation funds ranked by Lipper for the 1-year period ended
3/31/97.(1)
WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
The largest contribution to the Fund's success was our emphasis in technology
and financial services. Within the technology sector, computer hardware,
telecommunication equipment, and semiconductors were the best performers. The
Fund was able to benefit as corporations continue to strive to increase
productivity--which largely depends on upgrading technology. By accelerating
new products, and in the case of large-cap firms, using their financial
flexibility to tap into opportunities outside their core businesses, these
companies gained strength.
Within the financial services sector our strongest performers were
banks, bro-kerage and credit card companies, as well as consumer finance firms.
These companies outperformed due to ongoing industry consolidations,
restructuring that reduced costs as well as healthy revenue growth. Increased
focus on savings, particularly for
1. Source: Lipper Analytical Services, 3/31/97. Oppenheimer Capital
Appreciation Fund's Class A shares were ranked 19th out of 76 funds in its
category for the 5-year period ended 3/31/97 and 26th out of 55 funds for the
10-year period ended 3/31/97. Oppenheimer Capital Appreciation Fund is
characterized by Lipper as a capital appreciation fund. Lipper performance is
based on total return and does not take sales charges into account.
4 Oppenheimer Capital Appreciation Fund
<PAGE> 5
FACING PAGE
Top left: Jane Putnam, Portfolio Manager
Top right: Michael Levine, Member of Equity Investments Team
Bottom: Jay Tracey, Member
of Equity Investments Team
THIS PAGE
Top: John Doney, Member of Equity Investments Team
Bottom: Robert Doll, Executive VP, Director of Equity Investments
and Richard Rubinstein, Member of Equity Investments Team
A TECHNOLOGY AND FINANCIAL SERVICES
WERE LARGE CONTRIBUTORS
TO THE FUND'S PERFORMANCE.
retirement, has also helped fuel the industry.
In addition, our investments in large grocery and drug store chains
added to the Fund's positive performance. This is an area that has exhibited
better-than-average growth over the past few years.(2)
DID ANY INVESTMENTS NEGATIVELY IMPACT THE PORTFOLIO?
A few of our larger retailers did not perform as well as we had expected during
the second half of 1996. Inventories were well-managed, the consumer was in
good financial shape and demand was strong. However, Christmas sales volume was
somewhat disappointing and markdowns were higher than expected.
During the period, the Fund had a slightly higher-than-average cash
level. As the prices of some of our large-cap holdings reached what we felt
were peak values, we sold or reduced our positions and took profits. We're
comfortable with this higher cash level because we feel it will allow us to
take advantage of buying opportunities if they arise in the coming months--as
we expect they will.
[PHOTO]
WHAT AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING?
We believe technology and financial services will continue to outperform
throughout 1997 and plan to maintain our emphasis in those areas. However, we
have trimmed our bank holdings slightly, preferring instead to add to our
holdings in diversified financials and insurance companies. While retail as a
whole has been disappointing, certain specialty retail stores have shown
consistent, strong earnings growth over the period. As a result, we plan to
build our position in this area over the coming period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We're very optimistic about this year. We believe that 1997 will be a year that
will place great importance on earnings growth. That said, we maintain that the
industries and companies best poised to outperform the market should be those
that continue to post the highest earnings growth. And while we expect the
coming year's market to return to a more "normal" pace, relative to the past
few years, we remain confident that it will offer many opportunities that
should benefit investors.
[PHOTO]
2. The Fund's portfolio is subject to change.
5 Oppenheimer Capital Appreciation Fund
<PAGE> 6
FINANCIALS
CONTENTS
<TABLE>
<S> <C>
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS AND LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENTS OF CHANGES IN NET ASSETS 15
FINANCIAL HIGHLIGHTS 16
NOTES TO FINANCIAL STATEMENTS 18
</TABLE>
6 Oppenheimer Capital Appreciation Fund
<PAGE> 7
STATEMENT OF INVESTMENTS February 28, 1997 (Unaudited)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
===========================================================================================================================
<S> <C> <C>
Convertible Corporate Bonds and Notes--0.2%
- ---------------------------------------------------------------------------------------------------------------------------
Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 (Cost $1,723,750)(1) $1,700,000 $ 2,567,000
</TABLE>
<TABLE>
<CAPTION>
SHARES
===========================================================================================================================
<S> <C> <C>
COMMON STOCKS--82.3%
- ---------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--3.1%
- ---------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.7%
Dexter Corp. 75,000 2,212,500
-------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 75,000 8,043,750
-------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 90,000 3,138,750
-------------------------------------------------------------------------------------------------------------------
Morton International, Inc. 80,000 3,300,000
-------------------------------------------------------------------------------------------------------------------
Praxair, Inc. 180,400 8,771,950
-------------------------------------------------------------------------------------------------------------------
Terra Industries, Inc. 158,100 2,154,112
-----------
27,621,062
- ---------------------------------------------------------------------------------------------------------------------------
METALS--0.4%
Oregon Steel Mills, Inc. 135,200 2,298,400
-------------------------------------------------------------------------------------------------------------------
USX-U.S. Steel Group, Inc. 50,000 1,568,750
------------
3,867,150
- ---------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--13.5%
- ---------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.6%
Arvin Industries, Inc. 129,900 3,052,650
-------------------------------------------------------------------------------------------------------------------
Champion Enterprises, Inc.(2) 196,000 3,797,500
-------------------------------------------------------------------------------------------------------------------
Pulte Corp. 150,000 5,118,750
-------------------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(2) 240,000 4,650,000
------------
16,618,900
- ---------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--2.2%
AMR Corp.(2) 18,000 1,415,250
-------------------------------------------------------------------------------------------------------------------
Applebee's International, Inc. 82,500 2,083,125
-------------------------------------------------------------------------------------------------------------------
Callaway Golf Co. 160,800 5,125,500
-------------------------------------------------------------------------------------------------------------------
CKE Restaurants, Inc. 108,050 2,093,469
-------------------------------------------------------------------------------------------------------------------
Disney (Walt) Co. 64,000 4,752,000
-------------------------------------------------------------------------------------------------------------------
Gaylord Entertainment Co., Cl. A 100,000 2,025,000
-------------------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 252,800 5,245,600
------------
22,739,944
- ---------------------------------------------------------------------------------------------------------------------------
MEDIA--0.3%
Evergreen Media Corp., Cl. A(2) 105,000 3,150,000
- ---------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--4.0%
Donna Karan International, Inc.(2) 200,000 2,400,000
-------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.(2) 155,000 5,386,250
-------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., Cl. A(2) 110,000 4,496,250
-------------------------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(2) 141,200 5,242,050
-------------------------------------------------------------------------------------------------------------------
Liz Claiborne, Inc. 65,000 2,632,500
-------------------------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(2) 100,000 2,500,000
-------------------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(2) 209,000 11,416,625
-------------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 230,000 6,066,250
-----------
40,139,925
</TABLE>
7 Oppenheimer Capital Appreciation Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL: SPECIALTY--5.4%
American Pad & Paper Co.(2) 166,900 $ 3,421,450
-------------------------------------------------------------------------------------------------------------------
Ann Taylor Stores Corp.(2) 170,000 3,400,000
-------------------------------------------------------------------------------------------------------------------
Bed Bath & Beyond, Inc.(2) 200,000 5,200,000
-------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 105,000 1,706,250
-------------------------------------------------------------------------------------------------------------------
Claire's Stores, Inc. 155,000 2,189,375
-------------------------------------------------------------------------------------------------------------------
CUC International, Inc.(2) 92,500 2,208,437
-------------------------------------------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 100,000 4,587,500
-------------------------------------------------------------------------------------------------------------------
Gap, Inc. (The) 205,000 6,765,000
-------------------------------------------------------------------------------------------------------------------
Home Depot, Inc. 20,000 1,090,000
-------------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 135,000 9,703,125
-------------------------------------------------------------------------------------------------------------------
Nine West Group, Inc.(2) 218,800 10,283,600
-------------------------------------------------------------------------------------------------------------------
Ross Stores, Inc. 20,000 960,000
-------------------------------------------------------------------------------------------------------------------
Tiffany & Co. 90,100 3,130,975
-------------
54,645,712
- ---------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--12.9%
- ---------------------------------------------------------------------------------------------------------------------------
BEVERAGES--0.7%
Coca-Cola Co. (The) 110,000 6,710,000
- ---------------------------------------------------------------------------------------------------------------------------
EDUCATION--0.2%
National Education Corp.(2) 145,000 1,866,875
- ---------------------------------------------------------------------------------------------------------------------------
FOOD--2.4%
JP Foodservice, Inc.(2) 94,900 2,692,787
-------------------------------------------------------------------------------------------------------------------
Kroger Co.(2) 115,000 6,095,000
-------------------------------------------------------------------------------------------------------------------
Richfood Holdings, Inc. 187,500 3,960,937
-------------------------------------------------------------------------------------------------------------------
Safeway, Inc.(2) 240,000 11,550,000
-------------
24,298,724
- ---------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--3.5%
Amgen, Inc.(2) 35,000 2,139,375
-------------------------------------------------------------------------------------------------------------------
Biogen, Inc.(2) 85,000 4,186,250
-------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 60,000 7,830,000
-------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 54,526 3,142,061
-------------------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. 55,000 4,805,625
-------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 150,000 13,743,750
-------------
35,847,061
- ---------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES &
SERVICES--5.1%
Boston Scientific Corp.(2) 80,000 5,300,000
-------------------------------------------------------------------------------------------------------------------
Guidant Corp. 95,000 6,365,000
-------------------------------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(2) 130,000 2,746,250
-------------------------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(2) 139,100 5,937,831
-------------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(2) 115,000 4,628,750
-------------------------------------------------------------------------------------------------------------------
Henry Schein, Inc.(2) 99,500 2,686,500
-------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 70,000 4,532,500
-------------------------------------------------------------------------------------------------------------------
Nellcor Puritan Bennett, Inc.(2) 135,000 2,345,625
-------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc.(2) 115,000 6,411,250
-------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc.(2) 171,500 4,459,000
-------------------------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(2) 80,000 3,170,000
-------------------------------------------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(2) 46,000 828,000
-------------------------------------------------------------------------------------------------------------------
VISX, Inc.(2) 125,200 2,785,700
-------------
52,196,406
</TABLE>
8 Oppenheimer Capital Appreciation Fund
<PAGE> 9
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSEHOLD GOODS--0.3%
Blyth Industries, Inc.(2) 108,200 $ 3,543,550
- ---------------------------------------------------------------------------------------------------------------------------
TOBACCO--0.7%
Philip Morris Cos., Inc. 30,000 4,053,750
-------------------------------------------------------------------------------------------------------------------
UST, Inc. 105,000 3,241,875
------------
7,295,625
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY--4.0%
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES &
PRODUCERS--1.5%
BJ Services Co.(2) 70,000 2,782,500
-------------------------------------------------------------------------------------------------------------------
Global Marine, Inc.(2) 155,000 2,886,875
-------------------------------------------------------------------------------------------------------------------
Smith International, Inc.(2) 45,000 1,828,125
-------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 80,000 3,440,000
-------------------------------------------------------------------------------------------------------------------
Transocean Offshore, Inc. 75,000 4,190,625
------------
15,128,125
- ---------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--2.5%
ENSCO International, Inc.(2) 80,000 3,470,000
-------------------------------------------------------------------------------------------------------------------
Mobil Corp. 40,000 4,910,000
-------------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co. 130,000 5,378,750
-------------------------------------------------------------------------------------------------------------------
Unocal Corp. 135,000 5,214,375
-------------------------------------------------------------------------------------------------------------------
USX-Marathon Group 235,000 6,256,875
------------
25,230,000
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL--16.3%
- ---------------------------------------------------------------------------------------------------------------------------
BANKS--2.6%
Bank of Boston Corp. 125,000 9,421,875
-------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 30,000 3,412,500
-------------------------------------------------------------------------------------------------------------------
Societe Generale 44,600 5,166,683
-------------------------------------------------------------------------------------------------------------------
SouthTrust Corp. 40,000 1,585,000
-------------------------------------------------------------------------------------------------------------------
State Street Boston Corp. 87,400 7,024,775
------------
26,610,833
- ---------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--10.6%
Advanta Corp., Cl. A 65,000 2,689,375
-------------------------------------------------------------------------------------------------------------------
Alex Brown, Inc. 62,500 3,632,813
-------------------------------------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 124,000 5,983,000
-------------------------------------------------------------------------------------------------------------------
Fannie Mae 100,000 4,000,000
-------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 240,000 7,140,000
-------------------------------------------------------------------------------------------------------------------
Finova Group, Inc. 75,000 5,728,125
-------------------------------------------------------------------------------------------------------------------
First USA, Inc. 350,000 17,018,750
-------------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc. 90,000 5,265,000
-------------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 400,000 15,000,000
-------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 10,000 960,000
-------------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 65,000 4,103,125
-------------------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates 140,200 6,186,325
-------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 105,000 5,840,625
-------------------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. (New) 130,000 4,875,000
-------------------------------------------------------------------------------------------------------------------
Travelers Group, Inc. 350,000 18,768,750
------------
107,190,888
</TABLE>
9 Oppenheimer Capital Appreciation Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE--3.1%
Allstate Corp. 90,000 $ 5,703,750
-------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 240,000 7,530,000
-------------------------------------------------------------------------------------------------------------------
MGIC Investment Corp. 70,900 5,574,513
-------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc. 270,000 12,386,250
------------
31,194,513
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--6.9%
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.3%
Emerson Electric Co. 85,000 8,415,000
-------------------------------------------------------------------------------------------------------------------
Honeywell, Inc. 73,700 5,241,913
------------
13,656,913
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--1.2%
Centex Corp. 160,000 6,460,000
-------------------------------------------------------------------------------------------------------------------
Rayonier, Inc. 157,700 5,992,600
------------
12,452,600
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--1.9%
Corrections Corp. of America(2) 140,000 3,990,000
-------------------------------------------------------------------------------------------------------------------
Culligan Water Technologies, Inc.(2) 142,000 5,538,000
-------------------------------------------------------------------------------------------------------------------
Kent Electronics Corp.(2) 168,000 4,620,000
-------------------------------------------------------------------------------------------------------------------
Manpower, Inc. 85,000 3,208,750
-------------------------------------------------------------------------------------------------------------------
Patterson Dental Co.(2) 35,000 1,190,000
-------------------------------------------------------------------------------------------------------------------
U.S. Rentals, Inc.(2) 40,000 760,000
------------
19,306,750
- ---------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--0.7%
AGCO Corp. 135,300 3,839,138
-------------------------------------------------------------------------------------------------------------------
U.S. Filter Corp.(2) 100,000 3,500,000
------------
7,339,138
- ---------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.8%
Burlington Northern Santa Fe Corp. 42,000 3,496,500
-------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. (New) 400,000 9,900,000
-------------------------------------------------------------------------------------------------------------------
Illinois Central Corp. 132,150 4,542,656
------------
17,939,156
- ---------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--24.1%
- ---------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.3%
Goodrich (B.F.) Co. 84,000 3,412,500
- ---------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--6.5%
Adaptec, Inc.(2) 141,900 5,401,069
-------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(2) 187,000 5,610,000
-------------------------------------------------------------------------------------------------------------------
Cascade Communications Corp.(2) 263,000 8,120,125
-------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp.(2) 91,000 7,211,750
-------------------------------------------------------------------------------------------------------------------
EMC Corp.(2) 345,000 12,420,000
-------------------------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(2) 170,800 10,034,500
-------------------------------------------------------------------------------------------------------------------
Seagate Technology(2) 210,000 9,922,500
-------------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(2) 232,000 7,163,000
------------
65,882,944
</TABLE>
10 Oppenheimer Capital Appreciation Fund
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE--7.9%
Applix, Inc.(2) 50,000 $ 556,250
-------------------------------------------------------------------------------------------------------------------
BMC Software, Inc.(2) 185,600 7,946,000
-------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 75,000 3,262,500
-------------------------------------------------------------------------------------------------------------------
First Data Corp. 230,040 8,425,215
-------------------------------------------------------------------------------------------------------------------
HBO & Co. 140,000 8,067,500
-------------------------------------------------------------------------------------------------------------------
Microsoft Corp.(2) 280,000 27,300,000
-------------------------------------------------------------------------------------------------------------------
Oracle Corp.(2) 338,850 13,299,863
-------------------------------------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(2) 180,000 2,677,500
-------------------------------------------------------------------------------------------------------------------
SAP AG, Preference 25,500 3,925,891
-------------------------------------------------------------------------------------------------------------------
Shiva Corp.(2) 155,000 2,576,875
-------------------------------------------------------------------------------------------------------------------
Structural Dynamics Research Corp.(2) 120,000 2,385,000
------------
80,422,594
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--4.2%
Altera Corp.(2) 50,000 2,268,750
-------------------------------------------------------------------------------------------------------------------
Analog Devices, Inc.(2) 153,333 3,564,992
-------------------------------------------------------------------------------------------------------------------
Applied Materials, Inc.(2) 95,000 4,809,375
-------------------------------------------------------------------------------------------------------------------
Intel Corp. 115,000 16,315,625
-------------------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(2) 90,800 7,422,900
-------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc.(2) 151,800 8,121,300
------------
42,502,942
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--5.2%
3Com Corp.(2) 95,000 3,145,391
-------------------------------------------------------------------------------------------------------------------
Andrew Corp.(2) 85,000 4,675,000
-------------------------------------------------------------------------------------------------------------------
Ascend Communications, Inc.(2) 65,000 3,396,250
-------------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(2) 260,000 14,462,500
-------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc.(2) 160,000 1,870,000
-------------------------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 50,000 868,750
-------------------------------------------------------------------------------------------------------------------
Newbridge Networks Corp.(2) 180,000 5,737,500
-------------------------------------------------------------------------------------------------------------------
PictureTel Corp.(2) 85,000 1,338,750
-------------------------------------------------------------------------------------------------------------------
Tellabs, Inc.(2) 220,000 8,772,500
-------------------------------------------------------------------------------------------------------------------
WorldCom, Inc. 305,000 8,120,625
------------
52,387,266
</TABLE>
11 Oppenheimer Capital Appreciation Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--1.5%
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.1%
Empresa Nacional de Electricidad SA, Sponsored ADR 45,000 $ 2,761,875
-------------------------------------------------------------------------------------------------------------------
PacifiCorp 135,000 2,784,375
-------------------------------------------------------------------------------------------------------------------
Pinnacle West Capital Corp. 175,000 5,468,750
------------
11,015,000
- ---------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--0.4%
Cincinnati Bell, Inc. 60,000 3,720,000
------------
Total Common Stocks (Cost $571,469,980) 835,933,096
<CAPTION>
FACE
AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT--17.7%
- ---------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.38%, dated
2/28/97, to be repurchased at $179,680,521 on 3/3/97, collateralized
by U.S. Treasury Nts., 5.50%--7.50%, 5/15/98--8/15/04, with a value of
$183,416,674 (Cost $179,600,000) $179,600,000 179,600,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $752,793,730) 100.2% 1,018,100,096
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (2,095,546)
------------ --------------
NET ASSETS 100.0% $1,016,004,550
============ ==============
</TABLE>
1. Identifies issues considered to be illiquid--See Note 5 of Notes to
Financial Statements.
2. Non-income producing security.
See accompanying Notes to Financial Statements.
12 Oppenheimer Capital Appreciation Fund
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES February 28, 1997 (Unaudited)
<TABLE>
===========================================================================================================================
<S> <C>
ASSETS
Investments, at value (including repurchase agreement of $179,600,000)
(cost $752,793,730)--see accompanying statement $1,018,100,096
-------------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 8,313,699
Interest and dividends 697,163
-------------------------------------------------------------------------------------------------------------------
Other 20,967
--------------
Total assets 1,027,131,925
===========================================================================================================================
LIABILITIES
Bank overdraft 132,935
-------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 6 1,141
-------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 6,778,855
Shares of beneficial interest redeemed 3,417,815
Distribution and service plan fees 273,212
Trustees' fees 209,676
Transfer and shareholder servicing agent fees 75,194
Other 238,547
--------------
Total liabilities 11,127,375
===========================================================================================================================
NET ASSETS $1,016,004,550
==============
===========================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $696,855,900
-------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 566,290
-------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment and foreign currency transactions 53,273,162
-------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 265,309,198
--------------
Net assets $1,016,004,550
==============
===========================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of $978,077,216 and
30,090,147 shares of beneficial interest outstanding) $32.50
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $34.48
-------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $20,722,648 and 644,240 shares of beneficial interest outstanding) $32.17
-------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $17,204,686 and 539,279 shares of beneficial interest outstanding) $31.90
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Capital Appreciation Fund
<PAGE> 14
STATEMENT OF OPERATIONS For the Six Months Ended February 28, 1997
(Unaudited)
<TABLE>
<S> <C>
===========================================================================================================================
INVESTMENT INCOME
Interest $ 4,461,005
-------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $26,795) 3,001,730
-------------------------------------------------------------------------------------------------------------------
Total income 7,462,735
===========================================================================================================================
EXPENSES
Management fees--Note 4 3,234,232
-------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 746,147
Class B 68,339
Class C 67,795
-------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 524,428
-------------------------------------------------------------------------------------------------------------------
Shareholder reports 187,888
-------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 26,092
-------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 21,639
-------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 4,682
Class C 1,891
-------------------------------------------------------------------------------------------------------------------
Other 41,492
------------
Total expenses 4,924,625
===========================================================================================================================
NET INVESTMENT INCOME 2,538,110
===========================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss) on:
Investments 70,224,188
Foreign currency transactions (13,870)
------------
Net realized gain 70,210,318
-------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 77,695,355
Translation of assets and liabilities denominated in foreign currencies (309,643)
------------
Net change 77,385,712
------------
Net realized and unrealized gain 147,596,030
===========================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $150,134,140
------------
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Capital Appreciation Fund
<PAGE> 15
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED
FEB. 28, 1997 AUGUST 31, DECEMBER 31,
(UNAUDITED) 1996(1) 1995
===========================================================================================================================
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 2,538,110 $ 2,862,338 $ 5,803,306
-------------------------------------------------------------------------------------------------------------------
Net realized gain 70,210,318 75,873,404 71,199,990
-------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 77,385,712 11,279,147 58,150,018
------------- ------------- -------------
Net increase in net assets resulting from operations 150,134,140 90,014,889 135,153,314
===========================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (4,636,958) -- (5,896,377)
Class B (28,622) -- (8,658)
Class C -- -- (24,850)
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (94,225,656) -- (69,237,207)
Class B (1,583,385) -- (100,605)
Class C (1,485,118) -- (663,926)
===========================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 141,759,219 (58,800,845) 397,611,091
Class B 15,370,804 2,415,163 2,840,388
Class C 6,393,685 2,250,436 5,989,404
===========================================================================================================================
NET ASSETS
Total increase 211,698,109 35,879,643 465,662,574
-------------------------------------------------------------------------------------------------------------------
Beginning of period 804,306,441 768,426,798 302,764,224
------------- ------------- -------------
End of period [including undistributed
(overdistributed) net investment income of $566,290,
$2,693,760 and $(168,578), respectively] $1,016,004,550 $804,306,441 $768,426,798
============= ============= =============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to August 31.
See accompanying Notes to Financial Statements.
15 Oppenheimer Capital Appreciation Fund
<PAGE> 16
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
===================================================================
SIX MONTHS PERIOD
ENDED ENDED
FEB. 28, 1997 AUGUST 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996(3) 1995 1994
=======================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $30.81 $27.44 $22.63 $25.72
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .09 .11 .24 .20
Net realized and unrealized gain (loss) 5.32 3.26 7.61 (.11)
-------- -------- -------- --------
Total income (loss) from investment operations 5.41 3.37 7.85 .09
- -----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.17) -- (.24) (.20)
Distributions from net realized gain (3.55) -- (2.80) (2.98)
-------- -------- -------- --------
Total dividends and distributions to shareholders (3.72) -- (3.04) (3.18)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.50 $30.81 $27.44 $22.63
======== ======== ======== ========
========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(6) 18.22% 12.28% 34.85% 0.46%
=======================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $978,077 $788,504 $758,439 $301,698
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $922,499 $789,903 $538,210 $325,003
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.56%(7) 0.55%(7) 1.08% 0.72%
Expenses 1.02%(7) 1.09%(7) 1.03% 1.16%
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 34.9% 45.2% 71.9% 34.7%
Average brokerage commission rate(9) $0.0622 $0.0595 $0.0578 --
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to December 31,
1993.
2. Per share amounts calculated based on the weighted average number of shares
outstanding during the period.
3. The Fund changed its fiscal year end from December 31 to August 31.
4. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
5. Less than $0.005 per share.
6. Assumes a 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.
16 Oppenheimer Capital Appreciation Fund
<PAGE> 17
<TABLE>
<CAPTION>
CLASS B CLASS C
==================== ===================================================================================================
SIX MONTHS PERIOD PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED
FEB. 28, 1997 AUGUST 31, DEC. 31, FEB. 28, 1997 AUGUST 31, YEAR ENDED DECEMBER 31,
1993 1992 (UNAUDITED) 1996(3) 1995(4) (UNAUDITED) 1996(3) 1995 1994(2) 1993(1)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$25.25 $23.76 $30.56 $27.37 $29.77 $30.27 $27.11 $22.50 $25.72 $25.92
- ----------------------------------------------------------------------------------------------------------------------------
.13 .16 .05 --(5) (.14) -- (.03) .09 -- (.01)
.86 2.28 5.17 3.19 .78 5.18 3.19 7.43 (.15) .31
- -------- -------- -------- ------- -------- ------- ------- ------- ------- -------
.99 2.44 5.22 3.19 .64 5.18 3.16 7.52 (.15) .30
- ----------------------------------------------------------------------------------------------------------------------------
(.12) (.17) (.06) -- (.24) -- -- (.11) (.09) (.10)
(.40) (.78) (3.55) -- (2.80) (3.55) -- (2.80) (2.98) (.40)
- -------- -------- -------- ------- -------- ------- ------- ------- ------- -------
(.52) (.95) (3.61) -- (3.04) (3.55) -- (2.91) (3.07) (.50)
- ----------------------------------------------------------------------------------------------------------------------------
$25.72 $25.25 $32.17 $30.56 $27.37 $31.90 $30.27 $27.11 $22.50 $25.72
======== ======== ======== ======= ======== ======= ======= ======= ======= =======
============================================================================================================================
3.93% 10.27% 17.71% 11.65% 1.67% 17.72% 11.66% 33.56% (0.50)% 2.11%
============================================================================================================================
$368,806 $401,256 $20,723 $5,448 $2,751 $17,205 $10,355 $7,237 $1,066 $8
- ----------------------------------------------------------------------------------------------------------------------------
$383,875 $362,295 $13,888 $4,285 $ 661 $13,738 $9,053 $3,792 $467 $6
- ----------------------------------------------------------------------------------------------------------------------------
0.47% 0.69% (0.32)%(7) (0.25)%(7) (0.54)%(7) (0.29)%(7) ( 0.30)%(7) 0.19% (0.02)% (0.07)%(7)
1.07% 1.09% 1.92%(7) 1.94%(7) 2.62%(7) 1.88%(7) 1.93%(7) 1.90% 2.18% 2.18%(7)
- ----------------------------------------------------------------------------------------------------------------------------
22.9% 42.3% 34.9% 45.2% 71.9% 34.9% 45.2% 71.9% 34.7% 22.9%
-- -- $0.0622 $0.0595 $0.0578 $0.0622 $0.0595 $0.0578 -- --
</TABLE>
7. Annualized.
8. 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 February 28, 1997 were $270,665,678 and $284,348,239,
respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
17 Oppenheimer Capital Appreciation Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Unaudited)
===============================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Capital Appreciation Fund (the Fund), formerly named
Oppenheimer Target Fund, is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is to seek capital
appreciation, primarily through investment in equity securities. The
Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The
Fund offers Class A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares
have identical rights to earnings, assets and voting privileges, except
that each class has its own distribution and/or service plan, expenses
directly attributable to a particular class and exclusive voting rights
with respect to matters affecting a single class. 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.
-----------------------------------------------------------------------
INVESTMENT VALUATION. 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 the
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 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 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 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, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and 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' FEES AND EXPENSES. The Fund has adopted a nonfunded
retirement plan for the Fund's independent trustees. Benefits are based
on years of service and fees paid to each trustee during the years of
service. During the six months ended February 28, 1997, a reduction of
$33,207 was made for the Fund's projected benefit obligations, and
payments of $9,051 were made to retired trustees, resulting in an
accumulated liability of $196,879 at February 28, 1997.
18 Oppenheimer Capital Appreciation Fund
<PAGE> 19
===============================================================================
1. SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date.
-----------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of the distributions made during the
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 dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund.
-----------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis used for federal
income tax purposes.
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. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996(2) DECEMBER 31, 1995(1)
---------------------------- ------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 4,101,930 $136,044,985 2,809,568 $ 83,949,691 3,305,271 $ 90,988,885
Dividends and distributions
reinvested 3,067,096 94,558,539 -- -- 2,635,092 71,461,980
Issued in connection with the
acquisition of Oppenheimer Time
Fund--Note 7 -- -- -- -- 11,277,345 315,314,574
Redeemed (2,675,150) (88,844,305) (4,852,702) (142,750,536) (2,909,180) (80,154,348)
----------- ------------ ---------- ------------- ---------- ------------
Net increase (decrease) 4,493,876 $141,759,219 (2,043,134) $ (58,800,845) 14,308,528 $397,611,091
=========== ============ ========== ============= ========== ============
- --------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 680,896 $ 22,268,701 358,325 $ 10,711,635 107,562 $ 3,071,314
Dividends and distributions
reinvested 51,517 1,574,884 -- -- 3,988 107,888
Redeemed (266,448) (8,472,781) (280,568) (8,296,472) (11,032) (338,814)
----------- ------------ ---------- ------------- ---------- ------------
Net increase 465,965 $ 15,370,804 77,757 $ 2,415,163 100,518 $ 2,840,388
=========== ============ ========== ============= ========== ============
- --------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 215,585 $ 7,043,906 152,465 $ 4,501,923 257,084 $ 7,022,376
Dividends and distributions
reinvested 45,590 1,381,821 -- -- 22,545 604,205
Redeemed (64,030) (2,032,042) (77,259) (2,251,487) (60,076) (1,637,177)
----------- ------------ ---------- ------------- ---------- ------------
Net increase 197,145 $ 6,393,685 75,206 $ 2,250,436 219,553 $ 5,989,404
=========== ============ ========== ============= ========== ============
</TABLE>
1. For the year ended December 31, 1995 for Class A and Class C shares
and for the period from November 1, 1995 (inception of offering) to
December 31, 1995 for Class B shares.
2. The Fund changed its fiscal year end from December 31 to August 31.
===============================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At February 28, 1997, net unrealized appreciation on investments of
$265,306,366 was composed of gross appreciation of $292,532,707, and
gross depreciation of $27,226,341.
19 Oppenheimer Capital Appreciation Fund
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
===============================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.75% on the first $200 million of average annual net assets, 0.72% on
the next $200 million, 0.69% on the next $200 million, 0.66% on the
next $200 million and 0.60% in net assets in excess of $800 million.
The Manager has voluntarily undertaken to waive a portion of its
management fee, whereby the Fund shall pay an annual management fee of
0.58% of its net assets in excess of $1.5 billion.
For the six months ended February 28, 1997, commissions (sales
charges paid by investors) on sales of Class A shares totaled $702,690,
of which $232,471 was retained by OppenheimerFunds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. Sales charges advanced to broker/dealers by
OFDI on sales of the Fund's Class B and Class C shares totaled $281,439
and $43,556, of which $20,246 was paid to an affiliated broker/dealer
for Class B. During the six months ended February 28, 1997, OFDI
received contingent deferred sales charges of $4,718 and $2,790,
respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not
exceed 0.25% of the average annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and
other financial institutions quarterly for providing personal service
and maintenance of accounts of their customers that hold Class A shares.
During the six months ended February 28, 1997, OFDI paid $33,774 to an
affiliated broker/dealer as reimbursement for Class A personal service
and maintenance expenses.
The Fund has adopted a compensation type Distribution and
Service Plan for Class B shares to compensate OFDI for its services and
costs in distributing Class B shares and servicing accounts. Under the
Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per
year on Class B shares. OFDI also receives a service fee of 0.25% per
year to compensate dealers for providing personal services for accounts
that hold Class B shares. Both fees are computed on the average annual
net assets of Class B shares, determined as of the close of each regular
business day. During the six months ended February 28, 1997, OFDI
retained $60,042 as compensation for Class B sales commissions and
service fee advances, as well as financing costs. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plan was terminated. As of February 28,
1997, OFDI had incurred unreimbursed expenses of $312,060 for Class B.
The Fund has adopted a reimbursement type Distribution and
Service Plan for Class C shares to reimburse OFDI for its services and
costs in distributing Class C shares and servicing accounts. Under the
Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75%
per year on Class C shares. OFDI also receives a service fee of 0.25%
per year to reimburse dealers for providing personal services for
accounts that hold Class C shares. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. During the six months ended February 28,
1997, OFDI paid $1,006 to an affiliated broker/dealer as reimbursement
for Class B personal service and maintenance expenses and retained
$27,749 as reimbursement for Class C sales commissions and service fee
advances, as well as financing costs. If the Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for certain expenses it incurred
before the Plan was terminated. As of February 28, 1997, OFDI had
incurred unreimbursed expenses of $132,877 for Class C.
20 Oppenheimer Capital Appreciation Fund
<PAGE> 21
===============================================================================
5. ILLIQUID AND RESTRICTED
SECURITIES
At February 28, 1997, 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 be considered illiquid if it
lacks a readily available market or if its valuation has not changed
for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
from time to time) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional
investors, are not subject to that limit. The aggregate value of
illiquid or restricted securities subject to this limitation at
February 28, 1997 was $2,567,000, which represents 0.25% of the Fund's
net assets.
===============================================================================
6. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at a
negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio
currency risk. The Fund generally enters into forward contracts as a
hedge upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Fund may enter into such contracts as a
hedge against changes in foreign currency exchange rates on portfolio
positions.
Forward contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer. The
Fund will realize a gain or loss upon the closing or settlement of the
forward transaction.
Securities held in segregated accounts to cover net exposure
on outstanding forward contracts are noted in the Statement of
Investments where applicable. Gains and losses on outstanding contracts
(unrealized appreciation or depreciation on forward contracts) are
reported in the Statement of Assets and Liabilities. Realized gains and
losses are reported with all other foreign currency gains and losses in
the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to
meet the terms of the contract and unanticipated movements in the value
of a foreign currency relative to the U.S. dollar.
At February 28, 1997, outstanding forward contracts to purchase foreign
currencies were as follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT VALUATION AS OF UNREALIZED
CONTRACTS TO PURCHASE EXPIRATION DATE (000S) FEBRUARY 28, 1997 DEPRECIATION
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
French Franc (FRF) 3/27/97 2,865 FRF $504,667 $1,141
</TABLE>
===============================================================================
7. ACQUISITION OF
OPPENHEIMER TIME FUND
On June 23, 1995, the Fund acquired all of the net assets of Oppenheimer
Time Fund, pursuant to an Agreement and Plan of Reorganization approved
by the Oppenheimer Time Fund shareholders on June 20, 1995. The Fund
issued 11,277,345 shares of beneficial interest (Class A), valued at
$315,314,574 in exchange for the net assets, resulting in combined Class
A net assets of $686,360,280 on June 23, 1995. The net assets acquired
included net unrealized appreciation of $67,068,398. The exchange
qualifies as a tax-free reorganization for federal income tax purposes.
21 Oppenheimer Capital Appreciation Fund
<PAGE> 22
OPPENHEIMER CAPITAL APPRECIATION 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
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
Jane Putnam, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
==============================================================================
INVESTMENT ADVISER
OppenheimerFunds, Inc.
==============================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
==============================================================================
TRANSFER AND SHAREHOLDER
SERVICING AGENT
OppenheimerFunds Services
==============================================================================
CUSTODIAN OF
PORTFOLIO SECURITIES
The Bank of New York
==============================================================================
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
==============================================================================
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken from the records
of the Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Capital
Appreciation Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Capital Appreciation 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, are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
22 Oppenheimer Capital Appreciation Fund
<PAGE> 23
OPPENHEIMERFUNDS FAMILY
===============================================================================
OppenheimerFunds offers over 50 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your children's
education or tax-free income, we have the funds to help you seek your
objective.
When you invest with OppenheimerFunds, you can feel comfortable
knowing that you are investing with a respected financial institution
with over 35 years of experience in helping people just like you reach
their financial goals. And you're investing with a leader in global,
growth stock and flexible fixed-income investments--with over 3 million
shareholder accounts and more than $60 billion under OppenheimerFunds'
management and that of our affiliates.
At OppenheimerFunds we don't charge a fee to exchange shares.
And you can exchange shares easily by mail or by telephone.(1) For more
information on Oppenheimer funds, please contact your financial adviser
or call us at 1-800-525-7048 for a prospectus. You may also write us at
the address SHOWN on the back cover. As always, please read the
prospectus carefully before you invest.
<TABLE>
====================================================================================================================================
<S> <C> <C>
STOCK FUNDS
Developing Markets Fund Quest Capital Value Fund
Global Emerging Growth Fund Growth Fund
Enterprise Fund(2) Global Fund
International Growth Fund Quest Global Value Fund
Discovery Fund Disciplined Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Capital Appreciation Fund(3) Quest Value Fund
====================================================================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Multiple Strategies Fund(4)
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
====================================================================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
====================================================================================================================================
MUNICIPAL FUNDS
California Municipal Fund(5) Insured Municipal Fund
Florida Municipal Fund(5) Intermediate Municipal Fund
New Jersey Municipal Fund(5)
New York Municipal Fund(5) Rochester Division
Pennsylvania Municipal Fund5 Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
====================================================================================================================================
MONEY MARKET FUNDS(6)
Money Market Fund Cash Reserves
====================================================================================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may
be exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund."
5. Available only to investors in certain states.
6. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market
fund will be able to maintain a stable net asset value of $1.00 per
share. Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
23 Oppenheimer Capital Appreciation Fund
<PAGE> 24
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RS0320.001.0297 April 30, 1997
[PHOTO]
CUSTOMER SERVICE REPRESENTATIVE
OPPENHEIMERFUNDS SERVICES
"HOW MAY I HELP YOU?"
As an Oppenheimer fund shareholder, you have some special privileges.
Whether it's automatic investment plans, informative newsletters and hotlines,
or ready account access, you can benefit from services designed to make
investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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